My first experience of altitude-sickness was in 2008 while on a trip to run a marathon in Leh , northern India. I had gone on a small excursion to the Ladakh ranges on the first day, arriving at one of the mountain passes which was more than 5,300m above sea-level (as a reference, K1 base camp is 7,800m). The area was large and hilly, and in my excitement then, I sprinted up one of the knolls for a panoramic view of the landscape. On the journey back to the hotel that day, I became totally out of commission, and basically had to stay in bed for the rest of the day right up to the following morning. I initially thought it had been motion-sickness from the winding roads but later realised it was most likely due to the lack of oxygen from the thin air. Because the marathon was held in an area of high altitude, the race required a mandatory four-day, no-exertion acclimatisation process. No exercises, no jogging, no training, no hiking, just sitting back and relax. Also, on the third day the doctors would make everyone run a short two kilometre stretch outdoors and take your heart rate at the end point. If it was too high or deemed dangerous, they had the right to revoke your participation on race day beyond contestation. Following that incident I learned that: There is always a natural limit to the way things work. You can always try to test those limits, and if you are lucky, get away with it. I read later on also that altitude sickness if not managed properly, can result in potentially a life-and-death situation. It all makes sense. Before any race, every athlete knows to do sufficient interval trainings and regular runs with a gradual ramp up in distance and intensity. By pushing your body in a short time and disrespecting the importance of progressive physical conditioning, you could end up as what we used to call a one-burst wonder: someone who would give his 100% during one race and then retire forever. Even if you are an above-average fit person doesn't mean you can always push your body to extremes under a short period of time. To perform well for extended periods, one must follow an appropriate and natural course of physical conditioning. Some studies on ecology talks about how bigger body sizes improve short-term survivability by reducing the risk of being caught by a larger predator. "There appears to be a link between accelerated growth and lifespan: rapid growth early in life is associated with impaired later performance and reduced longevity" - Neil B Metcalfe, Pat Monaghan In fact a bigger body size also increases the chances of successfully making a kill to get food. With size also comes the ability to accumulate energy reserves that reduces the risk of starvation. From a Darwinian perspective, it is only in the best interest to grow big as fast as possible. This is not difficult to relate to. From big bullies to big companies, size does matter. Growing quickly maximises your chances of outperforming or eliminating the competition. Yet, observations on lab mice and other animals have statistically shown that with rapid juvenile growth comes reduced lifespans in adult years. Seems like any desire for rapid growth comes at a cost. For example, Red Bull might "give you wings" but the energy surge from one drink can last for up to 4 hours before most people descend into withdrawal-like symptoms and 'crash' the rest of the day. Also, performance enhancing drugs such as steroids have somewhat permanent damages on the body, years after those who use them have stopped. These damages often result in the human body using up additional resources which could otherwise be directed towards the normal upkeep and functioning of the biological system. Every sentient object follows a certain natural order of growth and size: "Each animal, as a product of chance mutation and natural selection over geologic time, ' has a most convenient size '. We don’t expect, for example, to see cheetah-like elephants or elephant-like eagles in the wild, do we?" - J.B.S Haldane But there are elephants that want to run like cheetahs, and cheetahs who want to fly like eagles. In business, Damodaran talks about the importance of companies to ' act their corporate age' within the corporate finance cycle: "Teenage" companies don't always think through the consequences, but the future is full of potential.... then you've got young growth companies. This is when you are at the peak of your glory. This is when you can go to sleep at three o' clock in the morning, wake up at six and still function. Young companies are all about growth. Unless you have a legacy like a Walmart or a Coca-Cola , chances are the markets are pretty unforgiving towards 'small-ish' companies and those who demonstrate an unimpressive growth rate. Some large companies today continue to be unrelenting in the pursuit for innovative growth. As a result, ambitious sales and profit targets are drawn up to satisfy stakeholders. Apparently, more is good, bigger is better. In today's market, it's extremely easy to enter the penalty box with a zero or negative growth rate. You get left behind easily once you stop moving. Growing up is indeed hard to do. On the other hand, if you consume too much steroids to bulk up, you might do this at the expense of sustainability and sometimes even survivability. A HBR article written in 1983 talks about how ineffective work delegation and poor management of cashflow increases the possibility of failure for companies in the "take-off" phase (Stage IV below). Without a solid foundation of management, a firm that grows too quickly puts its operational hierarchy at risk. Delegation of responsibilities and work fail, resulting in higher costs, lower efficiencies, outflow of talent, higher requirements for working capital and therefore cash flow. Source: HBR, "The Five Stages of Small Business Growth" | https://hbr.org/1983/05/the-five-stages-of-small-business-growth In the worst case scenario, it may even result in a fallback to the Survival stage or fail. "Companies are born, they mature, they decline. It's the nature of that process." - Damodaran Like the laws of nature, there needs to be a healthy respect for the inner workings and dynamics of industry and markets. Knowing one's limits and when to lift or push the pedal on the accelerator is an un-deniable truth that both businesses and individuals need to eventually come to terms with.

Come next year on 3 January, I would have clocked three years into my current company. This would also be my longest unbroken stint working at any organization (apart from the one I started). For most people, staying at one company for many years is a given. But for me when I graduated, “jumping ship” (switching companies) was something of a norm , a necessary rite of passage in order to get a significant pay raise or to move up the corporate ladder. That said, my perceptions towards career progression and life overall in general had also changed dramatically over the last 17 years. I had moved (or evolved) from being a relatively young desktop grunt, crunching numbers and producing eye-catching powerpoint presentations at breakneck speed, into a mid-senior management role. With more work experience, I am called upon to show up at meetings either because I am a subject matter expert in a particular area, or simply because the ratio of grey hairs to black hairs on my head is higher than average (I like to think that it is due to the former). They say you can only appreciate most of the learnings in life once you have clocked sufficient mileage. I have had my share of experiences, both the good ones and the bad ones. I have pulled all-nighters at work, got promoted at work, take part in at least one billion-dollar transaction, sat and moderated a number of interesting M&A negotiations, seen corporate re-organisations resulting in teams being shuttered, getting laid off, laying people off, watching people get laid off, etc. I am not particularly proud of some of the things I've done, including sacrificing a lot of my personal time for work, but for good or for bad, it has made me the person I am today. When I was younger in my career, I had looked towards those who were older (presumably have clocked more mileage than me) for a professional role model - both the positive and negative examples. I learned that there isn’t one perfect epitome of a successful person. I have had colleagues who leave the office promptly at 6pm, pulling off a sustainable work-life balance (defined here as getting off work on time). And then there are also those who are religiously back at the office every weekends regardless of family. I have had seniors who were extremely competent in execution but suck terribly at management. Some were nice people but couldn’t execute. Some use looks to get by. Some put in the gruelling hours to prove their worth. Each of their characteristics were unique in a homogeneous and somewhat brutal environment, which makes understanding them both interesting and complex at the same time. And people being complex creatures, are what makes them interesting. But then again, at the end of the day, who decides if they should be deemed successful ? As I grew older, I realised that these hallmarks in which we define how well we do in life increasingly deviates from the professional workplace and quantifying the material possessions. But to say this assumes that we have been lucky to be able to earn well - well enough to get by in life comfortably, keeping the lights on, and putting food on the table. There are many other aspects that we consistently take for granted such as a happy family, your parents, your siblings, kids, friends you can rely on, good health, and for some, the ability to travel overseas at whim, and perhaps quite importantly, the peace of mind. No amount of money can buy any of these. But life will occasionally throw you a wrench to test how far you would stray from the path to give up on any of these, and if you had subconsciously forgotten the most important things around you. You can listen to anyone's experience and draw conclusions on how you should live your life and solve your problems. But at the end of the day, everyone’s position is different, and you bear the consequences of the decisions you make solely by yourself. Because what works for one person may not work for another. Many of life’s lessons and takeaways don’t need to be drawn from the advice and anecdotes of other people. It just comes from a position of inner peace and self-realisation.

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.

Had catch-up drinks with a much older (more than 12 years) friend that I hadn't seen in nearly two years. Our common experience of having worked overseas led us to talk amongst other things: Money, work, mid-life challenges, investing, investing in real estate, and the state of the economy in China. Economic lifespan. The state of working in banking and finance. It becomes incredibly hard to find something in between. You are either senior management or not. Besides, those who earn up to the S$5,000 range are typically younger folks with 3 to 5 years of experience on their backs. Salaries for banking and finance are often above-mediocre. Those in banking and finance work round the clock with no night or day. You are basically on call 24-7. Regardless of whether you are in the front or mid office, you basically work round the clock, constantly on your phone and replying emails. The markets today are digitally powered with information that move at the speed of light. Singapore today, more than ever, serves the international market, therefore warranting that we work across all time zones. While there are many who still struggle with finances in their fifties, the unspoken truth is that money shouldn’t be a focus anymore at this stage. Grey hairs. Also, people expect you to act your age for the role you are in. When you are an analyst, you are expected to do the grunt work. When you are an associate or director, you lead execution. When you have more than ten years of experience on your back, you are meant to assemble and manage a team, impart knowledge, and on occasion, demonstrate thought leadership and disseminate advice. No more upside... Take REITs for example: investors could make compounded returns by re-investing the dividends, and relying on further appreciation of the share prices because of insatiable demand for space. Over the last year or so, distributions and share prices for REITs have declined quite a fair bit. Higher interest rates have hit distributable income margins but rental reversions are also taking a hit. This is not only the fault of inflation and borrowing costs impacting their own businesses but also impacting the businesses of their tenants, crimping the ability to accommodate the higher rents. REIT managers today have to weigh between higher rents and lower occupancies, or otherwise run them at the same occupancies at lower rents. Not an easy decision. A bleak world... To re-stimulate the economy, we have to rely on the next generation to accumulate wealth and buy homes. For this generation of folks who can’t afford to buy houses, they will simply just move in with their parents. Furthermore, China is also faced with an ageing population, which means that when the older folks pass on, there will be possibly an over supply of housing. It might take at least 8 years for for this segment of the economy to recover.

During my first interview upon graduating from university, I showed up at the offices of an IT consulting business. The premises were then at the under-construction Biopolis area of Buona Vista in Singapore. Started by a pair of French founders, it was a fledging business that provided IT consulting services, primarily targeting large European companies that had a significant presence in Asia. Like most of my peers, I was an eager young freshie looking not just for hands-on work experience but also an opportunity to gain more geographical exposure. I was told that the role required someone who was not only conversant on the technology front but also good at communicating with clients. Someone who could be like a Marissa Mayer of Google, traversing between the technical and the business aspects. This person had to be able to navigate conversations with potentially blue-chip clients of the world, yet possess the programming skills to write code for television. The goal was to eventually create a simulation prototype to be showcased to the Chief Engineer and the CEO, so that they could launch the final product in the global market. They wanted the best of the best, and I did want to be the best of the best. Midway into the conversation, I was also shown a huge wall-hung map of Asia Pacific as the founder himself stood in front of it, pointing to various cities while sharing his grand plans of expanding within the region. I had liked what I heard and was convinced that this was the company I wanted to join: A regional role, growth prospects, ownership. Money aside, there was also the hybrid business-tech angle, the entrepreneurial experience, and being part of that rewarding journey. If I had pressed on about comps, they probably would have also talked about employee share options and long-term incentive plans. Everyone likes share options – an equity stake in the business, unlimited upside, bragging rights to call yourself a shareholder . The founder’s sales pitch had worked. Never mind that I wasn’t a client. I had been sold into doing something bigger. I am less impressionable these days (no discredit to that company that I interviewed with in 2005). Much later, I also realized the effective-ness of talking to a prop of a world map when it came to showcasing the vision and geographical reach of any business. Some firms give away equity as part of selling their story. You might be able to get away with paying out less cash to employees who are clueless on how to value a business. But many fail to realize that equity is only worth something if it can be converted into money. Besides, for privately held companies, the pathway to a liquidity event is sometimes not straightforward. “Ownership is usually a bust unless your company is being fast-tracked to sell for big bucks.” - Karen E Klein, Bloomberg Then there are also those who will take a lower pay for a great working environment. For many startups and emerging businesses, founders and management have to find out what motivates their people to go above and beyond . Surprisingly, it’s usually not money. Adrenalin wears away quickly and no amount of money can compensate for working in a toxic environment. Corporate culture at its very essence is what makes a business successful in the long run. How do we provide support and training for newly onboarded staff? Do we have an environment that allows individuals to develop themselves both professionally and personally? How do we stay in touch with those who leave the firm? What is the first thing that comes to mind when people hear about the firm's name? Do we have Friday happy hour drinks? Do we make it an effort to listen to what employees really want, or are we just forcing-feeding the narrative at every townhall meeting? When employees go above and beyond the job and pay check, it essentially all comes down to corporate culture. Selling equity isn’t enough. Value needs to be communicated, and maybe that was what I saw in that world map.

“They talk about work-life balance. That’s a term I didn’t even know when I was their age. Work-life balance. When I was their age, if there was no work, there was no life.” - Morris Chang There is a huge mindset difference between those in their mid 30s and 40s compared to the Gen Z population, categorised as those born after the year 2000 or those in their 20s who have just graduated. If you are one of those who believe in working hard and earning lots of money for your future retirement or to be financially free, you probably belong to the mid-30s and 40s group. Gen Z doesn’t care for money. Gen Z also doesn’t think that far. Their manifesto in life revolves around " YOLO"  (You live only once), a term I first heard only when I spoke to a colleague about the importance of having CPF savings in 2019. Some mud in the water might be good. “水至清则无鱼” ( "Fish prefer muddy waters and avoid clear streams" ) When Jack Ma was “rusticated” after his speech at the Bund Summit in 2020 , I think it might have sent a certain message to the business community about the new rules of capitalism in China. I don’t think he intentionally meant to sound like he was going against the authorities, that innovation isn't afraid of regulation . Some dislocation in the market is always good for entrepreneurship as long as those in the game play by the rules. But the concept of risk-reward is viewed very differently the moment you take away the opportunity for any abnormal upside in a free market.  This trend further permeated when the term " common prosperity"  was introduced in 2021 as part of China attempting to bridge the wealth gap. What followed was a series of events including the ongoing purge of corrupt civil servants, clampdowns in the private online education and peer-to-peer lending segments.  Not that the occurence of any of these events had anything directly to do with the worrying youth unemployment statistics today. But it is interesting to note that for Gen Z, coincidentally, this was a period whereby most of them had started to enter the workforce. They should be brimming with excitement and hope for the future. Regardless, the contagion caused ripples across the industry, essentially discouraging the pursuit of excessive wealth and high incomes, almost similar to imposing a virtual red line on how much one can earn. And people generally stop trying too hard the moment you define strict limits on how much they can achieve. “The point is ladies and gentlemen that greed, for lack of a better word, is good.” - Gordon Gekko Gen Z looks at money very differently. Aside from graduating into a generation characterised by apathy, most of them are financially cushioned by the wealth of their parents, who are mostly Gen X. Gen Z’s outlook on life and material values are quite different. They are not obsessed with going after flashy items, brands or asset ownership. Why Calvin Klein  when you can Uniqlo ? Why Louis Vuitton  when you can MUJI ? And renting isn’t such a bad idea when home ownership is too far-fetched at current income levels. Besides, there is always that option to stay with their parents if all else fails. According to Morgan Housel , the mindsets and lifetime investment decisions of people are heavily anchored to the experiences in their own generation, especially those in their adult life. “The differences in how people have experienced money are not small, even among those you might think are pretty similar. Take stocks. If you were born in 1970, the S&P 500 increased almost 10-fold, adjusted for inflation, during your teens and 20s. That’s an amazing return. If you were born in 1950, the market went literally nowhere in your teens and 20s adjusted for inflation. Two groups of people, separated by chance of their birth year, go through life with a completely different view on how the stock market works:” Because of that, when it comes to the perception of money, what one group of people think as ridiculous might sound totally fine for another group of people. While the vast majority of Gen Z’s parents have put in the hours, sown the seeds and reap the harvest of their hard work, most have also concluded after two or three decades of their working life that earning lots of money is nothing but simply a means to an end. There is no point in chipping your life away and earn so much only to spend it when you are too old and frail to enjoy.  In this vein, financial freedom to Gen Z means that I only need enough to survive and get by instead of the need for any passive income from an investment asset. Furthermore, most of these people have been brought up in an environment in which they have been very likely been told to “do what makes them happy ” rather than get into a mindless pursuit of money, the rat race. Social media for what it is, also plays a big part in influencing the way they think of lifestyle and money. You can almost live your whole life online in the digital realm. Some people even make money simply just by live streaming ( 直播 ) their day-to-day activities. Source: DFC Studio Why work the regimental hours when you can make a living sitting at home doing stuff on your own terms? Ironic, but the biggest ultimate sponsors of these initiatives are the parents of Gen Z, the same group of people who believe in decent wages for decent work done. These are just some of the mindset challenges faced by employers today in a workforce increasingly dominated by Gen Z workers. They don’t care for the high incomes. If these people do not find their work purposeful, they leave. If pushed too hard, they leave. They just simply don’t care anymore.  There is nothing right or wrong with that way of thinking. But it is the rat race mentality that propels the economy. The rat race makes people to want to earn more and live better than their peers. For good or for bad, it forces creativity and innovation.  Today, there is no incentive to do that, no incentive to go above and beyond the call of duty, no upside. They just want to lie flat. You can continue to whip the proverbial horse but you can’t make it go faster.  The point is ladies and gentlemen that greed, for lack of alternatives, is good for the economy . There isn’t a perfect solution for how employers and managers should work with the younger generation. Some might say “ shut up and listen to your elders and seniors ” but I think that would only invite more resistance. However it does help to understand how the post-millenials of today think and behave the way they do. Given the youth unemployment rates and the current state of the economy today, maybe a little dose of “Jack Ma” wouldn’t hurt... Have a great week.

It just goes to show that even seemingly intelligent humans, when desperate, gullible and possibly even bored enough, will believe nearly everything you tell them and to some extent, resort to illogical behaviour to get what they want. When something good or bad happens, we lean towards seeking answers retrospectively. We look logically for these answers by re-tracing the steps and putting together the pieces leading up to the events that take place. There is usually a connection between the cause and effect. For example, “ he is so small and thin today because he didn’t eat well when he was younger ”, or “ he works in a mediocre job now because he didn’t study hard in school then ”.  Conversely, we make the subsequent conclusions in nearly every aspect of our day to day lives, for example: Studying harder maximises your probability of getting good results ; or: working harder increases your probability of doing well later in life . But whenever the science and logic fails us and things don’t go according to plan, we fall back on, or turn to the spiritual side of things. Humans seek comfort in rationalising stuff that happens to them, both the good ones and bad ones, but especially the bad ones. Hence, the existence of the avocado bell curve god,  drinking water mixed with the ashes of books, and the wearing of good luck charms, gods in other forms, amongst others. The truth is sometimes, the good and bad things that happen in life, they happen for no logical reason at all. A winning lottery ticket, contracting a deadly virus, a plane crash, bad timing when making an investment, black swan events, etc. Events that can significantly change the course of one's life . Life is a lot simpler when we start to make peace with  the things around us, rather than try to make sense of the things the happen around us. “We are so good at justifying things to avoid our deepest fears. That is one trick the mind is really good at.” - Alicia Cramer

I have been teaching financial modelling for over 5 years now. But at the first ever class held in July 2018, the delivery was so badly curated that it was clumsy and in my opinion somewhat even embarrassing. I had spent weeks preparing for it, assembling a deck of over 500 slides. In those slides were numerous case studies and valuable content which I had amassed from over 10 years of corporate finance experience. It was by some measure, a work of art . Yet, in spite of those, I received possibly the lowest rating ever for a financial modelling course. Someone in the class even openly remarked, " how can anyone teach financial modelling like that?? " Turns out that being a teacher and a practitioner can be two vastly different things. Being good in your trade does not imply that you are good at transferring that trade knowledge . Having years of industry experience does not necessarily mean that you are a good teacher. Even good teachers need training regardless of their age and background. Just as some aspects of your job sometimes needs to be re-learned or upgraded. I recently gave a one-hour workshop on business and corporate finance in Hong Kong to a group of university undergraduates from the Guangzhou Huashang College (广州华商学院). The workshop was part of a three-day immersion program to get the students acquainted with the prospects of working or studying overseas. The flow of the workshop was basically the same content I had been doing over and over again for the last five years at SMU, condensed into a sixty-minute session, and further watered down for an audience with basically little to no working experience. The catch was that everything was to be done in Chinese , which put me at risk of being reduced to a babbling idiot. It might not sound like a big deal, but for me, this was the first time ever that I had to deliver a class (somewhat professionally) in a second language. Sure enough, being based in HK and Shenzhen over the last three years, I have had to communicate and present plenty in Chinese. I had also done cross-border M&A deals in China during my banking days. However, I always had the benefit of a safety net - coworkers around me who could help fill in the gaps. This was entirely different . The aftermath? Not as bad as I expected. Neither was it as smooth as I wanted it to be. But most of all, it was refreshing. The entire experience was a discovery process and a learning opportunity for them as much as it was for me. The point is: When we are in our twenties, it is conveniently easy to commit to learning. Every lead or project is seen as an opportunity to clock some mileage, hone technical skills and sharpen the sword. Practice makes perfect. There is that insatiable thirst for acquiring more knowledge, which leads to opening many doors in the future. When we move onto the thirties, that mileage elevates us to become subject matter experts, but we also become increasingly narrow and selective in terms of the assignments and projects we undertake. Beyond the thirties and into the forties, companies, shareholders and the people who hire you become more impatient and less forgiving. Results get prioritised and learning often takes a back seat. Amidst many lost opportunities and closed doors, it becomes easy to forget the enthusiasm of the twenties, easy to stop learning: Easy to stop learning a new trade, a new product or service, the workings of a whole new industry, take on a new role at work, a new way of doing things, or even a new language . As for the taxi driver in Shenzhen: If someone older than me with a presumably mediocre income and virtually no university education can bother to learn English in a largely Chinese environment, in anticipation that he might need to use it one day to communicate with his foreign passengers, what excuses do we have for not picking up a new skill when the opportunity arises? Never stop learning.

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.

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, home had been 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. Immigrant mentality 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. Living out of a suitcase. 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. A realist. "You're on a roll, kid. Enjoy it while it lasts, cos it never does." - Lou Manheim [1] At one point of time, my performance KPI at work was linked to the company's share price. 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. So, the principle has always been very clear and simple to me: You are good, but only as good as your last trade [2] . 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. Pain is a good teacher. "There are two kinds of pain in this world. Pain that hurts, and pain that alters". - Robert McCall [ 3 ] 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 trading options, but also ended up losing a lot 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] Lou Manheim, one of the seasoned traders from the movie "Wall Street" [2] A phrase from Nassim Taleb's "Hidden Asymmetries in Faily Life". [3] From the movie, "The Equalizer 2"

On 24 June, Singapore Airlines completed the full redemption of all its outstanding MCB (mandatory convertible bonds) that had been issued during the throes of COVID-19. This means that if you had put in money to buy those bonds in 2021, the company returns the entire sum that you had invested, with a pre-agreed premium on the investment, even if you were content to keep it to maturity and have them converted into shares. The Business Times calls this " an interesting chapter of its history ". I think it's a good lesson in corporate finance and financial management, and we need more creative structuring like this in our capital markets. The premium for the final redemption works out to about 12.6%, which translates to be roughly 4.0% per year: Had SIA not followed through with the redemption, allowed you to hold those bonds, and converted the face value at S$ 4.84 per share at maturity, the IRR would be closer to 8%, depending on where you think the share price lands in 2031. Now a 4% to 8% annualised investment return over ten years may not seem like a lot if you compare it with interest rates today and also look back on how delicate things were during COVID-19. Some airlines even came close to bankruptcy during that period of time. Cost of capital was high. Buying airlines and all things travel-related were high risk investments, especially if you think about the speed at which SIA was haemorrhaging capital to the tune of S$ 8.8 billion in a year after its band aid of a rights issue in 2020. Even with sovereign underwriting from Temasek Holdings, there was simply no saying when the bleeding would stop. But ignoring the grim backdrop, a 10-year sovereign-backed corporate bond with step-up interest rates of 4 to 6% would have been a highly attractive investment, considering SOFR rates were at approximately 1.5% in 2020. The real pot at the end of the rainbow was swapping those bonds into SIA shares, in which the conversion price was at a big discount to SIA’s share price at pre-pandemic levels. After all, the prime minister had given his soft endorsement, saying that “ SIA will be a great way to fly again ”. How much worser could it get? What made a significant difference also was that the convertible bond offer was given exclusively to existing shareholders - a creative concoction of debt and equity. If you had missed out on the 2020 rights issue, buying SIA shares off the market would provide another window of opportunity to get in, or double down, albeit at an even lower price. And then you get the bonds as well, which ultimately increases the probability of a successful convertible bond issuance. It’s an ingenious way to market a deal. Most companies will just go on roadshows, paint a rosy picture against a hockey stick chart and promise the eventuality of brighter days ahead. But these MCBs were essentially structured as a “private club”, open only to existing investors, with a ten-year bet on the aviation sector and SIA’s reigning leadership over that period. Looking back, I think the conversion mechanics in the whole deal was arbitrary. The huge equity upside from swapping those bonds into equity at S$ 4.84 per share was probably meant to justify the low cost of debt. If you ask me, I think no one really baked in a scenario to have those bonds converted to shares. Ten years would give SIA sufficient runway to set aside capital to redeem those bonds at any time: Three years tops for the pandemic to play out and the economy to recover, plus another seven years or so to turn around. The worst case? Air travel doesn’t recover and the company’s business model becomes permanently altered. A remote possibility nevertheless, in which case, swapping those bonds into equity wouldn’t really be such a bad deal after all. [Disclaimer: I was a holder of SIA shares and its MCBs.]

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? But the key is in " 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. ” “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 process is more important than the outcome. 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: "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.

Singapore Airlines posted record net profits for its full year ending 2023 results - "the highest in its 76-year history". This shouldn't be surprising given the effects of inflation over multiple decades and the fact that people tend to be more well-travelled these days, both for leisure and business. Still, it is a spectacular achievement on all fronts, for both the company and shareholders, considering how air travel had been severely impacted by the pandemic. Doomed for bankruptcy. 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 a**es. Big companies 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. Apparently 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: 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 possibly 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 play out. Check out these depressing headlines from 2020: Even ECB President Christine Lagarde then 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. Everyone at that point of time certainly has a view on how things could pan out but when the central bank says something, you listen. Timing is everything. Yet even as the effects of the pandemic started to ease, very few companies 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 from state-run Temasek Holdings which not many other firms have. 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. 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 likely 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. No one likes to be caught with their pants down when a financial crisis hits, but there is no saying for sure when the next one will happen. 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."

NYU professor, Scott Galloway [1]  says that the worst advice to give anyone fresh out of school is to: Follow your passion . Follow your passion. Anyone telling you to follow your passion is already rich. The person telling you to follow your passion probably made billions in a boring industry like iron ore and smelting. The more boring an industry, the greater your return on capital. And the monetary rewards, prestige, the recognition of being a subject matter expert, is what makes people passionate about what they do. "No one grows up thinking: " I'm passionate about tax law ", but the best tax lawyers fly private jets and have a much broader selection of mates than they deserve. And they get to do interesting stuff, which by the way, makes them passionate about tax law." Why things don't work. Nobody is trying to fix the problems within the organization. They are simply just trying to make (or milk) enough money so that the problems don’t matter to them anymore. Success is the greatest imposter.  "In life, business, or martial arts, winning is a falsehood.  It seduces smart people into thinking that they are invincible. It tricks good people into believing that they are infallible. And it robs all people of reality and truth.  Don’t believe the hype. And don’t eat your own bullshit. Or you will lose everything.  The only antidote to the poison of success is humility, hunger, and gratitude. Stay humble. Stay hungry. Stay grateful. And outwork everyone." - Chatri Sityodtong It's relatively easy to be humbled when you have been beaten or when you have failed. But staying humble when you are ahead and winning is a much more difficult task. Solitude. Many people still do not understand why early morning coffees and hotpot alone mean so much to me. "Solitude is dangerous. It's very addictive. It becomes a habit after you realize how peaceful and calm it is. It's like you don't want to deal with people anymore because they drain your energy." - Jim Carrey Simple brand-less self-worth. MUJI was born in an era characterized by the rapid globalization of Japan, a booming pop culture and the yearning for a unique identity. This gave rise to the emergence of bold and somewhat psychedelic advertising which targeted consumers who favored branded and lavish goods. Contrary to the global brands, MUJI adopts a non-aggressive "no-brand" marketing approach. Far from lacking any product identity, it champions the idea that quality should speak for itself, eliminating the need for flashy logos or advertising campaigns[ 2 ]. But MUJI wasn't just about selling affordable quality merchandise, it was selling minimalism . While the rest of the world thrived on an insatiable appetite of wanting more, MUJI strips away this extravagance, reducing it to functional simplicity . Waste not, want not. "In the MUJI concept, design intervenes in the making of things. This counters the rest of the world, which runs on the fuel of capital and appetite. Japan, looking upon the world from its detached location at the eastern end of Asia, has built an aesthetic that is infinitely attractive to human rationality, not within luxury and extravagance, but simplicity." True minimalists often live in perfect balance with their surroundings and have an acute sense of self-worth. They avoid the excesses, and seek neither external validation from association with a brand, nor do they care about how the world looks at them. Prada charges over a thousand dollars for a bag, for which you can get for probably fifty bucks directly from a factory in China or somewhere else. Christian Dior designer slippers are priced at about sixty times more than the popular Havaianas , which are ten times more costly than your regular flip flops. If you step back and think about it: Almost no one will spend an inordinate amount of time looking at your footwear under normal circumstances, so why the need to splurge? Designer and luxury stores are not selling expensive items. They are really selling self-worth to people who do not have any. The illusion of freedom. Slaves used to work all day, everyday with no pay. But they had free food, water and shelter. Today, we work all day, nearly every day and get paid. But with the money we make, we spend on food, water and shelter. In both situations (past and present) we are still slaves. The only thing that is different is the illusion of freedom. Being rich. Some of the most well-off people I know aren't bankers, lawyers or doctors. "Doing well with money has little to do with how smart you are and a lot to do with how you behave. And behavior is hard to teach, even to smart people. A genius who loses control of their emotions can be a financial disaster. The opposite is also true. Ordinary folks with no financial education can be wealthy if they have a handful of behavioral skills that have nothing to do with formal measures of intelligence." - Morgan Housel You are free to leave, but you are also free to starve. Almost everybody spends most of their life living in a totalitarian system. It's called having a job. "When you have a job, you are under total control of the masters of the enterprise. They determine what you wear, when you go to the bathroom, what you do – the very idea of a wage contract is selling yourself into servitude. These are private governments. They're more totalitarian than governments are. They can't legally murder you but they can control everything that you do. Yes, you are free to leave, but you're also free to starve. You have a choice between starving or selling yourself into tyranny." - Noam Chomsky [3] People prefer fiction over the truth. It's getting more difficult to get access to reliable sources of information. “The vast majority of information is not the truth. A key misconception - especially in places such as Silicon Valley - is to equate information with truth.  Most information is junk. The truth is a very rare, costly and precious kind of information. To write a truthful story, you need to invest a lot of time, effort and money into research, and fact-checking. Whereas fiction is very very cheap.” - Yuval Noah Harari You can make a hundred mistakes and do no wrong. In 2016, Jared Kushner came across a book titled " Death by China " as part of an unwitting research on the Internet. The book was authored by Peter Navarro, an economics professor who would later end up being Trump's advisor for economic policy during his presidential campaign. Five years on after being voted in, Trump is defeated in the 2020 presidential election. The US Capitol is attacked by mobs resulting in the deaths of at least nine people and hundreds of injuries. Among those who allegedly coordinated the coup was loyal Trump supporter, Peter Navarro. When summoned to court, Navarro refuses, and is eventually sentenced to four-months in jail for contempt. In a turn of events, Trump “resurrects“ from the shadows and into his second presidential term in 2025 [4] , re-hires Navarro back into the administration, and makes him trade advisor. Navarro is widely credited as being the " architect " of Trump's tariffs, which has been the subject of much controversy in terms of how the rates had been calculated . This is a guy who has had a soft job offer from the President while serving jail-time. Trump was quoted as saying, " I would absolutely have Peter back. " This is also the same guy who invented a fictional expert in his book " Death by China ", that had been picked up by Jared Kushner nearly ten years ago. Navarro calls this fictional character " a whimsical device and pen name used throughout the years for opinions and purely entertainment value, not as a source of fact. " It just goes to show that you don't need brains and talent to get into the highest ranks of government or senior management. You can manufacture a tall story, openly defraud the public, talk rubbish, even go to jail, and yet still come back unbowed, unbent, unbroken [5] , providing counsel to the most powerful people in the world. You can make a hundred mistakes and still do no wrong -- as long as you are in the right social circles of influence. Sometimes, who you know is more important than who you are . [1] Scott Galloway's video clip on "the worst advice given to young people": https://www.youtube.com/watch?v=1feBz5ifT-U [2] Yuko Kikuchi, Japanese Modernisation and Mingei Theory, Cultural Nationalism and Oriental Orientalism, https://www.routledge.com/Japanese-Modernisation-and-Mingei-Theory-Cultural-Nationalism-and-Oriental-Orientalism/Kikuchi/p/book/9780415405829?srsltid=AfmBOopQ_vV76QWQout87cBKasyWwgeN4FQHIx7FHmkE-7tqpsqZ5smD. [3] Noam Chomsky's ideologies have somewhat generated public controversy. This is an editorial article on his life at 96: https://theconversation.com/noam-chomsky-at-96-the-linguist-educator-philosopher-and-public-thinker-has-had-a-massive-intellectual-and-moral-influence-232698 [4] Peter Navarro: the economist who has outsmarted Elon Musk and has the ear of Donald Trump https://www.theguardian.com/us-news/2025/apr/21/peter-navarro-the-economist-who-has-outsmarted-elon-musk-and-has-the-ear-of-donald-trump [5] To borrow a phrase from the title of the film series " Game of Thrones" (Season 5 Episode 6) https://www.imdb.com/title/tt3866842/

(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.

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

Nearly everyone I know who started out in banking or private equity had the goal of a five figure monthly salary in mind, or being able to buy a home at an early age, take leisurely trips around the world, shopping at whim. It was this idea 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. 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 .

Remember how people used to queue for Hello Kitty toys at McDonalds? Consider this: You are queueing in line for that limited edition item and suddenly realize that it'll be sold out by the time it reaches you. The thought of walking away empty-handed drives you to think of other ways, including negotiating with the folks in front of you. But everyone respects the unwritten rule of the queue - first-come-first-served , get in line and wait for your turn. Desperate and frantic, you decide to go bat-crap crazy and threaten to burn the whole store down if you don't get your toy, putting the entire queue and McDonalds store in jeopardy. Suddenly the store manager comes over to appease you, bringing you to the front of the queue, effectively guaranteeing a reward for your troubles. Make enough noise, create enough damage and you'll get something. 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.

The concept of retiring early has always eluded me. Recently I decided to look at this from a mathematical and slightly whimsical approach just to see how the numbers add up. The results were interesting and the findings led me to do up a table calculating the annual salaries in each year starting from the age of 24, which is the average age at which one graduates from university, right up till 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.

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.