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Working Culture
Two guys in the value investing commodity gave very interesting insight that US offers the chance to work. One of them was Bruce Greenwald, who mentioned that in the Forbes interview in 2010. I cannot remember who is the other one.
Essentially, US has such culture that, according to Bruce, if you can screw up till 35 years old, given hard work and smart you will do well. This kind of culture does not happen in Europe and, according to the other guy, in Asia. In other words, in Europe or Asia, if you screw up by 19 years old and don't get into school, say, college, you are finished for life.
I think about that comment and fully agree with that. Good real life example is Li Lu, who used to be participant of Tiananmen Square student protests. When he was on the run, anyone would think that his life was gone, meaning he had no future. When he arrived America, restarting his life from student at Columbia Business School with worries of getting money (at that time, he had no money) to hedge fund manager today. Clearly, American culture has given him a second chance to do something he is comfortable with. This kind of chance is unlikely to be given to anyone, who is in the same shoes in Singapore.
Entrepreneurs
There are two entrepreneurs catching my attention upon reading two articles about them from local free-to-use newspaper and a venture capital oriented blog. One of two is Singaporean, Neo Kah Kiat, who quit secondary school after secondary 2 and request to have NS a year early. I thought," Woah, that is one hell move which no young man want to do so.". His rationale for doing this is that a diploma or degree will not guarantee riches and respect. I agree with him. It is spot-on. His success is an example of an outlier. He worked at his relative's economical rice stall. Learning this food trade and gaining experience about food industry, he started his business in the food industry, focusing on catering business. Today, he lives in Sentosa Cove. It tells much about his success within more than a decade.
The other one is Chamillionaire (stage name). I happen to know about him by reading an article about him in a blog written by venture capitalist. Before why I am impressed by him, I am adopting multi-disciplinary approach to improve my (equity) investing mind by learning from wide disciplines. Learning about venture capital industry, I can have a good picture of how start-ups operates and how their business value appreciates over time. Indeed, I have learnt a lot by reading the discussions about venture capital stuffs.
Back to this man, he exhibits enterpreneurship spirit, whereby he is using technology to market his music in very innovative way. He wants to market his music through this channel rather than the suggestion of his employer, Universal. His channel of marketing his music is through free-to-air stream method via ustream. It is because he knows that this location is where his fans are. Unfortunately, Universal prefers him to market in another site that has cutted deal with Universal because that is not where his fans are. There are interesting seven points he mentioned in the venture capital talk. You can learn more about that by reading this website.
After reading them, I suddenly thought of something. Today, I see some adults holding their children to somewhere at Raffles Place. I am wondering where they are taking their children to. Suppose that there is a nusery or child care centre at Raffles Place. Blimey. It will generate revenue but moat is needed to ensure constant stream of income as children grow up. Such moat can be created by building a reputation of nurturing children as a good role model or something else. Office space is expensive at Raffles Place, which means that the school fee should be more expensive than the ones at heartland areas. Who cares since many people who work in Raffles Place can afford for given salaries. Given my limited accounting exposure on childcare centre, it can be viable plan as long as there is a moat. I think it can be very attractive to single parent, who needs to work or working mother. Currently, I have no idea whether there is such childcare centres in CBD areas.
Books
Book Title: The Big Short: Inside the Doomsday Machine
Author: Michael Lewis
Rating:10/10
Remark:
It is interesting and engaging finance-related book. In this book, the author has joined few different successful money managers' stories that are involved with the bets against sub-prime crisis. These lives are truly connected to the point the readers can see invisible links in between them. There are moments, where I laugh out loud when there are few scenarios which seems to be amusing around one particular successful money manager.
Book Title: The Only Three Questions That Count: Investing by Knowing What Others Don't
Author: Kenneth Fisher
Rating:5/10
Remark:
Ken has showed some interesting insights when he burst the investing methodology myths. However, his discussion on macroeconomics is not apt at all. Overall, it is decent book. His father's books are much more objective and descriptive.
Book Title: Blink: The Power of Thinking Without Thinking
Author: Malcolm Gladwell
Rating:8/10
Remark: Very interesting book that describes very clearly about thin-slicing. It is something I never think of. He gives very interesting insights about Coke experiment with 'The New Coke' and expirement of Aeron chair.
Book Title: The Little Book of Value Investing
Author: Christopher H. Browne
Rating: 8/10
Remark: It is a book that simplifies basic concepts of value investing book. I learn a lot of insights from him, which I have not thought of them before. More interestingly, although I know the story of Buffett rejecting the partnership offer based on my reading on Buffett biography, I does not know that the main reason for this decision is that his wife wants to be at Omaha. I am somewhat surprised. That is what introduction chapter says.
Movies
Lake Placid 3 (Hollywood Movie 2010)
Synopsis:
A family - husband, wife, and a son- come back to a cabin, where it is near the lake. With the memory of crocodile attacks in the past, this family is trying to clean the cabin who belongs to their late aunt. The cop, who is in charge of the area, assure them that there is no more crocodiles. In few years later, they are crocodiles appearing and terrorising them and some members of the public. How shall they deal these hungry crocodiles?
Rating:5/10
Remark: Average story with little lewd motion pictures.
Trading Places (Hollywood Movie 1983)
Synopsis:
Duke brothers make a bet on the result of cruel experiment. The experiment is to put well-educated and well-to-do person, Louis into the shoes of penniless person and poor Negro, Valentine into the shoes of managing director of Duke brother's trading company. What is the result of that bet?
Rating:7/10
Remark: Very unique story. It clearly illustrates the madness of traders on the trading floor.
Tony Del Piero wrote and posted at at 12:43 am The Tipping Point
This book is quite amazing, bringing me so much insight. I never knew that in general humans have brain capacity to remember 7 numbers at maximum, which explains why there are telephone numbers with only 7 numbers. Unfortunately, Singtel has added one more number to existing 7 numbers few years ago back.
It also mention why Paul Revere can get the attention of revolutionary leaders in the American revolutionary while the other guy, I cannot remember his name, fail to do so. Based on this, I suddenly thought of myself. It is quite unfortunate not to get myself surrounded with people who are interested to talk about investing and economics. I am equally comfortable in talking about every day life but I am very passionate to talk about investing and economics just like myself as a young kid talking about soccer. I see every day life as a package in our life, which may not differ much from others. In other words, I tend to treat them equally as an indifferent person towards every day life. Some people seem to place high importance to maximise their entertainment by talking every day life as long as there are two way conversations.
Nu Horizons Electronics Corporation and Irrational World
Its recent third quarter announcement sounds good to me. I wonder if not for merger deal announcement, this third quarter announcement can push its share price from, give and take, $3 to $4 or $5 (per share). I am surprised that Martin Kent, CEO, said that NUHC has not been able to reach that $7 price in the past three years. I wonder why it is so. In few months ago, financial statements clearly showed that NUHC was severely under priced.
Few days before 3rd Quarter announcement, I see a strong evidence that confirms my belief that the world is irrational. For a given merger announcement, we all know that the maximum price the stock can go is $7 per share. My eyes popped out when I saw the last price of US$7.20 plus. Why would silly buyer pay for that price? How can he make a profit. To make a profit, he can derail the current merger agreement and ask for higher cash tender offer. It seems to be illogical if he is small shareholder. Getting merger agreement to fail and wait for share price to rise from unknown last price (right after failure of merger)? It is quite long time to realise it. It is also illogical. We have no further answer. The conclusion is that people do irrational things that do not seem logical to me.
Not only at stock market, each morning I go to office. I see some people exit from the MRT station on the same way I do but want to cross one way wide road. If they want to go there, they should have taken safer route by taking another exit point, which they do not need to cross the road. Just a straight path. Truly illogical.
Book
Book Title: The Tipping Point: How Little Things Can Make a Big Difference
Author: Malcolm Gladwell
Rating:7/10
Remark: It is yet another insightful book written by Gladwell but less interesting than 'Outlier' one. I guess it is because I feel that it will bring many ideas to people who are very interested in marketing. In that book, the rationale of falling crime rate in New York is truly stunner to me, who does not live in New York. Overall, it is still good book to read.
Movies
Predator (Hollywood Movie 2010)
Synopsis:
Few humans were suddenly dropped from the sky out of blue. They are strangers to their own knowledge. They team up together to understand why they are in an island. Along the way, they discover monsters who are bigger and powerful than them. What will humans deal with those monsters who are wearing high technology armours and using laser powered weapons?
Rating:5/10
Remark: Average movie with boring storyline.
The Last Airbender (Hollywood Movie 2010)
Synopsis:
The Fire Nation is trying to conquer the other three nations, Water, Air, Earth. In order to do this, it has to suppress Avatar, who is the master of four elements (water, air, earth, fire). Avatar is the only one who can communicate with the spirits. One day, Avatar disappears and the Fire Nation manages to conquer most of the lands. Suddenly, Avatar appears out of the blue. How shall Fire Nation deal with the Avatar?
Rating:6/10
Remark: Great story but thin details.
How to Train Your Dragon (Hollywood Animation Movie 2010)
Synopsis:
Vikings live in the island, where dragons steal livestock from them. Outraged with them, vikings want to kill them so as to protect their food. There is a young kid, whose father is leading their village to fight dragons. But this young kid is timid compared to his brave and strong father. One day, he shot the dragon, who fall into the forest that is few miles away from his village. He finds that dragon and befriend it somehow. What happens next?
Rating:9/10
Remark: Nice show. The morale of this story is to do something different when things does not look good.
Tony Del Piero wrote and posted at at 11:58 pm I will like to discuss about how people make conversation in the next blog entry right after I have finished readining 'The Tipping Point' book.
Speculation
I never like to assign any value on upcoming news about a company such as new project. Whenever I read free local newspaper's financial articles, I always see them saying a certain financial institution upgrade its valuation on a firm. SGX's valuation has upgraded just because of its action to add some ADRs into its listing. I find it amazing because it is hard to conjure concrete financial number out of the blue now when the numbers can only be revealed gradually from few months time to few years time. Why pay the price or premium for such kind of prospects when the future outcome cannot be guaranteed? If you are doing it, you are doing speculation, not investment.
I think the degree of speculation is sky high on Genting stock. I find it amazing and amusing to see Genting to rise from $0.70 to $2 plus over last two months. I will like to think that market participants have placed too much emphasis on recent quarterly earnings. When we look at quarterly earnings, that earnings are subject to the business cycle fluctuation. We should be looking at annual earning that aggregates all four quarterly earnings and make a conclusion whether its earning has improved compared to last year. There is indication that Singapore's economy is improving but the question - can it be sustained over few years from now- has not yet answered. With blurry view of rear-view mirror, it is difficult to tell whether Genting's price per share is reasonable for a given recent exciting quarterly earning.
In the short run, speculation may help you to make some money and in the long run, your profit will be ultimately negative if you continues to speculate. I find that it is extremely dangerous to speculate without any solid logical reasoning or proof.
Singapore
I personally think that Singapore is growing too fast in late 2000s and 2010s after resolving social problems in 1990s. The sign of growing too fast should be obvious for the following reasons.
1) In 1990s, Singapore was riding on a good time when it was known to be one of four Asian Tigers. As far as I recalled based on what I saw in 1990s, there was not much area development other than adding Suntec, which was quite big project. I only saw government taking steps to resolve social problems in teenagers. In addition, cable project that cable was to be installed island has completed somewhere in between 1990s and 2000s. In 2000s, some existing shopping centres especially Marina Square and Wisma Atria renovated itself to attract more shoppers. Circle line project has been completed and is in full operation recently. Suddenly, new MRT line project commences (currently, we can see some construction sites around Bugis, Bukit Timah and elsewhere). Furthermore, there are a few numbers of new shopping centres in central area. Not only that, there are more foreigners moving around in Singapore in any time as in I always see him in central area as well as, sometimes, at heartland area. Islandwide-Fibre optics installation has commenced That is why I feel that Singapore is fast growing. For such growth, we must be prepared to see a rising cost of living. In no time, for a given growth towards modernised country, it is fair to expect that Singapore's cost of living can be similar to Japan's in a decade time or longer.
Humans and Their Behaviours
After reading this article, Feynman has my respect for his attitude of learning despite of his fame in Physics and interest in getting explanation simple. I wish that I can do what he tries to resolve the puzzle towards the solution in the investming way. I am type of person who slowly progress from bottom to top in each area. Although I may make some mistakes due to inexperience, my mind somehow store some memory of important things that enable me to pick valuable experiences that enable me to detect such problem.
Beside that, after reading the 'Outlier' book, it has somehow validated my concept. I once told my concept to my female classmate that all humans living in the same set of living condition and same type of parenting will produce the same result. It was quite unfortunate for her not to comprehend it and she didn't agree. This 'Outlier' book clearly outlines some factors in some people's success. It is really brillant book.
Book
Book Title: Outliers: The Story of Success
Author: Malcolm Gladwell
Rating:9.5/10
Remark: I hear this book from a website in my favourite reading list every morning. The content of this book somehow interests me because I do want to know what causes success resulting a person as a outlier. Surprisingly, the author connects some academic stuffs coming from Organisational Behaviour module (from your management course) to real life examples. He shows the success real life stories as well as failure real life stories. With both of them, it is getting more obvious to understand how success comes to a person, who is extremely interested in doing things. It is highly recommend for anyone. It can define your life better after you have read it.
Dramas and Movies
Joker: Yurusarezaru Sousakan (Japanese Drama 2010)
Synopsis:
Kazuyoshi Date , an inspector on the Kanagawa Division police force, is not popular figure with his colleagues because he is an odd one. However, he produces excellent investing results which his colleagues fail to do so. He questions every detail until he finds out the actual truth behind the murders. However, given such truth, these criminals can never go to jail due to insufficient proof or connection. He decides to go to other path to prosecute them. What is his other path?
Rating:7/10
Remark: Interesting drama with little twist in the end.
Tony Del Piero wrote and posted at at 12:10 am
