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I just complete the Starcraft 2 campaign, which lasts me for two Saturdays and one Sunday. Given my schedule of writing annual letter (to my partners) and reading annual reports, I think my next blog entry will be made on December 2010.
Entrepreneurship
On the first day of November, local newspaper 'My Paper' made a quick shot with the article titled 'Why Singapore cannot produce Zuckerberg'. In one well known local forum, there are a lot discussion about this article. The conclusion from that discussion has not concluded.
In US, there are a lot of venture capital firms, who are willing to seed new firms' capital. Some people like Clark and others can convert ideas from intangible form to tangible form in the belief that their ideas can work. In Singapore, there are too few venture capital firms that not many people know other than SPRING.
Suppose that most people in the public know who are the venture capital firms. They can ask their investment in their ideas that have transformed into business plans and models. It is the most vital point other than making bank loan, which may be difficult to achieve for young people, who do not have much physical assets that may have monetary value in the scenario of resale.
I do not think that attitude and/or personal attributes are major factors behind the entrepreneurship successes. Most importantly, there must be moral, monetary, and other supports. Venture capitalists can offer that. I must say that in Singapore, the missing link is venture capitalist industry. Too many people among public are doing so-called investments in such programs/plans offered by banks and insurance companies. I will like to see venture capital firms in the picture other than banks (bank loans), and family (personal loans).
Has Singapore's education system stifle Singaporeans' creativity? Tough call. The answer can be general and loose. In short, people who want to start business as entrepreneur need to know the source of the capital and determine the flow of the capital over the course of the business.
Banks
During past few weeks, I happen to see some interesting things. I often go to bank every working day. Firstly, I will like to mention about banks.
OCBC bank seems to have such on-the-job training for new bank tellers. It seems to be around 1 week to use experienced bank tellers to train new bank tellers on spot in the counter. The latter can observe the pattern of dealing different orders - deposit, telegraphic transfer, cashier order, bank draft, and etc - from customers. After that, the latter disappeared for another 1-2 weeks before appearing again in the counter. This time, they are doing the same work on their own as the former. Sometimes, the latter consult the former to confirm what is to be done if they cannot remember.
At Raffles Place, OCBC bank have a lot of young bank tellers whose ages are probably around 20-30 years old. The operating hours, as a form of differentiation means between OCBC and other two local banks (UOB and DBS), give OCBC enough edge to attract more customers. OCBC banks cleverly use staffs as mobile customer services officers, who are not sitting at one counter area but standing on bank ground to guide people to the right place to get their things done, greeting them, troubleshoot their ATM problems on spot. It seems to me that OCBC bank is very aggressive. It is no doubt that it is capable of getting no 1 spot, which it has done it this year. After acquiring ING Asia Private Bank, OCBC grows moderately positive, which is most likely reflect in the rise of the share price this year from $8+ to $9-$10+.
I have not own OCBC shares because it is expensive to buy 1 lot of OCBC bank at start. I find that SGX rule - market participants of SGX must purchase 1 lot, which is 1,000 shares at minimum - silly. High net worth participants may have no problem with this rule but not the rest. SGX should learn few things from NYSE, NASDAQ, and AMEX about liquidity issues. It probably explains very little volatility in SGX compared to these three aforementioned stock exchanges in US.
On 4th November 2010, while I was waiting in the OCBC bank, I saw a middle-aged man carrying luggage trolley and a paper bag. He proceed to the counter, which is designed for premier banking, and gave that paper bag as a gift to bank tellers. Based on his action I saw, it suggested that this gift is meant for all bank tellers, who he does not know. I couldn't hear since I am waiting from few distance away from that premier banking counters. I find it odd to give gifts to strangers.
Few weeks ago, I was giving forms to the bank teller, waiting for her to key in the information in the computer. Before I went to the counter, I notice a Chinese guy, who prefer to deal with Chinese bank teller rather than Indian bank teller. So, he switch from a counter that is manned by Indian one to another counter that is manned by Chinese one. At the same time, while I am waiting as mentioned, I saw him taking out a rectangular plastic wrapper that contains unimaginable numbers of $50 Singapore dollar notes. Even the bank supervisor's eye open wide. This should trigger anti-money laundering measures to know the sources and uses of the money. However, I didn't see whole action there. I just left. It made me wonder whether he is loanshark or foolish person who put money under his pillow.
Thin-slicing Skill
I once read a book about George Soros. In that book, whenever Soros feel a pain on anywhere on the body -let it be back, stomach, shoulder-, he will feel that something bad is going on. In this case, he will close the investment position he has made before. At a quick glance, it sound absurd. Even his son thinks likewise. On a second thought, it is probably a skill of thin-slicing that enables him to 'see' something in advance, which nobody can.
Likewise for Warren Buffett, he made some investment on certain companies like Burlington Northern, which nobody think that it is up for growth in the future. My bet is that Buffett has developed such thin-slicing skill by reading 500 annual reports per year (he once said that to someone). As for myself, I manage to read 250-300 annual reports per year this year but may read less next year due to a lot of activities I have taken up. The more annual reports he read in his own preferred pace (read through for less interesting and read seriously for more interesting), the better his thin-slicing skill that enables him to distinguish companies in the same industry and/or different industries.
The point here is that it is extremely important to create your own activity that develop new skill, probably thin-slicing type, that will enhance your life management. Let me rationalise why you should do this. Last Friday afternoon, I was stopped by a lady, who happened to have the same degree from the same school as me. She surveyed me about my thoughts on the local banks' saving program. Based on my thought, she proceed to elaborate briefly about her company's saving plan. During the survey, I mentioned that for such saving programs, it is important to have higher nominal interest rate if the expected/future inflation rate is going to rise. In the end, real interest rate matters the most that determines the purchasing power. She does not get the idea.
To understand the importance of the real variables, consider the simplified example. Suppose that you receive nominal wages per month worth $2,000. It is your only income. Your expenditure per month is $2,000. In 5 years time, your nominal wages does not change and the cost of living has risen as a result of rising inflation rate. Because of that, your expenditure per month has risen to $2,500. As a result, your purchasing power has reduced. In this case, you are forced to borrow $500 on every month. Hence, if inflation rate rise, your nominal wage needs to rise proportionally as well. That is why we need to look at real wages, which nominal wages divided by (aggregate) price. Real wages will be constant if you have a positive growth nominal wage for a given positive proportional inflation growth. I believe that this example is quite enough to illustrate the importance of real variables we need to look at in real life every day.
If you have understood the importance of real variables, you can make appropriate decisions, which many people has not done so. It boils down to the activities you have undertaken. If you have read and thought of how to utilise such theories for your personal use, you can do exciting things on your own. My activity is like read, think about, rationalise (the use of), and utilise the theories. If the theories proved to be great with or without my modification, I will use them to my own benefit that probably enhance my wealth for the future. As for you, you should design your own activities that enhance yourself for greater benefit and good rather than wasting time on entertainment that bring no value for unreasonable amount of hours. We can play games since they enhance our thinking skills. But the longer we play the same games, the same set of skills remains unchanged at the same level, we will be stagnant in the end.
So, value investors like me has a lot of things to learn from established ones like Warren E. Buffett, Martin J. Whitman, Charlie T. Munger and etc. They have done their own activities that enable them to think uniquely, which no one has bothered to do so. There is a reminder for ourselves. Self-improvement is good thing but don't stress ourselves for nothing. Take things easy and learn along the way. Over years, we will develop nice set of skills that enable us to live comfortably, which many people with normal life cannot do. We have to remember that these mentioned guys have taken so many years to self-train in order to gain such skills.
Books
Book Title: The Little Book of Common Sense Investing
Author: John Bogle
Rating:7/10
Remark: Fairly decent book highlighting the importance of holding only low-cost index fund with infinite faith. Bogle carefully points out the failure of active investing management. So far, it is good start to learn for someone, who is lazy to do serious analysis.
Book Title: Moneyball: The Art of Winning an Unfair Game
Author: Michael Lewis
Rating: 7/10
Remark: Entertaining book that give you so much details about the operation of successful baseball team with small budget. He shows that this baseball team is doing unconventional by trusting statistics more than experienced scouts who have played as professional baseball player before.
Book Title: The Little Book of Safe Money: How to Conquer Killer Markets, Con Artists, and Yourself (Little Books. Big Profits)
Author: Jason Zweig
Rating: 10/10
Remark: It is very good book that guide you what is truism and fallacies in the personal finance and investment. He demonstrates the importance of doing your homework rather than being guided by someone.
Book Title: Liar's Poker
Author: Michael Lewis
Rating:9/10
Remark: This book tells us about his career path at Salomon Brothers and how Salomon Brothers functions during his time. I find it hilarious that Michael took the bait set up by his colleague. It also tell us that we shouldn't rely on Wall Street proffessionals' advices especially when they are too interested in making quick bucks for their own firms. I will like to believe that a few of them know what is good and what is bad in terms of investment choices.
Book Title: The New New Thing: A Silicon Valley Story
Author: Michael Lewis
Rating:7/10
Remark:
Michael Lewis finds a real-life story, profiling the mastermind of three different technology-based firms that are public-listed. This mastermind is Jim Clark, who likes to use his brain to come up interesting ideas to create these three mentioned firms as an entrepreneur. It tells quite much about entrepreneurship.
Book Title: Quality of Earnings
Author: Thornton L. O'glove
Rating:10/10
Remark: This book is surprisingly easy-to-read with excellent real-life examples to illustrate why these firms may have problem for given accounting variables. Enough said, this book clearly explain why wall street and medias are awfully 'evil'.
Movies
Cats and Dogs: The Revenge of Kitty Galore (Hollywood Movie 2010)
Synopsis:
Dogs have its own organisation to protect humans, keeping the famous phrase true to its words: Dogs are the humans' best friends. Now, dogs discover that there is a kitty, who is attempting to use her plan to make all dogs worldwide mad. They send one veteran and newbie, who is just recruited to prevent her plan to be fulfilled.
Rating:8/10
Remark: Very refreshing story with nice actions
Detective Conan Movie 14: The Lost Ship in the Sky (Japanese Animation Movie 2010)
Synopsis:
There is bad news that is first known to the Tokyo cops. For that news, a group of armed men have stolen viruses that have no cure from the research lab. Based on that incident, cops are thinking of bio terrorist war. Before these cops allow the press to publish this horrible news, these armed men drop a demand that it will spread the virus. The problem is that they does not say where. Meanwhile Jirokichi Suzuki sets a new trap by publishing a big article that he is inviting Kaito Kid to steal his latest jewel from him in the largest airship. Can Conan solve both major cases at once?
Rating:8/10
Remark: Very emotional and interesting story.
Toy Story 3 (Hollywood Animation 2010)
Synopsis:
Andy, a grown-up teenager, aged 17, is making the most difficult decision whether to keep his toys who have been with him for a long time or put them aside somewhere. These toys are extremely concerned where they will be at. They missed old days, where Andy played with them lovingly. One day, these toys are accidentally donated to a child care centre without Andy's knowledge. What will they find in there?
Rating:7/10
Remark: Touching story that tells the motto of the story: friends who stay together each other can survive throughout any kind of situations.
Lake Placid 2 (Hollywood Movie 2007)
Synopsis:
One day, a researcher is scooping the water from the lake on the boat while the boat driver suddenly disappears into thin air, leaving his arms and legs that are floating on the lake in minutes later. He inform this disappearance to the cops. Sheiff Riley takes the task checking out what is going on with the lake. Emma joins him as she is anxious to protect animals. They - Sheiff Riley, Emma, and researcher - discover man-eating crocodile. What will they do with them?
Rating:5/10
Remark: With little naked ladies in the movie, the story seems to be average. Not much excitement.
Inception (Hollywood Movie 2010)
Synopsis:
Mr Cobb is desperate to get back to his homeland but can't do that. It is all because there is criminal charge on him for which he has not done it at all. He makes a deal with Japanese guy, Saito to convince Robert Fischer on what Robert will be doing with his inheritance, his going-to-be-late father's business empire. To do this, Cobb has to delve into Robert's dream and get Robert to realise the truth. Can Mr Cobb make it?
Rating:9.5/10
Remark: Brilliant story with creative action moves. Leonardo DiCaprio is the star with different facial outlook compared to his other movie, Shutter Island.
Shutter Island (Hollywood Movie 2010)
Synopsis:
Teddy Daniels, US Marshal, is going to a island to investigate a case. On that island, there is top secret mental institution that houses all dangerous criminals with mental and psychological problems. The case is about a woman, who is reported to be escaped from the mental institution. He is going to find out why. What is the truth behind that case?
Rating: 9/10
Remark: A lot of brilliant twists that throw you off the chair. The story is very clever enough to keep you engrossed.
Koshonin (Japanese Drama 2008)
Synopsis:
Usagi Reiko, who has her late father, cop, being shot by unknown person in the hostage situation, swore to find out the truth behind her late father's death. To do this, she has worked hard in order to join Special Investigation Team (SIT) as a negotiator. Along the way, she resolve many disputes that suspects have in the hostage situations. Can she find out the truth?
Rating:7/10
Remark: Decent drama with interesting developments about Usagi.
Tony Del Piero wrote and posted at at 6:36 pm
