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Showing posts from April, 2009

China Heart Taiwan

What does it take for a country's stock market to rise 6% in a day? What kind of news can jump start that? Apparently, very little. China Mobile announced that it will buy a 12% stake in Far East Tone Telecommunications. The news raised hopes that there is a tacit approval from Beijing to encourage China firms to do more investments into Taiwan.

Besides being a good move politically, its a very good move economically as well. Just look at how Hong Kong's economy rely on China, its like a modern day umbilical cord. At the same time, it leverages on the advantages of each side to link up. A similar situation looks to be happening between China and Taiwan. Can you imagine the economic might of a Greater China economic grouping that has HK, China and Taiwan. Its pretty formidable. Its might and collective strength more than equates an ASEAN grouping.

Far East Tone is Taiwan's third largest telco. The deal still needs approval from Taiwan regulators, but it should be a done deal.…

56 Cents To The Dollar = $1,000 Billion Additional Writedowns

Banks may need to write down another $1,000 billion, and this is already widely hinted in the markets. I would rather not take this as a negative but a positive. Additional capital will not be lost, its to boost the balance sheets. US regulators may force Bank of America, Citigroup and at least a dozen of the nation’s biggest financial institutions to write down as much as $1 trillion in loans, twice what they’ve already recorded, based on past Federal Deposit Insurance Corp. Assets sold under the Legacy Loans Program may be worth an average of 56.3 cents on the dollar, based on the results of FDIC auctions at failed banks over the past 15 months. In view of the potential losses, reports emerge of banks trying to game the system by bidding each other's asset prices up. GoldmanSachs and Mike Mayo report in their analysis that most banks carry unsecuritized loans at 92-98 cents on the dollar on their books. Moreover, most of the assets in the PPIP are loans. Details of past FDIC dis…

Grooming & Style Tips For Executives

Impressions and how you present yourself are very important for an executive. In a world where first impressions are made in the first 3 to 6 seconds and 70% of that first impression is made with the eyes, the importance of being self assured and looking good has never been so vital. It indicates professionalism and how serious you regard what you do. I see too many executives who will just put on whatever they have with no serious thought on what image they present to their colleagues, superiors and clients. Some might argue that its the performance of the executive that counts. Yes, sure that is true, but business is also about branding and how you represent your company. That is why certain companies will always give a senior executive a certain type of executive car when they reach a certain level - its not really a perk, its there to ensure that this RM20,000 a month executive does not drive to work in a Proton Iswara - there are a host of issues to consider.Of course if you are …

Cricket Terminologies For Dating & Sex

Well, to really appreciate this posting, you have to be a fan of cricket like me. Sports mad fans will stand or sit and drink their Tooheys (or VB if you are from the inferior southern city), and cricket being cricket, there will be plenty of time to talk about other stuff. Cricket is full of its own lingo, positions, batting, bowling, catches, fielding... its natural to associate those terms with dating and sex, especially when you are talking with your mates in a pub. Somehow football does not have that many terminologies of phrases where you can equate to dating and sex. We can try:

he missed the bloody penalty - a girl who really likes a guy but he just didn't care

he took a dive in the penalty box - a guy pretending to be someone high and mighty to impress chicks

he was yellow carded - a guy who has been rejected a couple of times by different girls in a bar

he was red carded - a guy trying to pick up chicks in a bar but his girlfriend/wife arrived

he took the ball to the corner f…

Next Market Catalyst - Banks Stress-Test Results

The next catalyst for the US markets has to be the government's stress-testing of banks' results. Most analysts and commentators can only guess what the parameters are like. Some banks will be asked to raise additional capital due to the results of the stress-test.

19 banks were asked to submit to the test. If we look at the table for comparison, their Tier-1 capital would be a start. Those around 10% or below would fall under the "danger list", but its not all definitive, its probably one of the many factors that the government looks at. But Wells Fargo, Bank of America, even American Express and PNC Financial would fall under the "to be watched" category.

Of greater importance will be the Tangible Common Equity Ratio which has been harped on by Bernanke and Geithner. I think this measurement will be more critical. I would worry if the ratio is 4% or lower. Bank of America stands at just 3.1%. Citigroup is making me nervous at 1.7%. PNC Financial is there ag…

Swine Flu A/H1N1 Takes Centerstage

Can something like an unknown swine flu affect financial market? One need only ask Hong Kong, and the rest of Asia during the SARS outbreak. It nearly crippled the surrounding economies. AirAsia could weather oil prices above $100, but the SARS outbreak nearly drove the company to collapse. So, it is best to keep a close watch on the flu outbreak as it seems to be spreading beyond Mexico. The Obama administration declared a public-health emergency with 20 cases confirmed in the U.S., including eight in New York, and said that there are likely to be more illnesses. China and Russia made plans to quarantine anyone with symptoms of the virus. Asian airports used a device to test arriving passengers for fever.

Russia banned meat imports from Mexico and several U.S. states, although World Health Organization officials said there is no sign the flu spreads by contact with meat. A WHO panel will convene Tuesday to consider whether to raise its global pandemic alert. In Geneva, World Health Or…

Business Reads To Start With

There have been a few readers who have asked me what business books to recommend. I am not going to recommend textbooks, as you can go and do a CFA and read those books on their required list. If you are venturing into the business world, in particular in financial industry, be it research, brokerage, remisier, dealer, fund management or investment banking - these books are a good start. These books are well written, but more than that, its rooted in reality. In the corporate world, you need to appreciate how the different players interact, how to view various players, deciphering the motivations of various players... It should help enormously to have a sense of the kind of loyalty, integrity and egos running around.

Liar's Poker by Michael Lewis

Panic! by Michael Lewis

House of Cards by William D. Cohan

The Real Price of Everything by Michael Lewis

The Money Culture by Michael Lewis

The New, New Thing by Michael Lewis

Capital, The Story of Long Term Excellence by Charles D. Ellis


100 Million Vs 3 Million - The Beautiful Soul Of Eva Cassidy

The Susan Boyle youtube video now has been seen by more than 100m people collectively in just one week. While I am happy for her, I am a bit angry that only a few million (just 3 over million, and this was over a few years mind you) have seen this video of Eva Cassidy.

Many people just had to stop whatever they were doing and just listen to her when they first heard her sing Over The Rainbow. Some even said they were driving and had to pull over, listen to her song which was playing on the radio, and then tears just flowed. Eva touches so many of her listeners because she has a beautiful soul, and you know she sings from a place deep inside her. Eva never had the success she deserved when she was alive, and later she battled cancer but still sang her heart out. She got her fame after she died when some station picked up her recordings, and her albums now have sold millions. If there were so many of you who have watched Susan Boyle or Paul Potts, the least you could do is to give Eva a …

Yale University Endowment Fund Beats Harvard

University endowment funds are widely tracked and followed. Yale, Harvard, Virginia, etc... have high profile managers and there is a strong fascination to follow how these supposedly top business universities manage their own funds. The fact that these universities can attract the best professors and teaches the best management practices and finance courses, puts additional pressure on themselves in that regard. Can they apply what they supposedly know best?

Yale and Harvard led the pack, and their most significant move was to diversify their portfolio into private equity and hedge funds. Harvard went as far as buying tracts of timber concessions. The rationale is quite good. If all your funds are in equity, you are tracking listed companies' fortunes. The best you can do is to continually beating the index, which is very difficult over the longer term. It can be argued that funds that seek out alpha returns are usually hedge funds and private equity funds, owing to the fact that …

The Susan Boyle Phenomena Debated

Sometimes the media can drive something into orbit and then take the other side and whack the same thing down, after being largely responsible for jazzing up the frenzy. Granted, Susan Boyle was very good. The fact that she was frumpy, even a bit fat and not in the requisite package, made her rise to stardom all the more wonderful and appealing. We have a strong streak in rooting for underdogs. Now after all the hype and hoopla, we have the detractors coming in to pour cold water on the Susan Boyle phenomena.

Some would compare her to Paul Potts, who won the previous year. The thing that made Susan's appearance on the show all the more remarkable was that she faced a hostile audience that treated her with complete disdain, yet she silenced and won them over within four or five bars of her song. Potts faced no such hostility during his audition in 2007 and the reason was he knew his place: he was fat, ugly, poorly dressed, a typical "mild, unassuming, probably a loser" an…

Glimmer Of Recovery In HK Property Market

HK and Singapore properties went down sharply at the beginning of the crisis. Singapore is still nursing a down trending market. However things are looking up in HK. Recent property launches have attract a lot of buyers. Of course the pricing of these new developments were a bit more attractive, and we should remember that many of the buyers were from mainland China. Developers reported vigorous weekend sales as Sun Hung Kai Properties (0016) sold 400 apartments at The Latitude while Cheung Kong (0001) said all flats at Central Park Towers II were sold on Saturday. SHKP raised prices by 3 to 5 percent after the first batch of 50 homes at The Latitude, a San Po Kong residential project, were sold on Saturday. The average price was 2 percent higher than the original price of HK$7,255 per square foot.The developer reaped more than HK$3 billion from flat sales at The Latitude, at an average price of HK$7,400 psf. Prices ranged between HK$5,300 and HK$15,000 psf. Flats were sold at betwee…

Don't Marry An Economist! - The Trouble With Economists

You can only listen to economists for so long. They are generally depressing. Have you ever seen a bullish economist? Start of a bull market for stocks, economists will be guarded and cautious. During the market's peak, the economists get more alarmist, warning of impending doom. When markets crash, they will say they told you so, and their prognosis is its not over yet. Deep into a recession, they will find more work and still say the worse is yet to come. When markets start a bull run, they will still be guarded and cautious - and that my friend, is as bullish as economists will get, guarded and cautious.Its very depressing to read an economist blog, worse, hear him talk. They look at past figures to project the future and somehow their projections are never bullish.Their famous lines during a recession, heck, even deep in a recession:1. Things are still getting worse. They will seek out the negatives rather than look for positive. Even today, they will cite that industrial prod…

Bangkok (Really) Dangerous

The Thais still don't know what they really want. Three years on and they are still at it. As neighbours, we need to keep watch on why they are still at it. The King is still not interfering, and it looks increasingly likely that it will be up to the King to make a call. The shooting of Sondhi Limtongkul (yellow shirts' leader) indicates that things are getting to a boiling point and some of the more extreme members are resorting to desperate measures which does not jive with the spirit of the protests from both sides - many are wondering what have they created. Unrest left to fester will always see bad hats trying increasingly ruthless strategies to win the battle - it is not a nice development.

The government was once again surrounded by protesters Mar 26-Apr 14, 2009, this time called the Red Shirts, a.k.a. United Front for Democracy against Dictatorship (UDD). The protests underscore the ongoing political rift in the country between Thaksin supporters and opponents despite …

Putting Bear Markets Into Perspective

Putting the 4 truly bad bear markets next to each other kind of puts into perspective where we are. The grey line is the Great Depression, were the markets lost as much as 89.2% before recovering. The 73-74 oil crisis saw equity markets losing 48.2% before rebounding. The internet boom and crash saw equities losing 49.1% before recovering.

The current correction went as low as losing 56.8% and has since recovered some 28% from its low. This is not to say that we have definitely touched the low point, but it looks persuasive enough. I would say that we have a better than 75% chance NOT to revisit the lows again, which means we should recover slowly from here.

p/s photos: Maggie Wu

Update On Marketocracy Portfolio

My portfolio was started on 1st August 2008. Marketocracy lets you manage a virtual portfolio of $1M in a simulated trading environment, allowing you to track your performance accurately and compare your fund management skills to other investors and professional fund managers. Yes, they do take into account transaction cost as well. If your track record turns out to be one of the best, you could be hired to help manage a real fund at Marketocracy. It's a great place to learn, and a great place to prove your talent. They also have important rules to ensure that you are running an actual investing portfolio and not just sitting on cash:No position can exceed 25% of your total portfolio value.
Half your portfolio must be comprised of positions under 10% each.
Your cash position isn't limited by this guideline, although you must be 65% investedMy fund was smartly called SMF, or Salvador Mutual Fund (no, not the …