For many, it is that time of the year again for festivities and holidays. However, it is also the time of the year for many companies to round up the hits and misses. Simon Sinek says that "you can’t incentivize performance, you can only incentivize behavior". But what happens to an organization if you reward the right behaviour and fail to deliver on results? Embracing the philosophy of 'survival of the fittest' might be their best chance of staying afloat, should they continue to reward good behaviour at the expense of performance? Goldman Sachs, has an annual 'culling' ritual whereby it shaves off the underperforming 5% of its workforce. This might sound brutal but that practice is probably one of the key reasons why the investment bank has successfully maintained its leading edge amongst the rest of its competitors. In the book "Dream Big", Jim Collins also talks about private equity firm 3G Capital's corporate culture: "The very best people crave meritocracy, and mediocre people fear it." Generally, those who seek to cruise their way to a natural retirement should be eliminated for the greater commercial good of the company. Yet this is not always so. Large companies often have blind spots and loopholes within their organisational hierarchy for underperforming people to hide away. Sometimes, it is also more costly to replace a long-serving employee who has been too familiar with keeping up with the firm's day to day operations. But trimming the fat is a crucial aspect for staying alive. And in all of these scenarios, the firm pays the ultimate price in terms of profitability and efficiency. It can be very easy to feel victimised when you don't get credited or rewarded (monetarily) for the efforts that you put into a particular project or for achieving a breakthrough for the company. It could also be a certain line manager or a higher up finding fault with you. And this could be anything from a missed deadline, falling short of KPIs, or even not trying hard enough. Sometimes the way things work (or don’t work) within the company is not entirely your fault. The larger the company, the more complex and inter-connected the workings are. The reality is everyone is entitled to their opinion. Just remember that the ones who have real skin in the game (those who have something to really lose when things go bad) have the absolute right to ask questions and demand for results - even if they sound unreasonable. Don’t beat yourself up too much. But remember, as an employee, also don't be too quick to give yourself more credit than you deserve for your achievements at the workplace.

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

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

It has been a relatively productive two weeks in Singapore. Most of the conversations I have had ranged from my life in Hong Kong to opinions involving the current state of affairs in China. A few common themes consistently came up and I thought it might be a good idea to summarise them here. China will open up... eventually. There is no denying that supply chains, the over-leveraged property sector and the broader economy has been impacted. This has likely resulted in a slowdown of the economy (hard to verify if any of the public disclosed figures can be relied on). There's a lot of noise involving the recent protests, possibility of further lockdowns, speculation over when travel will open up etc. No one really knows. The concern over handling foreign infections is understandable given that China has over a billion people. Just imagine the toll on healthcare infrastructure if a billion people went to the hospital at the same time. That being said, we can be sure that China will eventually open up. Its interest for doing business with the rest of the world remains intact. There is no way to prove this, it's just a matter of time. However, given the elevated cost of funds in today's environment, time unfortunately also means more money. A changing demographics and mindset is shaping the new world economy. Persistently high youth unemployment rates might pose a longer term problem for the economy. 躺平 has obviously been one of the catalysts, but the contraction of jobs supply is partly also due to the crackdown on big tech and edu-tech over the last year, the imploding of the property sector, and the more recent cost-cutting measures observed in various household tech giants such as JD.com and Sea. There is also less motivation (or greed depending on how you look at it) to excel in life. Call it the successful result of pushing for common prosperity (共同富裕) or simply renouncing the lofty desires in life (看破红尘). Young people are increasingly comfortable with getting by doing the minimum. This is a generational paradigm shift that is taking place not only in China, but many parts of middle-class Asia as well. The beliefs and values of those born before the 1980s have been mostly shaped by the need to have a good education in order to secure a well paying job. Having gone through the dot-com boom and bust, the Asian financial crisis, globalisation, etc, hard work has been taken to be the 'holy grail' for being successful - success in life being largely defined as having a high paying job, even at the expense of sacrificing personal time and working long hours. Hard work correlates to wealth, which buys a roof over the head and some financial stability. And the results have been evident over the last 5-10 years as seen in higher income levels. Economists in Asia have previously also touted the emergence of Asia's middle class, in which the rising affluent population (especially the Chinese) were expected to spend more on lifestyle and luxury. In a recent weekend coffee catch up with a friend, he mentioned an interesting observation: Setting aside the affordability of buying a home, it is actually a lot easier for young people today to get by. In Japan, Korea and China for example, there are tons of convenience stores for getting decent hot food and supplies. There are shops like Uniqlo and MUJI for clothes, and "dollar stores" such as Daiso and JHC for incredibly cheap household stuff. If you are willing to forgo the luxurious brands, you technically don't have to dig very deep into your wallet to live comfortably. It is actually very easy for people to 躺平 and give up on the ”high life". From a capitalism point of view, this is obviously bad for the country because growth has traditionally been associated with increased spending, and not about being contented with living the simple life. And while US and the rest of the world are hiking rates to fight inflation, China by contrast is doing the opposite. By cutting domestic rates, the Chinese government is probably adopting the age-old "inflation targeting" monetary policy to rejuvenate economic growth and avoid stagflation. A new new normal. The narrative on the outcome of China's recent party congress meeting is obviously extremely divided, you either love it or hate it. Some of the peers I spoke with see XJP's next 10-year rule as an iron-fisted style of governance. While it might appear as if too much power is in the hands of one person, this continuity also implies a certain stability in policies, which can be a good thing in today's volatile markets. The so-called 'strong fisted' ruling also means that privately owned enterprises who work more closely with state-owned-enterprises could be seen as a more 'friendly' party aligned with national policies under the current regime. "I believe China is currently in the range of 3 to 5 percent growth, and headed rapidly to zero" - excerpt from Politico.com, January 2016 In 2016, when the term "new normal" was first introduced at China's 13th Five Year plan, there were several opinions hinting that one of the world's largest economic engine was rapidly grinding to a halt, including the possibility of a catastrophic outcome. But an article published in Fortune put this into perspective: "The slower growth rate is a sign that China’s enormous economy has passed the startup stage and is beginning to mature. While this is certainly a new environment for investors to wrap their hands around, it doesn’t equate to economic Armageddon." China and most of the global economy continued to thrive in the three years that followed, right up to the pandemic in early 2020 which took the whole world down. What doesn't kill you makes you stronger. Maybe that could also be what the world needs right now: To be less pessimistic and gradually learn to embrace a second new normal of a controlled (or regulated) market economy rather than a free market economy that is jacked up on steroids.

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

HKIA isn't what it used to be in the old days. No crowds. Only a handful of shops open. Lounges are dead. HKIA used to be a humdrum of travelers, both business and leisure. I used to look forward to the lounges (the Cathay ones especially) as they usually served free flow warm food, drinks, snacks, etc. The Pier at HKIA was a favourite go-to for its refreshing hot showers and Aesop scented shampoo and body wash. After that, I would settle into a bowl of hot wanton noodles from the noodle bar, extra serving of chilli, paired with either champagne or a can of Asahi. At times I would have someone from the dessert counter give me a scoop of vanilla ice-cream, then head over to the coffee bar and ask for a double shot espresso and pour it over to make an affogato. Then I would either get to work on my laptop at the bar area or just get some shut-eye on the couch. I could spend an entire day in transit at HKIA - and people would think I am crazy. Occasionally, I would even travel out of the airport into the city to meet with friends. Macau was also accessible straight from HKIA via a one-hour or so ferry ride. This was the Hong Kong that I was familiar with, at least from the perspective of an airport commuter. So you can understand why I was slightly sad and somewhat disappointed when I saw the nearly empty aisles along the departure gates at HK airport. Aside from the crowd, nothing much about the facade has changed except for some additional seating areas with charging points. The city struggles having to deal with conforming to mainland policies (which is totally understandable), but at the same time, facing pressure to open up like the rest of the world, especially Singapore, its closest competitor. It is not an easy task. Every month, business and investor confidence in the city is diminishing. Whether it relates to the perceived lack of freedom, uncertainty around propaganda from Beijing or the draw of spacious living, companies can always find a reason to jettison Hong Kong for Singapore. It is odd for me, speaking as a Singaporean but I actually am rooting for Hong Kong, in a healthy competitive way. Hong Kong is probably the last frontier for China's position as an international gateway. Despite its current sovereign ownership, it's colonial legacy and history is what gives Hong Kong its uniqueness - the ability to harness the vast potential of the Chinese market and combine this with the best (or widely accepted) practices of the West. And if you think about it, this is actually very similar to Singapore. Singapore surely has Southeast Asia as its playground, but Southeast Asia as a market dims in size significantly to China. Its diversity of language and cultures, unlike China, makes it more difficult to penetrate and navigate the ground. As big as China is, its socialist-driven economy incorporating standardization and uniformity is probably one of its biggest selling points. For example, you could hire a Chinese-speaking person, parachute him/her anywhere in China, and can be assured that he/she will be able to navigate the ground with relative ease. But you can't do the same with Southeast Asia. To master the Indonesian market you need a native from Indonesia who understands not only the language but the customs. Likewise for Vietnam, the Philippines and Thailand. The ASEAN bloc as a whole works well together because we collectively thrive on regional common interests. But to succeed in each market independently, we need to dedicate resources specific to each country. Besides, to win in Southeast Asia, you can't afford to focus just on one country. Even the biggest and most successful startups in the region have expanded their footprint beyond their home country. After Indonesia, GoTo has set its sights on Singapore, Malaysia and the Philippines. Despite making a name of itself in Malaysia, Grab has expanded into other key markets such as Singapore, Indonesia and Vietnam. Yet, even as successful as these startups go, Southeast Asia as a region still falls behind significantly in size to China. Over one billion people in China over the last few decades have been reading more, spending more, investing more, and consuming more. And in recent years, the flurry of venture capital and private equity money into Southeast Asia, lifting overall valuations, has just made it increasingly difficult to find a rich exit in a crowded market. Everyone is waiting eagerly for COVID restrictions in China to open up and for trade flows to resume. Guess which city will be the biggest beneficiary of that? It is perhaps simply just all a matter of time. Make Hong Kong great again.

I recently rewatched SBF being interviewed on the David Rubenstein show - "Why do so many young people seem so attracted to crypto... it seems like young people are particularly are very interested in it. Why is that?" "If you're...you know... twenty-one years old, and trying to get access to markets... you want to be able to trade, to invest. You can sign up for an account on crypto-exchange and get full market access. If you try to get that same level of access in equities, in commodities, you can't get it. You're going to end up with heavily mediated access that has like pretty limited amounts of real interactive-ness, limited amounts of liquidity, limited amounts of size, limited amounts of market data. And so for a natively digital generation looking to take more control of their finances, actually being able to do it with crypto is a big big difference."- SBF Observe David Rubenstein's expression and you might detect a little skepticism and "wtf" in his responses. So much of the above subconsciously embodies a culture of wanting unlimited quantities of everything. It also speaks to the rebelliousness and perceived inadequacies in younger people, that they don't get the same opportunities and access as older folks. And how does having unlimited amounts of liquidity enable one to "take control of their finances"? That just sounds crazy. Whatever happened to spending within your means? Call me old school but if you are twenty-one years old, you shouldn't be trying to "get access to markets", you should be trying to acquire hard skills and work experience to do something constructive to society and the economy. The problem with financial markets is that after awhile, everyone forgets the most basic purpose of a stock exchange: To enable businesses to raise money from providers of capital. Along the way, we somehow got carried away in the frenzy of buying and selling based on imagination and greed, passing on the hot potato down the line. Social media also amplifies a lot of that. For what the FTX fiasco is worth, it has highlighted that: Despite how far and sophisticated we have come in terms of building an efficient capital markets, our understanding of risk-reward has been severely distorted in the process. Leverage is increasingly being seen as a tool for achieving abnormal returns rather than a cost-effective way of expanding a business. The ability to tap on unlimited liquidity to have "more control over finances" simply removes having skin in the game. It transfers the risk onto the financial ecosystem, which is buoyed by layers and layers of story-telling. [Read part I]

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. Will 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. At one point of time, FTX was 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? Why aren't middle eastern investors readily stepping in the same way they are concurrently evaluating a deal to put more capital into Credit Suisse? Systemic risk. 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. If the carnage doesn't result in jeopardising the greater good of social-economic stability, we can afford for a few investors to lose money. But no one wants to hold that hot potato. 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 tomorrow your company proclaims that all employees shall be paid in ethereum going forward, would you accept it? Why are people willing to accept discounted shares or stock options as an alternative form of wages? At the very core of it, it is simply because both believe that for better or worse, these "assets" (the shares) can be sold in the future. I hear that there are even platforms today that facilitate the monetisation of employee share options in privately held start ups. Therefore digital assets, like cryptocurrencies, are essentially a derivative product. Stocks are fundamentally a derivative product in which its intrinsic value is based on the performance of a certain underlying business, but perhaps more importantly, shares in a business can be sold 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.

In 2017, I flew to Riyadh for the first time ever to attend the Future Investment Initiative (FII) conference. This was Saudi Arabia’s largest and first ever nation-wide event orchestrated to bring in the largest and wealthiest investors, businessmen and celebrities from all over the world. Obviously a large budget had been set aside to fund these events, in exchange for sovereign publicity or to bring in foreign investment. Held at the Four Seasons, the whole thing was so high profile that it was dubbed “Davos in the desert” by the media. Many governments have their own versions of the FII - the APEC summit, Boao Forum, Saint Petersburg as well as other relatively smaller but similarly symbolic events hosted by relatively high profile media and organizations including the Forbes, Fortune, etc. In addition to rubbing shoulders with the who's who in the upper echelons of the business world., the people who travelled to these places often associate strategic importance with the cities that hosted these MICE events. Hong Kong was always known to be the top MICE destination for such events. Accessibility was one of the biggest draws. No one needs to plan ahead to be in Hong Kong. There are basically at least a hundred flights in and out from the city every day. The 20-minute commute from the airport to the city centre means that one can fly in the morning and get out by night. Besides, there was always something to do in town: Cultural festivals, concerts, business conferences, food and the shopping. And there would always be investors to meet and friends to catch up with. All you have to do is book your tickets and go. Almost every company with a meaningful global presence in Asia has an outpost in Hong Kong. At one point of time the city was even leading the charge in convening the "most brilliant minds in international tech" via the RISE conference - a must-go for any technology company with a serious interest in Asia. But there is less reason to get into Hong Kong today. Aside from the fact that many companies and conferences have shifted away, a string of covid testing procedures awaits upon arrival at the airport. Travelling into Hong Kong today has become a meticulously curated trip. Despite the recent inaugural policy address by the new chief executive in Hong Kong to reclaim the city’s historic position as a premier financial center and to step up talent acquisition and retention, people seemed to have somewhat lost confidence in what the future holds for the city. To stem the further outflow of companies and talent, the government had also in recent months very publicly unveiled a high-level banking summit to host the titans of finance back in its city center. Yet inbound quarantine measures and restrictive health monitoring continue to weigh on travel. Unlike the FII in Riyadh, never in my wildest imagination, did I expect a city like Hong Kong to have to host a large summit in order to convince high profile bankers, businessmen and investors to come to its shores. If you wanted to raise capital in Asia, Hong Kong was definitely one of the cities you had to stop by. No questions asked. During the "peak season" of investor roadshows and conferences, it was even common to bump into some of the bigwigs when you were in town (I remembered sharing the same lift with David Rubenstein once in HK at a conference). The reality that Hong Kong now has to go out at length to advertise a high profile banker summit reveals how much its economic environment has deteriorated over the last few years. Aside from the exodus of companies and talent, the debt and equities market has basically also dried up. Companies that wanted the largest and most jumbo offerings almost always came to the HKEx because of the size, depth of liquidity and diverse pools of capital. People go to Hong Kong for the riches - and it was not uncommon to find multi-bagger companies listed on the Hong Kong Exchange as compared to Singapore, which in my view, the latter is more suited for those who seek stable returns and the preservation of wealth. In order to justify and maintain its leading role as an IPO destination for Asia, the Hong Kong exchange had also initiated waiving revenue requirement for tech IPOs in an effort to revive the IPO market. Singapore is quite the classic example of how efforts in positioning itself as a listing hub has proved relatively futile. Its tie-up with NASDAQ and Tel Aviv has been questionable - none of which has produced any signficant tangible results. Even, the newly launched SPAC framework, which was probably meant to be an avenue for VCs and early tech investors to cash out, has yet to see outstanding results with only three listings to date. Part of this was probably also due to bad market timing. Hong Kong has enjoyed much success in priding itself as the go-to Asia Pacific regional hub for business and equities market over Singapore largely attributed to China. It is undeniable that China played a part in creating the huge ecosystem of listed companies. The sheer size of the market breeds liquidity, which drives more brokerage and trading activity, more research coverage, more investor awareness, drawing in more capital for companies. Globalization (i.e. China opening up its doors) also played a big role in that process. As such, Hong Kong didn't really need to sell itself as a prime destination or lower its standards in order to attract the influx of capital and large companies. Maybe not until recently. But once we start to compromise on quality and start doing things like waiving revenue requirements for tech IPOs, things can start to get dangerous. And if not careful, this shift could end up being permanent and structural.

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

More than ten years ago during my early banking days, I was chatting with a friend over lunch. At that point of time, I had just purchased my house and the economy was gradually recovering from the shock of the 2008 financial crisis. In the midst of our random conversation, the idea of living debt-free came up and I said to him: "My ultimate objective is to pay down all the debt in my property as fast as possible." He sounded surprised. Being in banking and "living and breathing" finance day in and out, he had expected that we understood the concept of an optimal capital structure, which meant that for the firm or investor, returns could (and should) be maximised by the use of leverage, assuming that cost of leverage was cheaper. As a fledging professional in finance, it sounded stupid that one would not make use of this to improve your investment. We had also just emerged from the US mortgage crisis at that point of time, and central banks around the world had launched what was called “quantitative easing”, which kinda meant cheap money for all. Governments all around the world were basically throwing money into the economy to stimulate consumption and investment. Leverage had been cheap. In those years, the trajectory of the Singapore property market also favoured this hypothesis, allowing many people to maximise their returns in real estate investment. In short, any fool could make money through property. The construct was based on a few simple ideas: Real estate has traditionally been a good store of value. In fact in Singapore, one could potentially even make outsized returns. Cost of borrowing is low. The Singapore government also did a relatively good job of maintaining the city’s status as a prime financial center, attracting a lot talent, which in turn encourages foreign investment and economic activity, which again in turn translates to lots of liquidity chasing investors and home buyers' money. Employment stats are healthy. A stable socio-economic environment allows the working class to comfortably service their mortgages. All else being constant, assuming a steady increase in property prices, even the average working household can be a millionaire on the books after 30 years. Because it seems like a no brainer, a lot of people are puzzled at why I do not want to put more money to work in real estate. We bought our house on the secondary market in 2011. It was a relatively pricey purchase, especially when you compare it with the remaining leases and state of facilities of the new developments. We could afford to buy the new developments, and on hindsight, those would have also possibly paid off more handsomely today if I had "flipped" it in the market. Had I taken leverage, the returns would even be magnified. But I did not regret my decision: If you own one property (assuming you need to stay in that property), it's almost impossible to achieve outsized returns i.e. if you sell high, you have to buy high. Fortune in property investment only favours those who have more than one property or can afford to stay 'homeless' after selling their house. The house that I live in is within less than a 2 km radius from my parents and parents-in-laws i.e. they are never too far away to visit. The nearest MRT station is only a 5 minute walk (both ways once the Thomson East Coast line is open). In addition, I have direct buses to any where in the city area. And perhaps more importantly, because of these, I never need to set aside a hefty budget for owning a car. There is good food all around - from the cheap hawker fare at Tiong Bahru market to artisanal coffee. Unlike most, I do not need to ‘travel’ and queue for these good food. They are basically just around my hood The commute to the CBD takes me no more than 30 minutes door-to-door. Extremely convenient when I need to schedule meetings in town. Sure enough I have the options of (i) paying off my home loan or (ii) re-levering to cash out some equity, but I see my current mortgage amortisation as a ultra-long-term rental arrangement without having to worry whether or not the landlord will jack up my lease and chase me out. Buying or investing in a big house would have probably worked the same way too. We would still have solved for having a roof over our heads and potentially cashing out a healthy profit in the future. But going back to my first point above: when you sell high and cash out, you have to buy high as well. Cash and the peace of mind is the oxygen of independence. “The difference between what someone suggests you do and what they do for themselves isn’t always a bad thing. It just underscores that when dealing with complicated and emotional issues that affect you and your family, there is no one right answer. There is no universal truth. There’s only what works for you and your family, checking the boxes you want checked in a way that leaves you comfortable and sleeping well at night”

I used to played a lot of basketball in school. Basketball is a fast-paced game that embeds a lot of strategy. A team of five on each side can come up with numerous ways to score within a 24 second time frame. Everyone on the team has a role - the point guard, the power forward, and the center. Street basketball sometimes involved three-a-side on a half court, and given my height I was always told to play the center position. The center position was important. When you are on the offense, the center serves as a back-up to do a rebound if the point guard's shot is off or if the power forward needs support while doing the lay-up. When you are on the defence, the job of the center is to be the sturdiest pillar under the net, blocking every shot that comes your way and turning the play over. But I hated playing the center. It was a boring position: standing under the net, constantly looking up and pivoting around a 1-2 meter radius. Sure enough I might be able to get the rebound most of the time but there was not much fun in catching the ball and then passing it on almost immediately. So I always preferred doing the layups, occasionally shooting from the 3-point line, mainly for variety. I would sometimes get told off for not staying in my position. I wasn’t trying to be ‘showy’ or anything, but simply because I enjoyed the momentum and dynamic game play as compared to relatively standing still. This ‘rigidity’ took out a lot of the fun in competitive basketball playing and I eventually found my way in athletics. Much later on, I realised that a lot of school teams select their center positions primarily based on height. The idea was that even if that person had no ball-sense but had the height, he could be trained to do what he was supposed to do. The grunt of the firm The running of businesses, especially for employees, unlike a basketball game, may not be that enjoyable. But like basketball, companies need to assemble a spread of people based on different functions and positions - rainmakers, executors, administrators and grunts. Last week, I had someone in the office telling me how frustrated she was over doing something she felt was unnecessary and that the exercise yielded no value. “I don’t like what I do, but I have no choice.” Many employees don’t like their day jobs but a lot of them in this category feel disgruntled primarily because the work is not fun, they don’t see the point of what they are doing and often perceive it as stuff that needs to be done in order to report to the higher-ups. This employee was the grunt of the firm. And despite her lack of experience, she was generally good what she does - accountable, hardworking, and diligent. She does what she is told and sometimes goes the extra mile to get it done even on a weekend. Now and then she wants to be able to see the big picture, the significance of what she is doing and be able to learn something in the whole process. But the reality is that, sometimes the things we do at work that seemingly make no sense need to be done because only those with real skin in the game says so. Such is the reality of a lot of working environments. I don’t like playing the center position but the team simply needs someone there to just hold the line. Sometimes a small nudge in the mindset can change the perspective of how people can approach work and carry on their day-to-day jobs. As part of any job, sometimes it is unavoidable that you have to do the things that you don’t like to do. Because a lot of employees don’t condition themselves to seeing things this way, they often get upset, feel unappreciated and eventually leave. Employee attrition can go down like a negative spiral and be a big problem for companies. The right fit Managers can obviously do a lot more to understand the attitude and personalities of their employees. Too much focus is placed on hiring for skills rather than personality. Sure enough, a lot of companies include “cultural fit” as part of their hiring criteria but in today’s context, remote working and high employee turnover is increasingly becoming the norm. In the past, “right fit” means placing someone in the organization who would ideally jive with the rest of the team. In companies whereby departments are constantly being refreshed with new faces, it can be difficult to foster any real camaraderie. I once overheard a senior colleague in an interview asking a potential hire: “Are you prepared to work long hours?” It got me curious because I wondered what response he was expecting to hear. If the candidate gave a brutal reply insisting on doing regular hours, would his honest preference imply a lousy fit for the company? And if he/she answered ‘yes’, wouldn’t that be pretentious? As hiring managers, what are we really trying to look for in a candidate's response when we throw them questions like these? Just as all basketball teams want the tallest, fastest and the best shooters, all companies want the most hardworking, the most resourceful, and innovative people (ideally at a fraction of the cost). In a certain extreme, companies simply want corporate slaves working in a manufacturing sweat shop. This is mathematically speaking, solving for maximum P&L but does nothing to improve corporate culture. To make it worse, the Internet has also virtually created a 24-hour work day, resulting in a term called neurofacturing, which basically refers to the modern white-collared jobs involving technology and brainpower. The Atlantic has an interesting article that talks about why people spend all day at the office working. Do candidates who claim that they are willing to embrace the long hours make better employees? The problem with HR Companies tend to be somewhat myopic when hiring, focusing on either the highest "neurofacturing capacity" or filling immediate human resource gaps such that they almost always overlook the candidate’s interests and ambitions. After all, why does it matter? Just think about it: How many of the interviewers that you’ve met previously really took a genuine interest in your long-term career aspirations? Aside from the long working hours which seem to be mostly a given now, most of the questions directed at you probably test for experience and skills: “Can you tell me how to value a company?”, “Can you do this?”, “What have you done before that convince us you can do this?” The idea that if someone has had success in his or her previous stints, there is a good probability that they will be able to replicate this in their future roles. But this is not always the case. “History helps us calibrate our expectations, study where people tend to go wrong, and offers a rough guide of what tends to work. But it is not, in any way, a map of the future. - Morgan Housel If companies could focus on aligning corporate goals with the ambitions of their potential employees, imagine how much impact that could potentially have on productivity and culture. Instead of searching for the best match of skills and experience in the relevant industry, one could consider placing more focus on hiring for personality. For example, someone who enjoys talking about everything under the sun could be a fish in water for a sales role. A perfectionist could be a good managerial hire for a public relations role whereby collaterals need to be impeccably produced. Or someone who has previously attempted a failed start up could also be the best choice for a corporate venture role as he would be prudent and sensitive to the nuances of launching a new product, having gone through it first-hand. Hard technical skills can be trained but interests and unique experiences remain more deeply ingrained in a person’s DNA. Furthermore, people generally don’t like to be told what to do because it makes them feel like they are not in control. Instead of free will, they feel like they have been given no choice even though they might have been happy to go along. [Jonah Berger] People produce their best work when it interests them. Companies use incentives such as money, hoping to channel and convert some of these personal interests into their commercial interests. No fault in that. But to do so requires some work in understanding what drives these people.

In the last couple of years, Hong Kong had remained relatively “closed” to the rest of the world. I think the city is bearing the brunt, both on the psychological and commercial front from reduced travel. Basically no one was making plans to get in, unless it was for business. This was favourable from the perspective of a traveller as accommodation prices, once considered to be incredibly high for Hong Kong had plummeted significantly. And so I had never given much consideration towards the amount of rent paid only until recently. As most of the world opens up, the return of overseas travel has increasingly led to higher airfares and hotel rates. When I returned to Hong Kong this year, I discovered that the lease on my place had gone up by about 30%. Last year had been a tough period for Hong Kong - 14-day quarantines, tourist inflows from China taking a hit, businesses and residents relocating among other things. So this year, with the anticipation of opening up to the world mounting, I foresee that prices will continue to increase into next year. When I graduated from university, I was one of the lucky ones who did not have to worry about paying rent or having a roof over my head. After amassing enough savings over 3 to 4 years, I made that decision to buy an apartment rather than renting one. Renting had never really been an option for me, maybe because being a resident in my own country, home ownership was the de facto scenario. Or so it was until I moved to Hong Kong last year. Owning a place and servicing the mortgage payments work pretty much in the same way as rent with a few main differences. Both rent and mortgage service are cash expenses. But the action of paying the mortgage every month is different from rent. With mortgage, one takes some comfort in home ownership, knowing that your equity position generally improves with every month of debt service, assuming of course the value of your home doesn’t decline, and you continue to diligently pay your loan. Based on consensus, property is generally accepted to be a good store of value. With rent, it’s basically a one way street as a sunk expense with no returns. Buying a property is definitely more cash intensive due to the upfront costs but that is inherently seen as an investment. Also, the “step-up” in rents can be merciless as compared to mortgages, which arguably at this point of writing, interest rates for home loans have reached a cyclical high. Putting interest rates aside, rents remain much more highly sensitive to short term spikes in supply and demand, while mortgage payments are largely based on the amount you borrow and your declared income upon taking on the loan. It can also be very difficult to call a rented place home, especially if you do not have any long term visibility of staying in that city. This ’temporary’ or immigrant mindset creates a lot of uncertainty and inertia for doing any ‘upgrades’ to improve your living condition. To an immigrant, the bottom line is everything. The less I pay in rent, the more I bring home in cash. While I consider myself middle-class and one of the more fortunate and relatively better-placed immigrants, I can totally feel what it is like to be an outsider alone in a foreign country earning a living, setting aside as much as possible every month with the end goal of going home one day.

Whenever I approached the close of my financial modelling course, I always did a simple roll-call to call for feedback from everyone in the class. This time, instead of recycling this common practice, I decided to try out a different approach by using Mentimeter and getting everyone to input three keywords on how they felt about the last two days, and this was the result: A million followers can't be wrong. One of the key aspects of financial modelling is being able to accurately project cash flows. This has consistently been a perennial question that comes up - "how do we do it?", "How do we know that the numbers are reliable?", and of course the occasional remark from the seasoned industry veteran: "the assumptions are too conservative, I think it should be much higher!" Subject matter experts and experienced professionals who have been in the game for a long time play an influential role in terms of how we rely on an estimation of the future. In today's context - given the speed and digital pervasiveness of information - the loudest person in the room can also sometimes be easily misconstrued an industry thought leader. “Facts can be so misleading, but rumors, true or false, are often revealing." - Colonel Hans Landa [Inglorious Basterds] Before we had the TV, email and newspaper, people relied on word-of-mouth as their primary source of information. Casual banter amongst households within proximity was how we passed the word around. There was usually nothing lost in translation and no one usually questioned its legitimacy. That playground of information is so different today. Part of how we receive information today has evolved to include social media channels, such as Twitter and LinkedIn. We no longer need to hear information directly from the proverbial horse’s mouth. It is incredibly easy to be swayed by the opinions of the majority, albeit online or offline. After all a thought leader with a million followers can't be wrong right? “Be wary of self-proclaimed and crowd-proclaimed experts. It’s less likely that experts will be mimetically chosen in the hard sciences (physics, math, chemistry) because people have to show their work. But it’s easy for someone to become an overnight expert on “productivity” merely because they got published in the right place. Scientism fools people because it is a mimetic game dressed up as science." - Luke Burgis "The key is carefully curating our sources of knowledge so that we are able to get down to what is true regardless of how many other people want to believe it. And that means doing the work.” The process is more important than the end result. In my opinion, projecting cash flows requires more imagination than hard core quantitative and technical skills. Valuation and financial modelling is in reality part art, part science. In fact I would even go further to say that a large part of it is art, since the desired outcome is almost always based on creatively imagining what the future beholds. The narrative, so to speak, is as important as the numbers. As Yuval Harari puts it in his book: "A person who wishes to influence the decisions of governments, organizations, and companies must learn to speak in numbers. Experts do their best to translate every idea into numbers." And so, the process of constructing a financial model tries to achieve this. I often get asked if I could provide excel templates for a variety of sectors that people could use to just work off, punching in the inputs to generate the valuation output. Unfortunately, I don’t think it works that way. The real value in any financial modelling exercise is not the result it produces, but the mental exercise that you have to go through in order to produce a functional three-statement spreadsheet of intricately connected moving parts. This is probably the same parallel why people run marathons - not to get from point A to point B but more so the journey, the process of having gone through first hand and pain of completing 42.195km and that personal feeling of having achieved something at the finish line. That sensation means something different to everyone. The financial model is then a representation of what you think of the business and possibly how you see it evolving over time. In the hands of another person, the assumptions and results might look very different. As Warren Buffet once said: "Forecasts may tell you a great deal about the forecaster but they tell you nothing about the future." Whatever someone wants has value. 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. 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.

The last couple of weeks have been incredibly exciting for Singapore: SuperReturn Asia, DealStreetAsia's PE/VC event, the Milken Asia Summit, Forbes CEO conference and the F1. Visitors getting into Singapore today are neither required to serve any quarantine nor wear masks in public. Everything feels like it's been reverted back to 2019 - big MICE events, face-to-face meetings, public gatherings, etc. It almost feels surreal. Except that I am not in Singapore. Envious onlookers residing in Hong Kong can only drool at the party from afar and read about these large-scale social events in the news and LinkedIn feeds. Last week, Hong Kong finally announced that it was lifting mandatory quarantine for arrivals into the city. From the 14-day quarantine implemented last year to 7 days and recently to 3+4, inbound travelers now simply need to do 0+3 i.e. no quarantine but just a 3-day monitoring period (still better than serving quarantine in China). It was a long awaited step, but some have said this was too little too late. Against the backdrop of an increasing number of people and firms moving from HK to Singapore, and the recent high-level summits taking place over the last couple of weeks, I guess HK is finally saying "enough is enough and we have to get back in the game or run the risk of really losing out in the long term." It seems like Singapore has played its cards well and somehow "gotten ahead of the game". "Singapore may have the edge at the moment, but Hong Kong has more longer-term advantages to attract capital and talent" - HKEX Despite the COVID restrictions, the relatively high costs of housing, stilfing space and population exodus, there is some truth in HK being better positioned than Singapore in terms of leveraging the resources of Asia's largest economy - China. Besides, conference go-ers are generally indifferent to where the party is held as long as they are invited and there is reasonable certainty of a huge turnout. Understandably, those sitting on either side are motivated to swing the odds back into their favour. I am not trying to pre-empt whether or not the tables will eventually turn for both cities but recall back in 2020 at the onset of the pandemic, Hong Kong was at one point of time leading the charge on potentially emerging from the abyss. And then in a twist of events, it was tightened again in late 2020 due to the resurgence of the 'second wave'. When the dust finally settled in early-mid 2021, I vividly recalled HK was gradually moving back to larger group gatherings and reinstating back-to-the-office work. Over that same period, Singapore on the other hand was back-tracking. I had been preparing to depart Singapore in May, looking forward to getting some reprieve that at least face-to-face meetings were possible in Hong Kong. Singapore didn't make any significant headway in lifting the restrictions until later that same year. And then in 2022 after the spring break, HK again went into partial shutdown for over a month. Look, you might be wondering what is the point behind all of these. If there was anything I learned over the last 2 years from the pandemic, it is that nothing is ever really permanent. The stable state of things we are familiar with can be easily contested at some point of time or another. We took public gatherings for granted until COVID happened. Singaporeans took for granted chicken rice, a somewhat common staple would always be there until Malaysia halted the exports of Chicken for awhile in May 2022. The same way energy stability in Europe have always been considered a given until they were forced to take sides amidst the Russia-Ukraine war. Even the economies that were halfway around the globe probably didn't expect their food supply chain to be disrupted by a territorial conflict involving one of the world's largest exporter of grains. Things can change in an instant. In 2021 when I thought Hong Kong had finally sorted COVID out and Singapore was still lagging far behind in terms of getting infection numbers under control, look how one year has totally reversed the state of things when Hong Kong became the unfortuate victim of the Omicron resurgence in February 2022. Just like the conference go-ers, the companies and workers that have relocated to Singapore can easily find themselves moving back to Hong Kong very quickly once normality has been restored. Change is the only constant and the race is long. Sometimes you are in front and sometimes you are behind. All things - no matter how good or bad they may seem to be today - can change very quickly.

So, none of this makes sense anymore. For a long time, offshore financing - which was predominantly priced off the LIBOR or overnight rates - had always been significantly lower than the benchmark rates in China. For years, raising offshore money at a lower cost had always been the de facto fundraise strategy. Today, it is obvious that the tables had turned, quite abruptly as well. After you account for taxes, hedging costs (which is somewhat upside down now) and geopolitical risk, raising offshore money in China doesn’t seem to make much sense at all, not at least in the near term. While the rest of the world is hiking interest rates, China is going in the opposite direction, encouraging credit activity to boost growth and revive the economy. Earlier on, a consultation paper was also released, outlining guidelines towards formalising and further regulating the approval of offshore debt, on the pretext of promoting the healthy and orderly development of overseas financing by enterprises. Putting aside its over-leveraged property market and inflation in the rest of the world, it is almost as if the policy is indirectly encouraging Chinese companies to source for capital domestically rather than look elsewhere for financing. The combination of all of the above, coupled with no end in sight of travel opening up, seems to hint that China is closing up from the rest of the world. With the largest manufacturing engine closed from the world and the severe shortage of oil due to the war, you can hike all the rates you want but I don’t think that is going to meaningfully bring prices down.

Many years ago, after completing a USD 2 billion cross-border deal, I was invited to share some of my takeaways (confidentially of course) from that transaction in a university setting on a Saturday. As the main execution person on the deal, I had to take point on steering most of the conversations that took place - from translating, managing emotions on both sides of the table and proposing negotiation strategies. I vividly remember on one of the nights (I think it was probably around 1am) when we were sitting in the client's office finalising the deal documents, we had received a competing bid on the deal and had to make a decision whether to jettison everything. In that Saturday sharing session, I remembered that one of the biggest takeaways I'd mentioned was: If both sides are motivated to get the deal done, it will be done. everything else doesn't really matter. Nearly seven years on, complexities in deal execution still never cease to amaze me, that is probably why investment banking had been such an interesting career. Here are some additional learnings that I've consolidated below: (1) An issue only needs to be dealt with as long as the biggest stakeholder and/or someone important thinks so. (2) All transaction processes have unprecedented bumps and disagreements of sorts from fees to valuation, but a good negotiator knows how to play both sides of the game. (3) The drafting of most agreements is effectively a process of managing risk, less so of governing commercial interests, especially when everyone is convinced that the pie is big enough to be shared equitably. People only start to fall back on and scrutinize these documents when shit hits the fan. They are really just a formalised set of what-ifs and everyone hopes they won't ever have to re-look at these contracts when stuff blows up. (4) Following on the above, the essence and spirit of most agreements are in reality like guidelines. If no real harm is caused, any violation could simply warrant a slap on the wrist. The contract basically gives either party the legal right to punish the other party if real harm has been done. At the very bottomline, it’s all about whether interests are being thrown into jeopardy and the money, really. (5) MOUs and term sheets - while legally non-binding in nature - are important. They are an essential framework to help guide the drafting of the final legal documents. When done properly, they eliminate ambiguity and misunderstandings, enabling both parties to save a lot of time in the documentation phase (which ironically, is not in the interests of lawyers who are billed on time). That said, there will inevitably be blind spots in the negotiations. The proverbial devil is always in the details. (6) Engage a lawyer that: doesn’t think like a lawyer can dumb down complex legal concepts is able to articulate the consequences of certain nuances within the agreements can provide constructive solutions to resolve conflicts (7) Home-ground advantage has a cost. When you are holding the pen on drafting, expect to incur higher costs - both on expenses and time. That said, you do have some upper hand when it comes down to dictating the overall flow and structure of the agreements. (8) On the point of flow and structure, depending on which side of the table you are sitting, the drafting of nearly all documents generally comes down to two approaches: “You can do everything, except for the following...” “You cannot do anything, except for the following...” (9) Some lawyers provide maps (legal opinions), some lawyers will be your guide and chaperon you for the journey (legal advice). You will need to decide whether you need a map or a guide. Legal opinions don’t protect against anything, it serves only as an ‘expert opinion’ on outlining the risks and enforceability of key aspects in the transaction. Decision makers who cannot navigate the nuances in a cross-border deal or have no meaningful way of controlling the risks in a deal fall back on the ‘tightness’ of a legal opinion. Good legal advice on the other hand will tell you where the pot-holes are, the hidden corners, why you should take certain routes instead of short cuts, etc. It goes a step further, implementing the mechanisms to clearly define and safeguard relevant risks and commercial interests. (10) The closing phase of any documentation process is almost as important as the drafting and negotiation phase.

[Adapted from something I saw off the Internet recently.]

The Lamborghini brand sixty years ago was not known as the luxury car brand it is commonly associated with today. They were actually well-known for making tractors. Apparently its owner Ferruccio Lamborghini was unhappy with the fact that the clutch on his Ferrari car wasn't working as well as he expected and decided to give this feedback to Enzo Ferrari, who tells him off that he is better off sticking to manufacturing tractors. Insulted, Ferruccio later went on to build the first Lamborghini supercar a year later. Fast forward a series of technology innovations and many years later, both Lamborghini and Ferrari are now associated with the league of prestigious car brands. So when Apple announced last week that it had hired someone from Lamborghini to lead its electric vehicle program, it got me thinking: how does one go from high-end consumer products into cars? And is that even possible? Why would any veteran in one industry and who has spent the last few decades of his life working in a zone of familiarity jump into a totally new business? Can you imagine the kind of conversations he would possibly be having with the engineers on the ground? Calibrating watts to kilowatts. Migrating from working with small iPhone and Mac enclosures to designing large car chassis. Not to mention, ensuring the religious compatibility with the entire Apple ecosystem, which I am sure will be an important consideration in the design process. This guy has to basically get management's buy-in to look at and potentially execute things in a whole different way. So how do you convince someone who has done things a certain way their whole careers to get out of his comfort zone and embrace a whole new ecosystem? Say if this initiative was championed by another company with a brand and scale much smaller than Apple, would they also be able to headhunt and convince someone of a similar calibre to drive this innovation? The importance of a virus. A friend once commented the use of "virus" having a negative connotation. I don't really think so. Businesses in their early phases struggle with sourcing for capital and achieving profitability. But once they have crossed that chasm and survive, they then have to deal with grabbing other important resources such as attracting and retaining talent. You can always use capital to buy talent. But to keep talent, you need more than just money. You can retain the existing employees and management teams that have been comfortable with a certain way of doing things, keep the status quo, and you most likely continue to survive. But to get to that next level, you will need introduce a change agent, a different way of looking at things and someone who dares to challenge conventional wisdom. I like to think of it as introducing a virus to the system. Vaccines work in this way: Introduce a foreign agent to the system, a dose small enough without killing the host, allowing it to learn and adapt. There will be discomfort. But over time, the idea is to acquire immunity and become stronger. Professional experiences, both good and bad, follow a person around for a long time. Well established companies like Apple have better leverage over smaller companies to attract and inoculate talent because of their brand equity. Branding doesn't necessarily apply only to consumer or retail facing businesses. It is how people outside the firm view the company - the customers and suppliers (existing and future), as well as employees: past, present and potential. Are existing and past employees proud to say that they have worked at a particular firm? Despite the expected grunt of having to work long hours under tremendous pressure and high expectations, do they feel a sense of accomplishment and pride after leaving the firm? Do these people feel like they have learned something or contributed to something during their stint within the company? Do past employees simply drop off the radar once they leave the company or does HR make it a point to keep it touch with them? An example of those who make it a point to keep in touch with past employees or alumni include KPMG, Goldman Sachs, McKinsey, the list goes on. Most alumni who reminisce their time within the firm over drinks tend to mostly remember the struggles, the tough times and the nasty people. For good or for bad, these moments represent shared experiences. And no matter what kind of impact it has left on them, these shared experiences inevitably shape their professional outlook and approach towards their future careers. Those experiences and intangible skills acquired form a sense of identity - much like how people feel a sense of loyalty to their countries although the majority will continue to complain about taxes and how their governments are not doing enough to help them. This sense of identity in the context of the corporate world is basically brand equity. But how do you nurture brand equity? Encourage people to embrace discomfort as a normal Dare to try (and fail) attitude - don't over-penalize for the lack of results from trying, penalize for the lack of trying. Encourage idea generation and reward execution - it's good to have ideas, but remember that execution is everything Hire well - Test for ability and skills, but once employees and managers come onboard, be genuine in understanding what drives them deep down and make an effort to help them achieve their personal development goals All employees (past & present) are brand ambassadors for the firm. It's ironic that a lot of firms invest relatively more time to ensure that they hire well but spend so little effort when the employee is formally onboarded and during their exit from the firm. Never under-estimate how much advertising (good or bad) employees can do when they are no longer at the workplace Customers, suppliers, employees and basically anyone who comes into contact with the company directly or indirectly needs to form an impression of the business that resonates with its values and corporate culture. But culture cannot be built overnight. Like a good habit, it is formed from months and years of iterating and improving. A distinctive company culture sticks long after employees have come and left. And with all things in good time, culture becomes brand equity. "We only incentivize performance" - that's impossible... performance is a result. You can only incentivize behaviour. And so the best companies are aware of their own values... and build a culture around those values. The ones that go toxic, they forget about those values, they think it's performance at all costs. - Simon Sinek Any new product or venture has risk, but beyond a strong balance sheet, the companies who are most genuine, willing to adapt and embrace change with a little discomfort to build a good culture and brand equity will find themselves in the best position to attract talent and succeed in the long run. "Invest always - and above all - in people Better to give talented (if unproven) people a chance, and endure a few disappointments along the way, than to not believe in people. The number one ingredient in their secret sauce is an obsession with getting the right people, investing in those people, challenging those people, building around those people and watching those people experience the sheer joy and exhilaration of achieving a big dream together. And, just as important, stay with your proven people for a long time. " - Jim Collins [Disclaimer: I hold shares in AAPL] [The story of Lamborghini and Ferrari can be found here.]

Management is: Get it done, follow-up, discipline, planning, analysis, facts, facts, facts. It’s [getting] the right people in the room, kill the bureaucracy, all of these various things... ...Humility, openness, fairness and being authentic are most important – it's not about being the smartest person in the room or the hardest working person in the room. - Jamie Dimon, 2020 Sitting inside a glass box has certain kicks. I can do calls in private, talk as loud as I want and frivolously use the bigger table space and cabinets for stashing paperwork. But it takes some getting used to. Why? For most parts of my banking life, I've worked out of communal spaces in which senior directors sit out in the open and fraternise with the rest of everyone across the ranks. There weren't many physical boundaries. Everyone works out of a common row of desks or cluster of cubicles. When a director needs some stuff to be done, he/she just gets up, walks a few steps over to the analyst's table to talk. In one of my previous transactions involving an airline company, the Chief Operating Officer actually sits openly in the geographical centre of the entire office, no walls, no barriers, just a table with a desktop computer and stacks of documents. When I asked them why they had done it this way, they said it was to ensure that the key person is easily accessible by everyone in the office - much like the control tower of an airport. So it takes a bit of getting used to when I get to sit in a glass box. While I don’t see this as a privilege, there is indeed a price for people who sit in a glass box. There are subtle ‘expectations’. Expectations on capability, responsibilitiy, and many more. People on the outside usually see those sitting inside glass boxes as 'senior management' regardless of whether they think so. So it is along this train of thought that got me thinking: What makes management a good management? Over the last couple of years, I've been observing, listening, reflecting and even experimenting through interactions with different people, in the process constantly asking myself - what makes an outstanding leader, how do people learn management skills and if business schools really impart any tangible (and usable) skills on this. After all, there are many academic modules covering organisational behaviour, strategy, international business, as well as many ideologies drawing references to notable thought leaders and practitioners: Peter Drucker, Michael Porter, Jack Welch, Bob Iger and so on... It is refreshing to read so much literature and draw a wide variety of insights from these accumulated experiences on what defines good leadership and management. But application in reality is much more difficult. Since I started working, I have also had numerous first-hand experiences in 'receiving' and 'practising' management - both good and bad ones. Most of my previous stints involve elements of conflicting work styles and company cultures. I have seen and experienced how managers and colleagues try to adapt and assimilate these. Obviously, not all were successful. At times, I wonder if there are perfect solutions, and who decides whether the outcomes had been effective. Get it done Perhaps the most important principle is to deliver the goods. Results are basically everything: Topline and cashflow. Quantifiable metrics are not only tangible, they are surgical, honest and most of the time beyond contestation. To contextualise this to military ops: The mission is everything. The spirit is: If it needs to be done, it will be done. And you'll do whatever it takes to get the job done. 尽管过程有多完美，最终还是得看结果 It's not so much about ability, it’s about responsibility I've seen too many managers try to impress, in different ways. They try to look the part, exert authority, flaunt their past experience or pedigree sometimes. The reality is that most people (especially employees) only care about ability to the extent it affects their bonuses or whether or not they will need to work overtime. Looking good is overrated. Responsibility is not about taking credit but mostly also about the taking the rap when shit hits the fan. You will look stupid screwing up or when someone in your team screws up. But that's part of the job that no one tells you when you become a manager. It's not about taking credit for good performance but also 'taking credit' for the slip ups. Responsibility also means developing the technical and personal aspects of the people around you. By helping those around you, you are indirectly relieving yourself of unnecessary management work freeing up more time for doing the more important things and in the process delivering the point above on getting the job done. Motivate rather than manage The office environment is full of "Do this", "Do that". One of the things I like to ask after any meeting or conference call is: "what do you think?". Because no one, especially in the junior ranks, expects their opinion to be taken seriously. Most of them believe that it is not in their place to make decisions. This mindset, if not managed well, can lead to prolonged apathy at the work place, overburdening managers with decision making, which may not always be the best judgement. This is also how good corporate culture gets destroyed. Employees at the workplace get increasingly disconnected because "no one listens to me any way." I am genuinely interested in developing colleagues and staff - across all ranks. Money aside, there is no better satisfaction of seeing how someone goes out of his/her comfort zone to overcome their limitations. This can even be as simple as delivering a presentation, facilitating a conference call or even achieving a breakthrough in a seemingly impossible project. It is also very encouraging to see managers get excited brainstorming on a new strategy, daring to experiment with possible solutions, not being afraid to try, and perhaps more importantly, not being afraid to fail or look bad. After all, we are all about just getting the job done aren't we?

If the Central Banks got it wrong on monetary policy, can we also assume that the valuation models that we have done and relied on for the last two decades are also flawed? Though hard to mathematically quantify, truth is: Liquidity drives a huge part of value. Put simply: an asset is only as valuable as the next guys who wants it. Against the current backdrop of monetary tightening to fight inflation and funds becoming more cautious about their investments, asset prices seem to have reacted and dramatically fallen. Growth is another key driver of value - which in this case, is being eroded by rapid inflation, adding to the further discount in prices. The double whammy here is that the same high growth companies that sold astronomical prospects of the future will face the real test over the next two years as they fight against a policy that encourages the cool down of the economy. Is there a playbook to rectify this? Was it an error on the part of Central Banks when QE was introduced in the aftermath of the 2008 financial crisis? Did early bitcoin and cryptocurrency adopters see this gradual erosion in the value of money coming? I'm not sure. Most of the existing infrastructure we know is build around a set of 'stable' economic assumptions. Capex for power grids and oil exploration / refining (which are easily 10 to 20-year projects) have been traditionally modelled around $60 oil. Cap rates for real estate (another presumably long term asset class) are largely driven by interest rates. Likewise with breaking down the cost of any manufacturing plant, which is driven by the input prices of raw materials including commodities. The world just cannot absorb the sudden change in prices that would dramatically disrupt these economic models that we have relied on for many decades. Beta quantifies risk by measuring the standard deviation of an asset price against a reliable index benchmark over a long term dataset - the key word being long term. Furthermore, assuming that the immediate future would follow a reversion to the historical long-term would be borderline laughable given the current state of world affairs. So if we can't rely on beta and the pricing assumptions of today, the best thing to do is to probably wait it out until the world finds some sanity (and stability) amidst the current circus of events.

Inspired by a tweet that I'd read elsewhere, I decided to adapt the content and pen this. Best way to solve money problems at home is simply to earn enough. Make enough money and you'll never have any disputes. Use credit cards for day-to-day expenses. They rack up a ton of points which can be used towards discretionary shopping. Doesn't matter how much you save for retirement - the moment you stop working, you'll worry about running out of money. Better to spend money on stuff that you like than spend on stuff that you don't need. Eating out does not imply a luxurious way of life. Some people call this the "rich life". We splurge on eating out but save on fancy houses, cars and other stuff. Property today is no longer a good store of value. There are numerous costs - agency fees, duties, illiquidity, uncertainty over its appreciation in the long term. There are much better alternatives out there to give you a steady 5-6% annualized return over 20 years. Educate yourself on where to put your money. Financial markets are way more sophisticated as compared to 30 years ago. Today we have the ability to invest in stocks globally, a wide range of ETFs, index funds, etc. Worst way to earn an income is to work for a living. Learn to develop multiple income streams as you progress in life - the old school saying of "get a good education, get a good job, start a family, etc..." is out-dated. Invest in yourself. Wealth will take care of itself after that. Don't underestimate the power of compounding. A single investment (no matter how small) can change the course of your finances drastically. Aside from learning how to manage money, learn how to write and code as well. Sales is everywhere - learn how to sell and money will take care of itself. Money will only motivate you so far. If you are not doing the things you love to do, you'll burn out. 100% guarantee. The moment you feel that you pay someone more than what they owe you, you'll most likely end up spending the bulk of time chasing them for what they owe you. Most people who trade stocks lose money. Don't get sucked into speculation. The minute money is too easy to be made, it's probably time to get out. 99% of people who post images of their income online are not telling you something. Really rich and secure people don't flash their wealth and call themselves rich - not unless they are trying to sell you something. People who tip you off on a stock nearly always have something to gain from doing so. Don't be stupid and listen to everything they say. Use your own discretion to decide for yourself. Most of my losses are attributed from listening to others. Don't be envious of those who are ahead of you. You don't know what they've gone through. Bankers are not your friend. They do not care about you. Relationships are booshit. They are only as nice to you as the amount of assets you are banking with them. Don't keep too much of your assets in cash unless you know how you are planning to use it. Invest, even if it is a small amount.

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

Over two months here and I've already grown a routine sufficient for baristas to know what coffee I typically order. The speed at which the orders are processed is impeccably fast - it takes only less than 3 minutes to do up a vanilla latte at Pacific Coffee Company at Lippo. Things in Hong Kong somehow move incredibly fast. The shop just below where I stay even knows what I typically order for takeout: Basil pork rice or Hainanese chicken rice. Oh, and Chicken rice tastes slightly different over here, it done slightly Thai-style, nice, but just different. As I grow older, I feel that routine becomes increasingly important. Whenever I am overseas I tend to wake up significantly earlier as compared to being at home. I treasure the moments of making my way to the usual coffee or confectionery place to start the day, regardless or whether it is a working day or the weekend. I enjoy simply just sitting there, relaxing and basically do nothing but unwind. This is very likely a habit had was cultivated early on during the downtimes of my national service days where I mostly hung out at Coffee Bean during the weekends. To date, I spend most my time on the HK island side, occasionally making trips to Kowloon on weekends. I hardly venture north of the area past TST (not sure why). I hear that there are many nice eateries in the area but it can be difficult to get seats especially over the weekends. Admiralty and Central have become synonymous with work. They are nice places to go over the weekends because it tends to be less crowded, but I still find it hard to look for places to sit down for a cuppa. Comparatively, Sheung Wan is a lot better, especially when you venture further south of the island (further uphill). My go-to place is Halfway Coffee which is located along the street selling Chinese antiques. It is frequented by ang mohs (or gweilos at the locals say) and mostly the affluent local community in Hong Kong. Perhaps one of the biggest differences for coffee and general dining here is that prices are way much higher (a black sugar latte sets me back by about HKD 50 or roughly SGD 9, which is nearly 70-80% higher than similar artisanal coffee in Singapore). I haven't tried hiking yet although I have heard much about it but maybe I'll do so towards the end of the year when it's cooler or when I decide to break out of my routine of weekend coffees.

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

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

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

I conclude. Without a doubt. That the McDonald's double cheeseburger. Is the best cheeseburger in the world.

I was watching a documentary on TV that talked about how the urgency for reducing our global carbon footprint and its impact on the climate. I believe that as temperatures rise - to intolerable levels of 40 and 50 degrees Celsius - a huge proportion of our land mass will turn to deserts (as compared to over 20% currently). This implies a significant land shortage, which will becomes even more pronounced as the global population increases. This land shortage doesn't only affect arable land but also inhabitable land i.e. residential housing, retail malls, parks, office spaces, etc. As a result, land and property will start to rise dramatically and render the cost of housing increasingly inaccessible to the mass market. The rich-poor gap widens and home ownership - which once used to be a financially serviceable amenity turns into a luxury product available only to a privileged few who can afford it.

Reaffirming point #36 in my forty takeaways last year: Most of the people around me keep trying to tell me what's good for me or how I should use my money and resources without really wanting to listen to what I really want to do with them. Their great plans are manifested in the monologue they have with me on whatsapp / wechat. From these conversations, I can feel that they want me to 'agree' with them. Agreement means I nod, concur and tell them that what they say is correct. My points of view, my current circumstances are irrelevant. They say never judge someone until you've walked a mile in their shoes. So why should anyone impose what they think I should do just because it has worked for them, without truly being in my current position and going through what I have gone through? It's really absurd that these same people claim to have high EQ but they'd never really demonstrated empathy and asked me the simple question of: "What are your plans?" or "What do you want to do?"