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

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

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

Education. "I hereby sincerely apply for a job." We go to school not to learn how to write a resume, but to study. And we study so that we can solve problems within the real world. Consider this: Before going to school, identify a problem in the real world. Then go to school, study the problem and then think up of possible solutions. Draw up a plan of how to solve the problem. After graduating, go back into the real world and actually solve that problem. In that process, you have now created value, and can get someone to pay you for doing that.  Instead, we live in an education system that entices people to collect certificates and degrees. And the best thing that you can say after getting a certificate or degree is: “ I work well under pressure, I am a team player, I hereby sincerely apply for a job ”. From a purely academic standpoint, you are qualified to gain employment. Beyond that, nothing else shows that you can actually get stuff done. This is how we end up with so many graduates and postgraduates today who are simply looking to just get a high monthly salary rather than solving real world problems. "Back in the old days..." "你的苦不值得被承认" [1] Older people tend to conveniently project their experiences on younger people. Those who say that " we had it much worse off back in the days " are not trying to comfort you on the struggles you are facing today, neither have they given you any practical advice on how to go about dealing with them. Instead, what they are really doing is comparing who is worse off, and subtly hinting that what you are facing now is nothing compared to what they had gone through many years before. The truth is: Everyone goes through their own personal struggles. There is no basis for saying who has had a tougher time. Bringing up unhealthy comparisons to the past will only cause those who are currently struggling to feel more helpless. Staying humble. ...is not just about NOT showing off. Many people think that humility means keeping quiet and not bragging about how good you are. But being humble is not just about restraining yourself from showing off. Being humble is about being consciously aware that you are never good enough , that you are never the best , and that there is always room for being better - only if you are are willing to let your pride down and take the criticisms of others. The art of receiving feedback (especially negative ones) therefore becomes a very important element of being humble. When someone provides you with feedback, just listen and not rush in to justify yourself.  If your higher ups give you negative feedback, it simply means that your execution had been ineffective. If subordinates give feedback, this is merely observation on their part, albeit right or wrong.  Humility is about taking responsibility for the outcome, not about who’s looking good or bad. At the end of the day, the results are all that matters, not the process or delivery. Justifying yourself (especially in any negative outcome) will only demonstrate your need to always be right, and nothing good ever comes out of proving that you are right all the time. Treat everything professionally. Take nothing personally. [1] As seen from: https://www.instagram.com/reel/DIgSPPoxQcS/?igsh=dHV2eHJnN2YzMzJj

It feels weird to say I'm traveling 'back' to Hong Kong after a business trip. I have spent the majority of my time here for the last 2+ years and there's a certain feeling of familiarity. Yet it feels nothing like going back home in Singapore. It's not a bad thing, just different. Beijing International Airport Whenever I travel, I often think about what it would be like to live in the visiting city. Not for a few days, but for months, and even years. Universities nowadays offer abundant opportunities for students to do this in the form of student exchange programs. It's an invaluable experience of learning to be independent and making more friends. Yet there is a subtle difference. With exchange programs, there is always a finish line. Exchange programs are pretty much like extended holidays with a simple commitment to set aside some hours for study, take an exam at the end of it all, and then go back to the comfort of home with an album full of instagram-able stories. Most who work overseas don't have a clear finish line, unless of course you have been sent there on a secondment with a visible plan of returning after a certain number of years. Unlike school, there is a commitment to deliver and perform in a largely unfamiliar environment. And if your familial and social support is back at home, there is sometimes also little to look forward to at the end of the day. The various circumstances, both external and internal, faced by those who venture abroad, are what makes them more tough and resilient, each in their own ways. People who have been born, bred and work in their home environment, or have assimilated into the indigenous fabric of society with their families may find this difficult to understand. This year marks my third year in Hong Kong. The experience of relocating in the capacity of a working professional, as I sometimes describe to colleagues and friends, comes down essentially to four things: Getting used to living apart from loved ones for an extended period of time Learning to use a second language as the lingua franca Embracing culture - both in the social and business setting Adapting to a new corporate environment or business function Some people adjust very quickly. Young folks and fresh graduates in particular, are almost like sponges , soaking everything up around them when thrown into a foreign place. When you relocate as an experienced hire, the slate is not empty and the "soaking" tends to be a bit slower. But in any case, anyone who has lived overseas for an extended period of time inevitably goes through at least one or more of the above. Each overlapping the other, each influencing the other. Everyone navigates this differently. Whether you are a budding professional or a seasoned hand, whether you are living overseas or starting work in a new environment, one of the most effective ways to get the most out of living in any foreign environment is to fully imbue yourself in the local life. In short: The faster you acclimatise to all aspects of your surroundings, the easier life becomes. " Comfort of home " is the term most people use to describe the country that they were born in. I might live out of a thirty-square-metre space without a kitchen stove or windows that open, but when traveling back from Beijing, Hong Kong is pretty much as good a home as is Singapore. 入港两周年 PS: This week officially marks two years of me residing in Hong Kong.

After two years and given that it was the year end, I thought it was timely that I should spend some time to consolidate and reflect on the takeaways, the hits and the misses during this time. But nothing actually came to mind. So I spent the crossing-over to the new year in a relatively low key fashion. No celebration, not a lot of booze, no chugging of beers, no fanciful dinners or gatherings. All I did was head up to the open-air rooftop of my hotel at approximately 23:50 in anticipation of the fireworks overlooking the Hong Kong city skyline. Even after the clock struck 00:00, there was also no spectacular display of fireworks, not at least from where I stood. On the roof of Harbour Grand hotel. Yet, this was how I enjoyed the new year crossing. The simple peace and serenity of taking in the cool 15 degrees outdoor air, the sensation of looking forward to a restful morning on the following day. And perhaps more importantly that the rest of the world only wakes up and starts to go to work two days later. Some might even call it a short reprieve from the shitstorm of work awaiting in the first week of the new year. During my investment banking analyst days, a VP once asked me what I did on weekends. I gave him the rhetoric of being too busy catching up on work to be able to plan for anything else. It was true anyway. Whenever anyone asked me about my banking days, I always told them that we worked seven day weeks, had after dinner drinks at 9pm, went back up to work around 11pm, got off past midnight and then back into the office the next day at 930am. That routine changed slightly as we grew into our jobs with travel increasingly becoming a part of it but the hours never really changed. Aside from the mandatory 2-week compliance leave that we were entitled to, there was hardly any downtime, and hardly a moment to "switch off". This daily cycle can put a toll on you, both physically and mentally. I recalled one of my colleagues popping pills to regulate this blood pressure because he was getting increasingly affected by the incessant badgering, the non-stop phone calls and the never-ending refreshing of pitchbooks and financial models. " Regardless of how little time we have, one must learn how to block out work when it is time to rest. Otherwise, you would go crazy. " - that was what the VP had said to me. There is stress everywhere, in every blue-collar and white collar job, no matter how much you try to justify it using salary. It could take the form of overtime hours, a nasty boss, an unreasonable client, unhealthy working environment, etc. Everyone deals with the vicissitudes at work differently. Some say this deprivation of normality over long periods of working in a high pressure environment leads to overcompensation through the splurging on the extravagant stuff. Despite what the rest of the world says and thinks, I think one of the biggest takeaways from doing investment banking wasn't really the money, but the fact that you can put yourself under tremendous pressure and yet pull off functioning as a normal person under any circumstance (at least for those of us who made it out sane). Yet, there are those who seemingly made it out but never really left. You can of course leave an investment banking career and still stay rooted in a toxic mentality. These are the same people who continue to measure success through lofty titles, name dropping and the size of their pay checks. You can always sniff these people out by what they choose to talk about with you. Only just recently, I was re-connecting with an ex-colleague over WeChat. Much to my surprise, within a few text exchanges, he started asking where I was now, if it paid well and other stuff related to corporate hierarchies and knowing who's who. I did not write him again. And so, there will always be nasty people to meet and unpleasant experiences, but there is also the mindset we take with us to deal with it. We can continue to complain about working on weekends, how much of a pile of work awaits us on Mondays, how we are not commensurately comp-ed to our peers, how much we are sacrificing personal, social and family time for work, or how sucky the markets are. Endless worries. Life will forever be a struggle, but to some extent, we are almost always in control of the decisions we make and always have the choice of deciding how we want to let the little things shape us and the way we move forward.

At twenty, you don’t get the life you deserve, you are just the product of the environment you were lucky or unlucky to have. Then, as you get older, and enter your thirties, forties, and beyond, you notice how much agency you actually had on your life. Maybe you moved abroad, learned another language, another culture, another mindset, and became an entirely different person. Maybe you decided you had nothing to lose, and invested all your meager savings into the bet of a lifetime, and it worked out. Maybe you changed all your habits, and realized that you could be much healthier, smarter, stronger than you thought, if you simply maintain a better diet, a better training, a better sleep, a better routine. Maybe you fell in love, and realized that a great marriage was about so much more than physical attraction and intellectual compatibility: if you find yourself walking alongside with a kind, thoughtful, honest person who loves you back, you actually won the lottery. Maybe you met some great people during your journey, shared with them parts of your journey, overcame difficult challenges together, finally understood the real meaning of “friendship,” and that some people are worth trusting and making sacrifices for. Maybe you also had health issues, lost a few precious people that you loved, understood the fragility of life and the pain that comes with truly loving someone else, but also finally gained enough wisdom to appreciate the simple things in life, that are free and in abundance. It’s a long journey. The best and the worst things will happen to you. You can choose to act like a victim, or you can choose to respect yourself and be more resilient, mentally stronger, overall better. In the end, you will look back, you will connect the dots, and it will all make sense, that you got exactly what you deserved. Note: Read the above off X (Twitter), Orange Book

Day 4 of Singapore's so -coined "circuit breaker". This is how my re-designed work space looks like. My daily routine has totally been disrupted. I used to frequent the cafe that's near my place around 8-9am in the morning. I would sit there to start the day reading news, emails and top stories from the night before. Depending on the morning schedule, I could sit there for hours right up till lunch. These days I spend the entire mornings at home. I think this is a very trying period for many people. These are very uncertain times. Sure, I've been through economic uncertainties - the global financial crisis in 2008 which saw 100+ years-old Lehman vanish, the Eurozone crisis in 2011 and the oil supply glut in 2015. These crises were mainly driven by financial markets. People were nervous, some lost jobs and there was a lot of jitters in the office at times. So back then as an employee, I just sat tight, kept my head down and did my work. It was tough and everyone knew bonuses would be bad, salary increments would be crimped. But this time it was different for me. This is possibly the very first time I am experiencing a worldwide financial crisis and pandemic as an employer / entrepreneur. I worry not only about my own cash flows, but also payrolls, business expenses and also how the world will return to normalcy in 6 months, a year, maybe more? I keep wondering how this pandemic will change the way we do business, how it will affect cross border business travel and many others. And maybe for the first time, I truly understand how the sole proprietors out there and the marginally paid front line workers who live month by month are feeling. That sense less of helpless-ness and uncertainty that looms. Just last week, I overheard a young chap on the bus sitting behind me talking: I was supposed to have gotten that restaurant job... They were reviewing my salary but after the circuit-breaker announcement on Friday afternoon, they came back and told me they not hiring anymore. My wife also just lost her job last month, so I just need to find something to do for this month, maybe food delivery or something... The cash crunch is real for many. It's also creating a lot of tension for people. After I alighted the bus, I could hear another random person on the street arguing with someone over the phone. Fortunately the band aid here is that the government is giving discretionary payouts for low income families. I personally don't think it will be enough but I also believe that they are trying their best. This one month of circuit-breaking will be a big financial set back for many people and businesses, even with increased food delivery measures for F&B operators . It'll also be a game changer for the world in terms of how individuals will manage themselves and businesses will interact with each other. To be continued.

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

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

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

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

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

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

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

August is shaping up to be one of my busiest months. On top of three webinars every weekend, I have a couple of two-day on-campus classes. I think Zoom fatigue is real and the offline classes provide a huge reprieve. However, the valuation and financial modelling classes always made me think about how I could enhance my existing content and in-class experience in each successive session. I don't claim to be the best and most experienced on the street, but I think where I am different is my perspective of looking at financial modelling and business valuation. Perhaps that is the unique value-add I bring to the table. I thoroughly enjoyed the 2-hour talking session last night on Zoom and was possibly the youngest panellist. We spoke and shared our views on what to expect in the next 6-12 months, personal experiences and opinions on valuation and investing, amongst others. We also discussed the current situation around the pandemic and how people and companies should remain flexible and adaptable for the uncertainties that lie ahead. Learning on the job. During my corporate finance days, I tend to be the junior 'play-maker'. I don’t crave to be in the limelight. I'm happy to just sit in and meetings and watch the show. Occasionally, I get the ball, I pass, someone scores a goal, sometimes I score. Everyone gets paid at the end of the day. Everyone wins. I'm happy. Tired, yes - but happy. So I had spent most of the early chapters of my career being the nice guy, helping out where-ever I can, whenever I can. On one occasion as an analyst, a VP had requested some help for work to be done for an RFP due on Monday. An email was sent out to the analyst pool on a Friday and I was the only sucker that said yes. Sounds like a common Friday evening horror story? I ended up burning my weekend doing up the presentation deck. In fact, many weekends were like that. It was a sacrificial rites of passage as an analyst in investment banking. Someone put this in perspective for me: You're basically trading time for money . I still enjoyed what I did. I disliked the mundane work, but just wanted to show up and be a team player. As time passed, I increasingly became the go-to guy for a lot of what we knew as JIT (just-in-time) projects. It could be a comps table that needed refreshing an hour before a client meeting., a model that needed updating before a meeting, or a pitch-book that required assembly in 24 hours. I had proven to be one of the most efficient and effective analysts in the team. I took pride in what I did, and I still do today. But in the frenzy and rush of producing all the work, I had unwittingly lost sight of the " bigger-picture " investment banking business model - I just did what I was told and dedicated very little bandwidth to develop myself more professionally in other aspects. As the days passed into years, my professional growth became increasingly stunted and fuelled by the mindless monotony of spreadsheeting and churning pitch books. Compensation. In negotiating any compensation, one must first ask the difficult question: What value do I bring to the table? When you graduate from school and someone hands you a $10k paycheck, you are expected to be the most powerful sponge on earth. Your job is to soak up anything and everything as fast as possible. You are the " smallest gear " in the entire system required to produce the highest torque - that’s your leverage . That leverage has a premium and that is what companies are paying for. When you eventually evolve into middle and senior management, you become the large gear . You are measured based on your ability to drive as many smaller gears as possible. A large and heavy gear which does not drive anything is both costly and redundant, and will inevitably be scrapped. Therefore in starting up any business or pursuing any career, one needs to first understand your role within the firm - are you a small gear or a large gear? If you can't make a difference to the organization you work for and its clients, there is really very little that you can ask for commercially. Don’t get me wrong and under-price yourself. Shoot for the sky if you can. But remember that if you ask for high fees or draw a high salary, you must deliver . And don’t get cocky. More importantly, don’t ever be complacent. 羊毛出在羊身上 Everything has a cost, nothing comes for free. It was much later in my investment banking years, and after starting a business, that I truly appreciated what revenue model and cost structure really means. As an employee, your salary is a cost to the organization, and your main job is to bring in revenue for the firm. Everything else that you do in that process is ancillary to that main task. Beyond salaries, the firm incurs other overheads such as rent, administrative expenses, entertainment costs, etc - all of which are important in supporting the operating infrastructure of the business. The firm's most critical focus is to be profitable. To do that, it needs to grow revenues as much as possible, and it depends on the best employees and sales people to achieve that goal. Usually, the people who are most instrumental to that growth will be rewarded, but in larger organisations, there is always bound to be some dislocation of credit. Don't get too quickly disgruntled when you get paid a lesser bonus than expected. Unless you run your own enterprise, your remuneration is never perfectly correlated or proportional to the firm's profits. You are just an employee , a cost center, and not a shareholder. Understanding this corporate dynamics early on in your career makes you more sensitive to not only the firm’s P&L, but also the need to intelligently source for sales and develop yourself personally. Over the years, when I started my own business and spoke with more people outside the banking industry, I increasingly appreciated the costs of customer acquisition and the value of relationship building. Your work experience gets increasingly diluted and worthless if you choose to sit behind a desk doing endless powerpoint pitches and spreadsheets. In banking, the one thing that many junior analysts (and even associates) fail to realise is the importance of doing small talk with professional parties, engaging colleagues from other departments within the bank, and even client interaction. Every individual is different. Some like to go deep into numbers, others like to hear the big picture. Some like bragging about their achievements while others just want to complain and vent their frustrations to an external party. Regardless of the shapes and sizes that people come in, the interactions - whether direct or indirect - are ultimately contributory to helping the firm bring home the beef that pays the salaries and bonuses. You can choose to systematically and independently acquire technical skills from a corporate finance manual, but there are no handbooks for learning the ropes of business from the "s chool of hard knocks" . So don't get too frustrated if you aren't hitting home runs by showing off your beautiful presentation or financial model to your bosses or clients. Sometimes, your greatest value is in just showing up or being a small cog in a big system. Being commercial. From a statistical point of view, not every one will make managing director in an investment bank. This is not abnormal. In an ideal world, the funnel is straight, and 100% of all analysts would make associate, 100% of all associates would make VP and VPs to MDs. But the reality is that attrition happens at every rung. Making Partner or MD isn’t the pinnacle of your career. I used to think that MDs were the creme de la creme in the investment banking world. But the truth is, many of them are just successful in navigating corporate politics and hierarchy within the firm. MDs are really just highly paid salesmen within the bank. MDs exist only because the banks believe that their relationships with senior industry people and clients can be monetised at some point of time. Their KPIs are based on the bank's revenues and not on whether they make your life easier. It is also because of this that most cultures in investment banks appear to be toxic. Don't take it personally, it's all just comes down to sales and the bottomline . As someone lower down the rung of the ladder, if you focus too much on pleasing your bosses and co-workers as part of climbing the corporate ladder, you'll find yourself rudely awakened ten years later into a miserable job. So, everyone - junior or senior - needs to learn to be commercial , and that means understanding how the business of your firm works and who the real customers are. Above all, be smart, be a good listener and nurture good analytical skills. Learn more to solve problems rather than pleasing people.

I have been through corporate budget planning processes. They can be quite uncomfortable. Some of my colleagues used to comment that the numbers keep going up every year, recession or not. The numbers usually involve an estimation of the revenue opportunity based on current pipeline and their probability of closing. In some cases, revenue shadowing is being applied, especially when a huge client is being serviced by multiple parties within a bank, a relationship manager, an industry specialist and a product guy. This "30-year" plan was charted out in what was supposed to be IJK's annual meeting. in 2018. Looking back, this has to be one of the most ridiculous budgets and firm targets ever to be drafted. It's nice to have big dreams and ambition, but it's more important to stay real and keep your feet on the ground. Also, this "astronomical" plan also serves as a gentle reminder to never listen to dubious people whose credentials and experience are questionable.

TLDR version Discount rate is investor-driven . Every investor has different expectations on returns, which implies the discount rate is subject to bias. The CAPM model for deriving cost of equity is historical-looking and based on the perspective of a fully diversified investor. As such its relevance to the future and the target company must be taken with a pinch of salt . Don't neglect the importance of analyzing future cash flows when using the income approach. Discount rate isn't everything. Most analysts and associates that I know tend to get very caught up in the math and precision of calculating the discount rate when it comes to doing discounted cash flow valuation. I have a healthy respect for the work and research that has gone into developing the industry standard for the discount rate or WACC ( weighted average cost of capital ) - which is extensively used by most people in the world of finance. However, in reality, I don't see why any investor should dwell too much on the accuracy and precision of the discount rate - especially when it comes to valuing deals in emerging markets. Warren Buffet summarizes this aptly: "Volatility is not a measure of risk. And the problem is that the people who have written and taught about volatility -- or, I mean, taught about risk -- do not know how to measure risk. And the nice about beta, is that it's nice and mathematical, and wrong in terms of measuring risk. It's a measure of volatility, but past volatility does not determine the risk of investing." WACC as a discount rate It reflects returns expected by all the stakeholders in the business. Debt holders get their returns in the form of interest and principal, while equity holders (shareholders) get their returns through dividends or whenever they sell their shares in the company. The model behind quantifying risk and returns are incredibly correlated with share price movements as public markets provide the most visible and transparent form of valuation. The theory is that: The share price of a company generally moves in tandem with the overall market. The riskier the company, the more the prices deviate from the benchmark indices. Risk in this case is driven by the industry dynamics as well as the amount of debt the company holds. More debt means more risk and therefore more share price deviation. The beta in the capital asset pricing model tries to quantify this. There are a number of factors that go into the calculation of the beta: Choice of company and market benchmark to compute the data points Relevance of the company being selected for the comparison Sample duration (1 year or 5 years?) R-squared of the dataset Assuming that you can accurately triangulate the above datasets, the outcome of the analysis is still inherently based entirely on historical data, which we already know, cannot be used as an accurate basis for predicting the future. Comparison is the name of the game in valuation. The industry-standard for deriving the discount rate involves comparisons with market benchmarks such as government bond rates, indices and comparable companies. In layman terms, what this means is: "If I invest in a similar bond or financial instrument and get a X% return, why should I invest in you for the same?" The discount rate for companies are priced at a premium because they are perceived to have higher risk than a certain market benchmark . In most cases, this is pre-defined as the expected returns from putting capital to work in a mature and diversified financial market with the following attributes: Little or no history of defaults on sovereign bonds; Triple-A rated by credit agencies A stable political governance framework (a possibly contentious assumption under today's incumbent president) and; The existence of a highly liquid and transparent equity capital market. The price movements in the markets are also dominated by different investor profiles: Hong Kong has been traditionally seen as the capital markets gateway for companies with significant exposure to Greater China , while Singapore is noted for its position as a "safe haven" for wealthy asset managers hungry for yields, making the listing of real estate investment trusts ('REITS') hugely popular with the its exchange . Likewise, the companies listed on the ASX, TYO and KRX are also largely shaped by the their home country's trade and industry dynamics. The resulting beta calculated from each of these markets will be to a certain extent, driven by the largest companies listed on the respective exchanges. An appropriate benchmark for a mature market? Most firms continue to use the US market as the benchmark. Research states that this is approximately 5.23%. Is a "mature market" in Asia - one which has stable financial and geopolitical regime - be compared and likened to the US? Can we equitably also say that the returns for investing in a mature Asian market are also 5.23%? Take Hong Kong for example: It is a key and unarguably mature financial center in Asia, constantly perceived as a gateway to China. In the last couple of years, the city has also been caught in the epicentre of social unrests stemming largely from geopolitical factors. How does one marry the two to derive the equity risk premium in a market such as HK? Can we appropriately coin HK as a stable equity market? For a foreign business looking to enter Asia/China, would you use the mature market risk premium as the basis for your budgeting calculations? Risk is ultimately a game of probability and uncertainty, and not volatility. Uncertainties are driven by external factors such as geopolitical events; while internal factors refer to the company's business plan which drives the visibility of future cash flows. In a period of significant uncertainties, the application of the discount rate becomes less relevant. Additionally, every investor out there has different appetite for risk, and these are shaped by their degree of understanding and comfort levels in the business and the market it operates in. Every investor who receives a pitchbook of a company profile knows that the valuation number in the deck is whatever the banker wants to portray in order to win the mandate. The discount rate is irrelevant. A smart investor knows that validating the DCF valuation presented by the banker takes more than just a meeting but a deep dive into the operating drivers and free cash flows . Rather than spend time dissecting and defending the WACC, you are better off analyzing the company's underlying fundamentals. Most business meetings involving pricing comes down mostly to market multiples: P/E ratios, EBITDA multiples, EV/Sales. These ratios are intuitive, easily applied and comparable across geographies and businesses. It may not be rocket-science accurate but at least everyone sitting in the boardroom has sufficient understanding of the literature to make a decision. In some cases, valuation can also be totally irrational. Investors will acquire a business 'at all costs' to gain a foothold into the lucrative markets of Asia regardless of what the discount rate shows. It makes the WACC calculation sound like a bunch of pig latin but that's the reality of asset pricing, especially in emerging markets. There are still many merits to understanding a company's cost of capital (read also my article on DCF and LBO). Cost of capital is important in capital budgeting and knowing the limits of your borrowing capacity. Unless the most important stakeholder in the room (which most of the time happens to be your client) asks for a scientific breakdown of the WACC, you'll find that most of the time, the discussions around valuation are going to be on cash flows and market multiples.

General Electric (GE) in the 20th century was known for the implementation of many successful business and management practices, including the lesser-known origination of the modern day investor relations (IR) function. It was apparently pioneered by a guy called Ralph Cordiner , who was GE's CEO and Chairman from 1958 to 1963. The roots of IR were evolved in the early days due to the need for companies to compete for capital in a systematic and strategic way, beyond the customary one-directional promotional advertisements. Money markets back then were a lot less developed with far fewer investors, and the large part of' IR work was subsumed under public relations , which was primarily focused on getting word out into the market and letting investors decide for themselves whether they wanted to buy the stock of a company. Over time, the tactics for investor targeting have grown increasingly sophisticated, characterised not only by demonstrating financial competency, but also the need for bi-directional communication and interaction. The fierce competition for capital also required companies to 'up' their game with the goal of optimising cost of funds to deliver higher shareholder returns while adapting to the changing tides of the capital markets. There is obviously a lot of art and science in IR today, from analyzing changes in shareholding patterns, proactive capital markets management, to dancing the tango between the company's management team and investors brokered by securities firms and investment banks. Because share price is often taken to be the holy grail of a company's success, IR functions are often expected to be part of corporate decision-making process, with investor engagement being an extremely core part of that consideration. Rightfully speaking, this dialogue with investors should guide towards a true and accurate reflection of a company's fair value , but the world is more complicated than that. As many business units within the firm including C-suite functions tend to be graded based on share price performance, there is almost always a natural incentive to curate and design the short-term narrative towards a high value, which sometimes comes at a cost. Beyond the obvious moral hazard, this ultimately results in share price and trading volume volatility. In the textbook context, these attributes are conventionally perceived as risk, which in today's market can be capitalised and profiteered by creative investment managers seeking to take advantage of the wild swing in prices. And the swing in share price can sometimes put a lot of pressure on those in IR roles. I recently "counselled" a couple of colleagues on the above, hoping to help them put things in perspective, and perhaps more importantly, not to beat up themselves too much if things don't go according to plan. There are things that you can change and there are those that you can't. The world is that complex a place. "When something that previously didn’t work suddenly does, it doesn’t necessarily mean the people who tried it first were wrong. It usually means other parts of the system have evolved in a way that allows what was once impossible to now become practical." - Morgan Housel Because of all these moving parts, any success or failure in an IR function becomes incredibly difficult to measure. Take for instance, should IR be judged based on a decline in the share price of a public listed company? Even though inherently we know that share price is correlated to fundamental performance such as net profit. Conversely, how much credit should be given if there is a two or three fold increase in share price over the same period of time? Underlying all this: Should a company's share price performance be a key performance indicator for an IR team? These are sometimes the result of fundamental reasons ranging from revenue and profit (which are partly driven by the business and macro environment), to irrational and unpredictable events such as someone firing a missile from a certain peninsula in Asia. Both of which are not within the direct influence of the IR function. The reality is that changes in share price are subject to multi-dimensional catalysts. And if these are mis-read, can unwittingly lead the company down the wrong path of decision-making.

Blatage Coffee. My typical (and definition of a) quiet weekend in Shanghai - chilling by the 黄浦江 on the Pudong side.