Wednesday, March 4, 2015

Random stories: An interview with Mr Market

Q: let's cut the chase, how do you actually value counters.

A: I like your style, you are impatient, most probably you will lose money to me LOL. 

Oops sorry, most of the time, I just play the nice guy, if many want a counter, I quote higher so as to
Persuade people to sell, if less people or not people I quote lower, to get the buyers out in the market. 

Q: HOW about in the long term?

A: we have to understand long term and short term are not mutually exclusive, if there is no short term, there is no long term. The importance here is certainty of these short term event unfolding. 

When a company is mature, and is stagnant or growing very slowly, I consider yield to be important. The more certainty of the many short term payout adding together, the lower the yield I demand, and the price hence accordingly 

For growth companies, again it depends on the certainty of growth. If I believe a company can continue to grow with many short term growth Spurs, I give it a higher PE. HIgh PE does not tell you whether something is overvalued or undervalued, the certainty or the perception of certainty of growth determine it. If u see growth for 1-2 years , and you see a SME becoming the next blue chip in 10-15 years, the PE I accord them will be different. Other considerations like FCF, balance sheet strength are consideration for certainty of growth, if I see a company burning cash faster than the ROE, what certainty is there to talk about. Therefore I have to discount it accordingly. Anything in between is an art, I also accord lower yield and higher PE for big companies who might still grow to accord for future yield growth, but never as high as those hot grow stocks which double every few years. The key is to know when re-rating is about to happen. Is a company going to be a sexy grow stocks for years to come, or has it mature to the state where it's growth should be compensate by yield. If something along that line give way, expect valuation to give way too.

Q: It seems your valuation method do not always hold true. 

A: I AM ALSO HUMAN, I make mistakes, get depressed or overly excited. Also, as I said, I am a Market whore, I tried to serve as many participants as possible, so I take notice of those of higher liquidity than those of lower liquidity. So if a counter is super boring and not looked at by people, I might overlook it. Also, those super hot counter, I might "over" look too and fall in love with it. 

Q: Your valuation seem too simple for accuracy.

A: aiyo, how many times have I tell you I am a human and market whore. I also agar agar one. Look, if I ask you, what do you think of your wife/ girlfriend, you will say she is ok, she is sexy, she is a bitch etc. Will you say on a sexy index of 1-100, she is 74, and that is due to the fact that her breast is 32 inch waist 24 and bottoms 31. 

We all got a gut feel about beauty etc. But we know something is not beautiful when it's there, for me, I am just concerned about not being completely wrong than being 100% correct. 

Q: your concept of certainty; nothing is certain except that we are all going to die, so in a way, you just wasted my time isn't it. 

A: aiyo, if can be so certain, no one makes money liao. Also, although we cannot be certain, the more angles we look at it, the more confident we are. Like you say your girl chio, if I see her figure chio, her looks chio, her demanour chio and her friends all bo chio, and cannot make it, we can quite safely say she chio right. Just make sure you dun look at the eyes only and see chio and forget to look at her as a whole. Also, if she chio because she super high maintainence, need to go spa, do pedicure, facial every week, that I think you are better off with a less chio girl but need just a shampoo and a body foam. 

Q: I think we are getting out of point and you are showing you MCP side too much, I think we will have to end this interview. You have not been very helpful, thank you !!


8 comments:

  1. Lol.

    Why is the commentator more normal than the market? Mr. Market seems overly excited.

    ReplyDelete
    Replies
    1. Ha B,

      Mr market Of US is a bit overly excited isn't it. Mr singapore seem more measured and composed.

      Delete
  2. SI
    nice writing.
    someone ask me to sell all my holding, should i?
    aiya, headache la

    ReplyDelete
  3. Hi yeh,

    There is no need to headache. Maybe you can answer these few questions first.

    1) who ask you to clear your holding? Does he has a track record as a good investor and can he be trusted.

    If yes to qn1) then
    2) did he find out your investment portfolios, your asset allocation, your finances before giving you the advice

    Once you have the answer to the above, answer this your self.

    If market go into a major correction, 10-20%
    What will your portfolio be like? Most prob,? What will you do?

    If market goes into a mild bear, correction of 20-30% ask the same above

    If market goes into big bear 30-50% ask again

    Once in a lifetime crisis of more than 50% fall.

    As the list go lower, the no. Of times it will happen get leaser, for the big fat bear maybe another 2-3 in our lifetime only.

    As we move higher, it will almost definitely happen, correction might happen anytime either yearly or every 2 years.

    Now quote CW quote of another legend

    What is the worst that can hAppen?

    Proceed to do what u will do when that happen.

    Now u have a answer??

    ReplyDelete
  4. Hi SI,

    Can I add some more interview questions?

    1) How do I know you're a Mister and not a Missus or Madam? Assuming you're really a Mister, how do you think you'll be like if you're a female? Will there be any difference?

    2) What's your purpose in earning so much money?

    ReplyDelete
    Replies
    1. mr. market reply:

      1, i'm bi-sexual, man and woman are all welcome.

      2, expansion, expansion until its pop! thats my purpose of existing.

      Delete
    2. Haha, thanks coconut for your brief and succinct replies ;)

      Delete
    3. LOL, nice to see people joining in the fun...

      1) If I am a female, I will make sure liquidity is low. I will not agar agar, because I don't people to lose money

      2) Hello, the exchange earn money, the brokerages earn money, you earn money, I am the cheapest market whore who work like mad without getting paid la.

      You lose money to me, I will pass to someone else. I dun keep it lor,,,,

      If i moody, I throw it into the sea

      Delete