As we all prepare for the upcoming Chinese New Year festivities, it is good to take a little step back before we welcome the year of the rabbit. Interestingly, I bumped into a remisier friend at a bar last night and we got into a chat on the market. He is one of the most experienced remisiers I know personally. With more than 20 years under his belt, he sighed when we spoke on the market. He said he had gone through 2 zodiac cycles for the market and rabbit years have never been good years for the market. Of course there is absolutely no scientific evidence on his statement but I have to say, he sounded convincing. Haha.
Another person whom I respect to a great extent is my good friend FSM whom I had dinner with earlier in the week. He on the other hand, gave a pretty good story on the market. Being a Feng Shui Master, he gave me an interesting perspective. He said he believed the market movements of 2011 will mirror that of 1951 because markets move in 60 year cycles and overall the market will perform fine this year. (FSM do correct me if I am wrong because I got pretty drunk last night and many things have slipped out of my mind). FSM's words should not be taken too lightly because this is the man who was responsible for a 400 point drop on the STI index 4 odd years ago. For those who witnessed it with me, will know that this is the truth. How much did DBS drop that morning? Someone please fill in the blanks for me. Trust me, FSM has been pretty accurate about everything since I have known him.
Now that I have warmed up, its time for my opinion on the current market situation. Since my last economic update post, we have seen a few interesting things. First and foremost, inflation is really here. I told you for some time already, inflation is very real and it is going to be tough to make it go away. In recent weeks, we have seen unrest in Tunisia and Egypt, protests have turned violent and the Tunisian dictatorship was overthrown. There was an interesting article on CNN commenting on how this was a victory for democracy but in actual fact the social unrest was all driven by economic weakness and inflation and the loss in confidence in the current governments. This is just the beginning in my view. It is scary to think if the same situation happens in China if inflation gets away from the central government's policy measures. There was an article I read a couple of years ago, it said China needed to create 20 million jobs a year just to keep its unemployment rate at this level. That is a huge number and no menial task. Believe me, China is watching this situation in the middle east with great interest.
Interest rates WILL definitely be raised in emerging market countries especially after their respective governments watch with great anticipation on how the current situation in Egypt and Tunisia unfolds. Nail biting times for many of the less developed countries facing inflationary pressures. Capital controls, interest rates, food price caps etc are all going to come out this year and trust me, its all not good for the markets. Look at the Asian market performance for this year. India is down 10% for Jan alone! Indo and Philippines are down 5% each. Things do not look good for these markets. Asia has underperformed the developed markets currently and that is something which has made many strategists look stupid recently.
One other consequence of the current unrest in the middle east is the upward pressure on the oil price as investors anticipate supply disruptions from the largest producers in the region. Pay attention to the other kingdoms in the middle east as they start to worry about the stability of their rule. Interesting times for sure. Some how all these events happening within the first month of the year gives me a feeling that we are in for a very interesting year indeed.
When there is fear, there will be opportunity. So not to worry, the market will always provide chances for us to profit, question is whether you have the guts to do so.
As Chinese New Year is just round the corner, many people are asking me whether there will be a nice new year rally after we welcome the year of the Rabbit. I will say that we are at a very unique juncture in the Singapore market. We have the general election coming up so the sentiment on the government linked companies are going to be positive. On the flip side, the US and European markets are due for a correction as they have had a couple of good months. That is why I am leaning towards some prolonged weakness in February. If I were a gambling man, I would put my bets on a better March.
Earnings season in the US is currently in full motion but the results have been some what disappointing. This is due to the overly positive earnings estimates by analysts which is just silly. From a seasoned market watcher point of view, earnings estimates are just a waste of time. Why don't they just keep their mouths shut and let the companies announce their earnings and you can be a judge of how they do and determine whether the results are favorable in your view. Overall I still like what I see in terms of earnings in absolute terms. The companies are still generating positive cashflows and delivering decent earnings growth. With that in mind, I still think stocks are still looking attractive. Of course they are no longer considered cheap but I believe you are still better off holding companies with strong fundamentals than in cash.
Singapore earnings season has started but it will only hit full steam ahead after the CNY celebrations. Keppel Corp has delivered fantastic earnings and given their shareholders a nice surprise in the form of a good dividend and bonus issue. Lets hope there will be more positive surprises like this from other companies. Overall picture should still remain robust but do not expect the market to rally substantially on earnings because most of it has been factored into the stock prices.
A close friend of mine asked for my opinion on the draconian measures placed by the Singapore govt on the property market. 16% stamp duty? My goodness, have you heard of such drastic measures? They might as well just say that no one is allowed to buy a second property unless they can pay all of it in cash. Personally, I disagree with the govt's move because I am a believer of free markets and the only intervening they should do is in the public housing market rather than the private housing. But who am I to say? All I know is, this is going to slow down the market substantially over the short term but whether it will rein in the ultra hot market remains to be seen.
To me the biggest determinant of housing prices is interest rates so until we see housing loan rates reach the levels of 3,4,5 percent, we will not see prices drop drastically. The rental yields are still decent and if loan rates continue to be lower than the forecasted inflation rate of 3%, you are still looking at negative real interest rates and money will still be considered cheap. Thus I will only be really bearish when interest rates see aggressive moves upwards. In the mean time, the market will take some time to digest the new measures and expectations will take some time to adjust, but prices will not plunge. In terms of property developers, I believe a lot of them continue to have plenty of cash sitting on their balance sheets from the past 2 good years, thus they will not be too worried about lowering prices. I am more concerned about the smaller developers that have been aggressively trying to buy land and depleted most of their cash and now they may be hard pressed for liquidity. So if you are an investor of small time developers make sure you look carefully at their balance sheets in their upcoming earnings announcements.
One more thing which I just have to point out that S&P downgraded Japanese debt rating to AA- during the week. Talk about being pretentious. An american ratings company downgrading an Asian country, a classic example of the pot calling the kettle black. This could be the turning point of the Jap Yen and I believe this could be the year when we see weakness in the Yen after so many years of gravity defying moves up. What does that mean? A good year for Japanese stocks. Therefore for those who are looking to diversify out of Singapore stocks, this could be a good option.
As per what I always say, if the market pulls back, take it as a chance to buy more because we will continue to thread upwards albeit at a slower pace. European markets have looked stronger and calmer with Spain being the top performer at 9% returns since the start of the year. Gold as a safe haven asset has fallen close to US$1300 per ounce due to the stronger conviction that the global economy is on the right track. The longer term yields on government bonds have risen substantially over the past couple of months creating some buying interest as investors get lured by the higher yields but this is a mistake as inflation chips away all the yield that they may get over 10-30 years offered by government bonds.
The theme for the first half of this year will revolve all around inflation and how governments deal with it. So while you are investing, you may want to keep this on top of your decision making process. Companies that are able to transfer their costs to the final customer easily will come out of this period relatively unscathed. Bear that in mind. That is all I have for this week.
Have a great CNY and prosperous returns to all of you!
Best,
SVI
Friday, January 28, 2011
Thursday, January 27, 2011
Midweek post, another speech to inspire all of you, just as you are getting bored to tears by the market.
Due to the overwhelming response to the great Steve Jobs speech which I posted over the weekend. I have decided to post another one for all of your reading pleasure. Do not worry, I will definitely be posting something over the weekend. But this is just a little extra curricular for me.
This is a speech by my favourite writer Adrian Tan. Some of you may know him from his Teenage Textbook and Workbooks published more than 20 years ago. It is hilarious while at the same time very meaningful.
Till the weekend then. Have a great Friday ahead!
Adrian Tan Speech at 2008 NTU Convocation
Title: Life and how to survive it.
I must say thank you to the faculty and staff of the Wee Kim Wee
School of Communication and Information for inviting me to give your
convocation address. It’s a wonderful honor and a privilege for me to
speak here for ten minutes without fear of contradiction, defamation
or retaliation. I say this as a Singaporean and more so as a husband.
My wife is a wonderful person and perfect in every way except one. She
is the editor of a magazine. She corrects people for a living. She has
honed her expert skills over a quarter of a century, mostly by
practising at home during conversations between her and me.
On the other hand, I am a litigator. Essentially, I spend my day
telling people how wrong they are. I make my living being
disagreeable.
Nevertheless, there is perfect harmony in our matrimonial home. That
is because when an editor and a litigator have an argument, the one
who triumphs is always the wife.
And so I want to start by giving one piece of advice to the men: when
you’ve already won her heart, you don’t need to win every argument.
Marriage is considered one milestone of life. Some of you may already
be married. Some of you may never be married. Some of you will be
married. Some of you will enjoy the experience so much, you will be
married many, many times. Good for you.
The next big milestone in your life is today: your graduation. The end
of education. You’re done learning.
You’ve probably been told the big lie that “Learning is a lifelong
process” and that therefore you will continue studying and taking
masters’ degrees and doctorates and professorships and so on. You know
the sort of people who tell you that? Teachers. Don’t you think there
is some measure of conflict of interest? They are in the business of
learning, after all. Where would they be without you? They need you to
be repeat customers.
The good news is that they’re wrong.
The bad news is that you don’t need further education because your
entire life is over. It is gone. That may come as a shock to some of
you. You’re in your teens or early twenties. People may tell you that
you will live to be 70, 80, 90 years old. That is your life
expectancy.
I love that term: life expectancy. We all understand the term to mean
the average life span of a group of people. But I’m here to talk about
a bigger idea, which is what you expect from your life.
You may be very happy to know that Singapore is currently ranked as
the country with the third highest life expectancy. We are behind
Andorra and Japan, and tied with San Marino. It seems quite clear why
people in those countries, and ours, live so long. We share one thing
in common: our football teams are all hopeless. There’s very little
danger of any of our citizens having their pulses raised by watching
us play in the World Cup. Spectators are more likely to be lulled into
a gentle and restful nap.
Singaporeans have a life expectancy of 81.8 years. Singapore men live
to an average of 79.21 years, while Singapore women live more than
five years longer, probably to take into account the additional time
they need to spend in the bathroom.
So here you are, in your twenties, thinking that you’ll have another
40 years to go. Four decades in which to live long and prosper.
Bad news. Read the papers. There are people dropping dead when they’re
50, 40, 30 years old. Or quite possibly just after finishing their
convocation. They would be very disappointed that they didn’t meet
their life expectancy.
I’m here to tell you this. Forget about your life expectancy.
After all, it’s calculated based on an average. And you never, ever
want to expect being average.
Revisit those expectations. You might be looking forward to working,
falling in love, marrying, raising a family. You are told that, as
graduates, you should expect to find a job paying so much, where your
hours are so much, where your responsibilities are so much.
That is what is expected of you. And if you live up to it, it will be
an awful waste.
If you expect that, you will be limiting yourself. You will be living
your life according to boundaries set by average people. I have
nothing against average people. But no one should aspire to be them.
And you don’t need years of education by the best minds in Singapore
to prepare you to be average.
What you should prepare for is mess. Life’s a mess. You are not
entitled to expect anything from it. Life is not fair. Everything does
not balance out in the end. Life happens, and you have no control over
it. Good and bad things happen to you day by day, hour by hour, moment
by moment. Your degree is a poor armour against fate.
Don’t expect anything. Erase all life expectancies. Just live. Your
life is over as of today. At this point in time, you have grown as
tall as you will ever be, you are physically the fittest you will ever
be in your entire life and you are probably looking the best that you
will ever look. This is as good as it gets. It is all downhill from
here. Or up. No one knows.
What does this mean for you? It is good that your life is over.
Since your life is over, you are free. Let me tell you the many
wonderful things that you can do when you are free.
The most important is this: do not work.
Work is anything that you are compelled to do. By its very nature, it
is undesirable.
Work kills. The Japanese have a term “Karoshi”, which means death from
overwork. That’s the most dramatic form of how work can kill. But it
can also kill you in more subtle ways. If you work, then day by day,
bit by bit, your soul is chipped away, disintegrating until there’s
nothing left. A rock has been ground into sand and dust.
There’s a common misconception that work is necessary. You will meet
people working at miserable jobs. They tell you they are “making a
living”. No, they’re not. They’re dying, frittering away their
fast-extinguishing lives doing things which are, at best, meaningless
and, at worst, harmful.
People will tell you that work ennobles you, that work lends you a
certain dignity. Work makes you free. The slogan “Arbeit macht frei”
was placed at the entrances to a number of Nazi concentration camps.
Utter nonsense.
Do not waste the vast majority of your life doing something you hate
so that you can spend the small remainder sliver of your life in
modest comfort. You may never reach that end anyway.
Resist the temptation to get a job. Instead, play. Find something you
enjoy doing. Do it. Over and over again. You will become good at it
for two reasons: you like it, and you do it often. Soon, that will
have value in itself.
I like arguing, and I love language. So, I became a litigator. I enjoy
it and I would do it for free. If I didn’t do that, I would’ve been in
some other type of work that still involved writing fiction – probably
a sports journalist.
So what should you do? You will find your own niche. I don’t imagine
you will need to look very hard. By this time in your life, you will
have a very good idea of what you will want to do. In fact, I’ll go
further and say the ideal situation would be that you will not be able
to stop yourself pursuing your passions. By this time you should know
what your obsessions are. If you enjoy showing off your knowledge and
feeling superior, you might become a teacher.
Find that pursuit that will energise you, consume you, become an
obsession. Each day, you must rise with a restless enthusiasm. If you
don’t, you are working.
Most of you will end up in activities which involve communication. To
those of you I have a second message: be wary of the truth. I’m not
asking you to speak it, or write it, for there are times when it is
dangerous or impossible to do those things. The truth has a great
capacity to offend and injure, and you will find that the closer you
are to someone, the more care you must take to disguise or even
conceal the truth. Often, there is great virtue in being evasive, or
equivocating. There is also great skill. Any child can blurt out the
truth, without thought to the consequences. It takes great maturity to
appreciate the value of silence.
In order to be wary of the truth, you must first know it. That
requires great frankness to yourself. Never fool the person in the
mirror.
I have told you that your life is over, that you should not work, and
that you should avoid telling the truth. I now say this to you: be
hated.
It’s not as easy as it sounds. Do you know anyone who hates you? Yet
every great figure who has contributed to the human race has been
hated, not just by one person, but often by a great many. That hatred
is so strong it has caused those great figures to be shunned, abused,
murdered and in one famous instance, nailed to a cross.
One does not have to be evil to be hated. In fact, it’s often the case
that one is hated precisely because one is trying to do right by one’s
own convictions. It is far too easy to be liked, one merely has to be
accommodating and hold no strong convictions. Then one will gravitate
towards the centre and settle into the average. That cannot be your
role. There are a great many bad people in the world, and if you are
not offending them, you must be bad yourself. Popularity is a sure
sign that you are doing something wrong.
The other side of the coin is this: fall in love.
I didn’t say “be loved”. That requires too much compromise. If one
changes one’s looks, personality and values, one can be loved by
anyone.
Rather, I exhort you to love another human being. It may seem odd for
me to tell you this. You may expect it to happen naturally, without
deliberation. That is false. Modern society is anti-love. We’ve taken
a microscope to everyone to bring out their flaws and shortcomings. It
far easier to find a reason not to love someone, than otherwise.
Rejection requires only one reason. Love requires complete acceptance.
It is hard work – the only kind of work that I find palatable.
Loving someone has great benefits. There is admiration, learning,
attraction and something which, for the want of a better word, we call
happiness. In loving someone, we become inspired to better ourselves
in every way. We learn the truth worthlessness of material things. We
celebrate being human. Loving is good for the soul.
Loving someone is therefore very important, and it is also important
to choose the right person. Despite popular culture, love doesn’t
happen by chance, at first sight, across a crowded dance floor. It
grows slowly, sinking roots first before branching and blossoming. It
is not a silly weed, but a mighty tree that weathers every storm.
You will find, that when you have someone to love, that the face is
less important than the brain, and the body is less important than the
heart.
You will also find that it is no great tragedy if your love is not
reciprocated. You are not doing it to be loved back. Its value is to
inspire you.
Finally, you will find that there is no half-measure when it comes to
loving someone. You either don’t, or you do with every cell in your
body, completely and utterly, without reservation or apology. It
consumes you, and you are reborn, all the better for it.
Don’t work. Avoid telling the truth. Be hated. Love someone.
How very true....
Best,
SVI
This is a speech by my favourite writer Adrian Tan. Some of you may know him from his Teenage Textbook and Workbooks published more than 20 years ago. It is hilarious while at the same time very meaningful.
Till the weekend then. Have a great Friday ahead!
Adrian Tan Speech at 2008 NTU Convocation
Title: Life and how to survive it.
I must say thank you to the faculty and staff of the Wee Kim Wee
School of Communication and Information for inviting me to give your
convocation address. It’s a wonderful honor and a privilege for me to
speak here for ten minutes without fear of contradiction, defamation
or retaliation. I say this as a Singaporean and more so as a husband.
My wife is a wonderful person and perfect in every way except one. She
is the editor of a magazine. She corrects people for a living. She has
honed her expert skills over a quarter of a century, mostly by
practising at home during conversations between her and me.
On the other hand, I am a litigator. Essentially, I spend my day
telling people how wrong they are. I make my living being
disagreeable.
Nevertheless, there is perfect harmony in our matrimonial home. That
is because when an editor and a litigator have an argument, the one
who triumphs is always the wife.
And so I want to start by giving one piece of advice to the men: when
you’ve already won her heart, you don’t need to win every argument.
Marriage is considered one milestone of life. Some of you may already
be married. Some of you may never be married. Some of you will be
married. Some of you will enjoy the experience so much, you will be
married many, many times. Good for you.
The next big milestone in your life is today: your graduation. The end
of education. You’re done learning.
You’ve probably been told the big lie that “Learning is a lifelong
process” and that therefore you will continue studying and taking
masters’ degrees and doctorates and professorships and so on. You know
the sort of people who tell you that? Teachers. Don’t you think there
is some measure of conflict of interest? They are in the business of
learning, after all. Where would they be without you? They need you to
be repeat customers.
The good news is that they’re wrong.
The bad news is that you don’t need further education because your
entire life is over. It is gone. That may come as a shock to some of
you. You’re in your teens or early twenties. People may tell you that
you will live to be 70, 80, 90 years old. That is your life
expectancy.
I love that term: life expectancy. We all understand the term to mean
the average life span of a group of people. But I’m here to talk about
a bigger idea, which is what you expect from your life.
You may be very happy to know that Singapore is currently ranked as
the country with the third highest life expectancy. We are behind
Andorra and Japan, and tied with San Marino. It seems quite clear why
people in those countries, and ours, live so long. We share one thing
in common: our football teams are all hopeless. There’s very little
danger of any of our citizens having their pulses raised by watching
us play in the World Cup. Spectators are more likely to be lulled into
a gentle and restful nap.
Singaporeans have a life expectancy of 81.8 years. Singapore men live
to an average of 79.21 years, while Singapore women live more than
five years longer, probably to take into account the additional time
they need to spend in the bathroom.
So here you are, in your twenties, thinking that you’ll have another
40 years to go. Four decades in which to live long and prosper.
Bad news. Read the papers. There are people dropping dead when they’re
50, 40, 30 years old. Or quite possibly just after finishing their
convocation. They would be very disappointed that they didn’t meet
their life expectancy.
I’m here to tell you this. Forget about your life expectancy.
After all, it’s calculated based on an average. And you never, ever
want to expect being average.
Revisit those expectations. You might be looking forward to working,
falling in love, marrying, raising a family. You are told that, as
graduates, you should expect to find a job paying so much, where your
hours are so much, where your responsibilities are so much.
That is what is expected of you. And if you live up to it, it will be
an awful waste.
If you expect that, you will be limiting yourself. You will be living
your life according to boundaries set by average people. I have
nothing against average people. But no one should aspire to be them.
And you don’t need years of education by the best minds in Singapore
to prepare you to be average.
What you should prepare for is mess. Life’s a mess. You are not
entitled to expect anything from it. Life is not fair. Everything does
not balance out in the end. Life happens, and you have no control over
it. Good and bad things happen to you day by day, hour by hour, moment
by moment. Your degree is a poor armour against fate.
Don’t expect anything. Erase all life expectancies. Just live. Your
life is over as of today. At this point in time, you have grown as
tall as you will ever be, you are physically the fittest you will ever
be in your entire life and you are probably looking the best that you
will ever look. This is as good as it gets. It is all downhill from
here. Or up. No one knows.
What does this mean for you? It is good that your life is over.
Since your life is over, you are free. Let me tell you the many
wonderful things that you can do when you are free.
The most important is this: do not work.
Work is anything that you are compelled to do. By its very nature, it
is undesirable.
Work kills. The Japanese have a term “Karoshi”, which means death from
overwork. That’s the most dramatic form of how work can kill. But it
can also kill you in more subtle ways. If you work, then day by day,
bit by bit, your soul is chipped away, disintegrating until there’s
nothing left. A rock has been ground into sand and dust.
There’s a common misconception that work is necessary. You will meet
people working at miserable jobs. They tell you they are “making a
living”. No, they’re not. They’re dying, frittering away their
fast-extinguishing lives doing things which are, at best, meaningless
and, at worst, harmful.
People will tell you that work ennobles you, that work lends you a
certain dignity. Work makes you free. The slogan “Arbeit macht frei”
was placed at the entrances to a number of Nazi concentration camps.
Utter nonsense.
Do not waste the vast majority of your life doing something you hate
so that you can spend the small remainder sliver of your life in
modest comfort. You may never reach that end anyway.
Resist the temptation to get a job. Instead, play. Find something you
enjoy doing. Do it. Over and over again. You will become good at it
for two reasons: you like it, and you do it often. Soon, that will
have value in itself.
I like arguing, and I love language. So, I became a litigator. I enjoy
it and I would do it for free. If I didn’t do that, I would’ve been in
some other type of work that still involved writing fiction – probably
a sports journalist.
So what should you do? You will find your own niche. I don’t imagine
you will need to look very hard. By this time in your life, you will
have a very good idea of what you will want to do. In fact, I’ll go
further and say the ideal situation would be that you will not be able
to stop yourself pursuing your passions. By this time you should know
what your obsessions are. If you enjoy showing off your knowledge and
feeling superior, you might become a teacher.
Find that pursuit that will energise you, consume you, become an
obsession. Each day, you must rise with a restless enthusiasm. If you
don’t, you are working.
Most of you will end up in activities which involve communication. To
those of you I have a second message: be wary of the truth. I’m not
asking you to speak it, or write it, for there are times when it is
dangerous or impossible to do those things. The truth has a great
capacity to offend and injure, and you will find that the closer you
are to someone, the more care you must take to disguise or even
conceal the truth. Often, there is great virtue in being evasive, or
equivocating. There is also great skill. Any child can blurt out the
truth, without thought to the consequences. It takes great maturity to
appreciate the value of silence.
In order to be wary of the truth, you must first know it. That
requires great frankness to yourself. Never fool the person in the
mirror.
I have told you that your life is over, that you should not work, and
that you should avoid telling the truth. I now say this to you: be
hated.
It’s not as easy as it sounds. Do you know anyone who hates you? Yet
every great figure who has contributed to the human race has been
hated, not just by one person, but often by a great many. That hatred
is so strong it has caused those great figures to be shunned, abused,
murdered and in one famous instance, nailed to a cross.
One does not have to be evil to be hated. In fact, it’s often the case
that one is hated precisely because one is trying to do right by one’s
own convictions. It is far too easy to be liked, one merely has to be
accommodating and hold no strong convictions. Then one will gravitate
towards the centre and settle into the average. That cannot be your
role. There are a great many bad people in the world, and if you are
not offending them, you must be bad yourself. Popularity is a sure
sign that you are doing something wrong.
The other side of the coin is this: fall in love.
I didn’t say “be loved”. That requires too much compromise. If one
changes one’s looks, personality and values, one can be loved by
anyone.
Rather, I exhort you to love another human being. It may seem odd for
me to tell you this. You may expect it to happen naturally, without
deliberation. That is false. Modern society is anti-love. We’ve taken
a microscope to everyone to bring out their flaws and shortcomings. It
far easier to find a reason not to love someone, than otherwise.
Rejection requires only one reason. Love requires complete acceptance.
It is hard work – the only kind of work that I find palatable.
Loving someone has great benefits. There is admiration, learning,
attraction and something which, for the want of a better word, we call
happiness. In loving someone, we become inspired to better ourselves
in every way. We learn the truth worthlessness of material things. We
celebrate being human. Loving is good for the soul.
Loving someone is therefore very important, and it is also important
to choose the right person. Despite popular culture, love doesn’t
happen by chance, at first sight, across a crowded dance floor. It
grows slowly, sinking roots first before branching and blossoming. It
is not a silly weed, but a mighty tree that weathers every storm.
You will find, that when you have someone to love, that the face is
less important than the brain, and the body is less important than the
heart.
You will also find that it is no great tragedy if your love is not
reciprocated. You are not doing it to be loved back. Its value is to
inspire you.
Finally, you will find that there is no half-measure when it comes to
loving someone. You either don’t, or you do with every cell in your
body, completely and utterly, without reservation or apology. It
consumes you, and you are reborn, all the better for it.
Don’t work. Avoid telling the truth. Be hated. Love someone.
How very true....
Best,
SVI
Sunday, January 23, 2011
I am back but this week lets dedicate the post to Steve Jobs.
Have not had time to post anything over the past 2 weeks due to my traveling schedule. All I can say to all is, never go to Vietnam and never take Vietnam Airlines anywhere. Currently too tired to write anything substantial so I have decided to post one of my favourite speeches on my blog to share with all of you.
This week, we received the news of the great Steve Jobs once again taking medical leave and suspicions on his cancer coming back is all over the news. Thats why I decided to read his Stanford University graduation commencement speech in 2005, 1 year after he was first diagnosed with pancreatic cancer. Lets cross our fingers for him because in my view, if Apple loses him, that is like getting its head chopped off. I really love this speech and it has inspired me to re-think my life. I hope it will help you reflect on yours too..
Enjoy the speech and I will be back next week....I hope.
Best,
SVI
Steve Jobs Stanford Speech Transcript
Thank you. I'm honored to be with you today for your commencement from one of the finest universities in the world. Truth be told, I never graduated from college and this is the closest I've ever gotten to a college graduation.
Today I want to tell you three stories from my life. That's it. No big deal. Just three stories. The first story is about connecting the dots.
I dropped out of Reed College after the first six months but then stayed around as a drop-in for another eighteen months or so before I really quit. So why did I drop out? It started before I was born. My biological mother was a young, unwed graduate student, and she decided to put me up for adoption. She felt very strongly that I should be adopted by college graduates, so everything was all set for me to be adopted at birth by a lawyer and his wife, except that when I popped out, they decided at the last minute that they really wanted a girl. So my parents, who were on a waiting list, got a call in the middle of the night asking, "We've got an unexpected baby boy. Do you want him?" They said, "Of course." My biological mother found out later that my mother had never graduated from college and that my father had never graduated from high school. She refused to sign the final adoption papers. She only relented a few months later when my parents promised that I would go to college.
This was the start in my life. And seventeen years later, I did go to college, but I naïvely chose a college that was almost as expensive as Stanford, and all of my working-class parents' savings were being spent on my college tuition. After six months, I couldn't see the value in it. I had no idea what I wanted to do with my life, and no idea of how college was going to help me figure it out, and here I was, spending all the money my parents had saved their entire life. So I decided to drop out and trust that it would all work out OK. It was pretty scary at the time, but looking back, it was one of the best decisions I ever made. The minute I dropped out, I could stop taking the required classes that didn't interest me and begin dropping in on the ones that looked far more interesting.
It wasn't all romantic. I didn't have a dorm room, so I slept on the floor in friends' rooms. I returned Coke bottles for the five-cent deposits to buy food with, and I would walk the seven miles across town every Sunday night to get one good meal a week at the Hare Krishna temple. I loved it. And much of what I stumbled into by following my curiosity and intuition turned out to be priceless later on. Let me give you one example.
Reed College at that time offered perhaps the best calligraphy instruction in the country. Throughout the campus every poster, every label on every drawer was beautifully hand-calligraphed. Because I had dropped out and didn't have to take the normal classes, I decided to take a calligraphy class to learn how to do this. I learned about serif and sans-serif typefaces, about varying the amount of space between different letter combinations, about what makes great typography great. It was beautiful, historical, artistically subtle in a way that science can't capture, and I found it fascinating.
None of this had even a hope of any practical application in my life. But ten years later when we were designing the first Macintosh computer, it all came back to me, and we designed it all into the Mac. It was the first computer with beautiful typography. If I had never dropped in on that single course in college, the Mac would have never had multiple typefaces or proportionally spaced fonts, and since Windows just copied the Mac, it's likely that no personal computer would have them.
If I had never dropped out, I would have never dropped in on that calligraphy class and personals computers might not have the wonderful typography that they do.
Of course it was impossible to connect the dots looking forward when I was in college, but it was very, very clear looking backwards 10 years later. Again, you can't connect the dots looking forward. You can only connect them looking backwards, so you have to trust that the dots will somehow connect in your future. You have to trust in something--your gut, destiny, life, karma, whatever--because believing that the dots will connect down the road will give you the confidence to follow your heart, even when it leads you off the well-worn path, and that will make all the difference.
My second story is about love and loss. I was lucky. I found what I loved to do early in life. Woz and I started Apple in my parents' garage when I was twenty. We worked hard and in ten years, Apple had grown from just the two of us in a garage into a $2 billion company with over 4,000 employees. We'd just released our finest creation, the Macintosh, a year earlier, and I'd just turned thirty, and then I got fired. How can you get fired from a company you started? Well, as Apple grew, we hired someone who I thought was very talented to run the company with me, and for the first year or so, things went well. But then our visions of the future began to diverge, and eventually we had a falling out. When we did, our board of directors sided with him, and so at thirty, I was out, and very publicly out. What had been the focus of my entire adult life was gone, and it was devastating. I really didn't know what to do for a few months. I felt that I had let the previous generation of entrepreneurs down, that I had dropped the baton as it was being passed to me. I met with David Packard and Bob Noyce and tried to apologize for screwing up so badly. I was a very public failure and I even thought about running away from the Valley. But something slowly began to dawn on me. I still loved what I did. The turn of events at Apple had not changed that one bit. I'd been rejected but I was still in love. And so I decided to start over.
I didn't see it then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods in my life. During the next five years I started a company named NeXT, another company named Pixar and fell in love with an amazing woman who would become my wife. Pixar went on to create the world's first computer-animated feature film, "Toy Story," and is now the most successful animation studio in the world.
In a remarkable turn of events, Apple bought NeXT and I returned to Apple and the technology we developed at NeXT is at the heart of Apple's current renaissance, and Lorene and I have a wonderful family together.
I'm pretty sure none of this would have happened if I hadn't been fired from Apple. It was awful-tasting medicine but I guess the patient needed it. Sometimes life's going to hit you in the head with a brick. Don't lose faith. I'm convinced that the only thing that kept me going was that I loved what I did. You've got to find what you love, and that is as true for work as it is for your lovers. Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work, and the only way to do great work is to love what you do. If you haven't found it yet, keep looking, and don't settle. As with all matters of the heart, you'll know when you find it, and like any great relationship it just gets better and better as the years roll on. So keep looking. Don't settle.
My third story is about death. When I was 17 I read a quote that went something like "If you live each day as if it was your last, someday you'll most certainly be right." It made an impression on me, and since then, for the past 33 years, I have looked in the mirror every morning and asked myself, "If today were the last day of my life, would I want to do what I am about to do today?" And whenever the answer has been "no" for too many days in a row, I know I need to change something. Remembering that I'll be dead soon is the most important thing I've ever encountered to help me make the big choices in life, because almost everything--all external expectations, all pride, all fear of embarrassment or failure--these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.
About a year ago, I was diagnosed with cancer. I had a scan at 7:30 in the morning and it clearly showed a tumor on my pancreas. I didn't even know what a pancreas was. The doctors told me this was almost certainly a type of cancer that is incurable, and that I should expect to live no longer than three to six months. My doctor advised me to go home and get my affairs in order, which is doctors' code for "prepare to die." It means to try and tell your kids everything you thought you'd have the next ten years to tell them, in just a few months. It means to make sure that everything is buttoned up so that it will be as easy as possible for your family. It means to say your goodbyes.
I lived with that diagnosis all day. Later that evening I had a biopsy where they stuck an endoscope down my throat, through my stomach into my intestines, put a needle into my pancreas and got a few cells from the tumor. I was sedated but my wife, who was there, told me that when they viewed the cells under a microscope, the doctor started crying, because it turned out to be a very rare form of pancreatic cancer that is curable with surgery. I had the surgery and, thankfully, I am fine now.
This was the closest I've been to facing death, and I hope it's the closest I get for a few more decades. Having lived through it, I can now say this to you with a bit more certainty than when death was a useful but purely intellectual concept. No one wants to die, even people who want to go to Heaven don't want to die to get there, and yet, death is the destination we all share. No one has ever escaped it. And that is as it should be, because death is very likely the single best invention of life. It's life's change agent; it clears out the old to make way for the new. right now, the new is you. But someday, not too long from now, you will gradually become the old and be cleared away. Sorry to be so dramatic, but it's quite true. Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma, which is living with the results of other people's thinking. Don't let the noise of others' opinions drown out your own inner voice, heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.
When I was young, there was an amazing publication called The Whole Earth Catalogue, which was one of the bibles of my generation. It was created by a fellow named Stuart Brand not far from here in Menlo Park, and he brought it to life with his poetic touch. This was in the late Sixties, before personal computers and desktop publishing, so it was all made with typewriters, scissors, and Polaroid cameras. it was sort of like Google in paperback form thirty-five years before Google came along. I was idealistic, overflowing with neat tools and great notions. Stuart and his team put out several issues of the The Whole Earth Catalogue, and then when it had run its course, they put out a final issue. It was the mid-Seventies and I was your age. On the back cover of their final issue was a photograph of an early morning country road, the kind you might find yourself hitchhiking on if you were so adventurous. Beneath were the words, "Stay hungry, stay foolish." It was their farewell message as they signed off. "Stay hungry, stay foolish." And I have always wished that for myself, and now, as you graduate to begin anew, I wish that for you. Stay hungry, stay foolish.
Hope you all liked it!
This week, we received the news of the great Steve Jobs once again taking medical leave and suspicions on his cancer coming back is all over the news. Thats why I decided to read his Stanford University graduation commencement speech in 2005, 1 year after he was first diagnosed with pancreatic cancer. Lets cross our fingers for him because in my view, if Apple loses him, that is like getting its head chopped off. I really love this speech and it has inspired me to re-think my life. I hope it will help you reflect on yours too..
Enjoy the speech and I will be back next week....I hope.
Best,
SVI
Steve Jobs Stanford Speech Transcript
Thank you. I'm honored to be with you today for your commencement from one of the finest universities in the world. Truth be told, I never graduated from college and this is the closest I've ever gotten to a college graduation.
Today I want to tell you three stories from my life. That's it. No big deal. Just three stories. The first story is about connecting the dots.
I dropped out of Reed College after the first six months but then stayed around as a drop-in for another eighteen months or so before I really quit. So why did I drop out? It started before I was born. My biological mother was a young, unwed graduate student, and she decided to put me up for adoption. She felt very strongly that I should be adopted by college graduates, so everything was all set for me to be adopted at birth by a lawyer and his wife, except that when I popped out, they decided at the last minute that they really wanted a girl. So my parents, who were on a waiting list, got a call in the middle of the night asking, "We've got an unexpected baby boy. Do you want him?" They said, "Of course." My biological mother found out later that my mother had never graduated from college and that my father had never graduated from high school. She refused to sign the final adoption papers. She only relented a few months later when my parents promised that I would go to college.
This was the start in my life. And seventeen years later, I did go to college, but I naïvely chose a college that was almost as expensive as Stanford, and all of my working-class parents' savings were being spent on my college tuition. After six months, I couldn't see the value in it. I had no idea what I wanted to do with my life, and no idea of how college was going to help me figure it out, and here I was, spending all the money my parents had saved their entire life. So I decided to drop out and trust that it would all work out OK. It was pretty scary at the time, but looking back, it was one of the best decisions I ever made. The minute I dropped out, I could stop taking the required classes that didn't interest me and begin dropping in on the ones that looked far more interesting.
It wasn't all romantic. I didn't have a dorm room, so I slept on the floor in friends' rooms. I returned Coke bottles for the five-cent deposits to buy food with, and I would walk the seven miles across town every Sunday night to get one good meal a week at the Hare Krishna temple. I loved it. And much of what I stumbled into by following my curiosity and intuition turned out to be priceless later on. Let me give you one example.
Reed College at that time offered perhaps the best calligraphy instruction in the country. Throughout the campus every poster, every label on every drawer was beautifully hand-calligraphed. Because I had dropped out and didn't have to take the normal classes, I decided to take a calligraphy class to learn how to do this. I learned about serif and sans-serif typefaces, about varying the amount of space between different letter combinations, about what makes great typography great. It was beautiful, historical, artistically subtle in a way that science can't capture, and I found it fascinating.
None of this had even a hope of any practical application in my life. But ten years later when we were designing the first Macintosh computer, it all came back to me, and we designed it all into the Mac. It was the first computer with beautiful typography. If I had never dropped in on that single course in college, the Mac would have never had multiple typefaces or proportionally spaced fonts, and since Windows just copied the Mac, it's likely that no personal computer would have them.
If I had never dropped out, I would have never dropped in on that calligraphy class and personals computers might not have the wonderful typography that they do.
Of course it was impossible to connect the dots looking forward when I was in college, but it was very, very clear looking backwards 10 years later. Again, you can't connect the dots looking forward. You can only connect them looking backwards, so you have to trust that the dots will somehow connect in your future. You have to trust in something--your gut, destiny, life, karma, whatever--because believing that the dots will connect down the road will give you the confidence to follow your heart, even when it leads you off the well-worn path, and that will make all the difference.
My second story is about love and loss. I was lucky. I found what I loved to do early in life. Woz and I started Apple in my parents' garage when I was twenty. We worked hard and in ten years, Apple had grown from just the two of us in a garage into a $2 billion company with over 4,000 employees. We'd just released our finest creation, the Macintosh, a year earlier, and I'd just turned thirty, and then I got fired. How can you get fired from a company you started? Well, as Apple grew, we hired someone who I thought was very talented to run the company with me, and for the first year or so, things went well. But then our visions of the future began to diverge, and eventually we had a falling out. When we did, our board of directors sided with him, and so at thirty, I was out, and very publicly out. What had been the focus of my entire adult life was gone, and it was devastating. I really didn't know what to do for a few months. I felt that I had let the previous generation of entrepreneurs down, that I had dropped the baton as it was being passed to me. I met with David Packard and Bob Noyce and tried to apologize for screwing up so badly. I was a very public failure and I even thought about running away from the Valley. But something slowly began to dawn on me. I still loved what I did. The turn of events at Apple had not changed that one bit. I'd been rejected but I was still in love. And so I decided to start over.
I didn't see it then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods in my life. During the next five years I started a company named NeXT, another company named Pixar and fell in love with an amazing woman who would become my wife. Pixar went on to create the world's first computer-animated feature film, "Toy Story," and is now the most successful animation studio in the world.
In a remarkable turn of events, Apple bought NeXT and I returned to Apple and the technology we developed at NeXT is at the heart of Apple's current renaissance, and Lorene and I have a wonderful family together.
I'm pretty sure none of this would have happened if I hadn't been fired from Apple. It was awful-tasting medicine but I guess the patient needed it. Sometimes life's going to hit you in the head with a brick. Don't lose faith. I'm convinced that the only thing that kept me going was that I loved what I did. You've got to find what you love, and that is as true for work as it is for your lovers. Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work, and the only way to do great work is to love what you do. If you haven't found it yet, keep looking, and don't settle. As with all matters of the heart, you'll know when you find it, and like any great relationship it just gets better and better as the years roll on. So keep looking. Don't settle.
My third story is about death. When I was 17 I read a quote that went something like "If you live each day as if it was your last, someday you'll most certainly be right." It made an impression on me, and since then, for the past 33 years, I have looked in the mirror every morning and asked myself, "If today were the last day of my life, would I want to do what I am about to do today?" And whenever the answer has been "no" for too many days in a row, I know I need to change something. Remembering that I'll be dead soon is the most important thing I've ever encountered to help me make the big choices in life, because almost everything--all external expectations, all pride, all fear of embarrassment or failure--these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.
About a year ago, I was diagnosed with cancer. I had a scan at 7:30 in the morning and it clearly showed a tumor on my pancreas. I didn't even know what a pancreas was. The doctors told me this was almost certainly a type of cancer that is incurable, and that I should expect to live no longer than three to six months. My doctor advised me to go home and get my affairs in order, which is doctors' code for "prepare to die." It means to try and tell your kids everything you thought you'd have the next ten years to tell them, in just a few months. It means to make sure that everything is buttoned up so that it will be as easy as possible for your family. It means to say your goodbyes.
I lived with that diagnosis all day. Later that evening I had a biopsy where they stuck an endoscope down my throat, through my stomach into my intestines, put a needle into my pancreas and got a few cells from the tumor. I was sedated but my wife, who was there, told me that when they viewed the cells under a microscope, the doctor started crying, because it turned out to be a very rare form of pancreatic cancer that is curable with surgery. I had the surgery and, thankfully, I am fine now.
This was the closest I've been to facing death, and I hope it's the closest I get for a few more decades. Having lived through it, I can now say this to you with a bit more certainty than when death was a useful but purely intellectual concept. No one wants to die, even people who want to go to Heaven don't want to die to get there, and yet, death is the destination we all share. No one has ever escaped it. And that is as it should be, because death is very likely the single best invention of life. It's life's change agent; it clears out the old to make way for the new. right now, the new is you. But someday, not too long from now, you will gradually become the old and be cleared away. Sorry to be so dramatic, but it's quite true. Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma, which is living with the results of other people's thinking. Don't let the noise of others' opinions drown out your own inner voice, heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.
When I was young, there was an amazing publication called The Whole Earth Catalogue, which was one of the bibles of my generation. It was created by a fellow named Stuart Brand not far from here in Menlo Park, and he brought it to life with his poetic touch. This was in the late Sixties, before personal computers and desktop publishing, so it was all made with typewriters, scissors, and Polaroid cameras. it was sort of like Google in paperback form thirty-five years before Google came along. I was idealistic, overflowing with neat tools and great notions. Stuart and his team put out several issues of the The Whole Earth Catalogue, and then when it had run its course, they put out a final issue. It was the mid-Seventies and I was your age. On the back cover of their final issue was a photograph of an early morning country road, the kind you might find yourself hitchhiking on if you were so adventurous. Beneath were the words, "Stay hungry, stay foolish." It was their farewell message as they signed off. "Stay hungry, stay foolish." And I have always wished that for myself, and now, as you graduate to begin anew, I wish that for you. Stay hungry, stay foolish.
Hope you all liked it!
Saturday, January 8, 2011
Trying to find the next Noble or Olam? I hope I have found one in APAC Resources HKD$0.50.
Another year another dollar. My first question to all of you is, how much is enough this year? What kind of profits are you looking for? What is your number for this year? I always ask myself this question whenever a new year starts. Of course, these are just targets we set for ourselves but trust me, I keep to it a lot better than keeping to my new year resolutions. Oh by the way, my new year resolution for this year is to lose 10 kilos. And yes...be a better man....yeah right!
The first week of January has passed by pretty smoothly with the exception of some correction in commodities and commodity related stocks. Overall a pretty good start to the new year so far and lets hope it will give us a little more before the must anticipated correctional phase sets in.
So far the top 10 picks have been performing with KS Energy leading the way. I had many people sms me on whether the 10 picks were in any order of priority. I will clarify it here. There is no order, I just wrote it as they came to my mind. It is up to you on which story convinces you most.
Was really caught in two minds on what to touch on today. Should I write on a stock today or should I just write about what I think of the market. I know most of you would like me to pick on stocks because these may become punts for you but I just want to say, the quick moves in KS energy and Tuan Sing were not something I anticipated but they were definitely picked because of their improving fundamentals. In the end, the decision was just to do a little bit of both. Seriously doubt I will have time to write over the next two weeks because I will be on the road travelling and not for fun I might add. Most business as usual. So try not to miss me too much. hahaha.
This year, almost everyone I have heard on CNBC, read in investment journals and spoken to, have been bullish on equities. Everyone expects this year to be the year where the equity bull returns in full flight and stocks get re rated upwards. Credit is expected to become looser and banks to start lending more, esp in the developed markets. As more companies take up more leverage into their balance sheets, re rating will happen. Somehow analysts love it when companies get really aggressive and take on more credit for their expansionary plans and for whatever other purposes.
One thing I am thinking more about is the relationship between equities and the USD. Over the past 2 years, the negative correlation between the USD and equity market performance has been almost a no brainer trade. When the USD falls, the market rises and vice versa. But something tells me, this relationship will not be so straight forward this year and onward. Why this relationship has been so persistent was because the dollar was the ultimate safe haven trade and it reflected risk aversion and risk on trades. But as the US economic recovery continues, market will continue to move upward while the USD may not necessarily move lower as it does. Even though I am sure the USD will continue to linger at weak levels or even move lower, monitoring the USD to determine how the market is going to move will not be so reliable any more.
There is a small correction in resource companies currently because of the stronger USD and worries over a hard landing for the Chinese economy but I believe it gives all of us an attractive opportunity to accumulate more. I know I am.
A few of you sent me smses on a stock amongst my picks. It was a stock that not many are aware of and flying way below the radar screens of analysts.
APAC Resources Limited is listed on The Stock Exchange of Hong Kong Limited (stock code: 1104). APAC and its subsidiaries are principally engaged in (i) trading in base metals and commodities; and (ii) trading and investment in listed securities with a portfolio primarily focused on natural resources and related sectors and industries.
APAC's investment strategy is to generate above average returns via identifying and investing in resource companies that have potential to generate long-term sustainable cashflows and, hence, significant capital appreciation. Core investments include Mount Gibson Iron Limited (ASX: MGX) which mines iron ore in Western Australia, and Australia's largest tin producer, Metals X Limited (ASX:MLX). Other investments include Kalahari Minerals Plc (AIM:KAH) which has an interest in one of the world's largest undeveloped uranium deposit. APAC also runs a commodity trading division.
APAC's portfolio comprises Mount Gibson Iron and Metals X Limited as primary investments. Other significant investments include Kalahari Minerals, as well as a spread of smaller positions for geographic, development stage and commodity diversification.
Company Code % Held Focus
Metals X MLX.AX 29.08 Tin/Nickel
Mount Gibson Iron MGX.AX 26.22 Iron Ore
Kalahari Minerals KAH.L 14.82 Uranium
As at 31st December 2010
The details on the miners owned are as follows:
Mount Gibson Iron Limited (MGX)
MGX is a leading independent iron ore producer in West Australia, operating Tallering Peak and Koolan Island mines and developing Extension Hill, lifting total Mount Gibson production to 9Mtpa in 2012.
Metals X Limited (MLX)
MLX is Australia's largest tin producer with operations in western Tasmania. MLX is also developing a nickel project at Wingellina in Western Australia. In addition, MLX holds meaningful interests in four other resource companies, Westgold Resources Limited (gold and copper), Jabiru Metals (copper and zinc), and Aragon Resources Limited (gold and phosphates).
Other investments include:
Kalahari Minerals Plc (KAH)
An AIM and Namibian Stock Exchange listed resource company with uranium, gold, copper and other base metal interests in Namibia. Kalahari is the largest shareholder of Extract Resources Limited, listed on ASX and TSX, holding 40%. Extract's main asset is the Husab Uranium project, which contains the Rossing South deposit with a resource of 367M lbs of uranium and already one of the world's largest undeveloped deposits. Kalahari also holds 45% of North River Resources.
Trading
APAC's commodity trading division is based in Shanghai and currently trades iron ore and coal. With significant industry experience, excellent distribution into China and extensive global connections, the company is in a good position to grow.
APAC's commodity team is highly experienced, having traded various carbon steel materials in China and abroad for many years.
Currently, the company is in line to derive earnings of close to 11 times p/e for 2010 while the company is trading at close to 50% discount to its NAV. I like the fact that their stakes in Metals X, Mount Gibson are Kalahari are all doing well and have seen significant movements in their prices. The NAV should be higher than their last report. If we look at the sum of parts, the NAV should be closer to HKD 1 dollar. I know it ain't much but considering the stock is now at HKD0.54. The discount is just not practical. Also, the NAV does not include in the potential of their trading desks growing. Remember, Noble also started this way and look where it is now. The new management is looking very aggressively to buy stakes in junior miners and so far so good. Thus I believe this is a great opportunity to buy a stock that analysts do not look at and has great growth potential.
Oh I forgot to add, the company has HKD640 mil in cash from their recent placement and thus have lots of opportunity to add more acquisitions. Operating cashflows have been positive for the past 2 years since new management was installed. Speaking of management, their chairman is Chong Sok Un who was in charge of Shenyin Wanguo Ltd a securities company in HK. Their new CEO Andew Charles Ferguson is a fund manager specialising in natural resource companies for City Natural Resources Fund which has delivered 300% since 2009. That explains the company's great choices of investments. Expect this company to be managed like a fund and if he continues to do well, expect that similar results for the company as well.
The more I read about this company, the more I like it. It has moved more than 8% since my call last week. I am keeping this for the long term. Will not put any target price for this.
Thats all from me.
Have a great few weeks from today. I am not sure I will be able to post simply because I will not be around.
The first week of January has passed by pretty smoothly with the exception of some correction in commodities and commodity related stocks. Overall a pretty good start to the new year so far and lets hope it will give us a little more before the must anticipated correctional phase sets in.
So far the top 10 picks have been performing with KS Energy leading the way. I had many people sms me on whether the 10 picks were in any order of priority. I will clarify it here. There is no order, I just wrote it as they came to my mind. It is up to you on which story convinces you most.
Was really caught in two minds on what to touch on today. Should I write on a stock today or should I just write about what I think of the market. I know most of you would like me to pick on stocks because these may become punts for you but I just want to say, the quick moves in KS energy and Tuan Sing were not something I anticipated but they were definitely picked because of their improving fundamentals. In the end, the decision was just to do a little bit of both. Seriously doubt I will have time to write over the next two weeks because I will be on the road travelling and not for fun I might add. Most business as usual. So try not to miss me too much. hahaha.
This year, almost everyone I have heard on CNBC, read in investment journals and spoken to, have been bullish on equities. Everyone expects this year to be the year where the equity bull returns in full flight and stocks get re rated upwards. Credit is expected to become looser and banks to start lending more, esp in the developed markets. As more companies take up more leverage into their balance sheets, re rating will happen. Somehow analysts love it when companies get really aggressive and take on more credit for their expansionary plans and for whatever other purposes.
One thing I am thinking more about is the relationship between equities and the USD. Over the past 2 years, the negative correlation between the USD and equity market performance has been almost a no brainer trade. When the USD falls, the market rises and vice versa. But something tells me, this relationship will not be so straight forward this year and onward. Why this relationship has been so persistent was because the dollar was the ultimate safe haven trade and it reflected risk aversion and risk on trades. But as the US economic recovery continues, market will continue to move upward while the USD may not necessarily move lower as it does. Even though I am sure the USD will continue to linger at weak levels or even move lower, monitoring the USD to determine how the market is going to move will not be so reliable any more.
There is a small correction in resource companies currently because of the stronger USD and worries over a hard landing for the Chinese economy but I believe it gives all of us an attractive opportunity to accumulate more. I know I am.
A few of you sent me smses on a stock amongst my picks. It was a stock that not many are aware of and flying way below the radar screens of analysts.
APAC Resources Limited is listed on The Stock Exchange of Hong Kong Limited (stock code: 1104). APAC and its subsidiaries are principally engaged in (i) trading in base metals and commodities; and (ii) trading and investment in listed securities with a portfolio primarily focused on natural resources and related sectors and industries.
APAC's investment strategy is to generate above average returns via identifying and investing in resource companies that have potential to generate long-term sustainable cashflows and, hence, significant capital appreciation. Core investments include Mount Gibson Iron Limited (ASX: MGX) which mines iron ore in Western Australia, and Australia's largest tin producer, Metals X Limited (ASX:MLX). Other investments include Kalahari Minerals Plc (AIM:KAH) which has an interest in one of the world's largest undeveloped uranium deposit. APAC also runs a commodity trading division.
APAC's portfolio comprises Mount Gibson Iron and Metals X Limited as primary investments. Other significant investments include Kalahari Minerals, as well as a spread of smaller positions for geographic, development stage and commodity diversification.
Company Code % Held Focus
Metals X MLX.AX 29.08 Tin/Nickel
Mount Gibson Iron MGX.AX 26.22 Iron Ore
Kalahari Minerals KAH.L 14.82 Uranium
As at 31st December 2010
The details on the miners owned are as follows:
Mount Gibson Iron Limited (MGX)
MGX is a leading independent iron ore producer in West Australia, operating Tallering Peak and Koolan Island mines and developing Extension Hill, lifting total Mount Gibson production to 9Mtpa in 2012.
Metals X Limited (MLX)
MLX is Australia's largest tin producer with operations in western Tasmania. MLX is also developing a nickel project at Wingellina in Western Australia. In addition, MLX holds meaningful interests in four other resource companies, Westgold Resources Limited (gold and copper), Jabiru Metals (copper and zinc), and Aragon Resources Limited (gold and phosphates).
Other investments include:
Kalahari Minerals Plc (KAH)
An AIM and Namibian Stock Exchange listed resource company with uranium, gold, copper and other base metal interests in Namibia. Kalahari is the largest shareholder of Extract Resources Limited, listed on ASX and TSX, holding 40%. Extract's main asset is the Husab Uranium project, which contains the Rossing South deposit with a resource of 367M lbs of uranium and already one of the world's largest undeveloped deposits. Kalahari also holds 45% of North River Resources.
Trading
APAC's commodity trading division is based in Shanghai and currently trades iron ore and coal. With significant industry experience, excellent distribution into China and extensive global connections, the company is in a good position to grow.
APAC's commodity team is highly experienced, having traded various carbon steel materials in China and abroad for many years.
Currently, the company is in line to derive earnings of close to 11 times p/e for 2010 while the company is trading at close to 50% discount to its NAV. I like the fact that their stakes in Metals X, Mount Gibson are Kalahari are all doing well and have seen significant movements in their prices. The NAV should be higher than their last report. If we look at the sum of parts, the NAV should be closer to HKD 1 dollar. I know it ain't much but considering the stock is now at HKD0.54. The discount is just not practical. Also, the NAV does not include in the potential of their trading desks growing. Remember, Noble also started this way and look where it is now. The new management is looking very aggressively to buy stakes in junior miners and so far so good. Thus I believe this is a great opportunity to buy a stock that analysts do not look at and has great growth potential.
Oh I forgot to add, the company has HKD640 mil in cash from their recent placement and thus have lots of opportunity to add more acquisitions. Operating cashflows have been positive for the past 2 years since new management was installed. Speaking of management, their chairman is Chong Sok Un who was in charge of Shenyin Wanguo Ltd a securities company in HK. Their new CEO Andew Charles Ferguson is a fund manager specialising in natural resource companies for City Natural Resources Fund which has delivered 300% since 2009. That explains the company's great choices of investments. Expect this company to be managed like a fund and if he continues to do well, expect that similar results for the company as well.
The more I read about this company, the more I like it. It has moved more than 8% since my call last week. I am keeping this for the long term. Will not put any target price for this.
Thats all from me.
Have a great few weeks from today. I am not sure I will be able to post simply because I will not be around.
Wednesday, January 5, 2011
2011 - The year of the rabbit - Here are my stock picks!
Happy New Year to all! Finally found some time to write a little on my blog. Since my last post, I have seen a couple more new followers and I wish to thank you for your support. Lets see if this blog can go for one more year. I like to set short term targets because Keynes once said, "in the longer term, we are all dead."
Hopefully, all of you had a great start to the new year. The year is starting off like how it ended 2010. Very bullishly. Santa Claus delivered the presents for Christmas and stayed till January. The Capricorn effect is starting, but the question is, is it sustainable? In December, the Dow only had 4 days of negative returns. Even though gains were only trickling in but it was sustained over long periods and weekly gains were registered for the whole month.
The purpose of this post is for me to write on my top picks for this year. I have so many ideas in my mind and that is really a curse rather than a blessing because you will have to choose between them.
1) KS Energy ($1.09): This is the laggard in the oil and gas services sector and I believe this year could be the pivotal reversal for this counter. It is the only true blue full provider for offshore services.
2) Singland ($7.53): This is a strong privatisation candidate. I think the struggle to gain control for UIC will probably end this year. Once that happens, Singland's future will be a lot clearer.
3) UIC ($2.55): The bidding war has just begun. Its 70 odd percent holding in Singland is something worth fighting for. We are talking about the largest landlord in the Suntec area. So it is worth looking at.
4) STX OSV ($1.15): Buy this. Finance costs have fallen dramatically. It is a market leader in its own field and I believe contracts will flow more freely this year.
5) Auric Pacific ($0.675): This is a company that will go through a transformation this year with its formation of a property investment arm. Lots of value here.
6) SGX ($8.52): I have said it so many times to my clients and I will reiterate. If the ASX deal falls through, it will be up due to more certainty of its ability to pay out its 4% dividend yield. If it goes through, it will be a bigger company with control of the largest commodity equity stock exchange in the world....what else needs to be said?
7) Citigroup: (US$4.90): Called for it last month and its already registering good gains. Its just the beginning. For those looking to pay for their kid's education, buy this one. No more share overhang, a great franchise in Asia and Latin America, trading below book. Nuff said!
8) APAC Resources (HKD$0.50): Do your maths. The sum of parts for this resource investment holding company is more than HKD$1 and they own a good stake in the largest tin miner in Australia. Way undervalued because Hongkies (did I spell it right?) are not into resource plays.
9) People's Food: I know! You must be wondering why I would keep calling for this stock when it has only risen 10% since my call. Well its because value will eventually shine through and when better than a time where food inflation is on the rise? I love this counter and the 2 billion RMB sitting in their books makes them very very attractive to me. Let me just share a quote with you. " Cash is a fact, profit is just an opinion."
10) Hotel Properties Ltd ($2.89): I really like this stock because I feel the stock price does not reflect its underlying properties value. I believe this is a bargain for this stock and with hotel room rates rising due to record tourist arrivals.
That rounds up my top ten picks as of the beginning of the year. Lets have a great 2011!
Best,
SVI
Hopefully, all of you had a great start to the new year. The year is starting off like how it ended 2010. Very bullishly. Santa Claus delivered the presents for Christmas and stayed till January. The Capricorn effect is starting, but the question is, is it sustainable? In December, the Dow only had 4 days of negative returns. Even though gains were only trickling in but it was sustained over long periods and weekly gains were registered for the whole month.
The purpose of this post is for me to write on my top picks for this year. I have so many ideas in my mind and that is really a curse rather than a blessing because you will have to choose between them.
1) KS Energy ($1.09): This is the laggard in the oil and gas services sector and I believe this year could be the pivotal reversal for this counter. It is the only true blue full provider for offshore services.
2) Singland ($7.53): This is a strong privatisation candidate. I think the struggle to gain control for UIC will probably end this year. Once that happens, Singland's future will be a lot clearer.
3) UIC ($2.55): The bidding war has just begun. Its 70 odd percent holding in Singland is something worth fighting for. We are talking about the largest landlord in the Suntec area. So it is worth looking at.
4) STX OSV ($1.15): Buy this. Finance costs have fallen dramatically. It is a market leader in its own field and I believe contracts will flow more freely this year.
5) Auric Pacific ($0.675): This is a company that will go through a transformation this year with its formation of a property investment arm. Lots of value here.
6) SGX ($8.52): I have said it so many times to my clients and I will reiterate. If the ASX deal falls through, it will be up due to more certainty of its ability to pay out its 4% dividend yield. If it goes through, it will be a bigger company with control of the largest commodity equity stock exchange in the world....what else needs to be said?
7) Citigroup: (US$4.90): Called for it last month and its already registering good gains. Its just the beginning. For those looking to pay for their kid's education, buy this one. No more share overhang, a great franchise in Asia and Latin America, trading below book. Nuff said!
8) APAC Resources (HKD$0.50): Do your maths. The sum of parts for this resource investment holding company is more than HKD$1 and they own a good stake in the largest tin miner in Australia. Way undervalued because Hongkies (did I spell it right?) are not into resource plays.
9) People's Food: I know! You must be wondering why I would keep calling for this stock when it has only risen 10% since my call. Well its because value will eventually shine through and when better than a time where food inflation is on the rise? I love this counter and the 2 billion RMB sitting in their books makes them very very attractive to me. Let me just share a quote with you. " Cash is a fact, profit is just an opinion."
10) Hotel Properties Ltd ($2.89): I really like this stock because I feel the stock price does not reflect its underlying properties value. I believe this is a bargain for this stock and with hotel room rates rising due to record tourist arrivals.
That rounds up my top ten picks as of the beginning of the year. Lets have a great 2011!
Best,
SVI
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