The concept of ‘retiring early’ has always eluded me. Only recently did I decide to look at this from a quantitative and slightly whimsy approach just to see how the math all works out. The results and conclusions were interesting to note. This led me to do up a table calculating the annual salaries in each year starting from the age of 24 - the average university graduation age - all the way to an arbitrary retirement age of 55. I assumed that past 55 years old, one increasingly finds it difficult to obtain gainful employment. At age 24, starting with a monthly salary of S$ 3,000, I applied an annual wage increment of 3.0%, which is more or less in line with the headline inflation rate. The conclusion: Upon reaching the onset of the forties - more specifically - at forty years old , it will basically require approximately ten years to recover all the income that you have earned cumulatively over the last 16 years i.e. roughly equivalent to two thirds of the time taken. Of course this simple abstraction trivially excludes any bonus payments received throughout the years, which can significantly accelerate this. Also, not all wage increases follow the headline inflation. For example, getting promoted into a more senior position with added responsibilities typically comes with a bigger jump in pay, or sometimes even a multiple increase over current income levels. It is also common-place to see double digit percentage increments when jumping between firms and in some cases, even sign-on bonuses. But you get the point. In some ways, applying a 3% wage inflation over one's useful economic life seems a tad conservative and over-simplistic. Even for non C-suite positions, moving between grades typically involves a huge bump in salaries. So I decided to take it up a notch and model this using the pay progression in the consulting and finance industry, benchmarking this against what I recall from the Big Four accounting firms. The chart looks something like this: The duration to "equalize" your cumulative income earned comes down significantly once you hit your mid thirties and beyond. With decades of experience on your back, it will basically take you only half the time  required to obtain the same aggregate amount of income earned since you graduated - assuming you graduated at age 24. Again this excludes any ex gratia  payments along the way and significant pay bumps attributed to taking on more responsibilities on the job. Clearly, the golden years of making money comes during your late thirties. Extending this beyond the age of 40 makes this observation even more pronounced: At age 40, assuming your salary remains stagnant at $15,000 a month, it’ll take you only about 6 to 8 years to recover all the income that you have earned over the span of your economic life since graduation, again excluding any ex-gratia payments. In fact, many high performers in this age bracket consistently generate incomes well in excess of this amount, exponentially accelerating this process. One can see the obvious conclusion here. The pursuit of excellence often comes with expensive price tags, to the point where it will even feel like you are trading your waking hours for money. But the good money comes later in life. If you happen to be in your twenties, it is important to nurture a ' superpower ' and be extremely good at what you do, even if it doesn’t pay well in the short-term. Work can be a drag. But by giving up too early and 'retiring' at 40, you risk leaving behind a lot of money on the table.

“All I ever wanted was the freedom to make my own mistakes.” - Mance Rayder (Game of Thrones) Some years back when we got into the advisory business as a start up, we had a whole bunch of M&A and capital raising deals, thrusted on to our plate by someone who seem to know important people from all over the world. There were companies who were looking to raise capital or get into new markets, start ups who were looking for venture funding, investors who were trying to put capital to work. It looked like a buffet of deals. We spent a considerable effort evaluating each and every one of them. Some times it involved a systematic way of filtering and deciding whether or not to proceed. Other times we had to do 'favours' such as meeting random people or even just sitting mindlessly in a lecture or workshop for days. Whenever we hit an impasse, felt it wasn't cost-effective or disagreed with pushing ahead, a voice would say, " When starting up, sometimes you just have to do the things that you don't like to do. " And as they say, listen to your elders and betters ... but the deal pipeline was so full - full of long shots and losers, projects that had a low probability of closing, clients that likely couldn't pay, or simply just a waste of time. It was probably only over a year later that I had begun to realise the ironic and toxic dumbness of it all. The idea of starting up had been ours, us bearing our own costs, but somehow suffocating under a blind workload, executing a totally different agenda that belonged to someone else, just to heed conventional wisdom, that it was part of the entrepreneurial journey , and we had to " do the things that we didn't like to do. " I couldn't remember exactly when it started to dawn on me, but one day amidst the frenzy of calls and meetings, I woke up, subconsciously dragging my feet out of the house and feeling that morning anxiety of arriving at the office before 9:30am. I was also checking my emails and text messages in the same way I used to check my Blackberry  on a Friday evening ( yes we used Blackberry in those days ), hoping that you don’t get a nasty email from the ‘boss’ to turn round a slide deck by Monday. And in any job, the moment you start counting down to Fridays or dread Monday mornings, you are basically f****d. Back then I had been ‘working’ on several leads. I had no full context to these projects, no direct connection to the source, no tangible resources to mobilise. Perhaps, more importantly, no autonomy in dictating any of the commercial terms. It wasn’t even a client that I originated. I was stuffed to the neck with work that wasn't mine and was simply churning slides and spreadsheeting numbers. At every discussion, I found myself mostly on the receiving end, listening to fluffy ideas and being fed with lofty dreams, all the while being told to follow up on execution in the background. A lot of these didn't have any commercial mandates tied to it. It was basically a bunch of stuff that was done in goodwill, in the blind hope that would one day convert into a billion dollar opportunity. We were being played. And as the popular Chinese saying goes, I was being led by the nose . In that whole process, I think no one had really considered what I wanted for myself. It was a weird setting. Why? Because my intention of starting a business was to unshackle myself from a corporate job, but I ended up in a situation whereby I was working on someone else’s projects and providing the ‘weekly reports’ on a regular basis. Suddenly I was an employee all over again. The reality of it hit me hard when I ran this through my head and played it out right till the very end: I was no longer the owner of my business , whatever form it had evolved into: No say, no control, no money, no visibility, all of the downside and none of the upside. That whole process taught me something: In any moment of vulnerability, if you are not careful in protecting your dreams, someone else will show up and make you build their dreams for them. It is true that things can get relatively complex when there are more than just one stakeholder. Some bring sweat, some bring relationships, some open doors, others bring influence. Regardless, no matter what you put into the pot, there are always some standard rules to live by: Integrity and transparency above and before economics, always. Respect the money and capital. Everyone has the right to their opinion, but only those with skin in the game get to decide. In any deadlock, refer to point number 2. If you ever feel that you are getting the short end of the stick in an agreement, refer to point number 2. If you find yourself doing the things that you don't like to do, refer to point number 2 You can bring up grey hairs and sweat from decades of experience, or flash selfie photos with the big shots, but none of that matters unless you put money on the table. I still remember the January of 2020 (just before COVID), when I was walking to my usual morning coffee hangout in Singapore around the neighbourhood, while reflecting upon life's decisions. On hindsight, I should have been panicking given the unnerving amount of cash in my bank account and thinking about what lies next. But even in those dark moments, I had found a quaint inner peace, taking responsibility of all the good and bad decisions that were made. It was a liberating feeling of sorts. A peaceful morning walk Perhaps all I really wanted out from starting a business was freedom - to do what I wanted to do, including the freedom to make my own mistakes .

“Our lives are defined by opportunities, even the ones we miss.” -- Eric Roth 1992 It was the year I took the PSLE. Some might say I was in one of the top notch primary schools in today's terms. But it came from humble beginnings in a neighborhood whereby most of my friends stayed in HDB flats and everyone knew their neighbors. I had been fortunate and always front-running in the cohort of the best performing students. My childhood dream was to be a doctor and I had aimed for a score of over 260 . That would surely propel me into the best secondary schools. But when the results were released, I had a score of 237, a decent grade no doubt for many at that time, but still fell incredibly short of what I had hoped for. I could not qualify for any of the schools that I had shortlisted. I remembered walking along the road to the bus stop just outside the school as my mum and I re-evaluated my secondary school options. I ended up going to a school that I had never heard of. Having said that, those four years were one of the most transformational periods of my life. Excellent teachers and numerous outdoors expeditions shaped me into a highly athletic, all-rounded and resilient person that good grades alone could not achieve. 1996 On the morning of my English 'O' levels, I came down with an extremely bad case of food poisoning. So bad that on that fateful morning, I had to be sent to the hospital. I vaguely remembered the nurse putting me on a drip as I gradually passed out on the wheelchair. Back then, I had enrolled in a triple science route as part of the pre-requisites to study medicine. I had nine subjects under my belt and English was just one of them. Failing or skipping the English papers meant that you had to re-take the entire year of school again, regardless of the other eight subjects. Everything was on the line here. When I had woken up, I remembered distinctively that it was 8:25 in the morning and a man was seated just across the bed where I was. The school had been informed of my circumstances and had sent an invigilator to the ward. I ended up taking my English papers nearly an hour behind every one else, in a slightly woozy state and with a thick hypodermic needle stuck in my right arm. Although the doctors had diagnosed it as a simple bout of food poisoning, I was put under further observation for a week. Ironic as it seemed, I scored an 'A' for all the papers that I sat for during my stay in the hospital. But I still fell short of the overall grade requirements to break into the top five junior colleges. 1999 I did well enough for my 'A's to do nearly any course I wanted in university except for medicine. I eventually gave it up when I traded biology for athletics , which I later obtained school colors for. As I left junior college and served my mandatory national service in the army, I had been offered a prestigious government teaching scholarship to study at some of the most reputable universities in the US. The catch was that I had to commit six years of my life to the public education sector upon graduation. So I passed. A year later when I graduated from OCS, they had once again offered to send me overseas to a military college in Japan and engineering school in exchange for serving six years in the army. I declined again, mostly because I didn't like the idea of working under a covenant. I figured there were much more job opportunities beyond civil service after four years of studying in a university. I had dreamed of being an engineer - or at least that's what I remembered one of my teachers in junior college saying then, " Go study engineering, it will always be in demand ". So I enrolled in Computer Engineering, believing that it would lead me to the holy grail of all professions. 2006 Studying engineering in university proved to be much more difficult than I had thought. I was toeing the red line and nearly got booted out. But my life changed forever when I decided to spend a year living and working overseas in China. I had been introduced to the glittery world of business and finance. Everything that I had looked forward to in an engineering career had basically been undone during those twelve months in Shanghai. I convinced myself that I wanted to be in banking, specifically investment banking . My entry into KPMG Corporate Finance marked the day that I would renounce my engineering career forever. Based in Raffles Place, I was excited to be in the league of young and aspiring fresh graduates, eagerly looking forward to make that eventual transition into a bulge bracket bank with a five-figure monthly salary. But I missed that boat when the 2008 financial crisis struck, crippling the hiring plans of the large investment banks across the globe. In the twist of fate, I managed to join a mid-market Korean securities house. I clocked my mileage, put in the hours and late nights, adhering to the rites of passage, before subsequently moving on to BNP Paribas and Standard Chartered Bank as part of a larger and more institutionalised corporate finance set up. 2010 Investment banking turned out to be a jealous and selfish bitch, demanding your personal and social time more than anything else. I had worked up to sixteen-hour work days, eighty-hour work weeks, pulling all-nighters, even on weekends and holidays. I was simply trading time for money, as one of my colleagues had coined the term then. For many years, the routine had been: Wake up, drink coffee, generate pitch books, run financial models, update trading comps, get yelled at by seniors . Rinse and repeat. I had received several offers to jump ship , some of those include buy-side and corporate development roles that promised a more balanced lifestyle and decent pay check. But all this time inside my head was a voice that kept saying, " just stick to the plan, put up with this for a few years and then leave ." 2016 Leaving banking and building a business from scratch was one of the best things that happened to me, and possibly one of the most liberating initiatives I had ever done with my career. But nothing could prepare me for what was to come: Waking up every day without reporting to a boss at the office, learning the ropes of HR, operations, finance, legal and sales all at the same time, the disappointment of repeated client rejections, but most of all, the anxiety of watching your bank account being depleted month after month. No one would be able to understand how difficult the process was without having gone through this experience first-hand. Entrepreneurship would basically test your limits and push you to the breaking point, again and again. Just picture a baby trying to force a square peg through a round hole. Under any situation, no matter how hopeless it seemed, your mind would always try to find a solution. It's good mental training and personal development. A lot of people had told me that money shouldn't be the reason why you start a business. It should always be about purpose, solving a pain point in the industry, making a better product, or offering a better service to the world. I never explicitly admitted it but what mostly drove me to do it was the naive illusion that I could make lots of money, in a relatively short time. Later on, I realised that employees are in fact the richest people in the world. They will all be slaves but they are still rich [1] . 2021 It felt surreal when I left Singapore. It had been an indefinite job posting and I had initially planned to return possibly after two years. I am into my fourth year now and residing in Hong Kong today feels so much different from it was three years ago. A part of it feels like a home and a sanctuary. Sometimes I think about how life would be like had I not accepted that offer to be based overseas. Paterson Walk, CWB... where I currently stay. I had been watching a documentary about a hawker on CNA earlier on, stuck with me: [1] Entrepreneurs of course have the potential to be much more wealthy, but no one considers the tail event. Only a miniscule percentage of entrepreneurs make it really rich. For every mind-blowing successful start-up seen on social media, there are at least a thousand others that have failed and don't even show up in the headlines.

“The good news is that the Italians make the pasta and the Swiss make the watches. But if we stop world trade and the Swiss have to make their own pasta and the Italians have to make their own watches, the world will probably... maybe arguably, people in both countries will be a little worse off.” - Howard Marks [1] There have been multiple narratives on why the current US administration is engaging a war on trade. Many say it all comes down to the huge US$9 trillion fiscal debt due this year, which the government can choose to either pay back or refinance. But refinancing is costly because interest rates are high. So the idea is that Trump announces tariffs -> global trade volumes are affected -> costs go up -> earnings come down -> growth slows. Trump creates a synthetic recession and interest rates come down. Some others say it is to bring back the jobs and manufacturing capabilities to the US.  But doing this means uprooting asset-heavy supply chains. Capex is long-term and relocating manufacturing hubs doesn’t happen overnight. Then there are those who think of the tariffs as a political tool. Get companies to pledge loyalty to the US -> local businesses will lobby to get import concessions -> foreign exporters negotiate bilateral arrangements -> US becomes the superpower of the world again. But no matter how you try and make sense of it, the overall state of global affairs today looks something like this: A thread on X recently written by Tanvi Ratna sums this up nicely: There is apparently also much confusion as to who are paying for the tariffs. The tariff is paid by the importer of the goods, who then in theory, passes the increase in costs to the end consumer. But in reality, things aren't so simple. Exporters who are hard pressed to sell may end up having to reduce their prices, hence indirectly bearing the costs of these tariffs. The pricing dynamics get even more complicated when we start looking across the spectrum from low cost items all the way to high value goods. It might be ok to pay a few more dollars for a pair of jeans but the purchasing considerations might be very different for an electric car. Still, there is little sense in trying to predict what a madman is trying to do [2] , what impact his decisions will have in a complex geopolitical system of moving parts, and how this will play out for global trade and financial markets in the near term. Best to simply just go outdoors take a walk and enjoy the breeze. And to draw some wisdom from Vishal Khandelwal : “Quieten the constant chatter in your mind that may lead you to act all the time, do your work and then, please shut up and wait.” [1] Howard Marks on credit yields and Trump's tariffs, Bloomberg TV - https://www.youtube.com/watch?v=KpnUyGM5M-I [2] "Is Trump playing the mad man?", The Economist - https://www.youtube.com/watch?v=wIeTXYRajhw

This is not a post about I told you so . It is about trying to understand how easily we can get carried away with mimetic desire and FOMO . About three years ago, someone asked me what I had thought about crypto-currency. I knew very little about it. I think I still know very little about it today. After all, this is an asset class that only came into more prominent existence over the last decade. Do I think an investment into crypto or bitcoin take off? I do not know. But perhaps, more important than what I think is actually what others think of it. And that is exactly what brought FTX down. Cryptocurrency, bitcoin, NFT, and all things in the metaverse, work the same way as stocks, bonds and paper money. The case with FTX is simply a bank run in the world of cryptocurrency. People who held these assets just lost faith in them. This is the unavoidable reality: Most of our material possessions are only as valuable as how others think it to be. That's all there is to it. FTX was at one point of time the second largest crypto-exchange in the world . So why doesn't a large financial firm like this get the same bailout treatment enjoyed by Bear Stearns, Wells Fargo or AIG? Similar to the downfall of Credit Suisse , why aren't the middle eastern investors stepping in to evaluate and put in more capital? The same group of people who decided in 2008 that Lehman Brothers should be taken out to the streets and shot in the head are basically the similar set of people who decide whether FTX should be saved. It's a systemic risk. If the fallout doesn't result in jeopardizing the greater good or threaten social-economic stability, we can afford for a few investors to lose money. But see, no one wants to hold that hot potato. When people say that they want to “ evaluate the situation " [1] before taking action, they are not waiting for the favourable outcome of a due diligence exercise. What they really want to know is whether there is sufficient faith in the market to ensure that the assets in the business can be monetised at some point of time in the future. This brings forth another argument: All virtual and digital assets are valuable only to the extent that they can be monetised . If bitcoin and cryptocurrencies are truly valuable as what their advocates say they are, shouldn't these be freely used in our daily transactions? If your company tomorrow decides that all employees shall be paid in ethereum or some other form of cryptocurrency, would you be amenable? And how does this compare to employees who are willing to accept discounted shares or stock options as an alternative form of wages? At the very core of it, it is simply because we all believe that, for better or worse, shares of a company (privately held or listed) can be readily sold in the future. There are even platforms today that facilitate the monetization of employee share options in privately held start ups. And so, digital assets, such as like cryptocurrencies, are essentially a derivative product. Just as the value of a share in a company is fundamentally derived from its intrinsic value, based on the future performance of its underlying business. But perhaps more importantly, shares in a business can be exchanged for cash. Cash, be it the dollar, euro, yen or renminbi, is fundamentally a derivative product. The value of cash is based on the fact that people can use it to exchange for goods and services, knowing full well that the counter-party on the other end of the table can use that money to do the same. Notwithstanding the multitude of currencies, the foreign exchange market is also a tried and tested system that so far works with traders all over the world. This is a USD 7 trillion market per day that works 24-7. Just loosely applying a 0.1% spread on this gives a USD 2.6 trillion annual wallet share - just on the FX business alone. Given the above, it is easy to see why there is so much resistance towards changing the status quo. The biggest stakeholders in the room are the institutions that hold the most amounts of cash. Maybe the 'new generation' of investors who have experienced the devaluation of cash due to the ridiculous printing of money into the system, want some credibility restored to the markets. I can also understand that inflation (and hyper-inflation in certain countries) eroding the savings of many individuals also partially makes the case for cryptocurrencies. But ironically, it also seems that a huge part of getting crypto adopted into the mainstream has gotten carried away by the greed of a few individuals. It's not that I don't believe in digital assets. Maybe it is just that I don't want it badly enough. [1] In an email, OKX commented on the FTX opportunity, saying that “at this point we are just evaluating the situation before we consider any participation from our side,” https://blockworks.co/news/ftx-bailout-candidate-list-is-shrinking-by-the-hour/

Reflections for the day: True wealth was never about the accumulation of money but a way of life. There is no point in comparing yourself with those who work 7-day work weeks, or clock 18-hour days earning heaps of money. This applies also to those working regular hours with relatively more ‘free time’ on their hand, and who are earning a fraction of the income. “There is no universal truth in terms of what makes up a good life, only what works for you and allows you to sleep peacefully at night” - Morgan Housel Once the rain is over, an umbrella becomes a burden to everyone. That’s how quickly loyalty ends when the benefits stop. Don’t take everything too personally. A lot of what we misconstrue as friendships and good relationships tend to be mostly transactional. Don’t overshare. Not everyone wants the best for you. Privacy is power, and people can’t ruin what they don’t know. Give yourself space. Sometimes all you need is a little more space to think through things and solve your problems - space to breathe, space to take a step back and more importantly, to look at the bigger picture. Nature often provides a good setting for this. You bear ultimate responsibility for everything that happens to you. They say don't be too hard on yourself. That's only because most people don't want to face up to the fact that they are responsible for everything good or bad that happens to them. Once you recognise this, you stop assigning blame and focus on just getting to the root of fixing any issues. If something doesn’t work for you, change it, or eliminate it. Run your life for gross profit, spend within your means, and don't buy more than you can afford. Manage your finances based on gross profit, not revenue. Never chase or compare yourself with the high-income earners or those who own a lot of stuff. You don’t know what kind of liabilities come attached with it. Buy experiences, not objects. Yoyogi Park, Tokyo If the volatility of tens of thousands of dollars per day keeps you up at night, maybe you shouldn’t be managing money. You either get the job done, or not. In the early days of school, we were brought up believing that you get credited partially by showing your calculations and workings next to the answers in some exams, particularly for math and especially when it is the wrong answer. This was done mostly to encourage students who did not get the right answers, but showed effort in trying. In the working world, right answers are everything. Results drive everything. Steve Scharzman illustrates this aptly during his guest address at Yale where he shared his experience working at Lehman Brothers [start watching from 48:20]: "In the real world, there is only one grade for every project... which is an equivalent of an 'A' grade. And the definition of an 'A' isn't the same as in academics. In academics you can get an 'A' sometimes with a 90, sometimes with a 92, a 93... and that's sort of pretty good. In our world, an 'A' is a 100. This was shocking to me, because I wasn't an 'A' kind of person..." Don't justify how hard you are trying to your clients or bosses. Stop complaining about how much work you have put in. No one is coming to pat you on the back or give you a gold star for your effort. No one cares, get over it. You either get it done, or not. That's it. You matter only to the people who genuinely care about you. If you drop dead tomorrow, your line manager will posthumously say a few words of thanks and condolences, and then proceed to hire your replacement the very next day. You only matter to your company and your colleagues as far as economics go. Be that as it may, so easy to say, harder in practice. So much depends on reputation, guard it with your life. Law number 5, from the book “ 48 Laws of Power ”. One of the most important things to a man is his reputation. When negotiating , remember that Nassim Taleb says: "What matters isn’t what a person has or doesn’t have, but what he or she is afraid of losing." Trust your gut. If you do something and find yourself awake and unable to sleep at night, with a nagging feeling in your chest or gut, it probably means that whatever you are doing is posing a threat to something of great importance to you, or is conflicting with your core values deep inside. Whatever that is, stop doing what you are doing. And the next time you do anything, remember that nagging feeling. At the end of the day, you are only accountable to yourself when you wake up in the morning. Be less judgmental. Don’t impose your moral high ground and standards on others in terms of what you think it means to be rich, what kind of work they are engaged in or what they say and do. You don’t know what they have gone through or have to put up with. “Some people were born to sit by a river. Some get struck by lightning. Some have an ear for music. Some are artists. Some swim. Some know buttons. Some know Shakespeare. Some are mothers. And some people - dance.” - Eric Roth (from the movie " The Curious Case of Benjamin Button ") Fat accumulates in organizations because most people work on the basis that it is better to follow instructions, even when it is wrong and get paid, rather than to be right and lose your only source of income. To paraphrase a Chinese colloquial saying: Stakeholders are the ones who foot the bill eventually . (Also, see number 40 here .) Money buys a lot of things , but the most important thing it buys is the option to walk away from everything.

When I arrived in Hong Kong in May 2021, I spent over two years of living out of a suitcase in a serviced hotel. Aside from the weekly room cleaning and makeup, the premises was basically a 33 square-meters room and a view of the harbour overlooking TST. There was the occasional frustration that I could not have ice cream in the room because the refrigerator wasn't cold enough. I also could not make my favourite gyudon  from Don Don Donki as it was impossible to store any frozen food. There also wasn’t a stove in the room. I was lazy to get a portable one and furthermore, room regulations prohibit any sort of cooking indoors. So last December, instead of calibrating my Hong Kong stay in 4-month blocks, shuttling in between flights to Singapore, I decided to take the plunge and sign a 12-month lease at a small cozy apartment located at the picturesque Fashion Walk  locality at Causeway Bay. I could now indulge in my favourite Japanese beef bowl, have home-cooked pasta, and of course Haagen Daz  rum & raisin. And then in an ironic twist of events, after 8 months into my lease and over 3 years of calling Hong Kong home, I got re-stationed  to Singapore. Glen Llopis writes about how having an “immigrant mentality” enables one to advance their careers. The idea is that: people who are constantly in a state of uneasiness and on their toes tend to “fight for opportunity” and embrace innovation which pushes them to thrive at work. I have always found myself in an uneasy profession. Investment banking and the advisory business by nature is perpetually dynamic. If you are not working on a deal, there are always endless pitch books and RFPs to put together. Constant work, bosses and clients keep you on your toes. But I did not have the best track record of staying put in a job for a long time. Call it a millennial attribute. That said, every jump I made usually came with a significant pay rise. And after a few good hops across a 12-year period, you inevitably hit a ceiling. Because there is only so much more any company can pay you. Taking this into perspective, my overseas stint away from Singapore can be considered one of my longest unbroken tenure at any full-time job. Whenever anyone asks me about my time in Hong Kong, I give the customary “ I am living by the month ” reply. Most people take this as an indication that things are shaky and I don’t plan to be in Hong Kong or China for long. But trust me, I’m just conservatively managing expectations. There have been counter-arguments to the cause of living like an immigrant, such as the lack of societal integration, disconnection to the past, limiting beliefs, etc. These factors don't really bother me. Aside from the fact that I still can't speak Cantonese and having to deal with accommodation which is always in a temporal flux, I feel quite settled into the city. In Singapore, I have a mortgage but never had to really worry about rent. In Hong Kong, aside from the lack of having timely access to frozen ice cream in the room, I consistently weigh the hefty costs and duration of how long to sign the lease contract on the hotel room ( that is before my transition to a proper apartment last year ). When a huge part of your life involves living out of a suitcase, it becomes very normal to be mentally conditioned for sudden changes, to expect the unexpected, and live month to month. I know a lot of people with family commitments and financial obligations don't live and think like that, but everyone's circumstances is different. "You're on a roll, kid. Enjoy it while it lasts, cos it never does." - Lou Manheim (Wall Street) At one point of time, my KPI at work was linked to the company's share price performance. Fortunately it had been a 'bull market' during that period, a lot of hype around China's tech landscape, and riding on the wave of the fintech frenzy, the company's share price surpassed expectations. I do not take full credit for this. I am aware that the movement of share prices in capital markets are due to many factors beyond control and rational logic. On the other hand, I also did not want to find out what the alternate outcome would have been if the price had gone in the opposite direction, leaving me with a nasty report card at the end of the year. The principle has always been very clear and simple to me: You are good, but only as good as your last trade . The wind can change at an instant, tear away your sails and send you down a waterfall faster than you can imagine. If you are in your twenties, fine - you can say that you are hardworking, you could be smart, and you can pick yourself up, grabbing onto the next employer who is willing to groom you, a diamond in the rough. In your forties and beyond, the dynamics change. Companies want someone who can "hit-the-ground-running", and experienced hires are relatively inert to change. Furthermore, there are so many diamonds to choose from. The wait to hop on the next boat is longer. I’m not being a pessimist, I’m just a realist. And being a realist keeps me grounded. "There are two kinds of pain in this world. Pain that hurts, and pain that alters". - Robert McCall (Equalizer 2) I think the ‘ great COVID bull run' on equities that took place between 2020 and 2021 probably also had something to do with my immigrant mentality. I had been fairly successful in writing put options then as strategy for investing and income, but ended up losing quite a lot of it in early 2022 when I failed to properly “hedge” my positions. In short, I learned: Everything could go as quickly as it came . It was a painful experience that altered my philosophy towards investing, creating a self-defense mechanism , to avoid similar situations in the future. And recognising that everything can change overnight or in a span of a few days have led me to constantly live on my toes . It might be true that I had done very well for myself in Hong Kong and Shenzhen, did a lot of good work, and embraced the environment, culturally, linguistically and commercially. I had also “out-lived” a lot of the friends and co-workers that I had gotten to know at the firm. I know a lot of people who get incredibly excited and feel a great sense of accomplishment from closing a landmark project, or being chiefly responsible in negotiating a good deal, or spotting that transformational investment opportunity, or getting a huge bonus at the end of the year. There is nothing wrong with feeling important and celebrating these achievements. But I will always be aware - aware that I’m just one bad trade, or one screw-up, one step away from losing it all. [1] Adaptation from the phrase " You are free - but only as free as your last trade " from 'Hidden Asymmetries in Daily Life', by Nassim Taleb

Accountants, investors, and many large corporates around the world use the discount rate as the go-to metric for pricing any asset that has elements of uncertainties in its future economic value. In the context of business, discount rates simply provide a guide for analysts in terms of determining what an appropriate investment value should be, that is, based on a series of estimated future cash flows. It broadly takes into account the perceived risks in execution as well as the opportunity costs of deploying that capital. But perhaps more importantly, it represents the expected return of the investor. The bigger picture "The complexities exist to give bankers and lawyers a reason to exist." I had often thought: How were business deals discussed and negotiated decades ago before the invention of computers and spreadsheets? How did investors made the call for investing $10 million in a particular real estate that gave say a 7% yield over buying a cluster of houses in another remote part of the country? How did they know that investing $200,000 in the neighbourhood bakery would generate a return of 15% over the next three years? How did shareholders split equity? Did they have drag and tag clauses, used term sheets and signed MOUs? I think we had relatively simpler lives back in the days. Deals were probably mostly executed as gentlemen agreements or done in the presence of credible witnesses which gave the covenant legal effect. But aside from the law, your word meant everything, and high-level numbers were calculated with no one needing to build complicated financial models. Today we have powerful spreadsheets that can do intricate calculations on valuations and IRRs to three decimal places. We can also write code in spreadsheets that precisely calibrate 10 years of projected cash flows to comply with a DSCR [1] of exactly 1.3x, no more no less. By embedding programming code into spreadsheets, you can even automate certain calculations to value stock options, run scenarios for valuing start ups, do debt sizing, etc. On the documentation side, we have chunky shareholder agreements accompanied by pages of legal jargon comprising disclaimers, indemnities and warranties. Sometimes I feel that the complexities are there only to give bankers and lawyers a reason to exist. And the burden of technology and excessive information at our disposal have made us so caught up in being faster and overly precise that most of us lose sight of the bigger picture. A numbers game "Numbers when presented and analysed in huge quantities mean something." At every session of my Corporate Finance and Investment Banking Bootcamp class, there is almost always a newfound perspective and opinion on how we go about applying the discounted cash flow analysis to valuing businesses. I consciously hold back diving too deep into explaining the discount rate , or the weighted average cost of capital . “ Don’t spend too much time getting the right figure ”, I always said, and I sometimes question the appropriateness in my unorthodox teaching delivery. In my humble opinion, the discount rate has always been investor driven. Consider this: The primary objective of trying to value any business is to arrive at a decision of to " buy " or " not to buy " Assuming future cash flows are whatever they are, the outcome of using the NPV is solely driven by how much you want to make from the deal. i.e. If you want a higher return, you pay a lower value, and vice versa. If you had raised money elsewhere, then there is presumably a cost to that money, which is the cost of capital . And your appraisal of the expected return would take into account this cost, plus a premium from doing the transaction that allows you to sleep peacefully at night or even make a decent profit out of it. That’s all there is to it, really. There are always mis-priced deals in the real world whereby investors end up paying more than they should, and also business owners selling themselves short. Given the relative transparency in terms of how much banks charges their clients on taking out a loan, a big part of what drives any asset pricing really comes down to the cost of equity - a mathematical estimate calculated based on something called the Capital Asset Pricing Model (CAPM). The objective of the CAPM is to ascribe a commensurate return on equity based on the underlying risk of the asset. This is essentially driven by two things: Establishing a baseline (equivalent to a default-free risk) and; Adding a risk premium , which involves market volatility and taking a view of how borrowing increases risk in a business. Since volatility in share prices results in uncertainty, and uncertainty generally equates to risk, CAPM tries to transcribe volatility to risk. In chemistry, volatility is the tendency for something to evaporate under normal temperatures. In the finance world, volatility indicates the tendency of something to change rapidly and unpredictably, to deviate from the norm. Hence, beta in CAPM is simply a regression analysis to understand how far a company's share price deviates from the performance of the overall market. Within the boundaries of the CAPM model, we attribute this solely to the company's leverage i.e. A firm that borrows more to fund its business is deemed to be a higher risk than its peers . Beta and regression analysis But there are so many things that can affect the share prices, and leverage is only one of them. Furthermore, we are determining a return on equity based on a series of random events looking back over three to five years. First there is the conventional saying of: What happens in the past does not imply that it will happen the same way in the future. Secondly: The speed at which information travels across the world and its accessibility today is very much different from what it was more than 30 years ago. The retail and institutional investor community, which plays a huge role in influencing the movement of share prices, is also significantly larger than it was back then. Therefore CAPM essentially is a game of numbers. Living in an evidence-based, data-driven world, we believe that numbers, when presented and analysed in huge quantities, mean something. To make sense of a chaotic market "There is more art in valuation than science alone can justify." Recently, a hedge fund manager wrote a paper about the " less efficient market hypothesis " [2] , suggesting that capital markets today are not what they used to be. A multitude of factors today influence the movement of share prices - social media apparently being one of the biggest culprits. Not to mention low interest rates encourage punters and traders to gain access to cheap financing just to take huge speculative bets on companies they have no clue about [3] . It is probably getting so difficult to make sense of the stock market even with the abundance of information. So difficult that many investors have basically given up and turned to the trillion dollar ETF market which only became popularised over the last 20 years. Funds today can simply invest into a basket of stocks and just ride the trend. Besides, the idea of ascribing a single variable to a complex system of moving parts for valuing a business just seems absurd. Seth Klarman writes in his book "Margin of Safety": "I find it preposterous that a single number reflecting past price fluctuations could be thought to completely describe the risk in a security. Beta views risk solely from the perspective of market prices, failing to take into consideration specific business fundamentals or economic developments." Here's the interesting thing: Establishing a discount rate using the weighted average cost of capital in deriving the fair value of an asset is mostly aimed at bridging any expectation gap between a buyer and a seller. This is simply an attempt at using history and science to convince the other party that they are looking at things the wrong way. In reality, a lot of deals are done based on impulse, greed, competitive tension, fear-of-missing-out , herd mentality and in some cases bad judgement. There is more art  to valuation than science alone can justify. And it doesn't get better. The onset of COVID in 2020 had led to the emergence of meme stocks - something quite non-existent not very long ago - supported by an entire community of keyboard warriors with nothing better to do than ride on the trend of social media influencers. “For whatever reasons, markets now exhibit far more casino-like behavior than they did when I was young. The casino now resides in many homes and daily tempts the occupants.” - Warren Buffett So much for relying on math to make sensible investment decisions in a largely chaotic world. Where do we go from here? Don't get too caught up with the discount rate when it comes to valuation. If your objective is to impress the other party through a demonstration of knowing the inside workings of the financial markets, then go for it. But in my experience, most people sitting in this part of the world don't care much for CAPM and WACC. The ways investors and businessmen perceive value differ across sectors and geographies. Take for instance in China, where size is everything and winner takes it all, businesses will not think twice to burn cash through their balance sheets at the expense of grabbing market share. Profitability without scale is useless. But Southeast Asia can be somewhat different. The gameplay is a race for profitability - a simple function of maximising top-line and optimising expenses. Value is created by achieving profit break-even in the shortest possible time, fixing the cost structure and searching for dislocations in prices to arbitrage the market. Considering the difference in cultures and market dynamics across countries in this region, it is only logical and prudent that investors put more focus on earnings quality over size. Yet, most of what we learn about finance in the comfort zone of our classrooms are originated largely from the observations and statistical findings of financial markets in the US, which operate nothing like Asia. CAPM, for all its robust mathematical foundations, hadn't been able to capture the impact of black swan scenarios such as SARS, the 2008 financial crisis or COVID-19. I do not discredit the theories of finance. They have been after all backed by empirical data over long periods of time. As chaotic as the world may be, leaders of organisations cannot be seen to make decisions without relying on some form of credible evidence-based analysis. But the rules of capitalism that work well for an efficient, mature and functioning capital market, are sometimes irrelevant in other economies where there is information asymmetry and deals are done differently. Coming from a practitioner point of view, we should avoid being too numerically precise but instead be more commercial when it comes to valuing businesses. Unless someone higher up or sitting at the dominant end of the negotiating table says so, valuation is always just a number. Ultimately, it is the folks with the cash who decide what the magic number is, calibrated based on however much they want the returns to be. Value sits with the beholder of cash in his pockets, who are you to say otherwise? [1] DSCR = Debt service coverage ratio. Calculated as cash flows divided by debt service: a metric that measures how much cash flow buffer a company has to cover its interest and principal repayments. [2] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4942046 [3] Check out Mark Minervini's interview on CNBC as he gets asked about the companies he invested in. Simply hilarious.

Herd instinct There is somehow a tendency for people to encourage others to do the same thing just simply because it has worked out for them and they have benefited from it. But it can be easy to forget that what is good for you may not be good for me. Selling stories At Berkshire Hathaway's 2023 annual meeting , Warren Buffett commented that access to capital has gotten so easy that there is an increasing trend of people raising money to fund (or gamble on) questionable projects. With ample liquidity, a lot of money in the finance sector has been made from selling stories to investors who are looking to profit from companies beating expectations on their quarterly earnings. This trend has led to many firms getting carried away with chasing short-term publicity campaigns rather than delivering long-term value. Instead of selling products, selling stories has become the name of the game for many businesses and investors. "The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works." - Gordon Gekko (Wall Street 2, the movie) Living by IFRS 16 If you own a leasehold, the house you live in is NOT an asset even if you plan to book a gain from a sale in the future. The prudent thing to do is always to treat your mortgage as the sum of the future rent on your property. Learning how to think Artificial intelligence (AI) is so much more than just Trump and Musk dancing to the Bee Gees' Staying Alive . At a meeting last week, I decided to try out an AI-enabled note taking app which parses conversations into written text. The results were shockingly accurate. There were also additional options for further transcribing the raw text into various formats, structures, and even translate where required. Coming from a background where I am used to taking notes by hand, this is both game-changing and scary. Of course the tech is not new. Companies have developed voice transcription devices decades ago, many apps also offer the ability to join your online Zoom meetings as a "note taking assistant", summarising the key points and follow up actions after that. The technology has just gotten better thanks to faster processing speeds and more evolved language datasets. Young bankers today who pride themselves on pulling all-nighters to collect, organise and analyse data for their bosses are in for a nasty surprise. The value-add used to be the stamina and accuracy of ploughing through heaps of financial data, formatting them nicely into powerpoint slides. Today, Microsoft has come up with something called Copilot which is apparently an embedded feature capable of doing all of this. I hear that it can even generate a summary of your follow ups after returning from a two-week leave with hundreds of unread emails. Word is still out on how effective this can be. But Copilot could be a formidable upgrade over its predecessor, the irritating Microsoft paper clip assistant . If developed properly, it could potentially make the traditional work of junior investment bankers laughable. Also: "AI can draft 95% of an IPO prospectus in minutes" David Solomon, CEO of Goldman Sachs, commented this at a recent AI summit saying 95% of the content that goes into an initial public offering document can be basically completed by robots. Source: https://fortune.com/2025/01/17/goldman-sachs-ceo-david-solomon-ai-tasks-ipo-prospectus-s1-filing-sec/ If prospectuses can be automated, what of credit ratings, loan documents, information memos, financial models and process letters? But there is a bright side to all this: "The people that understand how to solve a domain problem in digital biology, or in the education of young people, or in manufacturing, or in farming... Those people that understand domain expertise, now can utilise technology that is readily available..." The playing field today is not about the ability to write code, it is the ability to synthesize real world solutions . It has always been. But in order to do that, one must learn how to think . If you think this is not important, consider for a moment: AI will not only eliminate the commoditised jobs, it will further exacerbate inequality between the rich and the poor, driven by widening the skills gap between those who know how to think and those who don't.

Do not believe anything ever again. It is getting increasingly difficult to educate our kids with more technology today. “So you ask Google a question in whichever language in the world, what did Google answer with? It said, look, there seems to be 104 million sites on those . You can read all of them and make up your mind what the truth is. It's your truth.  2023, you switch on ChatGPT, you ask it a question, what does ChatGPT tell you? One answer. And that one answer is completely positioned as the truth." [1] Google used to be the default when searching basically for anything in the world. You would type a few key words in the search bar and a hundreds of seemingly unlimited entries would show up, allowing you to choose  what are the most appropriate results. You get to decide what is right and wrong with a buffet of choices. Today ChatGPT and a host of other blackbox AI-powered agents that claim to be more "efficient" narrows these to a few easy to view and choose options. Machines might have gotten smarter and more precise in being able to guess what the user wants. But that isn't always necessarily accurate or correct. Humans learn more effectively by making mistakes [2] , which improves their ability to appraise a situation or be a better judge of character. Errors and pain build resilience and values, allowing us to make wiser decisions. Some go through it more than others. And wisdom is something that tells you to go ahead or hold back on doing something even if most of the indicators show otherwise. Being able to act resolutely in a seemingly irrational sense is not in the rulebook and big data model of machine learning. Just like the news: That one headline event that took place, will come out in varying undertones when published in the Financial Times, SCMP, Straits Times, the Chinese news or any other platform across the globe. Nearly all media is propaganda. And digital media in its various forms (X, Weibo, Telegram, etc) is simply just a more entertaining way of putting ideologies into the minds of the masses. Just because something is widely reported in the media doesn’t mean that it is necessarily the right thing. A kid that watches Instagram growing up as compared to another watching Douyin  will be imbued with very different values and perspectives of how the world works. And with technology pushing the limits in virtual reality, it will get increasingly hairy to differentiate what is real and not real. As adults, most of us have had the benefit of accumulating enough scars to know what's good or bad for us, and therefore make informed and wise decisions. When fed with enough propaganda every day, even adults can be persuaded to bend their will and choices. What more can be said of the impressionable minds of kids? These days, with so many avenues of searching for information on the Internet, deepfakes and curated content being pushed to our devices, how do you then train young people to tell real from fake and discern right from wrong? How do you give them enough life experiences at an early age - and not just what they can read off books and the Internet - without permanently damaging their minds, instilling them to think on their feet independently, so that when they grow up and read the headlines or listen to someone talk, they will pause and ask, " Is that really the case? " "Do not believe anything ever again. Because the idea of asking a question and getting one answer for it is by absolute certainty not true." - Mo Gawdat Limitations. Years ago when I was just a young freshly minted investment banker at a social gathering, one of my older friends casually commented, “ I am not young anymore and can’t stay up to work the long hours like you guys, I have to sleep before midnight .” - an unnamed friend who was in the forties then Coming from an environment and work culture where all-nighters were worn like a badge of honor and people grab a few drinks after work before getting home after midnight, this was inconceivable.  Perhaps more inconceivable was the fact that fast forward nearly two decades today, I still push the hours. Since then, my work has evolved from being somewhat 90% confined to facing the monitor at my desk in Singapore, to mostly city-hopping, meeting and talking to people, while working out of hotels and on the move. I am not particularly proud of the long working hours and suitcase life, but these were part of the deal when I took on the job. As hectic as it sounds, I enjoy what I do in general. It was only in recent times that the frequency of falling sick had increased to the point that I start to question the limits of my body and ask, “ Is it time to really slow down? ” No more executive roles. Regardless of how we define and stereotype the characteristics of each generation of youngsters, the unspoken rite of passage that transcends time and industry is: Newbies and those fresh to the job, will first do the number crunching and leg work before being handed more important stuff.  It is a proven way for businesses to manage operational risk. Call it modern day apprenticeship. This is similar to how food recipes are handed down across generations, just like the 90-year old uncle who makes the char kway teow  that people religiously queue up for at the hawker centre in Singapore. Photo credit: mine When left to a pair of unseasoned kitchen hands, the quality of the char kway teow recipe gets compromised, because no one makes a better plate than the old man himself who adds just the perfect amount of ingredients in every serving. Execution excellence and mastery are forged and nurtured by simply doing something over and over again, for a very long time. But unlike char kway teow, most white collared roles will not expect you to do the heavy-lifting after a certain number of years. In large organisations, some will even consider it criminal to ask a senior person to run execution. The idea is once you push the forties and fifties, the nature of work tends to involve leading from the benches rather than from the trenches. There is a valid argument for succession and redundancy planning, but the main point was: Provide more counsel and less execution leadership. Managing grunt work is best left to the young foot soldiers. I recalled a conversation last year over a working lunch with an ex-senior partner at a top consulting firm. At the peak of his career, he socialised the idea of retiring into a corporate role to his higher up. This was at the onset of his late forties. The response that came back was, “ Just remember, there are no more executive roles after your fifties ”. And since then, I have kept this religiously in mind at every turn at the workplace. [1] The Sharjah Entrepreneurship Festival: https://www.instagram.com/sharjahef/ [2] "Making mistakes while studying actually helps you learn better" - Science Daily

There are only two people whom you are accountable to and whose pride should truly matter to you. Not your parents, not your friends, and certainly not your mentors at work. Just two: The 8-year old you - full of hopes and dreams. And the 80-year old you - full of memories. Both are watching you now. The child you once were is still inside you, filled with wonder and hope, waiting to see if you will chase the dreams they once believed in. They don't care about success the way the world sees it - they just want to see you try, see you brave enough to go after what truly makes you happy. And then, there's the older you who has lived through it all, the ups and downs, the missed opportunities and understands how quickly time passes. They do not care about achievements or what others think. They just want you to slow down, cherish the little things, live in the present, and fully embrace the life you have today - because those moments don't last forever. If right now, in this moment, both of them can look at you with a sense of pride: If the child sees their hero and the elder sees a life well-lived, then you can rest easy. Because in the end, it was never about being perfect, never about the public displays of achievements and wealth. It was about being true to yourself, about making the little one proud and giving the older one peace. And if you've done that, then you've already won. Note: Adapted from an unquoted excerpt off the Internet.

“We’re more threatened by people who want the same things as us than by those who don’t. Ask yourself, honestly: whom are you more jealous of? Jeff Bezos, the richest man in the world? Or someone in your field, maybe even in your office, who is as competent as you are and works the same amount of hours you do but who has a better title and makes an extra $10,000 per year?” - Luke Burgis The story of Blackstone is not new to many, at least not for those who are in the private equity and investment banking space. Schwarzman and Peterson pitched to over a hundred LPs before getting their first bucket of gold from Prudential . The rest is history.  This was the same with the founders of Carlyle , who raised their first pot from junk bond king, Michael Milken. During a talk at the University of Maryland , David Rubenstein whimsically shares how he metaphorically “got down on his knees” to raise his first fund. Today Blackstone and Carlyle are probably the largest private equity firms in the world. I use ‘largest’ loosely because a few million gap between first or second place is insignificant when you start comparing hundreds of billions. That was about 40 years ago. Since then, numerous private equity funds have come to market, raising fund after fund.  The economics of running a fund are pretty simple:  Find important people out there who are either rich or being entrusted by a lot of rich people to manage their money. Be sure to get their buy in and trust. And then charge a 2% fee for promising to make more money in five years or more, as compared to putting it in some fixed income and equities over the same time horizon. Then you go out there, search for some under-valued businesses, do your due diligence before buying them, improve it, sell it after five years or so, and split the profits from the sale. 80% goes to your investors, the house gets a 20% cut. Private equity in the early days were simpler and founded on the goodness of encouraging more wealthy individuals to fund the businesses of war veterans returning from World War II. It was called “development capital” which later became the foundation for venture capital. Over the years, to cater to the evolving creativities of the capital markets and the risk appetites of different investors, the business model evolved into private equity. Development and growth capital are both important catalysts in driving entrepreneurship and innovation, filling the gaps that traditional bank funding cannot provide. Without them, there would be no light bulbs, digital banking, electric vehicles and autonomous drones, etc. But most of the people I meet today who want to be a part of the private equity club are in it largely for the prestige and bragging rights, less so for the hard work and sweat of building businesses. The private equity domain, colloquially also called the buy-side , is such a sought after end game for many investment bankers and young business graduates that so few really think about what it really means to run one.  Over the last few months I spoke with quite a number of folks who have the intention of raising a fund at some point of time in the future. Aside from the prestige, many believed that just collecting the 2% management fees is itself an attractive proposition to be in this trade.  Apparently no one cares about the carry . The carry is only there to demonstrate the fund's track record and justify ongoing commitment by the LPs to the fund, and its subsequent funds.  There's a line in the movie Wolf of Wall Street that goes something like this: “So if you got a client who bought stock at 8 and it now sits at 16, he’s all f$%king happy. He wants to cash in, liquidate, take his f$%king money and run home. You don’t let him do that. What do you do? You get another brilliant idea. A special idea. Another 'situation.' Another stock to reinvest his earnings and then some. And he will, every single time. ‘Cause they’re f$%king addicted. And you just keep doing this, again and again and again. Meanwhile, he thinks he’s getting shit rich, which he is, on paper. But you and me, the brokers, we’re taking home cold hard cash via commission, motherf$%ker.” Securities houses run by stock brokers are there to make money on the cut of the transactions and not the profits. There is no skin in the game. Only the incentive to keep the snowball rolling. Sure a 20% cut of the profits can be attractive, but that's at least a five year wait with some uncertainty of how much that amounts to. Meanwhile the management fees are already in your pocket. Apparently, it is even common place for some funds out there to operate entirely on management fees. Many of those I spoke to also believe that after raising a fund, they would be able to sit back and pilot decisions from afar and atop, while recruiting credentialed individuals to run the show and do the grunt work. Having worked for nearly 18 years now, I sometimes wonder how realistic that is. It’s hard to take your foot off the pedal, and you don’t want to as well, not at least when you are starting a new fund. Don’t get me wrong. I’m not here to pour cold water on chicken soup.  Some publicity and bragging on the media can be helpful for running roadshows with LPs. After all, most institutional investors out there want to know that the fund managers they are investing with has been heard of in industry circles. No one wants to put money with a nobody. It’s the same publicity game.  I just think many people are more drawn to the limelight of raising a fund than the process of running it. In a hypothetical parallel dimension, you can still make lots of money using your own capital by employing leverage, minus all the publicity and industry recognition. For example, a captive investment fund raised entirely from family and friends. You could still make serious money for them and yourself, albeit quietly, but would you still do it? Ultimately you need to ask yourself this: Do you really like the business of investing? Or do you just want to look like an investor?

Competitive rivalry A lot of professionals in the venture capital and mid-cap private equity space seem to be bad-mouthing each other. I attribute this to two reasons: Either a misplaced sense of pride or the intense competition in fundraising. The state of venture capital Venture capital investing looks like a game of ego . Every week I see numerous congratulatory posts relating to successful investments or fundraises on LinkedIn. It's all good. But a lot of folks seem to be either ignoring or oblivious to the long line of investors that has silently accumulated over the years and who are now queueing up for the exit. Someone recently told me that the DPI (distribution to paid-in) for VCs in Southeast Asia had apparently been only four percent in the last ten years. If we assume 2014 as the vintage year for which hot LP money started to pour into Asia and an average fund life of 10 years, this would indicate that the harvesting period has come due. But the hearsay of 4% DPI would suggest that 96% of capital deployed is still stuck, waiting to be sold, written down or written off. I haven’t been able to verify this. A lot of wealth is sitting in this part of the world [1] . Yet at the same time, a lot of VC money also wants to get out. Those who put their capital to work 7 to 10 years ago in early stage ventures are still waiting for their payday. GPs and founders face an incredibly tricky job of having to re-direct this flow of money somewhere, or to someone else, just to avoid a meltdown of the startup ecosystem and perhaps more importantly, repercussion from the broader investor community. Maybe they aren't really clueless. They just don't want to look bad by admitting that valuations had been overstretched in the earlier rounds of fundraising. Recession in China China is probably already in a recession - a contraction in economic growth, decreasing FDI flows , and stark unemployment. The financial behemoths such as JPMorgan, UBS and Nomura had also ‘downgraded’ China equities recently . Of course no one is publicly admitting it yet, because no one can verify the data and information [2] . But let’s not rock the boat now… The smoking gun here are the unemployment rates in Shenzhen , one of the country's core economic engines. I don’t see the economy getting better, not at least in the near term. The balance sheets of individuals first need to be fixed before companies can be fixed. That means prioritising job creation, spurring disposable incomes and sustainable consumption. The upcoming Single’s Day sales in November will be a bellwether for things to come. Tech jobs in China Many youths in China are retreating to the countryside in search of jobs and a more meaningful pace of life. The economy seems to be backtracking on being an innovation and manufacturing powerhouse, and losing ground as one of the go-to destinations for business expansion. A documentary on CNA reveals the state of affairs in some of the leading tech giants: "Everything that could be done has already been done. At this point, the work mostly involves minor fixes. Or we repeatedly work on the same functionalities. You might create one version today, then scrap it and create another version tomorrow, with only very subtle differences between the two. The improvements might be minimal or even negative. That’s the kind of work we are doing now. It feels like there are over a dozen teams all working to enhance and fix a small issue. How much significance does that really have?” - a tech professional-turned-farmer in China Founder's mentality One thing that founders dislike more than incompetency is hearing that “it can’t be done.” "Potato, potahto. " Wealth is created both by selling hot potatoes and selling ' hot potatoes' . You make money by either selling products or selling stories. It is easy to get carried away by confusing stories with products. The work of bankers Most of the bankers I meet today don’t know the half of what they are talking about ( sorry if this offends ). Whether it is wealth management products or advising on strategic decisions involving raising capital, bankers ain't got a clue. They mostly talk about the general market sentiment at meetings (nothing that is not already in the news), talk about corporate strategies using different words, and then take a slice from the proceeds of the fundraising. Aside from the infrastructure backbone that banks provide to facilitate huge flows of capital, the proprietary insights and value-add in arranging investor meetings seem to be either marginalised by fact that companies themselves can get access directly to the investors, or are otherwise non-existent. I would run deals very differently if I ever went back into banking... A pipe dream Getting listed on the SGX looks increasingly like a pipe dream . As much as regulators and industry groups have committed to spending the next 12 months discussing the way forward, there are some very fundamental issues that needs to be addressed, listing costs being only one of the factors. Following roughly two decades of successful REIT listings, investors trading on the SGX have gotten used to yields . Anything that doesn’t sound remotely like a fixed income product just isn’t attractive. Companies that raise capital via issuing new shares in Singapore simply do not offer the same outsized returns investors can be getting in other high growth markets and structured investments. The biggest selling point for any stock exchange therefore is liquidity. To solve for this, the 'tap' needs to be flowing. A cut in interest rates to “push” money from safe havens out into the open seems like one of the most direct way to solve for this. Beyond institutional participation, we need punters, speculators, aunties and uncles. Singapore already has the Sands and RWS casinos. For what it is worth, we now need to turn our exchange into a vibrant online marketplace that allows people to make 'bets' on the shares of companies. I use the word 'bet' loosely: When retail investors trade shares, we consider them to be punting. But when an institution trades, we say that they 'invest'. We use the proverbial labels "stupid money" and "smart money" to describe the two. The stereotype here is that the market believes risk can be assessed and quantified using statistical and mathematical models, accessible by "accredited" investors. When something goes wrong, it's bad judgement on the part of institutional investors, but comes off as gambling for retail investors. A proper functioning stock market requires the participation of both retail and institutions - that is why the exchange mandates publicly traded shares to be in the hands of at least 500 shareholders . Regulators and stock exchanges around the world can't say this, but the reality is "smart" money needs "stupid" money to create liquidity. The sophisticated models and assessment of returns that we 'worship' so much are built on a large stochastic universe of individual investors. In order to galvanise liquidity, greed, at this point, seems to be good. Selfish interests Everyone has their own selfish interests at the deal table whether it is running a $100,000 company or a billion dollar company. It is always the same: Everyone thinks they know it all, everyone wants you to listen to them, to do things their way, and to top it off, some even want your money. Clarity is king When looking back on my professional career over nearly two decades, I realised that most of my younger days were characterised by long hours of churning models and slides with very little time for critical thinking and in-depth analysis. This proportion changed over the years of course, but I wished that I had spent more time thinking and synthesising ideas. The clarity of mind, even when you are not doing anything, is always better than blind productivity. How to legitimately lose money A lot of people don't realise that the covenants involving raising equity are very different from debt. The science around risk-reward for both equity and debt is well documented. Equity holders are generally willing to risk all their capital in exchange for a share in future profits, while most debt holders prioritise capital preservation in exchange for lower returns. Both involve an obligation by the parties involved to perform, or not to do certain things, but fundamentally with debt, there is an implicit expectation that the investment can, and will almost always be recovered . It pays to keep this in mind when contemplating any investment: Companies and founders who are asking you to invest equity (as compared to a loan) are not just trying to up-sell you on the huge returns, they are also asking your permission to legitimately lose that money . [1] McKinsey also has an interesting report that details this flow of capital to Singapore particularly from family offices: https://www.mckinsey.com/industries/financial-services/our-insights/asia-pacifics-family-office-boom-opportunity-knocks [2] The Economist: “The Chinese authorities are concealing the state of the economy“, https://www.economist.com/briefing/2024/09/05/the-chinese-authorities-are-concealing-the-state-of-the-economy

Recipe for an average life. "A few hours of distraction everyday is the most common recipe of an average life. Assume you don't have much time, and focus. The years are short even when you clearly know what you want to do. Cut the noise and get things done. - Orange Book "If you know how hard it was and how long it took to build my little universe of peace and happiness, you would understand why I am so picky about who I allow in my life." - unknown Faith in people. “Better to give talented (unproven) people a chance, and endure a few disappointments along the way than to not believe in people at all. - Jim Collins Decision making. "The more the state plans, the more difficult planning becomes for the individual. - Friedrich A. Hayek, economist Almost all of life comes down to being able to think independently and make decisions. No governing body can act in the best interests of everyone. If you don't set your own goals, you will be given one. The importance of being "pigs". Lei Jun shares a whimsical anecdote from Xiaomi’s early days: "90% of success is attributed to luck (being in the right place at the right time). When a typhoon is approaching, even pigs can fly. Xiaomi didn't succeed because it was a great company or that I was incredibly capable. We were merely pigs in a vortex of a typhoon. So if we want to succeed, we must adopt the mentality of being 'pigs '." - Lei Jun , CEO and co-founder of Xiaomi [1] The wisdom of Pooh bear. Pooh Bear, there's one thing we didn't do today. And what thing might that be? Hmm... Nothing. Nothing? Christopher Robin, what exactly is "doing nothing"? Well I'm told it means going along, listening to all the things you can't hear, and not bothering. It's when people say, "What are you two doing?" and we say, "Oh, nothing"... and we do it! This is sort of a nothing thing we're doing right now.I wish it could last forever. Well then we must do it again tomorrow, and the tomorrow after and the tomorrow following that! - Christopher Robin and Pooh bear from the movie Winnie the Pooh John C. Maxwell once said in his book, The 360° Leader : " The greatest enemy of good thinking is busyness. " Are you truly free? "We are slaves to the opinions and words of others, slaves to what we see, slaves to the work that we do.  Our self esteem is highly dependent on the opinions of others. If others disapprove of us, we are disappointed and become doubtful about ourselves. And that is why we can never be truly free." - Jet Li, actor and martial artist [2] A choice of response. “When we are no longer able to change a situation, we are challenged to change ourselves.  Between stimulus and response there is a space. In that space is our power to choose our response. In our response lies our growth and our freedom." - Viktor Frankl, Holocaust survivor and Austrian psychologist Use the difficulty. One of Michael Caine's life philosophies was drawn from a stage rehearsal as a young actor: “...and they got carried away and started throwing things, he threw a chair, and it lodged in the doorway. And I went to open the door and said [to the producer], ‘ I'm sorry sir I can’t get in. There’s a chair in my way .’ He said, "What do you mean?" I said, "There's a chair there." He said, ‘ Use the difficulty .’ So I said, ‘ W-What do you mean, use the difficulty? ’ He said, ‘ Well, if it’s a comedy, fall over it, if it’s a drama, pick it up and smash it! ’ Now, I took that into my own life. There is never anything so bad, that you cannot use that difficulty. If you can use it a quarter of 1% to your advantage, you are ahead, you didn't let it get you down. That's my philosophy, use the difficulty." - Michael Caine , actor and war veteran [3] [1] Excerpt adapted and whimsically translated from - https://www.instagram.com/reel/DG2l0X6Ry10/?igsh=bjV1NGc1YWNkeXJo [2] Translated and slightly adjusted from the Mandarin version. Jet Li's anecdotes are largely influenced by his faith in Tibetan Buddhism. Full video (in Mandarin only) from the Tzu Chi Culture and Communication Foundation - https://www.instagram.com/tzuchicultureandcommunication/reel/DGh6jRhJcPs/Watch [3] From Michael Caine's interview with Michael Parkinson - https://youtu.be/t-7xyd5_IfY?si=qkx-E_wvwyQizdjB

My maiden Carousell transaction. The attempt of communicating with the seller led me to discover a new estate in Singapore.

The picture speaks for itself.

The study of capital markets has always been both intriguing and amusing to me. A lot of its theories are backed by mathematics and statistics. But the system in reality is stochastic, complex, and at times even volatile. We can learn from our mistakes or the mistakes of others. History often serves as a good guide for making decisions but no one can guarantee a discrete outcome. Whether it is technical analysis with charts or regression models, the past is never a predictor of the future. With trading stocks, be it day trading or the well-thought through strategies adopted by the large hedge funds, I have always felt that one principle remains consistent: Both smart and dumb money goes wherever the big boys go. Those who got rich from trading think they know it all, but they were merely riding on the shoulders of giants. And so, it pays to know what the whales are doing. Last month, one fund manager became an unfortunate statistic of this system. Source: Twitter The letter widely circulated on social media attracted a flood of comments from the online community, some applauding his honesty for admitting his mistakes, cutting losses and returning money to LPs. Others lamented that he should have done better by hedging his positions like any respectable hedge fund. Nevertheless, for someone who has been in this business for over thirty years, this is a huge setback both personally to him and the investor community. One would think that any funds entrusted to a veteran fund manager would be in a safe pair of hands. But reality can be brutal. As one user puts it on Twitter : It only takes one bad month. One wrongly sized bad trade. It just goes to show that what we think we know of the workings involving financial markets do not always hold true. Whether you are managing ten thousand or ten million dollars, in the end, stock prices are driven by the simple economics of supply and demand. It always comes down to flows and the biggest whale here is obviously the government.

For most part of our education and up to university, we have been conditioned to conform and succeed. We have been constantly told and guided on what it takes to be a “successful person” and the parameters that define it. These include many things including - wealth, the “ right ” career, status, family, kids, education, being well liked and well behaved, etc etc - the list goes on. These ideologies gets further reinforced when we see the numerous self accolades and congratulatory messages on the social media feeds of our peers. In reality, life does not always go according to plan. Not everyone becomes a top achiever in their field or cohort, not everyone can get an impeccable score for their tests and be perceived as the role model playing immaculately by the rulebook. It's hard to live a life without blemishes or bumps. Being a perfectionist that way can be detrimental. It is not about being able to relate to others who are also imperfect or making you seem more real as a person. It all comes down to survival . In the case of vaccinations, a weakened virus is being intentionally introduced to the human body to disrupt the normal functioning of the biological system but also to enable the body's immune system to learn and defend itself from future similar threats. Another example: Inbreeding, which according to Darwin’s theory of evolution also illustrates that perfectionism through the lack of genetic diversity also results in weaker offspring. A blemish in pedigree is what makes the each generation of organisms better versions of themselves. It is the imperfection that makes them stronger and increases their probability of survival. Being too perfect makes one vulnerable to shocks - the shock of losing a job, money, health, basically anything precious. The little disruptions that throw us off the conventional course of life can be discomforting and at times debilitating. But they help build up our defences, make us mentally stronger and conditions us to be better prepared for other nasty surprises in life. And so these days when I see successful people being portrayed in the media, I don't necessarily always look up to them as perfect role models for where they are now. Many of them may have crossed boundaries and broken many rules before getting to where they are today. At the risk of sounding too pessimistic, many start-ups end up as failed ventures by following the conventional path of growth. Never try to be the perfect persona of what the world wants you to be.

Hey you lost your bet! He's still here!! - an unwitting stranger over drinks. For the want of money. The world was a very different place in 2006. We were about 2 years out from the SARS crisis, and it wasn't even considered a pandemic. I had completed my final exam papers, presented my engineering thesis and was comfortably placed in a French IT consulting firm, which at that point of time, was being subcontracted by Philips TV to develop a software prototype. The product was meant to be used for all of Philips' clients in the hospitality and healthcare sectors. My work desk at my first job ever But I left within 6 months into my role. My motivation for making that leap was driven by The fear of being stuck in an engineering job, working from 9am to 5pm everyday for the rest of my life , and Perhaps more importantly, the want of earning more money by being in banking. That was primarily how the world of corporate finance appealed to me. Fresh graduates bringing home $8,000 a month. No other career could offer that kind of salary, certainly not in the engineering world. But I was not lucky. My grades were less than mediocre and I had been in the 'wrong' field of study. I didn't even know what a Bloomberg terminal was, how to calculate a series of discounted cash flows, or the definition of enterprise value . I wasn't cut out for investment banking . I didn’t get my $8,000 per month dream job but I eventually managed to join the valuations team of an accounting firm. Trial by fire. I distinctly remembered my first day of work at KPMG. All eyes were on me as I walked to my desk. It was only much later in my career that one of my colleagues told me with a giggle: " We were all wondering why you - trained as an engineer - came here to steal our jobs. " So, it was with a bit of dumb luck, a vacant analyst position created by the timely departures of a few junior staff, and sheer persistence that landed me into a corporate finance role. I had graduated a year later than all my engineering classmates, which made me two years older than the guys who graduated from accountancy and four years older than their female peers. In short, I was the uncle of all the analysts in the team. For the longest time, no one could understand why I had taken a 33% pay cut from my job in Philips to venture into the unknown from a zone of comfort and familiarity. Many times, I even found myself having to clarify where I worked at previously: "Not Phillip Capital the securities house - Philips , the electronics company..." I was incredibly scared during my first six months in my role. I had come from a working culture that involved going to an office in a tech-park five days a week, sitting in front of my desk writing code for long hours. Finance would be quite different. The closest I ever get to writing code was the Bloomberg functions within excel and perhaps some visual basic . Other than that, I was a fish out of water. I was so afraid that my line managers would deem me unsuitable for the job and ask me to leave. However, what they did do was make a bet that I would voluntarily leave within those six months. This incident was later unwittingly and awkwardly revealed by a stranger who crashed one of our team drinks. I remembered him saying: "Hey! You lost your bet. He's still here!!" It was just one of those things people in banking like to do. It sounds condescending and insensitive, but you pretty much got to have thick skin in order to survive. Investment banking isn't just about getting through the gruelling late nights and delivering on the number crunching. It was also about the harsh and toxic environment that one has to be prepared to put up with for many years to come. No shortcuts, no straight paths. Today, I get a lot of questions on how to break into a corporate finance career whenever I teach at the Singapore Management University. "I don't have any accounting or finance background, how do I get in?" Ironic as it seems, most of the people asking me these questions have better credentials and working knowledge about the field of investment banking than I had during my time. My attempt to learn about the workings of financial markets was through punting in stocks during the bull market, which peaked shortly in 2007 and went bust later towards the end of 2008. I dabbled into the markets not to make money, but more so to experience first-hand how it was like to invest, trade or punt . It sounds unusual given younger people today are more investment savvy and have even more access to investment and trading platforms. Unfortunately, I don't have a straight answer for how to get into an investment banking role. I guess the willingness to work hard beyond the stipulated 8 or 9 hours a day was definitely a plus, but beyond that, it had been challenging to also prove how you could get the job done eventually or the value you brought to the team. For most of my peers it was mostly due to the fact that they were familiar with navigating the culture , having done similar internships before. In my case, it was probably my posturing as the go-to-coffee-boy for all the work that no one wanted to do. Mostly, I attribute most of this to being at the right place , right time and meeting with the right people (天时地利人和). That said, everyone has a different trajectory. In 2006, I had found myself then in a somewhat employees' market in which banks had been actively poaching from the accounting firms, creating a vortex of hiring, and I had been lucky to get dragged into the process. Revisiting "the want of money" Bankers during those hey-days were also raking in deals (most notably from the many S-chip listings) and taking home multi-year bonuses. I recalled hearing someone from one of the local banks earning thirty six months of bonuses. Even if his base pay was mediocre, the absolute quantum still sounded crazy. At that point of time, it was even common for bankers who got less than a year's pay in bonuses to jump ship just because they felt they weren't compensated enough. What a crazy world. To contextualise this to a working person with an average pay, just imagine: Bankers typically earned in a year, the equivalent of what everyone else outside of investment banking makes in 3 to 4 years. It also implies that after working for 7 to 10 years in investment banking, you could possibly retire for the rest of your life. It makes everyone else's job look like a joke. And yet there are still those in the industry who continue to complain about working the long hours and being under-paid. Fast forward 10+ years on, the frenzy of hiring and huge bonus payouts have significantly subsided. But the brutality of the work environment probably hasn't changed. Many fresh graduates today continue to worship the altar of corporate finance, chasing the money and prestige of being accepted into the bulge brackets . It is important to realise that there are many careers out there which pay decently well (but may not pay as " fast and furious "), if you stick it out consistently. It is obscene that bankers are paid so much for the work they do compared to most other careers. "It's unacceptable that chocolate makes you fat, but I've eaten my share..." Therefore easy for me to say " do whatever makes you happy " or " be open to other well deserving jobs " when I have personally gone through and benefited from the system. Investment banking offers no guarantees At the end of the day, everyone has to make peace with whatever career you have landed into. Many of my engineering-schooled friends are doing very well today, even having not gone into banking roles. Some are in sales, business development, entrepreneurs, etc. After all, not everyone who lands an investment banking career is guaranteed to make lots of money and the promise of working on exciting deals. Most of the day-to-day work in investment banking tends to be iterative (and sometimes even borderline mundane). These include stuff such as research, spreading numbers and window-dressing a company's profile. As a junior or mid-level banker, you'd be lucky to get involved in and be a spectator in deal negotiations. Be realistic, you won't get to be portrayed a hero or a rockstar deal-maker. This is not the movies. However, you will be paid well and most likely be a target of envy for most of your peers who are probably earning only a fraction of your salary. By the time you reach director or managing director level, chances are that you will feel the mighty burden of revenue targets and also deal with the complex politics that come as part of the job. Hopefully during this time, you stay grounded and haven't gotten too used to a lavish lifestyle that will put you in golden handcuffs for the rest of your life. More important than the prestige that comes with investment banking, you really have to love what you do. The dots really do connect backwards . It is not so much about simply earning the big bucks, but whether you also appreciate the dynamics of the job and find a way to sustain yourself in that line of work for an extended period of time. As I look back on my cover letter dated in 2006, I recall of how starry-eyed I was when I applied for a role in investment banking. I had been lucky, yet, at the same time, it also reminds me of how far along I had come. I had applied for the money, saved some, spent some, invested some and lost most of it. I'd gained knowledge of the subject matter, technical skills and the experience, including the network of people, intangible resources built over the years, and spat out by the system. But. No regrets.

“There’s nothing for you in Singapore.” China was a huge market and we thought we had what it took to succeed in that market. This was outside my comfort zone, not only in terms of the language but more so because the resources that I had mustered over the last 10+ years at that point of time were all within Southeast Asia - the connections, relationships and appreciation of the culturally diverse landscape. I felt that I knew relatively better how to navigate in Southeast Asia as compared to China. But China as an economy was the largest in Asia compared to the playing field in Southeast Asia. It was hard and impossible to ignore. I made that decision not to re-locate, staying put in Singapore while spending the next 4 years shuttling in and out Shanghai and many other cities, making stopovers in Hong Kong. By early 2020, our startup journey had taken us to Moscow, Saint Petersburg, Seoul, Riyadh, Astana, Budapest...the list goes on. As for the adventures we had over those 4 years, those stories are for another day. I never posted any of those trips on social media. We had travelled to many exotic places and I got to know many people whom I would have not met if we never started this business. More importantly for me, I succeeded in breaking away from the comfort zone I was in as an investment banker, the typical grunt of an employee. While I had picked up most of my accounting knowledge, financial modelling and structuring skills in a formal professional setting, I really only learned how to set up meetings, present ideas and sell when I became a business owner. These are lifelong skills that cannot be taught and follow you around for a long time. Look, the point here is not about the fancy globetrotting or the invaluable lessons learned. There is also no success story to tell. At the risk of being overly blunt and transactional: The business acquaintances and relationships acquired only make sense if you can convert them into fees at some point of time. The cash flows (if any), only sustain you for a finite period, and then you have to look for the next elephant to bag, and the next, and so on and so forth. The truth is we paid for many of these business expenses without getting anything in return. Many people choose to interpret and believe what they see on the outside. It’s not as good as it sounds. There is no glamour in running your own business. It is more like living life in a constant state of uncertainty. And when you are in a constant state of uncertainty, it gets difficult to plan for anything long term. Then at the end of 2020, in a twist of an opportunity, I made the decision to relocate to Hong Kong, taking that uncertainty into a whole new dimension. Over these last two years, many friends have asked me how I cope with living overseas for an extended period of time away from home. All I can say is that it is not as easy as one might think, even for those who are accustomed to frequent traveling for business. When I think about it, the people who travel and live overseas for work generally comes down to three buckets: Those who relocate early on in their lives either for study or upon graduation; Those in their mid-careers who relocate for work as a temporary arrangement and; Those in their mid-careers who relocate indefinitely. I have many friends in the first bucket. They had gone over mostly upon graduation and have called those cities home. Those I know have stayed overseas for easily more than ten years. They had built their social ecosystems and familial support there and did not have to uproot anything back home or had little to nothing to give up. For them, life started overseas . Those in the second bucket are slightly older and had more work experience. They had gone overseas midway into their careers or got seconded as part of a project. In nearly all of the cases I knew, there was always clear visibility in terms of when they were going back home, be it two years, three years or five years. There was always an end goal . Something to look forward to so to speak. Then there are those in the third bucket. I know of very few people who are in this bucket and they are mostly in C-suite positions. I sometimes wonder how they do it. How they manage their families at home is a miracle in itself. You can only truly empathise with this if you are in this bucket. The thing is: When you already have a life back home, relocating overseas for work indefinitely is much harder than it sounds on paper and what you hear from others. A lot of people take it for granted because they either feel that the remuneration package compensates for that inconvenience or they simply just think they are adaptable enough. But when you take a step back and really evaluate the circumstances that could potentially impact you - the distance, the unfamiliar environment, the lack of social and familial support, there is always a chance that you over-estimate yourself. The real question is: Money can only go so far in helping you settle the logistics of moving, but how does one psychologically prepare for and cope for the change to a new environment?

"Do you know how big is a billion ? Just imagine every person tossing a coin at you at the same time." This was how one of my flatmates used to whimsically describe the scale, the 'massive-ness' of China and its potential market opportunity when I used to live in Shanghai. Some weeks back, Mark Mobius, a seasoned investor renowned for his bullishness on emerging markets and China said that he " cannot get his money out ". Mr Mobius' experience might have just come down to a technical glitch in his personal bank account, and the media obviously loves to blow this out of proportion to create headlines. Capital controls have been existent since China's opening up and reforms decades ago. Everyone who ventures into the country knows and understands this. There are many ways in which flows of capital are designed, structured and moved in and out of China - the VIE structure, SAFE registration, designated cash pools, etc. That said, earlier this year, the NDRC also published an article guiding the application and use of long-term foreign debt in China. Among other finer details, it states that the process has become more substantive rather than procedural i.e. a more explicit approval is required for companies in China wanting to bring in foreign debt. No more "FYI"s. To complicate things further, over the last 12 months, SOFR rates - the benchmark for most USD-denominated lending - had risen dramatically, in quite the opposite direction from the PBOC benchmark lending rate . Numerous factors, both macro and on the ground, seem to hint at discouraging the flow of foreign capital to and from the country. One cannot ignore the nagging feeling that the narrative on China, in spite of its huge market potential, has been changing on a tectonic level. For years, fund managers have profited from the risk premiums between emerging and mature markets of the world. The business of investing sometimes all simply boils down to simple principles of comparison: All else being the same, money should go to where it has the lowest risk i.e. where it is most familiar The lower the odds of something happening, the higher the expected return. Tails drive everything . Risk premiums are fundamentally priced off interest rates, a tool used to keep inflation in check; and foreign currency exchange swaps, effectively a measure of how risky one country stacks up against another. Lately those odds have been somewhat warped: Emerging from the pandemic, one would expect central banks to maintain its near zero-interest rate monetary stance and encourage growth. But the bloating in asset prices happened to quickly and by the time governments intervened, it was too late. China, on the other hand, which was much closed out from the rest of the world during this period, went in an opposite direction. Short-term dollar-based deposit rates today have elevated to the levels of 4 to 5%, which means investors get compensated with a 5% return just by not doing anything. Approximately 3-5 years ago, a 5% return was the average expected return for investing in a 'stable market' regime and not doing anything yields anywhere from 0.3% to 0.5%. Just the arbitrage on risk premiums have compressed so much globally, making it incredibly difficult for many fund managers to justify dollar-based investments in emerging markets. For China, there is an added wrinkle of politics at play. Last year, the CPC announced slashing the compensation for senior executives at Chinese investment banks. Even state-run financial firms and regulators were not spared either as part of the reforms highlighted at the recent two sessions (两会). Also, last month, Bao Fan, Chairman and chief of China Renaissance, the deal-making rock star of many tech darlings in China, went missing only to re-surface some weeks later with news that he was assisting the authorities with investigations . One might say that all of this started in Shanghai after Jack Ma's controversial speech in 2020 , and also part of China's push for common prosperity. Either way, all of this seems to be the un-intended consequence of "doing well" or achieving outsized returns in China. If you are facing high cost of funds and still have to contend with limited returns in a regime that is largely state-controlled, it can be really challenging to drive that equity story home. The billion-people market opportunity obviously doesn't sell as well as before. Embracing policy is a choice for investors offshore but a necessity for firms operating in China. That said, ultimately one just needs to be a believer. A believer in the policies and directions set forth by the incumbent few who are in power, and possibly a lot of faith , something which happens to be incredibly difficult to come by these days.

Whenever I approached the close of my financial modelling course, I always did a simple roll-call to call for feedback from everyone in the class. This time, instead of recycling this common practice, I decided to try out a different approach by using Mentimeter and getting everyone to input three keywords on how they felt about the last two days, and this was the result: A million followers can't be wrong. One of the key aspects of financial modelling is being able to accurately project cash flows. This has consistently been a perennial question that comes up - " how do we do it? ", " How do we know that the numbers are reliable? ", and of course the occasional remark from the seasoned industry veteran: " the assumptions are too conservative, I think it should be much higher! " Subject matter experts and experienced professionals who have been in the game for a long time play an influential role in terms of how we rely on an estimation of the future. In today's context - given the speed and digital pervasiveness of information - the loudest person in the room can also sometimes be easily misconstrued an industry thought leader. “Facts can be so misleading, but rumors, true or false, are often revealing." - Colonel Hans Landa [ Inglorious Basterds] Before we had the TV, email and newspaper, people relied on word-of-mouth as their primary source of information. Casual banter amongst households within proximity was how we passed the word around. There was usually nothing lost in translation and no one usually questioned its legitimacy. That playground of information is so different today. Part of how we receive information today has evolved to include social media channels, such as Twitter and LinkedIn. We no longer need to hear information directly from the proverbial horse’s mouth. It is incredibly easy to be swayed by the opinions of the majority, albeit online or offline. After all a thought leader with a million followers can't be wrong right? “Be wary of self-proclaimed and crowd-proclaimed experts. It’s less likely that experts will be mimetically chosen in the hard sciences (physics, math, chemistry) because people have to show their work. But it’s easy for someone to become an overnight expert on “productivity” merely because they got published in the right place. Scientism fools people because it is a mimetic game dressed up as science." - Luke Burgis " The key is carefully curating our sources of knowledge so that we are able to get down to what is true regardless of how many other people want to believe it. And that means doing the work. ” The process is important. In my opinion, projecting cash flows requires more imagination than hard core quantitative and technical skills. Valuation and financial modelling is in reality part art, part science . In fact I would even go further to say that a large part of it is art , since the desired outcome is almost always based on creatively imagining what the future beholds. The narrative , so to speak, is as important as the numbers. As Yuval Harari puts it in his book: "A person who wishes to influence the decisions of governments, organizations, and companies must learn to speak in numbers. Experts do their best to translate every idea into numbers." And so, the process of constructing a financial model tries to achieve this. I often get asked if I could provide excel templates for a variety of sectors that people could use to just work off, punching in the inputs to generate the valuation output. Unfortunately, I don’t think it works that way. The real value in any financial modelling exercise is not the result it produces, but the mental exercise that you have to go through in order to produce a functional three-statement spreadsheet of intricately connected moving parts. This is probably the same parallel why people run marathons - not to get from point A to point B but more so the journey, the process of having gone through first hand and pain of completing 42.195km and that personal feeling of having achieved something at the finish line. That sensation means something different to everyone. The financial model is then a representation of what you think of the business and possibly how you see it evolving over time. In the hands of another person, the assumptions and results might look very different. As Warren Buffet once said: "Forecasts may tell you a great deal about the forecaster but they tell you nothing about the future." The value of a digital monkey. Going back to the narrative, the valuation exercise seems to be always all about that magic number and the story behind that number. It is easy to play around with numbers , crunch the numbers and as a lot of bankers say - massage the numbers. Data is widely available nowadays with the Internet and relatively cheap access to some proprietary information. Stories on the other hand are a reflection of the founder/CEO’s ambition or the company’s vision of the future. In the digital world, social media has also increasingly found its role as a facilitator of information (reliable or not), and does an incredibly good job of amplifying stories. Just look at GME's share price performance... This boring brick and mortar retailer was reportedly shuttering stores in 2019 and went into a semi-crisis when revenues plunged in 2020 . Yet, its share price defied everything the numbers were saying, becoming a cultural sensation on social media. If you looked at Lehman Brothers' balance sheet back in 2008 they actually had "one of the strongest capital and liquidity positions the Firm has ever had" . But the story unfortunately went sideways, souring sentiments very quickly, resulting in its shocking collapse, disregarding whatever the snapshot fundamentals and numbers were showing. Cryptocurrencies and NFTs are also classic examples of how story-telling has manifested in valuation. There is almost no means of proving why a digital image of a monkey could be worth thousands of dollars. There is also no real use for a digital monkey, and therefore, no way of doing a meaningful DCF valuation. NFTs are simply worth what they are because people say so and because people want it. So, you can’t model sentiment and emotion in a spreadsheet. You also can't do an analysis of the cost-benefits on waging war for national security. Neither can you put a price tag on human relationships. The numbers simply won’t stack up. "The concept of economic value is easy: whatever someone wants has value, regardless of the reason (if any), and its value is higher the more it is wanted and the less there is of it." - Per Bylund Storytelling for what it is, is a persuasion exercise to galvanise interest and sell something - an idea, a product, a call to action. But it remains effective only to the extent others believe and identify with it. Any story becomes instantly more believable if there is sufficient information and that the anecdotal evidence provided is relatable by the other party - which explains also why investor targeting strategies are different for retail punters and large institutional buyers. Without connecting the numbers to a story, projecting cash flows simply becomes an emotionless exercise of numbers.

For years, practitioners in the industry have been taught, have understood, and have accepted that equity holders stand behind debt holders in the queue to redeem cash flows of a business. These are the rules of the game relating to the priority of how cash in a business would be distributed, if and when assets are being liquidated. It's a basic principle codified in financial markets theory. But that rule seemed to have changed forever when Credit Suisse decided to write off a huge chunk of their AT1 debt last week and facilitate any residual payments to shareholders. Senior debt letting common equity know who's in charge [Source: Twitter] "Protectionism, geopolitical self-interest and state intervention, in other words, seem to have over-ruled free-market principles." - Financial T imes By allowing the "free market principles" to take reign and go its natural course, the Swiss government runs the risk of embarrassing a certain influential Middle Eastern shareholder who recently invested in Credit Suisse, and in the process, taking the rap for the bank's current state of affairs. Investors and onlookers would ask, " why bother even doing a capital raise in the first place only to write it all off within months? ". There would be a crisis of confidence in management, possibly wider overhanging doubts over stability in the region, including the country's position as a global wealth management hub. And then no one would put money in Switzerland anymore, a cost possibly too high for the government to bear. When the reputation of your country is at stake, all concepts of equity and debt gets thrown out of the window. Bottomline: Rather than adhere by the rules governing capitalist theory, it is far better to offend those who can afford to be offended than to risk a systemic meltdown. Of course extreme situations call for extreme measures. Under the normal course of business, every one is happy to stand in line and play by the rules. Decent wages for decent work, a fair share of the pie for a fair amount of effort invested. Most investors who walk into a share agreement try not to think too much about a material adverse outcome. But when the house is on fire, everything is up for grabs and all stakeholders - equity and debt - will scramble for the exit. I think the uncomfortable truth today, that no one talks about explicitly, is that: rather than fight a war using conventional arms, political decision-makers around the world have found a way to weaponise the workings of financial markets and monetary policies to drive their own agendas, in the process distorting how we perceive value. Any country in world can 'own' another country by simply imposing trade sanctions, ridiculous tariffs, and in extreme cases, confiscate assets - assuming one country is heavily reliant on the other for the import of certain critical goods and services. By creating dependency, you are weakening the bargaining power of the other party, and lesser bargaining power generally comes with lower value. Nassim Taleb also talks about this in his book under the section: " How to legally own a person ": "Every organization wants a certain number of people associated with it to be deprived of a certain share of their freedom. How do you own these people? First, by conditioning and psychological manipulation; second, by tweaking them to have some skin in the game, forcing them to have something significant to lose if they disobey authority—something hard to do with gyrovague beggars who flout their scorn for material possessions. In the orders of the mafia, things are simple: made men (that is, ordained) can be whacked if the capo suspects a lack of allegiance, with a transitory stay in the trunk of a car—and a guaranteed presence of the boss at their funerals. For other professions, skin in the game comes in more subtle forms." For good or for bad, sovereign risk has become even more closely intertwined with equity risk. When you buy a stock or a bond, it is no longer as simple as taking a view on profitability, future cash flows and room for improvements, but also the strategic importance of a company's position in the ecosystem. DCF does not capture all of that. In fact, no amount of number crunching and analysis allow for an accurate appraisal of any company's fair value today, primarily because the so-called free market is no longer that free. Instead of willing buyer, willing seller, the market economy is now to a good extent, influenced by statecraft, driven by the common interests of various governments. The treatment of Credit Suisse's AT1 bonds has also further demonstrated and reinforced how loosely-held and trivial the definition of equity and debt can be when push comes to shove. For what it is worth (as it has always been), value will forever be driven by the willingness of another party to take the asset off your hands at their own free will.

"You either die a hero or you live long enough to see yourself become the villain." - Harvey Dent, The Dark Knight Nearly everyone I know who started out in banking or private equity had the image of a five figure monthly salary in mind, being able to buy a home at an early age, take leisurely trips around the world, shopping at whim. It was the idea of a certain kind of financial freedom that caught us. No need for a billion dollars, just enough to live life on our terms. If you extrapolate that income over a period of say 7 to 10 years, it is easy to see how that could be possible. When you are a twenty-something year-old looking at someone else in their late thirties or forties working in the same career as you, it can be extremely easy to be disillusioned into thinking you can do this forever . But life is often never that straight. Pulling the hours and all nighters for that long a time can be both mentally and physically exhausting. It comes with the sacrifice of personal time, family and friends. Most people are oblivious to how much you have to give up (and put up with) when you work almost 7-days a week, go home past midnight and never see your family and friends for extended periods of time - all for that juicy bonus at the end of every year. Then there is also that temptation of starting a business, or a side gig, open a shop or something like that. After all what is the use of earning the big bucks when you can’t get to be your own boss one day? Some of us would go on to invest a part of that income into either public equities or the private markets. Both pathways requires staking a significant portion of capital. The lucky ones got out alive and sometimes with a decent profit. But there are also those who unfortunately come out with losses on the other end. Either way, statistically, it always seem to play out to the same result: We continue struggling to keep the lights on and do the jobs we do in order to justify our aspirations and lifestyles, whatever that may be. If you are a smart guy, you’ll figure the right time to get out before the hamster wheel consumes you. After all, the whole point of why we got into the high paying jobs was because it was always more than just about amassing money, correct? Life beyond Wall Street David Rubenstein, one of the co-founders of private equity firm, Carlyle, has his own talk show where it would seem that he is having a ball interviewing leaders and celebrities globally and from all walks of life. Both Steve Schwarzman (Blackstone) and Ray Dalio (Bridgewater) have turned to writing memoirs to share their collective experience and wisdom from doing business over the years. Andrew Ross Sorkin, no doubt a much younger chap and has a somewhat parallel career to Wall Street, has made his name both as a successful finance journalist and producer of TV show, Billions . Recently, one of my younger friends also highlighted to me that even the chief of Goldman Sachs, David Solomon, has apparently also started his own gig as a DJ . While they are not the best examples (primarily because they are either in the celebrity realm or billionaires), it demonstrates that there is possibly an alternative life beyond Wall Street. And everyone who has made it in some way or another, finds self-fulfilment in doing something either unrelated or tangential to finance, publicly or in the private domain. Your professional decline When you are in your twenties, you spend most years in the accumulation of cash. If you are the ambitious type, you might even set your sights on climbing the corporate or industry ladder. You work all-nighters and pump nitro just to get there. By the time you reach the thirties and touching forty, and if you are lucky enough to have some credentials, you find yourself in a nice position whereby you can capitalise on the knowledge, experience and the resources. It is relatively easy to earn well from here on, but also just as easy to get caught up in workplace politics and corporate re-orgs. You are a high-cost resource treading on a thin line and might find yourself working twice as hard just to justify your existence. It’s a never-ending cycle of work and more work. Many years back, a friend sent me this article titled “ Your Professional Decline is Coming Sooner Than You Think ”. It talks about how high performance individuals often struggle personally for many years past their prime. And it is important that we start to think about what comes next when the music starts to slow down. I have kept re-reading this article from time to time over the years, not because I’m not getting any younger, but more as a reminder of the fact that we are not invincible forever. We have been taught to plan our careers upon graduation but no one ever mentions about how we should plan the second good half of our professional lives, and that, I think, is important. [1] https://www.washingtonian.com/2017/10/26/david-rubenstein-become-tv-star/ [2] " King of Capital " chronicles the story of Blackstone; and Ray Dalio's " Principles " [3] https://www.vanityfair.com/news/2016/01/billions-showtime-andrew-ross-sorkin-brings-wall-street-drama-to-tv?srsltid=AfmBOooCOenxowMUUnVx_3iMzYbMnozD4mAUknV6YLLXNVLFq6BMQwsB [4] David Solomon ended his gig as a DJ in 2023 after being flagged by the board as a potential distraction from his main work. https://www.theguardian.com/business/2023/oct/17/goldman-sachs-ceo-david-solomon-dj-gigs-d-sol#:~:text=1%20year%20old-,Goldman%20Sachs%20CEO%20David%20Solomon,gigs%20due%20to%20media%20'distraction'&text=The%20music%20has%20stopped%20for,him%20from%20his%20main%20job .

Our lack of understanding in how different countries are being governed are rooted in bias, largely based on what we are familiar with and what we are not. Earlier this year in Singapore, I was having a conversation with someone from a bank about the creditworthiness of large state-owned-entities in China. Surprisingly, he actually saw this as a “high risk” business. If the counter-party had been one of the more familiar titans of the finance industry, that sentiment would have been very different. Apparently many still think that the business environment in China is still rampant with corruption and fraud. These same risks that investors are concerned about exist in many other countries as well, including the developed ones. Just take a look at 1MDB, Wirecard and Theranos. I recall a company sergeant major during my national service days who once said, “Soldiers all around the world behave in the same way once they put on their helmets and the uniform.” This is interestingly true. The helmet reminds everyone that: at the very core, we are essentially the same. In a similar fashion, consider a blue-collared production line worker sitting in China, Philippines, Italy, the US or anywhere else in the world that operates, say a machine, in more or less the same way. Because he is human, he experiences both good days and bad days. And on bad days, the quality of his work might be sub-standard. But at the end of every work day, he tries to get off punctually, goes back to his family, and starts his routine again the next day. You might attribute any quality defects to the fact that the product was manufactured in a relatively low cost location i.e. if something is lousy, it is easy to dismiss that it is cheap and “made in XXX”. After all we have been conditioned to conveniently draw trivial correlations between price and quality. Without this bias otherwise, you could have just as easily blamed it on the merchant who sold you the product. But corruption, fraud and quality control are smaller problems in the bigger context of things these days---Earlier this year, JPMorgan allegedly issued an “ un-investable ” call on China equities as a reflection of its unpredictability and geopolitical risks. All businesses need to embrace policy. Companies that end up on the wrong side of propaganda run the risk of getting cancelled , as can be seen from H&M’s business in China . But being cancelled goes against our ideologies and learnings of the free market, which is: identifying an environment with favourable supply-demand dynamics and taking scientifically calculated risks in raising capital to make money. State intervention is non-existent. For most places in the world, the market economy is the truth. In China, the authority is the truth. There’s no right or wrong. Most of us have simply been brought up imbued with the ideologies of an open economy that we become averse to a scenario in which autocratic intervention could make or break a business. We fear what we do not know or what we cannot control. And because of this, many companies write this off or cast a huge premium on country risk. Think for a moment how different the risk models and perceptions towards raising money (such as the weighted average cost of capital) would be for a domestic investor or owner of a Chinese company vs a foreign company. The assumptions driving the decision to invest should ideally be localized and go beyond the scientific calculations that we have been taught. Instead we consistently fall back on conventional wisdom (which are mostly capitalist-centered) defining what constitutes a 'mature' or 'stable' market return. For example, a common risk management strategy in the West involves diversification i.e. as long as we have enough eggs in the basket, we can always afford a few bad ones. In China, risk management is less of a game involving statistics but more about developing, embracing the ecosystem, staying in alignment with policies, and in the process, minimising (or sometimes even zero-rizing) the incidence of 'bad eggs'. This is inherently a very different way of doing business and ultimately a very different perspective of risk. In a slightly similar parallel, while modern Western medicine adopts a targeted approach towards treating afflictions and eliminating the ‘bad parts’, Chinese medicine tends to be more holistic, treating the entire system, including the patterns of symptoms. Because the fundamental perceptions and understanding of risks are different, many investors struggle with using scientific methods to quantify returns. Shan Weijian summarized this aptly in an interview last year : "Investment is a risky business, and China as a market, is not for the faint-hearted." On closer look, most of the policies are probably not meant to be autocratic or unreasonable. They exist to maintain a certain social stability, encourage economic activity and safeguard certain national interests - as with any sovereign state. Of course the whole inner workings of global trade are made up of many complex moving parts. But at the end of the day, these are just the rules of the game, and risk is just a measure of how well you think you can play that game. Starting a business in the US almost seems like fortune favours the bold . In China it feels more like: You better do as you are told . A very different image of entrepreneurship and doing business is portrayed in the West. Many of these are frequently sensationalised with stories of school dropouts creating billion dollar businesses, founders working out of a garage, cavalier businessmen who buck the trend, sidelining authority to grab resources on a level playing field, and numerous books celebrating corporate bravery. My first-hand experience in appreciating this difference was about 18 years ago when I embarked on the NUS Overseas College program in Shanghai. The idea of the program back then was to replicate in China, the “success stories” of entrepreneurship in the US - championing research & innovation and commercialising it. China at that point of time was less interested in leading the charge on technology and chose to prioritise large scale infrastructure investment and market reforms around reining in foreign investment. Some of the best businesses at that time weren’t centred around tech but the seemingly more boring and less sexy sectors. It was a very different economy and no one in the cohort had the slightest clue of how to adapt the program objectives to such a market. We were all learning along the way (摸着石头过河) from attending business meetings, fraternizing with colleagues, all the way down to getting visas and negotiating the rent on the apartment. We would later on also learn that the strategy of navigating in China (which probably still applies today), wasn’t so much about being the smartest guy in the room but more about handshakes and being able to connect the dots. Ideas and intelligence are nothing without endorsement. As such, individuals and high achievers who are used to thriving in a merit-based world and expect to use their minds to blow everyone off their seats will often find themselves stumbling in such an environment. Also, all the most important decisions are made centrally. There is almost always either a single decision maker or a small trusted circle of influence (almost mirroring the CCP style of governing) or if you like, using different share classes in a more western centric context. Language is culture and culture is language. Being effectively bilingual might be sufficient, but being able to speak the language does not automatically imply that you can assimilate into the culture. As with many cultures, there are almost always subtle undertones in both casual and professional banter between people, which is why as effective as Zoom and video meetings go, nothing can truly replace the relationships built with in-person meetings. Most of us would later on in our jobs apply these valuable learnings when we took on regional roles or help overseas and local companies in their expansion within China. Starting and running a business wasn’t the same as how most of the world saw it being done in the case of Facebook, Google, Apple or Amazon. The venture capital ecosystem in China didn’t really take off until maybe 10 years ago and the check sizes weren’t that large as well. Most of the time, it takes years for a company to grow, often staying in plain sight, having the right handshakes, playing by the rules of the game, and perhaps more importantly, having very very deep pockets. As you are reading this, the geopolitical and macroeconomic landscape is still constantly evolving, and we are still learning. There is certainly much more transparency today as compared to before, but the perspective of risk will continue to be an ongoing education process, and many investors and corporates seeking to do business in one of the largest economic powerhouses in the world will eventually need to find a way to balance expectations and reality.

Human nature eventually catches up "This is the nature of capitalism, get over it." - Kevin O'Leary After nearly two decades of being in finance I still don't think I appreciate how capital markets work. It's not that I don't know how it works. There is a fine difference between not knowing and not appreciating . In 2008, most of the world lost faith in Wall Street: The housing market crash, the financial bailouts, quantitative easing... Sure, a few banks went under and were eliminated, but there was so much greed and risk taking followed by cheap money being flooded into the financial system. The events that followed made a lot of people lose faith in the traditional financial markets as we knew it. And so most of bitcoin and cryptocurrency came into existence as investors started to look for an alternative store of wealth. Cryptocurrency and digital assets were meant to be a good thing. It would be digitally secure and essentially "un-fraudable ". But human nature eventually catches up. Anyone can make a bet on anything The series of unfortunate events that led to the downfall of SBF  in late 2022, the poster boy for cryptocurrency, just goes to show that the process of trying to do a good thing can sometimes turn out bad, if not executed under the right moral guidance. FTX, once touted as one of the world's largest cryptocurrency exchange used to be valued at more than the NASDAQ . Its recent bankruptcy is a rude wake up call for those who religiously believe cryptocurrency is the future. Look, I'm not dismissing the credibility of crypto assets and bitcoin. But all of the digital tokens that changed hands on the platform had to start from somewhere: Cold hard cash being used to buy tokens. Someone who trades on any cryptocurrency platform ultimately believes that at some point of time in the future, those tokens can be exchanged for cash, ideally at a higher value. The buying and selling of stocks, listed options and contracts for difference work pretty much in the same way. Aside from the issuance of new shares, none of the money in those transactions flow to the company for expanding its business, or used towards investing in innovation or research. It just stays on the platform in circulation amongst the punters and speculators, creating a whole lot of flow volume, which translates to revenue for the intermediaries who facilitate this flow. The secondary market is the world's largest legalised gambling den. Anyone can make a bet on anything. The possibility of a business achieving a certain milestone, hitting a certain profit target, releasing a certain product. And people further make bets on those bets through structuring warrants, put and call options, CFDs, products that don't require people to come up with all the capital, just enough cash margin to buffer any unexpected losses. It's just comes down to finding enough buyers and sellers on both ends of the trade, effectively making the market. As long as those in the game keep the ball rolling i.e. someone is buying those shares and someone else is getting their capital back, prices continue to hold up and no one gets hurt. Sounds like a Ponzi scheme no? All crashes in the market happen primarily due to a crisis of confidence: A whole lot of people just wanting to get out. It just takes one misstep to screw everything up "Entrepreneurs must be powerful storytellers to win early stage support" Here is why I could never wrap my head around putting money in the markets: Investors (typically) pay the price of a share based on the amount of dividends the company pays in the future (this is essentially the dividend discount model). Let's just say this company one day receives a huge order from a customer which could potentially double its revenue, but unfortunately it doesn't have that much manufacturing capacity. It decides to raise money from shareholders or banks, in which those proceeds would be used to buy or build a new factory, thereby solving for the shortfall in production capacity. Investors then do the math involving the costs and benefits of putting their money into this initiative and decide how much to put in. With this new factory in place, the business now generates twice as much revenue, but it also implies that profits could potentially double, as with the value of the business. Suddenly, the idea of ownership in a larger company, the prospect of the business being a market leader and the reputation of being part of a billion-dollar enterprise with a high market value dawns on shareholders. They start to get carried away with window-dressing and telling fancy stories about the future of the business in order to drive the company's valuation, rather than focusing on product deliveries and execution. This is how modern-day capital markets management looks like. Share prices driven by stories and narratives rather than business fundamentals. If everyone is telling stories then who's telling the truth? Cryptocurrencies, like financial derivative products, also do nothing to drive the real economy. Aside from making up for flow volume and its re-saleability (which again, benefits the intermediaries), there is no real intrinsic value. There aren't enough merchants around the world today that would accept bitcoins or tokens in exchange for goods and services. Cryptocurrency isn't backed by an underlying business. Most bank accounts don't even offer virtual asset wallets that you can use for day-to-day transactions. You can't take out a loan using cryptocurrency as collateral. And regulators around the world are still wrapping their heads around how they should deal with this asset class. Gambling is a well known vice in society. There are always winners and losers on both sides with middlemen profiting from it. But as long as there is sufficient law and order, and no one creates a hole too big that it swallows the entire house, the show will go on. People will continue to speculate on the value of derivatives and bitcoin. No one calls fraud when things are smooth sailing and the pie is large enough to be shared. It just takes one bad egg, one wilful misstep, to screw everything up.

(In the spirit of celebrating national day...) If there was ever a modern day HBS corporate case study that highlights the resilience of Singapore firms, Singapore Airlines (SIA) might just make the cut.  About just slightly over a year ago in May 2023, SIA reported highest ever net profit in its 76-year history , outperforming its long-time competitor in Hong Kong, Cathay Pacific (CX). Like the onset of COVID which has been widely seen as an 'unprecedented' occurrence, this unprecedented performance could also be attributed to the timely confluence of various events - the restarting of global travel, abolishment of hotel quarantines, Singapore’s re-opening to the rest of the world, while Hong Kong continued to suffocate under mostly closed doors. You can attribute this to the strong branding of Singapore’s flagship carrier, or its creative and fast response towards cost-cutting by putting a part of the fleet in cold storage, offering up meals in the air , or the ironclad financial backstop by parent company Temasek Holdings when the company embarked on its fundraising spree in 2020 to stem the cash bleed.  There are possibly a dozen other reasons, but one simply cannot ignore that these circumstances - both internally and externally - have facilitated the emergence of SIA as one of the champions from the pandemic. That was nearly two years ago. Since then, the world has re-opened and life as we know it has mostly returned to normal. But financial markets and the current state of the global economy are now paying the price for cheap money used to cushion the economic impact of COVID-19. The volatile state of geopolitics has also been putting a drag on growth.  In Asia’s largest market, cracks have also started to form for a while. Unemployment data in China remains stubbornly high, debt-ridden property developers are still in a process of unwinding, there is also diminished spending on luxury items across the board, significant pay cuts within the finance sector, and not to mention the outflows of foreign capital. Even policies around trade have increasingly become a weaponized tool for statecraft.  Investors and market watchers seem to be waiting for a rude ‘wakeup call’.  Maybe something must be broken, such as a market crash, or a big recession, before things finally (and hopefully) start to get better. The more important question perhaps is: for how long more? Even Hong Kong, a key financial center for China and once touted as the go-to hub for IPOs in Asia, have also fallen victim to the exodus of investors. And just like how SIA overtook CX when it bounced back from the pandemic, the biggest beneficiary of this outflow of investors seems to be Singapore. Just last week, MAS announced that a team had been assembled to “strengthen the equities market development” in Singapore as part of boosting the city’s position as a choice destination for equities investors. Aside from incentives, this initiative also includes amongst others, the establishment of more financing vehicles, corporate structures, share classes, encouraging research coverage, as well as fostering greater engagement with private and public stakeholders within the capital markets ecosystem. For years, the Singapore Exchange has been beleaguered by poor liquidity and the quality of its listings.  Based on a PwC report , in 2023, only 7 companies went public in Singapore as compared to 73 and 79 in Hong Kong and Indonesia respectively. Over that same period, both Hong Kong and Indonesia had also raised US$ 5.94 billion and US$ 3.55 billion respectively from the IPO of companies.  By comparison, Singapore as a listing destination had raised only US$ 0.03 billion, a miniscule fraction of the nearly S$ 900 billion of assets managed by private equity, venture capital and hedge fund investors in the city. Combine this with over S$ 800 billion in deposits from the commercial banks , this in theory should present an opportunity to mobilise at least SGD 1.7 trillion of retail and institutional capital, direct some of it towards public growth capital for Singapore companies, and in the process, re-igniting the sleepy equities market. As long as China remains an economic powerhouse in the region, Hong Kong’s position as the center of Asia’s equities markets will be difficult to replace. But there is a silver lining. Singapore can benefit from companies looking to diversify their business outside of China or use it as a springboard for markets in Southeast Asia. We have a unique window of opportunity.  Much like how SIA had turned itself around in 2022, if we play our cards well today, Singapore’s equities market might have a fighting chance to capitalize on this current trend to re-invent itself as a winner within the region.

I have never been much of a waterfront-living type of person, but the view of the Victoria harbour can be quite addictive. Quiet mornings overlooking the harbour are some of my most enjoyable moments over the weekends in Hong Kong. I realised recently that for a lot of companies out there, it's actually the season of promotions . For a number of friends whom I've known for some time and who were newly minted, I'm truly happy for them. Those that I have been acquainted with on a more personal level have all been very consistent people. Some of them came from relatively humble beginnings, either from totally unrelated backgrounds or started off in companies that practically had no bragging rights when you showed up at social events. A lot of them were hungry for technical skills and deal experience, and wanted to acquire these in the course of their work. Technical skills were important as juniors, but I think what made them stand out were often the softer aspects: the ability to make friends, staying in touch, knowing how to navigate politics at the workplace, or just having the ability to survive in an environment with repeated rounds of layoffs and corporate re-organisations. Looking back on more than 17 years of being in the workforce, you realise that consistency and patience are sometimes all highly under-rated attributes. That said, success means different things to everyone. I think that most consider landing a promotion, a big bonus payout, being publicly recognised or associated with someone reputable or distinguished in their field, the hallmarks of success. Being appreciated and recognised at the workplace is being important. The need for career progression has also been deeply inculcated as part of "life after graduation", especially for those who have had the privilege of going to school. No matter which it was, it mostly all came down to being able to accumulate more money, and so, all of success seems to come down to that moment of glory and the wealth that accompanies it. But the most valuable form of wealth is not having to impress anyone. Social comparison is the biggest culprit of dissatisfaction. See, because not everything can be measured in dollars and cents. The same way not everything is measured in terms of lofty positions and titles, or material possessions. Also, I learned recently that more important than getting rich is how to stay rich. A good number of people I know earn an average or less-than-average income and stay in very humble houses. In theory, they should be worse off when compared to those who are earning a lot more. But many of them are "doing well" simply because they didn't take excessive risk with their money, stayed consistent and perhaps well-grounded in their material expectations. Most of all, I think they stayed contented . "At your highest moment, be careful, that’s when the devil comes for you." This was what Denzel Washington said to Will Smith after his notorious outburst on Chris Rock at the Oscars in 2022. Although Will Smith won an award that night, he was subsequently banned from the Academy events for the next ten years. Today’s success story can very quickly turn into tomorrow’s failure. At any point of time, nothing is ever so good or bad as it seems.

Just think about it: Not very long ago, most airlines had been doomed for bankruptcy when COVID-19 brought air travel to a standstill. People were even mocking at the idea of ordering takeaway cabin food at home, selling SQ-branded merchandise and even " flights-to-nowhere ". All these seemingly whimsical initiatives were targeted at keeping customers engaged and satisfying the insatiable demands of wanderlust travelers, but most of all, I think it was meant to generate some cash flow, if any. Those flights-to-nowhere were subsequently scrapped due to environmental criticisms from the public but that didn't stop SQ from offering customers a unique dining experience aboard the A350 aircraft (on the ground of course). When the going gets tough, it's not only the bootstrapping start-up companies with the least bargaining power who have to creatively pull ideas out of their asses. Big companies with elephant-sized egos need to do this as well. When the world surprises the hell out of you and leaves you at the mercy of cash flows, anything and everything goes. "What doesn't kill you makes you stronger." Looking back on the last three years, it might be easy to conclude that there is a simple recipe for surviving the pandemic: Just stick around long enough, don't die in the process, and things will get better. But simply " sticking around" understates the numerous organisational and technical complexities that firms have to go through. In the case of SIA, this means re-allocation of manpower resources, deciding which planes to put in long term storage and the costs involved in such an operation (both the tangible and opportunity costs), as well as the means to raise sufficient capital to tide a potentially longer than expected winter . When you are neck-deep in a sticky situation it can sometimes be difficult to see how the longer term picture can potentially play out. Check out these depressing headlines from 2020: Even ECB President Christine Lagarde in mid 2020 said that the pandemic was probably "past the lowest point" and cautioned that any rebound would be “ uneven ”, “ incomplete ” and “ transformational ” - hinting that some industries such as air travel and entertainment might never recover. Well, when the central bank says something, you listen. Yet even so, very few emerge well from this period of crisis. This is not about hiring competent management to fix operational inefficiencies but the ability to weather a sudden economic shock. Moments like these test the effectiveness of a company's business continuity plan. Fortunately for Singapore Airlines, it also has a unique political and financial backing, not many firms have this benefit. To some extent, SQ is Singapore and Singapore is SQ. This leads to another less obvious factor that has contributed to SQ's record profits. Timing is everything. Six months was all that stood between SQ and its closest competitor, Cathay Pacific . That window was sufficient to give any well deserving airline a good head start in cannibalising market share along major competing sectors. If you compare SQ's FY2023 financial performance with the pre-pandemic periods in 2018 and 2019 , operating expenses including staff and fuel costs were almost at the same levels, implying that SQ had returned to nearly full operational status. CX on the other hand struggled with mobilising its fleet and dealing with the stubborn re-opening of Mainland China, one of its major revenue contributing segments. When life returned to normal, the dislocation in the supply and demand of air tickets, coupled with the tactical re-opening of Singapore borders six months earlier than Hong Kong / China, was probably what gave SQ the additional bump in profits. Had the Singapore government been slightly slower in its re-opening, we might have missed the boat on capturing tourist arrivals, the perennial fintech festival and numerous MICE events targeting business travelers and conference-goers especially towards the year end. Of course nothing is permanent. Supply pressures will eventually abate which should ease demand and bring down air fares. Unless Cathay Pacific screws it up big time, consumers being consumers will always seek out a variety of airlines to choose from. The key is whether SQ can continue to keep costs under control or will it get complacent from here on. In an interview with Charlie Rose in 2013, Mike Moritz said of Sequoia Capital: "I think we've -- we've always been afraid of going out of business. ...and so we've worked hard on trying to figure out how we make Sequoia Capital endure. And I think that's been the reason why we've been able to do what we've been able to do. Because we've assumed that tomorrow isn't like yesterday. We can't afford to rest on our laurels. We can't be complacent. We can't assume that yesterday's success translates into tomorrow's good fortune."

As I enter my third year of working for a Chinese company and living in China, it felt apt to reflect on and summarise a few takeaways from a cultural perspective. Gift giving is almost always a norm (and expected) when visiting someone. When in doubt on what to buy, more expensive equals more sincerity. Face apparently is still a big thing. You can leave home without bringing a wallet . Everything you need is stored in your phone - from money to your national ID. You can even buy meat from the market and pay via Wechat or Alipay . This is the power of putting a smartphone in the hands of one billion people and having an incredibly decent mobile broadband network. Buying stuff online is often cheaper than buying it offline or over the counter. The Internet has completely eradicated the need for any human interaction. Why bother negotiating for an extra shot with the counter-top casual banter when you can get discounted deals through an online menu? The catch here is whether you can navigate the complex menu sequence... Patriotism is in their blood. While some of the Chinese people may not agree entirely with the ideologies and methods of their government, they remain very proud of their own achievements and feel a strong sense of loyalty to their country. People all around the world aren't very different. A girl wolfs down seafood on Douyin Nearly everyone watches douyin ( 抖音). Contrary to being an unhealthy social addiction, I find douyin quite intriguing, and an excellent source of entertainment and general knowledge, not only about China but also the state of world affairs. Needless to say, the Chinese media is skewed. But who is to say that Western media and media all over the world is not?. Watch, rinse and filter accordingly. You can live your life without stepping out of the house - getting food, groceries, plumbing, courier, train tickets, etc. This is even more evident after 2020 when every one was forced to stay indoors during the pandemic outbreak. You can also hire anyone to do almost anything from queuing up to valet driving you home when you've had too much to drink. Because everything is transacted online, merchants take consumer ratings very seriously. Any negative comment in the forums can easily go viral and equivalent to being served a death penalty . The guiding principle being: The opinions of one billion people can’t go wrong . The stark income differential between the developing and urbanised areas is probably what keeps quality and service standards high and input costs low. Take for instance the food delivery sector. There are many videos online that showcase how riders - many of whom are in the low income bracket - risk life and limb just to make sure food gets to people’s doorstep on time. They earn only a fraction of a white collar income, but that huge population and wide domestic income gap is what keeps the gig industry going and the domestic economy resilient. The main reason why stuff in China appears so relatively cheap is simply because of its vast population. We know this but still choose to believe that cheap equals “ lousy ”. You just need to have a discerning eye when shopping for stuff online (especially on Taobao 淘宝). If you can ignore how some of these brands are named, you will realise that there are many places which are reputed for wholesaling high quality white label products for many global upmarket brands e.g. electronics in Dongguan , Guangzhou ; furniture in Foshan ; industrial parts from Wuxi ; textiles from Jiangsu and Shandong region, etc. Everything is “ made in China ”. The trillion dollar luxury goods market thrives on the fact that consumers like variety and perhaps more importantly, ultimately fall prey to effective advertising. University entrance exams are incredibly cutthroat . Being based in a certain province or city could pigeonhole you into a certain career or an industry for life. As a result, parents often go all lengths to ensure that their kids receive the best education the system can offer. Only the rich can afford sending their kids overseas. Beijing (北大) and Tsinghua (清华) are regarded as the " OxBridge"  equivalent, and considered the crème de la crème, at least within the country. There is also a vast difference between a local and a foreigner gaining admission into either of these universities, the former considered more prestigious as the attrition rates for locals are incredibly high. As a matter of fact, the locals don't really care if a foreigner gains admission to 清华 or 北大. Ownership of real estate is still considered a status symbol for many Chinese. As a result, many will do whatever it takes to hold on to their property even if the prices are falling. This trend however seems to be changing with the demographics as younger Chinese are increasingly being more knowledgeable about investing their savings into wealth management products. Happy third work anniversary.