Words from a few folks which I had whiskey with today: Not all PE firms are created the same: One of the best things to do is to track all the projects that these guys put money into. Everything they touch just turns from gold to brass. Instead of the “Midas” touch, they have the “minus” touch. Like the Forbes under 40, there should be a separate league table for investment deals called “Forty under 40”: The top forty deals that have an IRR of -40% or less... On China: A lot of private equity return models are broken: When it comes to decision making... Stupid questions asked by stupid people... The world needs enough stupid investors for astute investors to thrive. Investor relations is an art:

The reason we work. Learnings from a hearse driver ( read off LinkedIn ). "You could be professionally correct, but being correct does not mean that it is the right thing to do." - said an unnamed older colleague over lunch On dealing with people in a position of great authority and power.

I miss Blatage cafe in Shanghai. It is located in the Pudong new area, approximately 30 minutes by taxi (off-peak) door-to-door from where I usually stay in Shanghai (on the Puxi side). The small cozy cafe is along Binjiang Avenue (滨江大道), twenty minutes by bicycle from Superbrand mall or a 40-minute leisurely walk along the river. This is an extremely therapeutic exercise especially on the spring and autumn weekends. The indoor seating capacity is no more than ten and they serve an excellent flat white for CNY 30. Although situated close to some private homes in the vicinity, there isn't a morning coffee culture where people get up early to grab coffee. I am the cafe's first customer on most days when I arrive at 8 in the morning. View of the 黄浦江 from Blatage Cafe Back home in Singapore, " Blatage " is 40 Hands cafe at Tiong Bahru. A lot of people ask me why I spend so much on coffee when I can use the Nespresso machine and enjoy a cuppa from the comfort of home. Just as people sign up and spend their money on regular yoga classes, I spend mine on ' coffee yoga '. While yoga enthusiasts do stretching exercises to feel good. I indulge myself with sipping coffee. Case in point: a single yoga class ranges anywhere between $15 to $25 while an artisanal coffee is about $6. Just as people find inner peace and tranquility in an hour or so of meditation, I find mine through sitting by the street or in a quiet corner where I am able to reflect and declutter my inner thoughts. Not everyone understands this but everyone do need their own version of Blatage coffee - yoga, religion, travel. Sometimes, there isn't a need to architect a pricey escape into the Himalayas to seek private retreats. A lot of these can be found at your doorstep. 40 Hands - Street View You don’t need to fine-dine in order to enjoy good food. My favourite local hawker fare is the bak chor mee at Tiong Bahru market. You don’t need to own a car to have convenience. Even if I use Grab everyday my traveling commute expenses will probably never exceed $500 a month. And sometimes all you need is to buy a house in the right place with good access to public transportation. You don’t need to stay in a private condominium or landed property to enjoy your spatial environment. You just need the right renovation decor at home. What is the use of real estate if you wear it with a huge financial burden and/or can’t share it with your closest friends and family? You don’t need lots of money to be wealthy. In fact, you don’t even need to prove to anyone that you are wealthy. The wealthiest people are those who are comfortable in their own skin and do not give a f&*k about opinions from the rest of the world.

When FTX imploded, some of the largest investors including OTPP and Temasek Holdings issued public statements to disclose their full write-downs of the investment. Unfortunately these two entities fall under relatively more heavy scrutiny not because they are huge, but more so because of their source of funds. These are either the state coffers or life savings of relatively financially unsavvy civil servants and decent few who make an honest living out of making a real contribution back to society. To know that millions of dollars have been lost due to the apparent oversight of a few fund managers is unacceptable. At the end of the day, someone has to be held accountable. This is not to say that privately managed funds that have raised money from accredited and sophisticated investors can get away with calling caveat emptor . Regulators and the financial system exist to protect the interests of those who may not be equipped with the analytical skills to make sound investment decisions i.e. stupid money . The state of capital markets today. Stupid money doesn't necessarily refer to mom and pop money. It could be a hundred million dollar fund moving ahead with the decision to invest largely based on the fact that a well known name in the market like a Temasek or BlackRock is backing the deal. The underlying notion is that: if a large financial institution managing billions of dollars is putting money in this company, the due diligence is probably airtight. These institutions are also supposedly staffed with the brightest minds hailing from the best business schools . The investment process has probably also gone through numerous rounds of review under the scrutiny of multiple eyes. So what can go wrong? This is apparently not what it seems as highlighted in an article published by the FT recently, highlighting that in due diligence processes: "The hands-on work usually fell to the youngest lawyers, consultants and bankers. Today’s 20-somethings have no meaningful downturn experience so were less experienced at judging the adequacy of controls and clauses that only matter when money starts to run out." And so it somehow feels that even at the largest and most prestigious institutions, the decision to move ahead with a deal does not involve the knocking of experienced heads at the conference room table, instead it all comes down to endorsement . The endorsement of branding, track record and taking comfort that a 'rocket scientist' has crunched the numbers. That's essentially what today's capital markets has come down to. Talk to anyone in equity sales. Chances are that he or she will be an excellent story-teller. Don't bore them with the mechanics, and the nuts and bolts of the transaction, they'll almost always refer you to the deal team. Those in sales tend to have a condescending attitude towards execution work and often a lack of appreciation for details and protracted deal processes. In the world of equity markets, you (investors) have been conditioned to make that decision to invest almost solely on subscribing to the "equity story". Buying a share in a business equates to buying a bet on its future, and not its past. Sure enough you can "diligence" the historical numbers, ask about existing customers, next year's revenue, cost structure, profitability, cash flows, etc. But at the end of the day, chances are that owners of the business will insist on being valued based on its outlook. I have even seen some companies who turn away potential investors that ask too many questions. What kind of crazy world is that? But stupid money seems to be important, a lot of stupid money is born out from FOMO and FOMO is exactly what drives people to do stupid things. The final equity "takeout". There is nothing wrong with a fundamentally sound business with a good equity story. Ultimately, we just need to remember that a significant part of what supports the valuation narrative hinges on sufficient stupid money being in the system i.e. liquidity. And liquidity is a big part of what drives financial markets. For what initial public offerings are worth, they essentially represent the final destination for all stupid money, the final equity takeout representing the finishing line for all early investors in the business. This refers to those who had come in at the seed stage all the way to pre-IPO backers and cornerstone investors. It is basically whole lineup of "smart" institutional money waiting for their payday. This is the unspoken dark side of all IPOs. The smart money needs enough stupid money to get out. Can you imagine any decent institutional investor taking out a huge block of primary shares of a to-be-listed business that has an incredibly low free float? Portfolio managers also frequently turn down follow-on offerings of companies that have a low daily trading volume. The main idea here is that should there be a need to sell down their stake one day, they need to get comfort that those shares can be sold in the shortest amount of time within the open market. Liquidity basically gives investors the ability to transfer risk quickly to another party. So the next time you hear fund managers talking about "sufficient liquidity", what they are really saying is that they want to see enough stupid money circulating in the system for the investment to make sense.

I always have had interesting conversations around the assumption and concept of terminal value (TV) in my valuation and financial modelling classes. The above formula is an extension of the Gordon Growth Model - an economic model developed by Myron Gordon , a professor from the University of Toronto, a key assumption being that a company lasts forever . Corporate life cycles and the secondary market. The ecosystem of companies and their life-cycles today are very different from 40-50 years ago. Nokia came and went in 7 years. BlackBerry (RIM) lasted for no more than two decades. GE is probably one of the more closely relevant examples of how a company lifecycle could run its course for a relatively longer time before being dismantled into three separate segments in 2021. But I think most companies today don't enjoy that kind of legacy. Many corporate decisions are made using five and ten year plans. While founders may even have a longer term view of how they envision the business to be, these are mostly aspirational, some might even say fluffy. To make a call on a business over a 20-year horizon is almost unfathomable. Most human minds can't handle outcomes beyond a few decades, and as a result, economists try and simplify this scientifically, and in the process, disregard the cyclical nature of businesses - which is a practical consideration for most investors with a finite professional life. After all, the terminal value is only as tangible as the ability to monetise the underlying asset at the right time. The perpetual growth model also ignores the effects from secondary markets - investors and individuals that are prone to speculating on a company's value, taking positions both on the stock and derivative instruments such as CFDs and options. This opens up an alternative scenario: Instead of holding on to a share to perpetuity, there is a choice to flip their position for a quick profit, as long as the equity story continues to hold up. This makes both the use of market multiples and communicating the right narrative even more relevant. Origins of the 2% perpetual growth rate. Besides, as we all know, casting the remaining cashflows into terminal value after the forecast period usually implies that you are basing 60-80% of the total firm value on the discount rate and the perpetual growth rate, which to me seems very paradoxical given that we spend a significant amount of time working out the company's revenue and free cash flows, only to chuck it into a mathematical black box. Interestingly, the so-called 2% rate widely used in our perpetual growth models originated from New Zealand in 1989 when the reserve bank codified its monetary policy. According to the then central bank chief, he said that this was “ a chance remark " and that the figure was " plucked out of the air to influence the public’s expectations ”. The US would later on reference and incorporate this into their policy goals to balance economic growth, wages and unemployment among other things. If you try and communicate this with someone sitting in China or parts of emerging Asia, no one would have a clue what you were talking about. Most people in Asia simply don't care about what long-term growth rate you use for arriving at the terminal value. Discount rates are ultimately investor driven. We used get into hours of academic discussions over the WACC and terminal value during my earlier days in banking. Some of it was deemed as a test of your corporate finance knowledge. Other times it was because a valuation report required the loose ends to be tied in order to arrive at a fair value , or that we needed to demonstrate some form of credibility in the delivery of our report. The reality is: In the M&A world, there is no such thing as a fair value . There are no formulas for the correct cost of capital. There are only astute decision makers and those who are afraid to get caught on the wrong side of the outcome. Calculating the cost of capital or terminal growth rate with precision is only crucial either from a financial reporting point of view or only if you expect someone important to be challenging these assumptions specifically. " What is then the right discount rate to use? " Perhaps the more appropriate question is: What kind of returns are you expecting ? If you are evaluating a start-up, this could be anywhere north of 35%. For private equity firms, the rates could range between 15-25%. Institutional investors of public equities could expect 9-15% with zero tolerance for failure. Simply put: The discount rate is mostly investor-driven - which if you think about it, very similar to the CAPM (Capital Asset Pricing Model), only that the CAPM assumes the investors to be fully diversified. Investors who use their own yardstick for the discount rate and can't get to the valuation they want, generally try to manipulate the cash flows or find ways to "create value" in order to establish a case for the investment. Don't get so caught up with economic and valuation theories. They are only as important as much as you can use them in the real world. As the dynamics of the real world change, so must our understanding and application of finance.

"In the end, I am a teacher; that is really how I see myself." – Jorge Paulo Lemann When we think about teaching , instructional delivery is the defacto thing that comes to mind. This is probably the most familiar setting in which a professor or a lecturer pulls up a set of powerpoint slides and speaks to the class. Giving a two-day lecture on financial modelling has always been an enjoyable session for me - the interaction, debates and sharing of anecdotes. One of the biggest highlights personally is to see someone complete his/her Excel financial model (plugging the ending cash from the cash flow statement into the balance sheet) for the very first time. Doing up a financial model might be considered rudimentary for seasoned bankers but a ginormous task for someone who is either not trained in corporate finance or struggling to put together an investment thesis at the workplace. But my teaching engagements go beyond the classroom. At the work place, I am also the go-to person when it comes to troubleshooting excel files and powerpoint, explaining a financial model to an analyst or investor, or when someone needs a slightly older person to be present in the room or to do the presentation in English, etc. Aside from that, I've also been a listening ear to many of our colleagues at the office, from the senior and mid-level folks all the way to the rank and file. I've even been called to help in a situation whereby someone had called our front desk complaining about an imposter who offered him a job at our company. In August, we closed a landmark financing transaction with a highly reputable investment firm. The process was lengthy - mostly because we had very sucky lawyers - but also because it involved a deal structure that no one else had done before. Parts of the term sheet were tricky and the closing was even more convoluted. One treasury analyst (协办) in my team had the 'privilege' of assisting me on the deal. Joke was that I had brought her aboard a pirate ship (带上贼船), unleashing an incredible amount of documentation in the process, spanning at least seven inter-connected agreements. The deal was eventually closed and some weeks later, she resigned for better opportunities and left this note: Over that same period (with a separate team), I was also running multiple conversations on getting our first-ever "ESG financing" framework accredited by a international ratings agency. Although we had paid a fee for doing so, the negotiation process was tough. The ratings team sitting in Europe didn't have a clue on the overly long payment cycles experienced by public hospitals in China, and how supply chain financing for pharmaceutical companies delivering medical consumables actually resolves this critical financing bottleneck. When we finally obtained the official second party opinion (SPO) , I counted over 100 threads in the email exchange. It was not only the first time we had ever published a social and sustainability-linked financing framework and received a vote of confidence by an internationally reputed ESG ratings agency, but more importantly, this was one of the key CPs to drawing down on a RMB 500 million syndicated loan facility . In situations like these, I find my teaching methods taking on a more practical element. I am no longer working within the 'harmless' confines of the classroom where I can freely talk about structuring, negotiation and valuation. My actions have tangible repercussions on the outcome of the deal, and at every step, people are watching. Middle-to-senior management roles (much like my typical classroom lectures on financial modelling) are often like stage performances: As long as you don't screw up big time, you can always afford a few slip ups, which is perfectly normal, but the show has to go on. Look, most of the time, you work for money and are subject to the obnoxious KPIs placed on you because of your position. But once in awhile, your job gives you a unique opportunity to make a difference. That difference is sometimes not measured in the millions of dollars you bring in for the firm or the big bucks you bring home at the end of the year, but the impact that you make on the people around you. That difference could range from anything as simple as fixing the alignment on a powerpoint slide, fixing a financial model, helping someone negotiate through a transaction bottleneck or simply changing the mindset and perspective of a particular person. It is often said that we can't let our jobs define us. But how we do our jobs, and behave with our colleagues and clients ultimately determines the kind of person we are.

" Why is Starbucks coffee so bad? " was the thought that came to my mind as I was writing this in one of the Starbucks outlet located in Harbour City on a weekend morning. I had gone here obviously not for the coffee but mostly because it was relatively less populated due to the fact that is at least a 7 minute walk from the main shopping arcade. If you are a coffee "connoisseur" like me, you will appreciate what goes into a good cuppa. The type of coffee beans, the quality of the milk used (for lattes and whites), the crema at the top when it is served. Yet Starbucks, despite all its Seattle legacy, fails to impress those (or perhaps just me) who have acquired a certain palette for quality coffee. Most of us will also agree that for the same volume, prices have gone up significantly over the years. The topic of Starbucks is a perennial topic in my valuation classes. The argument being people are willing to pay premium, attributed to classy branding over the traditional local chains. In addition to brand, the quality of coffee beans used in the grind are also a contributing factor. There is also the element of Starbucks selling ambience. Based on my limited observations of several cafes in Asia, most operators tend to shun patrons who hang out for too long at their premises. From minimum spend, time-limited seating to restrictions on the use of Wi-fi, cafes in Asia use a variety of tactics to maximise table-turnover. Understandably, they don't really like their customers sitting around for too long as this is bad for business. This is quite different in the US, based on this this Starbucks story which glamourises one entrepreneur's experience of working out of an outlet located in San Francisco. This of course raises a more fundamental question: Is Starbucks selling overly-priced coffee, a lifestyle or something else? Starbucks has been known to drive up the prices of real estate in the places they have been opened. In 1999, Starbucks also made headlines when it opened its first store in China. It's almost like a bellwether for the gentrification of cities. So maybe Starbucks coffee tastes so bad because Starbucks isn't really selling coffee but real estate. The cup of coffee buys you the right to sit in one of their outlets. Those who order takeaways are basically just an added bonus for the shop. The value of that right to sit in the shop comes in different forms: a business meeting, catch-up with friends, quiet time alone to work on your proposal or simply arriving early and waiting for someone. Just for trivial comparison, retail rents in Singapore ranges anywhere between $8 to $37 psf monthly. In Hong Kong, the range is between HK$1,200 to HK$1,400 monthly. Here's a very rough breakdown of what it takes to keep that coffee outlet afloat: A few things to note here: Breakeven sittings per day and gross profit excludes manpower costs. We also assume that the outlet operates for 30 days a month Monthly rent and price per cuppa varies by location The average real estate per sitting is much smaller in HK as compared to Singapore. Also, each sitting assumes an average of 1 to 2 pax, hence 1.5. Pax count and sitting real estate again varies depending on location and the interior decor of each outlet. Rental cost per sitting assumes that 50% of the lettable area is for customers i.e. not the entire shop space is for sitting, half is set aside for common areas, the barista, cashier counter and the kitchen. Configurations vary per outlet. Gross margins are roughly between 70-80% , inputs costs comprises ingredients, electricity, and packaging. Excludes additional revenue earned from other products and channels e.g. food items, takeaway and online orders In fact, many retail businesses find it helpful to think about their business in terms of sales per square foot/meters rather than units sold, which enables the business to re-focus on asset-utilisation since a huge part of the overheads are attributed to maintaining the store front (i.e. real estate). Here's another helpful tip: By breaking down the cost-economics by real estate and sittings, you can essentially monitor the number of table-turns over the day to assess (i) whether you have achieved break-even (ii) which days are you making more money, and potentially (iii) which sittings have the highest turnover. Like real estate, retail yield is also a function of the footfall and surrounding amenities. Because a good number of people go to Starbucks for the space and not so much the coffee, it is probably also more helpful to evaluate the business on an income per area basis. At a breakeven of seven to eight cups per day, feel free to sit freely in your cafes. Starbucks isn't selling coffee, you are after all paying for the lease, and the nice drink is just a bonus. [ updated for number of cups ]

Finally and for the first-time, I took the high speed rail from Hong Kong into Shenzhen. Going to the High Speed Rail interchange from Austin MTR in Hong Kong Despite the lunar new year festive period, the station didn't seem as crowded as I remembered it pre-COVID. Entry gates at the Kowloon West Station I got my tickets online from 12306.cn, the official site of China Railway for all rail passes in China. I collected the hard copies from one of the counters the day before to avoid any long queues on the day itself. Ticketing gantry Once you pass through the gantry, numerous signboards will prompt you to fill up an online health and itinerary declaration form, which will generate a unique QR code for scanning at the border control points. While there are no swab or PCR tests at this point, you are required to obtain a negative PCR report within 48 hours before departure. e-immigration control point Queues form at the entry gates minutes before boarding En route to the platform... Entering the trains: To a certain extent, this feels similar to boarding the maglev in Shanghai. The cabin is as clean as it gets. and Arriving in Shenzhen Futian Station only just 15 minutes later... The Shenzhen Futian High Speed Railway station And that's it - this post is as short as the journey on the high speed rail.

Eating hotpot is great even if you are doing it alone. I do lots of things by myself, sometimes to the extent people think I’m an oddball. Time alone is priceless and highly underrated. Waking up at 7:00 am every day consistently regardless of whether it is a working day is not only an issue of discipline, but a conscious effort to carpe diem . Some of my most enjoyable and productive moments take place sitting out of a quiet cafe at 8:00 am in the morning. Nodding doesn't imply that I understand every single word that's being said in a dialogue. Some times it is simply an acknowledgement that I have been attentively listening, but more importantly it also shows a certain amount of respect to the other party. Nevertheless I'm grateful that most people give me the benefit of that doubt. Walking and pacing stimulates my thinking. It’s been shown that walking for 20 minutes increases brain activity and facilitates idea generation. As a result I tend to pace around a lot while on conference calls. There was even an occasion in which I had spent an entire hour on a conference call while walking outdoors from home to the office. Teaching is more showmanship than a demonstration of knowledge and experience. I realised this when I started giving lectures on valuation and financial modelling. You can be the most knowledgeable and technical person at the workplace, but in a classroom setting, it is all about entertaining the audience. In the words of The Kinks : Give the people what they want . Writing helps me consolidate and organise my learnings in a somewhat meaningful and chronological way. Unlike drafting publicity flyers, marketing materials, investment memos and work emails, I don't write to sell. I write to simply share. Disagreeing with people is sometimes pointless and tiring for me. In most cases, I usually just indulge them. Most people cannot accept, and don't like to be told that they are wrong. Besides, there’s really no point in proving that you are right if you can’t get to "keep your money [ #40 ]". Investing is highly personal. Each individual's perception of risk and expectation of returns can be vastly different. For example, I trade a lot of options and also use it to hedge my long and short positions. I don’t bother explaining this to a lot of people. Half don’t know how tradable options work. The other half don’t really care because they adopt a totally different approach towards putting money to work. Either way, it doesn't bother me because I’m not staking someone else’s capital on the table. Walking away doesn’t always necessarily mean you are giving up. It’s simply a risk management strategy involving the elimination of uncertainty. Morgan Housel talks about " getting the goalpost to stop moving " in his book, The Psychology of Money : "It gets dangerous when the taste of having more—more money, more power, more prestige—increases ambition faster than satisfaction. In that case one step forward pushes the goalpost two steps ahead. You feel as if you’re falling behind, and the only way to catch up is to take greater and greater amounts of risk." Most people experience what we commonly know as the fear of missing out (FOMO), which is exacerbated especially when others say " if only you had [done this] ”. You have to remember that what works for others may not work for you because people prioritise and value things differently. I think that one of the biggest masteries in life is not only to be at peace with the decisions you make, but also to make peace with the outcomes that follow.

Some of my new year resolves include: Drink less (no more than a glass day). Run a marathon (an offline one). Be selectively ignorant to people, projects and information that drain my energy and time. Remain focused on my personal goals and the big picture. But above it all, stay humble.

Social media had only really started to take off some time in 2009 . In the 2020 TV documentary The Social Dilemma , the show talks about how creators of social media encourage and nurture the addictions of users to help companies make money. But the impact of social media went beyond commercial exploits. Over the years, it also subtly cultivated a deep and unhealthy sense of emptiness . Luke Burgis talks about this using the story of a man with his martini in his book, Wanting : Social media has successfully connected strangers across geographical boundaries and re-connecting friends who have lost touch with each other over decades. It has also allowed us to keep up to date with what is going on around the world such as receiving breaking news about something happening halfway around the world, or browsing someone else's holiday pictures on Facebook, or reading about a friend closing a multi-million dollar deal with several well-known investors. We have had the privilege of more information but on the flip side, this has also amplified any feelings of envy, insecurity and greed . By understanding what drives these feelings could help us better appreciate why so many companies and founders choose to believe that they read, to inflate their corporate identities and "social circles" in hope that some investor will come along and take the bait. This is manifested in keywords across corporate websites, chasing social media endorsements, snagging a high-profile media interview, or participation in heavyweight conferences. As such, we have been led to believe that if something is sensational and disseminated widely enough, it often the "truth" - even better if someone seemingly important says something about it. Curating a healthy media presence is one thing, bullshitting to feed your ego is another ( as in the case of BN Group ). Celebrity endorsement is one of the most time-tested and effective ways to endorse a product. "It’s easy for someone to become an overnight expert on 'productivity' merely because they got published in the right place" - Excerpt from ' Wanting' Remember the reality TV show Shark Tank? Kevin O' Leary, aka Mr Wonderful, recently revealed taking a $15 million 'deal' from FTX to be its spokesperson . Never mind whether or not Mr Wonderful was a cryptocurrency-skeptic-turned-ambassador. In today's world, it seems that at the right price, people are willing to say enough bullshit to endorse a product or a company, regardless of whether they believe in it or not. This strategy has been effective in the business and investment world. Social media just made it better. People who consume bullshit will believe in bullshit. Feelings of envy and FOMO often drive people (and investors) to make foolish decisions. One of the biggest fears of any VC is to be left out in a multi-bagger deal. Some compensate for this through 'diversifying' their portfolios. Those who have staked their money have a vested interest. They want to make sure they don't look bad doing the deal, and therefore will do anything to ensure that the equity story holds up, at least long enough until they exit. This is the state of fundraising in the world today. This is the reason why we have so many asset bubbles. In light of the many recent frauds, scandals and apparent lapses in due diligence, investors have started to increasingly become more discerning about who they deal with, what they read in the media, the kind of information they are fed with, and perhaps even more importantly, where they put their money. If they haven't, they should. The era of bullshitting is over. Companies and people need to wake up to reality and stop the proverbial fake it till you make it , "over-packaging" their products and services, and start getting real about talking about fundamentals and their numbers.

It was 2011. The government debt crisis in the EU had reached a stage that required the bailout of several countries long thought to be considered creditworthy and stable. I was a senior analyst then and the bank that I was working for wasn't spared from this contagion. The outlook was bleak and the bank's share price had taken quite a beating. As part of ' austerity measures ', there were also talks of bonus and job cuts across the offices from Europe to Asia. The economic turbulence and uncertainty kept everyone on their toes. On one fateful afternoon that year, I was called into my CEO's room for a few words. It was a brief conversation but in short, I had been given the assurance of a " golden ticket " and had been recommended to be sent to HQ in Paris for training. At that point of time, I had no idea what this meant. I gave up the opportunity to another colleague whom I felt needed it more. It was only much later on that I realised this in fact an all-expenses paid two-week trip to wine, dine, possibly stroll along the Champs-Élysées, and rub shoulders with our colleagues from all over the globe. The valuation training was simply a side show. And then a few weeks later in a twist of events, I resigned to join a competitor bank. The offer came with a sixty percent increase in pay. It came at a time where I had to fund several huge upcoming expenses including the downpayment on my new house. The news of my departure didn't go down too well. While everyone else was 'congratulating' me, my CEO refused to speak with me during my final days at the firm. Later in that year, I also discovered that the entire analyst/associate pool had basically been decimated, leaving only the VPs and one analyst. That analyst was meant to be me, the last man standing. Fast forward a couple of years later, the team that I had jumped ship for shut down as part of an internal re-organization exercise and cost cutting. Talk about karma . Decisions like these can be tough. Some might say it was foolish to trade goodwill for money. The money had been good and without it otherwise, I probably would have been crushed under the weight of work while struggling to make ends meet. Besides, goodwill (to be blatantly transactional) is only good if you can derive something tangible from it in the future, and given the state of the Eurozone crisis then, it didn't look like a pay rise was on the horizon anytime soon. Yes, not everything should be weighed by its monetary merits. But it is fair to say that many of the benefits and opportunities I enjoy today are the seeds of goodwill planted years ago. Seeds that didn't appear to have any benefits ten or twenty years ago. That said, being able to gauge when to cut your losses and walk away, versus sticking it out for a benefit in the future requires a certain amount of judgement and faith (some say craziness). Even more so if you have something immediately lucrative on the table. "Summertime soldiers" are what Marc Andreessen calls those who only joined a company in the first place because it was already successful and have no interest in really bearing down and applying themselves to a challenge. These people while hardworking, are however not the type of people you want to retain and groom. As an employee, it isn't technically wrong to jump ship for a better paying job, and I never regretted what I did. Given the choice to re-write history, I might have went for that incentive trip, soldier on being the lone analyst within the firm and later on down the road, find a way to make back that sixty percent increase in pay.

To understand and decide whether bitcoin is a good store of value, let's consider other classes of assets such as real estate and commodities. Consider real estate. I remember hearing folks talk about property being a good store of value and something that has that ability to stand the test of time. In some ways that is probably true. Real estate has not only been able to hold its value but is also an instrument that has proven to deliver returns through generating rental income or appreciate in value steadily over time. Within Asia, real estate has not only demonstrated resilience through the up and down cycles, but also been a beneficiary of the economic prosperity of the regional economic titans such as China, Japan, Korea, as well as Southeast Asia. A rising tide lifts all boats. That trend still holds true to a certain extent today. Property is still pretty much the go-to choice for many investors flushed with cash and those in search of a relatively safe-haven especially during a recession . People continue to trade and invest in real estate because fundamentally, they know that a roof over the head is a basic foundation of life at least based on Maslow's hierarchy of needs. Residential property is also somewhat a good proxy to the overall global economic cycle. A resilient jobs economy encourages home ownership, driving up property values. Although its initial investment outlay can be high, real estate is also relatively liquid . Liquidity in valuation, is a metric that tends to be overlooked. In layman terms, this loosely translates to how easy it is for an asset to change hands. You can list your second-hand car for a million dollars on Carousell , but at the end of the day, it's still worth nothing if it can't be sold. The price of a share in a company is only as real as how much others are willing to pay for it, not how much you want to sell it for. Furthermore, liquidity is also driven by the availability of buyers and sellers, and also shaped by the perception of the broader market. All things considered, we can assume that property, as an asset class, remains still highly regarded amongst investors as the go-to asset class for investment. Now let's consider lab-grown diamonds. "A diamond is valuable only because people say it is, not because of its clarity or cut." Jewelers and advertising companies around the world have done an extremely successful job in positioning the diamond at the apex of all precious stones. But the raw material for diamond is carbon - one of the most commonly available elements found on earth, ranked many times above gold, silver and platinum. Yet despite being available in relatively large quantities, consumers continue to pay absurd amounts of money for a small rock mounted on a ring or co-joined in a necklace. To add to the paradox, lab-grown diamonds are significantly cheaper than their natural counterparts, even though they share the exact same properties and make. In fact, according to this website : "If you buy a lab-created diamond, you’d have a beautiful stone, yet no jeweler will buy it back." So, what can we learn about the value of bitcoin from real estate and precious stones? There's much talk of late about bitcoin being a store of value . I know very little about the world of bitcoin and cryptocurrencies - only limited to the banter that I read on Twitter and the news. Is bitcoin a good store of value? Only time will tell . Just like property, gold and other precious stones, it is considered a safe haven only as much as others see it . In this case, the erosion in value (and faith) of the dollar could be one of the key catalysts behind the value of bitcoin. Investors buy bitcoin and other cryptocurrencies because they have lost faith in fiat currency. Traders of bitcoin expect that one day, the guy over the counter of a McDonalds or convenience store will accept a bitcoin or cryptocurrency-equivalent as a valid form of payment in exchange for goods and services. Far out as it might sound, but for a billionaire or any large investor sitting on heaps of cash, this translates to a possible devaluation of their cash holdings. i.e. cash as we know it today, might one day be no longer king if crypto-currencies were to take over. I think that crypto-exchanges were created largely because of this phenomenon. Crypto-currency platforms are only viable and commercial if there is a sizeable market for trading. This implies that there has to be a significantly large pool of investors willing to kickstart the initiative and make the market so to speak. This is similar to early stock exchanges which were created to provide an avenue for companies to raise capital, and also an alternative gateway for investors looking to put their money to work. While people are comfortable with buying and selling shares, there is still a huge inertia is driving a paradigm shift in financial markets to accept bitcoin, inertia likened to re-inventing the wheel. There's a reason why successive versions of Microsoft Windows in its early days were so slow and buggy. We can blame the limitations of hardware and software but the reality is that having to re-write a software for the world from scratch is simply too lengthy and costly. Why demolish and re-build something that is already selling even with some occasional bugs and flaws? Far easier it is to patch the errors than to re-invent the wheel. So our existing financial system is not perfect. Market players are rigging interest rates, manipulating currencies and stocks, and laundering money. But the reality is that the paper currency since its inception a thousand years ago still works as a go-to medium for the exchange of goods and services. To revamp today's highly complex financial system using bitcoin or any crypto-alternative would simply take too much work involving several iterations of monetary reforms, even an astronomical " reset " on the global system, sending us all back to the barter economy. Just as how asset values move in cycle with the economy, bitcoin will probably follow the same trajectory. However we belittle cash, there are many commodities and asset classes out there which still serve as good alternatives to what we define as a "store of value". Bitcoin is only but just one of them.

The last few weeks had been a huge tailspin for me. I attribute it to the multitude of challenges compounded upon each other - first, the physical distancing barrier, then the business-cultural aspect of it and then the technicalities of the underlying business. To add on, while investment and banking is not unfamiliar to me, the work of public relations and investor relations remains uncharted territory. Perhaps the biggest difference is that the mindset that one takes into any job, any role, any engagement. Never take on a job purely because of money . This might be one of the most important starting points in terms of getting the right mindset. Money is of course important but the experience of taking on the engagement should enable you to grow as a person, forge new relationships, learn new things that you never knew before, and naturally add to your professional credentials. To add on: Never switch jobs solely because the pay on the other side is higher. The "intangible assets" that you give up from making that move might cost you a lot more in the future. Never wear your designation / rank like a "political shield" or a "badge of honor", and let it get in the way of what you should be saying and doing. Most of the people that I know like to flaunt their status of being a VP, Director or being in C-suite roles. That kind of ego wears off fast when things go bad. The ability to be hands-on and execute will eventually outlive ego. Never stop moving or learning. Towards the ending scenes in the movie, The Martian , Matt Damon (as Mark Watney the astronaut) talks to a class at NASA saying: "At some point, everything's gonna go south on you and you're going to say, this is it. This is how I end. Now you can either accept that, or you can get to work. That's all it is. You just begin. You do the math. You solve one problem and you solve the next one, and then the next. And If you solve enough problems, you get to come home." He didn't survive the journey back home by squatting in space, flaunting his celebrity status as an astronaut and griping about how people back on earth could have done better in trying to rescue him. Whether it is a Fortune 500 company, a small medium enterprise or a start up, the foundational principle of any organization is just to "get things done." A true entrepreneur - whether running his/her own business or working in someone else's organization - doesn't care about pride or rank. He/she just cares about getting the job done and getting paid for it. Unfortunately, most people out there aren't entrepreneurs, so excuses such as not being paid enough or avoiding assignments outside their work scope becomes the common excuse. And for all the people out there who think that they are "too senior" to be hands-on or doing grunt work: I still take a lot of pride in being able to build a three-statement financial model from scratch. I consistently do this during the classes that I teach at SMU and remind everyone that it is really not that difficult . If you refrain from revisiting the basics every now and then just because you think you are "too senior" to be working on models, you are going to regret it much later on in life with that kind of mentality. Keep telling yourself that you are too good or qualified for any job or you should be getting more credit for your work and you'll also find yourself in a lot of trouble when you get older.

I recall that the early days (and nights) of my banking job was spent in the office working on ppt slides and having discussions with my VPs and directors. Occasionally when they wanted to work directly on the numbers or show me how something was done, they would come over and sit at my desk space, typing away at my computer while I stood and watched how it was done. It was a simple gesture - fixing a problem right when and where it was needed, in person. And that simple gesture didn't only solve the problem (whether it was a glitch in the model or some formatting on powerpoint), it also demonstrated leadership right then and there. This seems quite different today. No more in-person consultations and discussions, no more live demonstrations. Nearly everything is done over Zoom. There's a Chinese saying that goes " fighting the bull from across the mountain " (隔山打牛) - which basically translates to trying to solve a problem from afar. So right now, that's how a lot of things are for people working away at their desks or from home. Clients and suppliers trying to deal with new normal of doing deals virtually without a handshake or sighting of the product. Employees and their line managers trying to make a project or a pitchbook work while being separated hundreds and thousands of kilometers, connected only by email or whatsapp / wechat. To take the challenge up a notch, imagine the difficulty of new joiners who may have never seen their bosses, co-workers and their office desks. Leadership and management in a virtual world is also extremely difficult, especially when it comes to showing how things should be done, or to foster camaraderie without having a meal together in person, or simply chugging a few beers after work. It is extremely hard to show charisma and motivate others when you can't show up in person. Lots of things get lost in translation when you don't see, don't talk directly to the other party. Zoom calls can only do much in facilitating communication in a physically disconnected world. But in order to restore the current situation back to equilibrium or the good ol' days, we'll eventually need to be able to go out and travel, meet people and forge collective experiences together.

There are many merits to taking a company public: prestige, a sense of accomplishment, publicity, and also the avenue for raising more capital. Condensed in the offering document are hours of laborious work invested by an army of bankers, lawyers and accountants. Despite the tedious process, many shareholders insist on taking this route. On average, bankers advising on an IPO generally communicate a timeline of between six to twelve months, subject to regulatory approvals and customary due diligence. In reality, this process could take up to two years and in some cases four years. The costs of going public could be so much more than you think. According to a survey conducted by PwC, more than 80% of CFOs commented in a survey that the one-time expenses relating to an IPO were in excess of USD 1 million. These relate to the engagement of law firms, accountants, a market study report, the book building and other miscellaneous expenses. The costs also vary according to the complexity in the company structure and the readiness of the company in terms of being compliant and addressing any queries from the regulators. As an example, the listing of e-commerce company Y Ventures on the Singapore Catalist last year in July 2017 grossed in approximately SGD 7.7 million in proceeds, of which the disclosed SGD 1.7 million went to listing expenses, making up about 20% of the total proceeds. While this could be an one-off case given the small size of the offering, average costs for public offerings of up to USD 100 million were found to be anywhere between 7% to 30% of the total proceeds raised. This statistic comes down to between 4.5% to 9.0% for deal sizes of between USD 250 to 500 million and 2% to 3% as we approach the billion-dollar range, which is fairly in line with market practice of advisory fees being 2 to 8% of transaction size. Post IPO expenses. Oxford Economics and PwC estimate that at least USD 1 million of additional costs annually are required to maintain a public company. The largest part of this goes into a more robust accounting and auditing process, but there are also additional resources that are required to be put in place such as investor and public relations, information technology and internal staffing costs amongst others. To put this in a financial perspective: If your company is performing at an annual run-rate of USD 50 million, this will put a dent of at least 2% in your net profit margin every year. Most companies are just not functionally ready. Most companies do not have the necessary resources for executing a stock exchange listing. For most, it is also probably the first time they are taking a company public.  Shareholders and management try to do a number of things to compensate for this gap – including hiring full-time senior professionals who have prior experience in capital markets (usually ex-investment bankers), assembling a team internally to execute the transaction and conducting a beauty parade to select the best bankers and lawyers to lead the process. On the surface on it, the deal could look well-orchestrated with an international line-up of the top firms. However, this usually results in an intricate mesh of numerous professionals with somewhat polarized personal agendas leading to overburdensome workload on the company’s management and IPO team as they try to coordinate the various working parties. If not handled well, this additional workstream will create undue stress on the operational team which should be focused on the day to day workings of the business. If you are a small to mid-sized company with a great product, solid business model, fantastic equity story and looking to raise capital for expansion, you are better off working with a strategic partner such as a private equity or venture capital firm who could potentially be more helpful in growing your business and sourcing for capital. If the IPO roadmap is something you must take, work closely with a trusted advisor right at the onset to minimize the need for mobilizing too much company resources and reduce decision fatigue for senior management and key stakeholders. As key issues in the IPO process get progressively resolved and transaction starts to take shape, the company can still onboard more banks to execute the book-building process.

If I had learned anything at all over the last decade of my professional life and investing, it is that banking is a transaction-based business. Year-end performance appraisals are evaluated almost entirely based on the number of deals closed, number of trades made, etc. Not that is not obvious but we subconsciously ignore this when it comes to investing. Much like brokerage firms, media works pretty much in the same way. Money is made on trades, and indirectly from viewership. Companies that provide news and updates as a service stay in business not because they help enrich your knowledge, but because someone is paying them in the hopes that you will act on that news, that you will make that stock trade, or that you will share it with someone else who might act on it. Those who a vested interest make money from your actions. Bluntly speaking, these companies profit from the influence they have over their customers. Once you come to understand this, stuff that you read online, you take with a pinch of salt, you analyze and approach it with a healthy sense of criticism (and sometimes skepticism). It will help you make better and well-informed decisions rather than acting on impulse. "Money is made in the sitting."

As an investment banker I used to work very long hours (and I still do) and we were almost always allowed to be reimbursed for dinner and transport expenses if we worked past a certain time (usually 9:00pm). Subway station at Fortress Hill Some times I would claim for these expenses, but other times I would not. And people found that puzzling. As I grew older and stayed longer in the office, I discovered that some of the most simple pleasures at the end of a hard day’s work was simply just to take a 10-minute stroll away from the office or use the public commute back home, enjoying the outdoor air in the process. Taking the taxi on the other hand constantly nauseated me because of the enclosure and motion. It was partly because of that, I did not usually claim for any transportation reimbursement. Likewise for meals and per diem allowances: Unless absolutely necessary such as dining with professional parties such as clients as part of the job, I would then claim for these meals. But I know of people who would go the full length to obtain all recoverable expenses as long as it was within the organisation’s HR policy. There’s nothing technically wrong with that. The rules that were set that way by the folks up there are also the same rules that are part of broader staff retention strategy, that is: To keep employees happy and contented so that they know they are well fed and taken care off. It was only in my later years in banking that I realised making these claims were also a deeper cultivation of a subtle employee-mentality . By attempting to ‘milk’ the system and extract the maximum benefits, one subjects himself/herself to the dependency on the little privileged comforts of life. There’s nothing wrong with that, in fact I believe the banks wanted you to do that. In Nassim Taleb’s words: “Someone who has been employed for a while is giving you strong evidence of submission. Evidence of submission is displayed by the employee’s going through years depriving himself of his personal freedom for nine hours every day, his ritualistic and punctual arrival at an office, his denying himself his own schedule, and his not having beaten up anyone on the way back home after a bad day. He is an obedient, housebroken dog.” So should one day I am unable to afford the ‘luxury’ of going home in a cab or rely on someone to pay for my meals, I would never feel insecure.

Bankers and financial professionals try to measure risk and returns using all kinds of academic and empirical bases - NPVs, IRRs, weighted average cost of capital, etc. I introduce to you a new way of looking at risk: How much are you willing to lose? Say you pay $10 to flip a coin. Heads: you get double the amount ($20), Tails: you walk away empty-handed. Now consider that it'll now cost you $1,000,000 to do this. Would you still take the chance? Mathematical models involving the calculation of risk disregards priorities and personal values. For many investment decisions in Asia and other emerging markets, the non scientific elements are often a huge part of what drives the deal. This is probably the single biggest reason why your complex DCF and bullet-proof-calculated discount rates don't weigh very much in this part of the world. Mispriced deals exist all the time because the stakeholders can't accept what they possibly stand to lose. Consider a scenario in which a business owner will never relinquish a partial stake in the company to an incoming buyer who has plans to break up the assets and change its corporate direction. Or a seller signing off on an under-valued transaction just to close the deal because he/she can't live with the possibility that there might not be another better offer on the table. All risk models break down when you have everything (or nothing) to lose. Managing it gets easier when you are more diversified and don't go to the negotiating table with an all-or-nothing mentality. The next time you are presented with an opportunity that offers a certain rate of return, think: what are you prepared to lose?

So time really flies when you are up about and at work. I would have been in Hong Kong for exactly 100 days tomorrow. Similar to what I usually do back home: I have my developed my own routine for where I grab my coffee (on weekdays and weekends). The baristas know what I usually order. I even go to the same places for lunch and dinners sometimes. Some form of routine is good I guess.