Tuesday, October 31, 2017

Random musing: An unexpected turn of event in my class

I told my pupils who failed the exam and who passed. As usual, I gave some morale boasting talk and encouragement. A girl in my class start to cry. I ask the class to let her be, as we all need an outlet to vent. She dried her tears, and as I speak, start to sob again.

Towards the end of lesson, I ask if she is ok and why is she so sad...
She told me it is because she failed her Maths Exam!

I almost died! I ask her why she cried about failing her Maths Exam in my Chinese Class. She smiled. I asked if she is upset about failing my subject, she said she is ok.

Double Ouch!!

Talk about 触景伤情!


Saturday, October 21, 2017

Is silverlake axis acquisitions a good deal?

I might be suffering from confirmation biases here, but I think it is a fairly good deal.

Here is why?

For the Base Case Acquisition Cost (Profits of all 3 entities do not experience more than 25% earning growth yearly for the next 3 years till 2020 ), the acquisition will be done purely through the issue of new shares. Hence there is no strain on the cash of silverlake axis, neither will it need to takes on loan for this acquisition.

New shares issued is cents 71cents, a premium of about 17% over the last traded price of 60 cents.

The acquisition cost is 50 mio, and hence will result in a dilution of shares by less than 3%. If we assume zero profits growth, the 3 entities will add about 14% of 2017 NPAT. Hence it is yield acretive.

Even if profits collective is halved, it will still be acretive. However, 2017 is a low base for NPAT. If we assume 30% more profits as reversion to the mean, and the 3 entities' profits to halved, it would still be accretive.

With the exception of SDE, of current ratio of about 1.3, the other 2 entities have current ratio above 2.

Now, the confusing part is when Earn-Out consideration comes into the picture.

Maximum dilution is 25%. For that to happen, the NPAT will amount to about 110 mio (RM), that is about 70% of 2017 NPAT. (Operating, excluding sale of GIT)

The problem is the qualitative part.

The customers of SDE and SDS are also renowned banks around the world, just google them.



I gave just 2 examples here.

There is simply not enough information to calculate possible growth, although the news from the SDE website does show a rather high profile type of corporate actions, e.g. digital bank at sri lanka launched by PM.


I do like the deal in general. How about you? Maybe we would know what Mr Market thinks come Monday. Personally, I think there is more good things to write about it by analysts than bad. Given that the US market is still on a roll, if Mr Market gives the deal a thumbdown, there is no excuse to blame it on market sentiments

Thursday, October 19, 2017

Random thoughts: Some uses of behavioral biases

I have been reading on behavioral  biases. 

This is just some musing, serious readers can stop now. I think these biases are bad for investing but good for family life, especially if u want to hitch a wife or girl.

Confirmation bias:

Confirmation bias give you perseverance. Everything she does or not do, you will interpret it as dropping hints, lol. She refuse a date, you think it's playing hard to get. LOL.

Illusion of control bias:

You think you can control her happiness and joy, because you think you are her center of universal and vice-versa.

Hindsight Bias:

Hello, if a courtship and/ or marriage is like" I don't what will happen tomorrow, past happiness is not any indication of tomorrow, then super ... zzzz

Of course, I think because I am happy with her today, I would be happily ever after right?


Anchoring irrevalant data gives one hope. She used to be 32 23 32, be after she bears you a son, the numbers can messed up, but you believe those numbers will happen again. That's the right "value"

Framing Bias.

A marriage or courtship either ends in success or failure. It's binary. But we says we can enjoy the process too.

Availability Bias.

Wa, if we don't have this bias, then the world super chaotic. You do peer comparison and think wa her sister better !! 

Loss aversion Bias.

If we unhappy then cut loss... hmm... think we might be divorcing again and again. In fact, this could be what be keeping a lot of marriage intact.

Endowment Bias.

Hello, of corse la. If not, every time you go to those gatherings, u keep thinking  the grass greener on the other side... 

Ok. I know. I bo Liao. In conclusion, sometimes being too clear-headed is like having too much vitamin 

Saturday, October 14, 2017

What is my investment plan?

Warning: Incoherent post with main objective of thinking aloud

I think I have a plan until when I asked myself this question, then I realized I have many nagging questions and thoughts, so I thought I pen it down and hope it crystallize my thoughts. You can stop reading now if you are looking forward to a coherent post.


My plan is simple, has enough cash to buy in bear and enough equity to sell in bull.

The % part is also simple. Assume STI historical peak of near 3800 is a peak where I would want to hold only 20% equity, then if it crash 50%, and STI is at 1900 I should have 80% equity. In between the two, it can be tiered, but  I feel there is no need to allocate a fix % to it.

The nagging question is with STI 3300 and 60% cash with the cash proportion increasing in a few months time, I don't think I am too far off from this rule, but I keep seeing companies that have already fallen close to 50%. such as CDG and SIA engineering (Close to 40%). I also realised I tend to pull the trigger when the fall is more than 30% from its peak. Sometimes too early, M1 and Raffles Medical are 2 examples, although 1 is sitting on loss and another on profits. So how to i reconcile individual companies with the broader market of STI of mainly banks and properties. (>50%).

There is this inherent dissonance within me. I know low tide cause all ships to sink somewhat, although high tide doesn't lift all boats. So should I really just wait for the Durian season to come? All in all, I have already missed 3 companies that turn out to be baggers. Although I have since came up with a rule of trailing gain. However, the wait for "durian" season nagging feeling is becoming a distraction and it seems clear to me I do not have a convincing investment plan. There are also days which I want to sell even more of my counters just to increase cash. This cannot be right.

Maybe the crux of the question should be the proportion of cash to be tiered according to STI or individual companies? Why should my cash be tiered according to STI since it is 50% on banks and properties. There are other sectors. Obviously this incoherence will affect my conviction.

If tired to individual companies, then there is another problem. There are tons of companies, how to allocate "cash level" then? If it is a hybrid of both broader market and individual companies, again it unclear which is which and each get into the other way. Look, if STI is marching upwards at 2700-2800, I seriously don't think I will sell my winning counters. It is precisely that they are 3100-3200 level, that I thought I should start lightening my equity weight and miss a lot of "profits"

Another possible alternative is to continue to with what I am doing and accept that 20-40%profit is acceptable. But hey, that doesn't seem coherent with let winners run, also how many good companies can you find in Singapore.

Maybe I should forget about cash level and buy as and when I see companies with potential growth in the next 1-2 years. But then again, that seems incoherent with risk management..

Thinking back, a rising market lift different boats, in this tide, banks and properties are sexy. But a falling tide (The most recent black monday), I remember seeing almost all companies falling, although banks have it worst. So I do think falling tide is more "evenly distributed" to most companies, and hence the risk management of cash allocation should stay.

Within the cash allocation, It is Ok to conduct guerilla tactics for companies that might have fallen perhaps more than 30% but with potential growth or turnaround stories. How then do I prevent myself from selling too early, if those guerilla hits happen to be correct?

Even if I accept the above preposition, I would have just settled on the buy and sell decision in a rising market. e.g. Buy when I see companies with growth in the near term but has been falling in price. Sell with a trailing stop when it hits above 20% gain.

Another question props into mind. I did saw the growth potential of MIT. (The new leases, etc)I even calculate the entry price of $1.7 would be fair and I even accepted that its OK to buy a few bids higher than that. Also, this is the first time I told myself its ok to buy more at higher price than my initial buying price of $1.48 to accumulate for future growth.

However, that growth in DPU that I calculate would happen also cause the price to keep going up. When it was 1.78, I thought well, it is coming soon. But it just went up, up and away.

Maybe it is ok to let good possible ideas pass if it didn't hit our target price? Ok, I answered this part of the question myself.

So, in a rising market, as long as cash is not stretched, it is OK to buy companies with growth, regardless if the companies has fallen from its peak of more than 30%. It is about growth. Either pure organic growth or turnaround stories with a mix of cyclical plays.

Let me see if I remember my own rules for cyclical plays. It should be alpha company, doing well, and the general market conditions to point at bottom conditions. Whatever I think should be entry price, take another 10% cut.

If I see recovery in earnings in the near term with reasonable valuation in terms of current dividends yield and conservative sustainable longer term yield, I also buy, regardless if the company's price has fallen or risen.

Yes, I should stick with the cash allocation call with the general STI as a risk management tool, since when the tide goes out, almost all boats fall and I am not superb in stock picking.

Now... The buy part in a rising or falling market is coherent

How about the sell part?

In a rising market, maybe slightly straight forward, allow a bigger margin when allocating advance orders either in the head or platforms. What happens if the price goes up together with the broader market? Assume STI march towards 3400 or even 3500. I think I will start to get nervous, if I am holding to 15-30% profits of recent guerrilla tactics of buy, such as silverlake and RMG, do I sell?

I think I am quite clear cut when the fundamental hypothesis of a company do not pend out as i planned, I sell quite ruthlessly. I sold Parkson, reduce Lee metals, Singpost etc when the numbers do not support the hypothesis I have in mind.

But it is not so clear-cut with RMG. I actually intent to average down slowly as I assume short term weakness in their expansion plans, although I seriously think they can manage their expansion costs. But now that the price has risen and the market is going up too, so I take profits so as to hold more cash? If I don't sell, the rule of less equity and more cash in a bull will not hold. Or should I just have a simple profit protected mechanism even if targeted profits is not hit in a rising market?? But if I sell simply because of cash conversation risk management, and the story unfolds according to my hypothesis, then I am also an idiot isn't it?

Selling is the tough part.

You see, when the numbers proved that I am wrong in my hypothesis, I have no problem selling, cut loss or taking profits. But I have been sitting on many unrealized losses during black Monday, although the hypothesis has NOT been proven wrong. I am glad I didn't sold ST engineering, A-Reit etc as the numbers did not show deteriorating numbers.

So i buy when market is falling, and hence the equity increase. But when numbers show, sometimes it is too late.

When the market is going up, you cannot have enough equity although I should have less, when the market is going down, you cannot have enough cash, although you should have less.

But It is damn scary buying in a down market. I know, I bought Sembcorp Industries with an average price of 3.8. You might think what is the big deal? It is... In practice, I told myself I should start accumulate at 2.5, I didn't even buy at 2.4. I dun have my balls. I sold half when it rebounded to $2.75 instead.

Theory works only when you have the guts to make it work. Had I av down at 2.4, I could be laughing now. SO I do think I need a more robust sell plan beside being shown in my face that the numbers are not working. To be fair to myself, the hypothesis of Sembmarine of zero profits is wrong, but when it is proven wrong, the price has plunge so much...

So should I have a circuit breaker? The what is the circuit breaker? 20% cut loss, regardless of numbers? Then I would have sold ST engineering, A-reit, MIT and many more for a song. 20% cut loss also contradict accumulation at bear, when things are supposed to be cheap.

Any company can fall. Just buy ETF? muahahhahahaha

Selling at profits is the easier part.

Selling to cut loss and buy back later? Then when buy back? The magic percentage is arbitrary, isn't it? Or sell on news of disruption? Maybe examples would include disruption of business. In a falling market, which sector is not disrupted?

I think I am getting something.

Sell when the qualitative hypothesis is not working or there are other risk considerations not taken into considerations, regardless of rising or falling market.

Cash ratio is about risk management in generally and thou should not based my buy and sell decisions on overall market conditions as long as the cash reserves is generally aligned to market conditions. With a rising market nearing to the peak, reduce the spread of advance order. With a falling market, buy only when "growth' can be calculated/projected and not simply because can "average down" le.


Buy and sell based on analysis of growth or the lack of. Keep Cash proportion based on the general market, make sure the two ideas don't get mixed up and fudge.

So simple and I keep going round and round. If the market cause the price to plummet but operating numbers is still strong, wait for bigger MOS to average down.

It is clearer for myself now. If you are still reading, Please accept my sincere apologies.  

Friday, October 13, 2017

Random thoughts: Knowledge is hypothesis tested

During my course, I learn about several strategies for pupils to remember vocabulary taught. One that intrigued me is the Frayer model.

In short, it's a model that also highlight examples and non-examples as well as meaning etc for a deeper understanding of a word.

I tried it for both my higher progress and lower progress pupils. I have since discard both.

For the LP, it's straightforward, they can't even understand the meaning, no point going so deep into the concept.

As for the MP, I struggle for a while. The pupils seem bored when I am explaining the model. I think to myself, maybe it's the delivery problem. So I turn it into a game whereby pupils read the table and and take away 1-2 information and get their oppositing team to fill in the right answer. It's a kind of a way of "forced" reading. Reading by itself is quite neutral for "memory", so but playing this game, they did "search reading", then retrieval process and replacing the lost information. This will be followed by a final paper and pen test on the vocab. 

After doing these for 2 chapters and my old way of just "guess the picture" game and bingo game. And looking at the performance of the vocab test, there is no difference. But my older "method" is much faster. 

I am not saying the frayer method is not good. I am saying it has not yet become "knowledge" for me and hence it yet to be useful. It will stay as theory until I can find ways to exact value out of it.

The simple act of connecting a comic to words however work better. I ask my pupils what is the difference between 辩论 and 争辩?silence.

I ask when have we seen the word 辩论?

I say Remember pikachu sitting in circle with other Pokémons deciding whether or no to continue battle in comic strip for chapter 15? Oh oh oh that! Debate! A few hands go up the air. 

Maybe we should not scoff at "simple" theory.

I told my boss my project with my department is about giving feedback. I can tell from her face although she didn't say it is why is it worth "Researching and testing". It is such a basic thing.

Well, buy low sell high also basic lei. 

I have seen so many presentations that is centered around how teachers give feedbacks. No one talk about changing the feedbacks according to circumstances and learning progress of pupils. 

We all heard about how to make money by investment legends. But I have not applied through different market conditions. So, perhaps the theory has yet become knowledge. 

However, there is nothing to scoff at. It's just our intelligence level to apply theory. There is nothing wrong with value investing, neither is there anything wrong with trading and stop loss. 

Saturday, October 7, 2017

Spying on the war between CDG and GRAB

I was looking around, wondering what counter measures CDG would do in the war against GRAB.

Seriously, I think CDG is not fighting a war. It is either too confident or too complacent.

I am thinking of the war online. The war on communication and propaganda. I search online Grab recruitment of drivers and CDG's. Here goes:


I saw incentives after incentives. Those who are newly signed-up and those who are already with them. This is not easy and I felt the sincerity or (aggressiveness) in getting driver's to cross over and stay. Please note that many promotion on bank deposits are only for new funds and the same with telecom contracts. 

So how is delgro doing ? 


Cold. How about the benefits?


Lack details. Hardly enticing. 

Next war front. Those of commuters:

This website show promotion from both Grab and Delgro. 

I saw dozens of promotion code, many as high as $10, with tie-up with SIA, UOB card etc.  There are also plenty of reward options with grab points. 

Look at Facebook:
 A complaint about wrong calculation of reward points in September was promptly attended to with request for PM and more information. 

Well, CDG also have promotion code with their master pass App. They have $1 $3 offer and the most generous of $15 with DBS pay lah. But...

Let's see:


I look at several newer posts and the issue of drivers unawareness of promotion, as well as the interface problem of master pay is obvious. 

There are also valid feedbacks about link of credit cards promotion etc but with no reply from management except one. You go check out their Facebook ba. 

Next: 攻心 (the war on the heart of driver's)

Grab encourage commuters to show appreciation to drivers and company will give free mooncake to them. Well, not a big deal. But it matters to me. 

There were plenty of "soft" campaigns. Child seat booster for example... 

CDG has a lot of news on road closure and a lucky winner of a grand draw. 


I am not sure if CDG management just look at hard cold numbers and think that is all to their business. With such glaring difference, I am not surprised with the straits time news that 3000 drivers from CDG had jumped in the month of September.


Battles might be won with weapons but war lost with words. 

In this case, it is lost in both hardware ($$) and software. 

Grab should be happy burning the 2 billion cash, and seeing the complaceny of CDG. 


Thursday, October 5, 2017