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When markets are wobbly, he buys Add to ...

John Gan

Age: 52

Occupation:

Founder and chief executive officer of a corporate finance and management consulting firm (888 Capital Group Ltd.), based in Burnaby, B.C.

Portfolio:

Bearish bets on the U.S. dollar, U.S. government bonds and S&P/TSX 60 index through Horizon BetaPro's double-short exchange-traded funds; holdings also include Claymore Gold Bullion Trust Fund and stocks such as ATS Automation Tooling Systems Inc. , Magna International Inc. , Onex Corp. and Citigroup Inc. - hedged with S&P 500 put options.

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Investing history:

Mr. Gan grew up in an environment where there "were three main topics of conversation: food, education and the stock market." Through his mother's account, he bought his first stock at the age of 12 on the Kuala Lumpur Stock Exchange in Malaysia.

After immigrating to Canada and graduating from university, he became a stockbroker in the early 1980s. "I was quickly taught a painful lesson when gold and silver prices collapsed and destroyed my stock holdings and my clients' portfolios," Mr. Gan says.

He left the brokerage industry and later became regional director of Asia for Allianz Insurance in Singapore. Until his return to Canada in 2004, he was invested in mutual funds. But, dissatisfied with their fees and performance, he became a do-it-yourself investor.

Investment approach:

"I use a top-down strategy and refer to market indicators to decide my asset allocation to equities," he says. For example, when the CBOE Volatility Index is near historical highs and indicating extreme fear, he increases his exposure to stocks.

"When the stock market valuation is low, I want to be overweight equities and have gone as high as 66 per cent of my liquid assets, which was in February and March of 2009. Currently, I'm 45 per cent invested in equities."

To decide which sectors and stocks to buy, he reads and watches what fund managers and analysts are recommending, particularly if their recommendations fit his own view of the markets. "I often use technical analysis to help me time my entry," he adds.

When he's wrong, Mr. Gan has no hesitation to liquidate his positions. "I have a stop-loss policy 10 to 20 per cent below the share price, except for contrarian and beaten-up stocks," he says. His approach seems to have worked. "My portfolio is up 84 per cent from March 9, and up 27 per cent year to date. It's down 7 per cent over the year to June 1."

Best move:

"My best move was buying stocks during the last three to six months when they were selling at a low valuation. Examples are iShares Taiwan Index Fund, Linamar and Canaccord Capital ."

Worst move:

"My worst move was two of the stocks bought in the last three to six months. The credit crunch forced AbitibiBowater to declare bankruptcy and CanWest Global to default on its loans. I've sold them at a loss of about 70 per cent."

Advice:

"What's most difficult and challenging is to manage and 'control' my fears, frustrations, anger, greed, stress and emotions."

Want to share your own strategies? E-mail mccolumn@yahoo.com

 

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