Former finance minister Thanong Bidaya formed his own risk profile for personal investment and, after more than 16 years of sticking with it, his dabbling in the markets with Bt40,000 in 1990 has reaped assets that now pass the Bt1-million mark.

Thanong, who turns 60 in July, divides his savings into cash, investments and personal-interest assets.

His investments are weighted evenly among real estate, individual stocks and venture capital funds, and mutual funds.

The real-estate assets are meant for long-term holding and he will leave it to his children and family to decide what to do with the properties.

His investment policy for stocks is simple.

"I review and think about what to do after I hold securities for six months. However, I will settle them within a year. Also, if the value of the stock I hold is 30 per cent higher than the price I bought it at, I will sell it anyway. I don't care whether the price of a stock continues to rise," he says.

Thanong also set aside some of his savings for venture capital companies, even though they are a very high-risk, high-return type of investment.

"You have to accept that investing in companies is very risky. Your money goes directly to the company's owner. If the business collapses, you're screwed too. However, if the company's doing well, you'll receive a very satisfactory return as well."

He believes that only one of five venture-capital companies can provide him very attractive returns. However, the yield from that one should cover the losses from the other four.

He adheres to three stock-buying criteria.

"I consider the trend, movement and situation of the economy, industry and market. Sometimes the economy is bad but it doesn't mean that every sector will struggle. Some sectors may perform well amid the bad times of the others."

He has diversified his equity investment into many plays at a time, but not more than 10.

"I'm not a day-trader. I look at the environment [of the company]. I take time to make a decision. Sometimes I lose but I have to execute [its sale] as it's over my limit."

Thanong's biggest loss was in TMB Bank, where he was once the president.

He sees the stock exchange as possibly going up to 800-900 points within three years. But for this year, the upside is not much.

"The negative factors have already come out. We can rest assured that any drop is unlikely to dive further than 50 points."

Thanong also believes in index funds and investing in the local market. "There are only a few investors in the world who can prove that they can beat the market. For normal investors like us, index funds have shown that over time they're one of the best choices for diversification."

Thanong has had a stake in TMB Asset Management's SET50 fund since its inception in 2001. He just sold some of his units in this fund, as their value has almost doubled.

Based on his own experience in index funds, Thanong found the weak point of the SET50 Index and initiated the JUMBO25 index for TMB Asset Management.

"Some SET50 stocks are not liquid. So, JUMBO25 was created."

JUMBO25 invests in 25 stocks, with each sector contributing up to three stocks.

Thanong has faith in the growth potential of the Thai market. Also, he wants to invest in businesses that can create productivity.

"I put a few bucks in a foreign investment fund. I was just curious about what it's like. However, I prefer to invest in Thailand. I don't invest in commodities. It's my personal view that investing in companies will help them become more productive. People have jobs. But investing in commodities doesn't reward any productivity in business."

Thanong earned his PhD in management from Northwestern University in the United States in 1978, and flew back to Thailand in 1987.

As a lecturer at the National Institute of Development Administration, he didn't want to teach his students only theories from thick textbooks.

He treated himself as a guinea pig, putting Bt60,000 into the underground commodities trading market. Back then, there was no official commodities market. The illegal trading in commodities then was like the method used in the Thailand Futures Exchange today.

"My students asked me to join. I tried because I wanted to be practical. And I lost all that money. So, I learned what it's like but I don't fancy investing in commodities."

In wrapping up, Thanong says doing well depends on weighing risk versus return.

"The key to success is to have higher returns with less risk than the others. Every fund manager tries to design products this way. You can do it on your own. But if you take too little risk, you can't be a businessman."

Piyarat Setthasiriphaiboon

The Nation