‘Emotional discipline’ of investing strikes chord with musician

Xin He, 27

Occupation

Musician and investor

The portfolio

Positions include Mattel Inc., PetSmart Inc., AmTrust Financial Services Inc., Canadian Oil Sands Ltd., Sohu.com Inc., Smith & Wesson Holding Corp. and Nevsun Resources Ltd.

The investor

Xin He began buying stocks at the age of 17 after receiving some money to invest. He read almost every investment book that could be found, and spent summers reviewing annual reports from companies. He has a bachelor degree in music composition from Simon Fraser University.

How he invests

Mr. He bides his time for "incidents that spread fear in the market." When they arrive, stocks sell off sharply and good companies are grabbed at cheap prices.

Buying a stock during a bout of heavy selling requires "emotional control." This is something Mr. He feels he is good at as a result of the emotional discipline instilled by his music.

"When I compose, I need to figure out every detail such as melody lines, harmonies, chords, rhythms and keys. Putting these things together requires managing my emotions to achieve the desired effect."

A recent portfolio addition was Mattel. The toy maker's revenues have slipped as children switch from Barbie dolls to electronic games and tablets. "However, Barbie's brand value can be leveraged into other platforms such as digital entertainment, movies and apparel." Mattel also has a history of regularly increasing its dividend, which now yields an appetizing 4.3 per cent.

Another recent move was buying into firearms maker Smith & Wesson. It has stable income, a share buyback program (that boosts earnings per share) and surplus cash for making acquisitions.

Best move

Buying Imax shares in 2010, when they were depressed. The big-screen movie company is now enjoying "aggressive growth" in emerging countries.

Worst move

Buying shares in Xinhua Finance Media Ltd, a market-research firm based in China. Its shares traded on the Nasdaq but were delisted.

Advice

"I usually recommend buying stocks hurt by one-time incidents that can be fixed …"

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