No flashy car for this high-flier

		Tue, Jul 21, 2009 The Straits Times
By Lorna Tan, Finance Correspondent In 1998, when he started his full-time finance and international business degree course at New York University (NYU), Mr Aaron Lee Smith also went to work full-time at investment house Morgan Stanley. He started out as a clerk, but within one year, he became a junior broker after obtaining the requisite investment licence. By the time he graduated from NYU in 2002, he had already chalked up four years of valuable working experience as a Morgan Stanley bond broker on Wall Street. Said the 30-year-old chief executive of Austria-based Superfund Financial (Singapore), whose core business is managed futures funds: 'No one my age was doing the things I did. Students were partying while I was working on Wall Street...If you have the focus and determination and are committed, you can do anything.' The American attributed his inspiration to be a success on Wall Street to a book - Winning On Wall Street, by United States stock market strategist Marty Zweig - that he read when he was 16. Mr Smith, who is single, has been financially independent for the past two years and his goal is to remain so and not owe any money. About 40 per cent of his portfolio is invested in managed futures funds which trade futures and forward contracts. The funds are invested in a diversified pool of futures which trade on 130 different financial and commodity futures markets, from soya beans to Nikkei and pound sterling. Mr Smith joined Superfund in 2002 after he graduated from NYU. He developed Superfund's distribution business in Europe, the Middle East and Africa and was head of the US business before heading the Singapore operations in July last year. Superfund Singapore, a regional hub for South-east Asia, has a staff of 15 and this is expected to double in the next six months. Its products are meant for sophisticated clients. Q: Are you a spender or saver? I'm more of a saver because before deciding where to invest, the most important decision is to commit to saving a predefined amount each month. I save at least 50 per cent of my monthly income and my entire annual bonus. Of the amount I save, 10 per cent is channelled into cash savings, while the rest go to my investments. Q: How much do you charge to your credit cards every month? Credit cards are for the birds. I spend the money that I have and never one penny more. I've never taken a single loan for any purchase in my life. I have three debit cards, two from Singapore and one from the United States. I visit the ATM three to four times a month and I withdraw $1,000 at each visit. Q: What financial planning have you done for yourself? My investment goal is simple. I want to make double-digit returns even when the market is going down. In the past, I achieved 15 to 20 per cent average returns on my portfolio. I have 40 per cent in managed futures, with the balance in gold, silver, commodity funds, real estate and less than 10 per cent in cash. Gold and silver are solid alternatives to holding cash. Cash rates today will give you a negative return after inflation but gold has always held its purchasing power over the past 2,000 years. I buy one-ounce gold coins and 100-ounce and 1,000-ounce (35kg) silver bars. I own one stock, Morgan Stanley, which is left over from my old job. It is still under water, more proof that you don't need any paper stocks to be successful. Q: Moneywise, what were your growing-up years like? I grew up in an upper middle-class family of six in the affluent town of Boca Raton, Florida. Dad is a lawyer and mum is a homemaker. We lived in a five-bedroom, double-storey house. The ethic of working hard and saving was instilled in me at an early age. My family owns an 18-hole golf course in Michigan and I had worked there during school vacations since I was 12. I washed dishes in the kitchen and cut the grass at the course. I was taught to be grateful for the opportunity to work hard. Another lesson is that even if you have the money, don't waste it. That's why I don't drive a flashy car. Q: What's your investment philosophy? Real fortunes are made by those who don't follow the herd. Very few investors will ever get rich buying stocks and bonds. I prefer to do something unique, that has much more upside potential, and that is managed futures. Q: What property do you own? I bought two residential properties in South Florida and Michigan in 2006. Both were bought with cash. The five-bedroom, 5,000 sq ft house in Florida is used as a family winter house while the double-storey, 3,000 sq ft, four-bedroom house in Michigan is used as a summer house. I do not wish to disclose their purchase prices, which would have dipped in the past few years as the US real estate market is on a decline. I have the luxury of waiting for the optimal time to buy properties here. In the long run, property in Singapore will become extremely expensive as the world's centre of influence shifts back to Asia and Singapore becomes the most important global trading centre for financial and commodity markets. Q: What's the most extravagant thing you have bought? I have been an avid wine collector since 2005. I buy wine for personal consumption with my family and friends, and not for investment purposes. My most outlandish purchase has been the Screaming Eagle, the most rare and sought-after Cabernet from Napa Valley, California. Each bottle cost $1,800 and I bought a case of 10 bottles. I have 1,000 bottles of wine, kept in a cellar in my Michigan home. Q: What's your retirement plan? I've been financially independent since two years ago. My goal is to remain so, since I can then continue to call the shots. At the moment, I have no plans to retire. My work is my passion. At Superfund, we are building up a whole new industry with managed futures, an undiscovered asset class. Q: Home is now... I live in a rented three-bedroom condo unit at Mount Sophia with my girlfriend. It's close to the office which is located at Shenton Way. Q: I drive... I drive a light green Toyota Camry. No to living on credit Credit cards are for the birds. I spend the money that I have and never one penny more. I've never taken a single loan for any purchase in my life. I have three debit cards, two from Singapore and one from US. I visit the ATM three to four times a month and I withdraw $1,000 at each visit. Dare to venture Real fortunes are made by those who don't follow the herd. Very few investors will ever get rich buying stocks and bonds. I prefer to do something unique, that has much more upside potential, and that is managed futures. WORST AND BEST BETS Q: What has been your worst investment to date? Nasdaq stocks such as Marconi and Cisco during the tech bubble. I held them for a year and exited at a 40 per cent loss in 2001. After that experience, I knew I would never buy stocks and hold them for the long term again, since they can and do lose their value by 50 per cent or more. Once you lose 50 per cent, you have to make 100 per cent, just to break even. My discipline is to cut losses early and let winning positions run. Q: And your best investment? I invested in my firm's managed fund, which has a diversified portfolio of financial and commodity futures, and it made 46.7 per cent last year. MR AARON LEE SMITH This article was first published in The Straits Times.