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 !!