From sceptic to shareholder: How my Xiaomi investment paid off
- Ben Tan
- Jul 26
- 3 min read
When I first heard the name "Xiaomi," I chuckled.
It sounded like a made-up name we’d use in primary school Chinese or Math class. Hardly the name of a serious company. But today, I have to admit — Xiaomi has quietly, almost stealthily, infiltrated my household.
It all started with a robot vacuum cleaner. In all honesty, it worked well for its price as long as I remembered to clear the wires off the floor.
So, in 2021, I decided to invest.
My investment thesis: Simple, practical, and product-driven
Back then, Xiaomi wasn’t the strongest company in terms of economic moat. If I applied my current investment framework to Xiaomi in 2021, it would’ve been a “no.”
There were no obvious network effects or switching costs. But my thesis was grounded in something more practical.
Xiaomi made a wide range of affordable, surprisingly durable household products — everything from fans to smart cameras. Today, I even use their cameras to monitor my newborn. That kind of brand presence, especially in homes across China and Southeast Asia, is powerful. It may not be a moat yet, but it signalled strong potential.
They had a clear cost advantage — lower prices without compromising too much on quality. And they were expanding fast across Asia.
Over time, I began to notice more Xiaomi products around me. They didn’t scream for attention. They just worked and at a price point that made sense.
So I invested. Despite the weak moat. I believed in the business direction.
Since then, Xiaomi has undergone impressive and aggressive expansion. The company rapidly expanded its product line, transitioning from simple household appliances to smartphones and now also offering electric vehicles.
Volatility and conviction
Investing in Chinese tech stocks isn’t for the faint of heart. Just look at what happened to Alibaba and Tencent.
Every time China tightens regulations or the macro outlook dims, prices tank. Xiaomi wasn’t spared either. It was down nearly 50% at one point and stayed there for three years.
But I kept reviewing my thesis. The company continued to grow. It wasn’t just selling products. It was building an ecosystem. Bit by bit, the moat strengthened.
And finally, the market took notice.
My Xiaomi investment results
Fast forward to today, that investment has more than doubled — a total return of 104.3%.
But total return isn’t the most important metric for a stock picker. CAGR (compound annual growth rate) tells the real story.
My Xiaomi investment delivered a 15.6% CAGR. That’s not life-changing, but it’s solid.
More importantly, I grew as an investor.
Four key takeaways from my Xiaomi investment
Conviction must be paired with review.
It’s easy to believe in a stock when it’s rising. But true conviction shows when prices fall. Still, don’t be blind. Keep reviewing your thesis. In Xiaomi’s case, I saw the company reinforcing its moat over time.
Aim for 10% CAGR or higher.
If your stock picks don’t beat the S&P 500’s average returns over time, you might be better off investing passively and spending your time elsewhere.
Frameworks evolve.
I’ve improved my investment process since 2021. Back then, I took a calculated risk on a company with a weak moat. Today, I’d be more selective — but that doesn’t mean those earlier decisions weren’t valid for their time.
You need the stomach for drawdowns.
Charlie Munger once suffered a 53% drawdown. Nvidia was down 65% just a few years ago. Amazon fell 95% during the dot-com crash. If you can't stomach volatility, investing in individual stocks may not be for you.
Final thoughts
Xiaomi's stock may have been down for three years, but when investors started to reexamine it, it took off. That’s the thing with value. Sometimes it takes time to be recognised. And if your thesis is sound, patience often rewards you.
What’s your latest investment conviction? And are you willing to hold through the storm?
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