Michael Tan, a name synonymous with successful investing, shares tips on how to survive ‘the mother of all financial crises’.Talking to Michael Tan for half an hour is like attending a one-day seminar with him as speaker. He talks fast, gets straight to the point and doesn’t waste time – the sort of guy you would want to ask for advice on how to cope during this pandemic. He’s done it – beaten the odds with up to 1,000% returns!
How did he do it?
He’s fast to react – when people were still panicking in March just before the Movement Control Order (MCO) was announced, he’s already made plans to pivot his fully brick-and-mortar business comprising offline events, seminars, and property investment onto the online platform. And in the nick of time too – he’s lucky his associates in five countries– Vietnam, Thailand, Cambodia, Singapore and Hong Kong – went onboard with him with no issue.
The key to profit during a crisis is investment. It’s a great opportunity as there are so many ways to pivot forward.
Those early days of struggle and learning new things were crucial to pivot his business to the next level. Thanks to the crisis, his business exploded. It attracted at one point 10,000 viewers, a far cry from the several hundreds during their offline events. “It’s a tremendous boom that we would not have explored if not for the pandemic. So, we went from a crisis to something that helped elevate our business to the next level with a six-figure turnover within a few months,” Tan smiles.
Apart from pivoting to a n online platform, Ta n also invested in a lot of properties. “Investment is key during such times. Crises like this is not a bad thing. It’s actually an opportunity as there a re so ma ny ways to pivot forward.”
The properties he acquired were in the following categories:
1. Tourism – “It will be the first sector to recover post-Covid, e.g. in Melaka and Penang. So, we acquired 41 units in the hospitality business. The income generated from them is enough to cover our expenses today.”
Rebound Guaranteed
“You can see that with every crisis, there follows a rebound. In March, while people were panicking, we analysed the situation. We knew that there would be a recovery, so we aggressively went into the market,” Tan reveals.
True enough, during the Recovery MCO, pent-up demand for holidays and leisure activities went up through the roof with many holiday destinations fully booked during public holidays and weekends. Tan’s ventures yielded extraordinary gains during that period – until the CMCO hit again in November.
Survival 201
After stabilizing his business operations and ensuring a stable income stream, he looked a round to see which businesses were thriving, “because it’s not enough just to survive, we need to thrive.”
“Very early on in March, we shipped several containers of made- in-China face masks from Vietnam to the US. We reaped a few thousand percent returns within one month,” Tan notes.
“When people are fearful, be aggressive,” he paraphrased Warren Buffett’s oft-quoted phrase, adding, “when people are aggressive, become fearful.”
“From October onwards, it’s a volatile period in terms of the direction of the Covid-19 outbreak and our political situation. But it is this very volatility or instability, that gives you the opportunity to pivot to another field such as food, technology or logistics.”
All these are inter-related, for example, agriculture provides the food needed for food supply which in turn needs a tech platform to sell, after which logistics are needed to deliver the food to the consumer.”
Key to Survival
But the future still worries Tan. Despite having survived two crises since 12 years ago thanks to mentoring from some very successful individuals, Tan laments
the Budget 2021. “The government is doing a great job helping the man- on-the-street, but more help is also needed at the business level to help the big companies and SMEs. These are companies that contribute 85% of the local GDP. If they don’t survive, there will be a lot of unemployment and it will have a negative ripple effect throughout the economy. Instead of a V-shaped recovery, we will instead see a U-shaped recovery, one tha t takes a very long time to recover to pre-pandemic times.”
The only thing that he sees can help save the day is an effective vaccine coming out at the right time. “If it comes out mid-2021, that’s a bit too late – many companies including airlines and many tourism-related companies would have collapsed by then. The government will also be cash-strapped,” he wa rns.
“The fact is we are regressing and getting poorer amid a recession caused by the pandemic. There is political instability and we are entirely dependent on local demand which do not bode well for continued growth.”
“How to survive that? I anticipate that even if there is a vaccine, the market will take several years to recover to pre-pandemic days. In the meantime, people still need food, so agricultural produce will still be in demand. Hence, we plan to be land owners and work with farmers to produce agricultural products.”
In summarising, Tan advises business owners and individuals to pivot and adapt to survive; and to continue to invest. “If you do nothing, you a re going to lose money but if you take the risk to invest, the money may grow one day and you will reap the rewards of your patience.”