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

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

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

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

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. Halfway Coffee at Sheung Wan 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.

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

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

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

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

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

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

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

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

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

I love Shenzhen. I like its wide city roads that are peppered with electric taxis. There are virtually so many electric cars on the street that if one pulls up just next to you at the junction you wouldn’t even realise it’s there. The street layouts, traffic lights and well-paved roads resemble something taken straight out of a Lego model. And there are dozens of cafes that serve up a good coffee as well as numerous shops offering spicy Hunan, Sichuan and Chongqing cuisine. Nanshan district, which is home to China’s tech giants and hundreds of budding tech unicorns has a coastline that somewhat resembles Singapore’s East Coast Park. Commonly known as China’s Silicon Valley, Nanshan is characterised by lush trees and shrubs neatly placed on both sides of its roads. Further down the road east towards the Futian district, pockets of greenery weave between towering skyscrapers and mid-century modern styled office buildings. And on some evenings, you can even enjoy the fancy laser light shows against the city skyline with the iconic Ping An Financial Center in the background. Despite its urban backdrop, you can still find traces of history and heritage in the back alleys of the old towns (城中村). This co-existence of old and new is what makes the city unique in its own way, in some ways similar to Shanghai’s Xujiahui  district, or Singapore’s Tiong Bahru estate. If not for the Internet restrictions and WeChat Pay / Alipay, the neighbourhoods do not even feel like China but more like an adapted version of Hong Kong. This is just Shenzhen. In close proximity are at least seven other cities in the Greater Bay Area with a similar profile. Each with its own distinctive heritage, each bubbling with its own economic engine, each liveable in its own way, each with the potential to displace Hong Kong as the new regional powerhouse, if not for Hong Kong’s legacy infrastructure and position as an international financial hub. Some might even say this is the dark side of the Greater Bay Area initiative. If you are a frequent traveler to Hong Kong or reside in the city like me, there is a noticeable quietness in Central, which is traditionally home to all the big banks and funds. Even being in Singapore recently, there is an observable contrast to Singapore’s Marina Bay city centre. Standing at the lobby of the Marina Bay Financial Center, you can even feel the difference in energy level and vibe. Part of the quietness in Hong Kong is also attributed to the out flows of travellers across the border. Hundred thousands of people flock to Shenzhen on a daily basis from Hong Kong. Coffee for one is significantly cheaper in Shenzhen. It’s on average RMB 28 vs HKD 45 for a flat white depending on where you get your daily grind. At some cafes such as Manner Coffee , flat whites are going for only RMB 18, and the quality of coffee is no less than decent. Eating in Shenzhen is generally much cheaper as well, not to mention the good variety of both Asian and Western cuisines. Chinese food (all kinds) is undoubtedly more authentic in Shenzhen, no question here. Also, you can get cheap food and groceries delivered to the doorstep at basically any time of the day. The gig economy is extremely vibrant. Meituan  is incredibly accessible and affordable compared to Deliveroo or Foodpanda in Hong Kong. Those who struggle with the high rents and suffocating spaces in Hong Kong are finding it attractive to stay in Shenzhen while continuing to work in Hong Kong, putting up with the 1+ hour commute. Bloomberg even has a report on this . Truth be told, Shenzhen is even more accessible than you can imagine. There are abundant car pools, buses, even the East Rail Line (东铁线) on the Hong Kong MTR goes directly to Lok Ma Chau and Lo Wu in under 60 minutes. If you are impatient, there is always the 15-minute high speed rail option departing from the West Kowloon station in Hong.Kong. I have tried them all and the journey (even passing through immigration with a passport) is seamless, despite the crowds and rush hour. Hong Kong should in theory, benefit economically from this flow of people within the Greater Bay Area. But this has been disproportionate, with more people traveling  out  of Hong Kong in recent years to spend on entertainment and retail across the border . Once known as the “promised land” for doing business in China, Hong Kong has been haemorrhaging capital and resources. The big bucks and high life that people used to be drawn to 10 to 20 years ago do not exist anymore. There are lingering doubts as to whether it is still possible to make good returns from investing in China using Hong Kong as a springboard. Affluent residents are spending meticulously, but are also more careful about flaunting their wealth. I think the music started to slow in 2019 with the protests, followed by COVID restrictions which really broke the camel’s back. Decades of growth and reputation unwound in just a couple of years. These are indeed delicate times. The firms that used to be paying top dollar have moved out or relocated their bases elsewhere. If people are not earning the top dollars, they simply won’t be spending, whether it is dining out, partying or buying property. And no consumption simply means no economic growth. No wonder Thailand and Philippines are jealous about Taylor Swift’s exclusive performance in Singapore , which quite inadvertently channelled tourist arrivals, entertainment and retail activity away to the little red dot. More than just its Canto-pop concerts, Hong Kong needs a “ Taylor Swift event ” to bring back the buzz and hype to the city. [Photo credits: mine]

“Rome wasn’t built in a day but they were laying bricks every hour.” "The problem is that it can be really easy to overestimate the importance of building your Roman empire and underestimate the importance of laying another brick. It’s just another brick. Why worry about it? Much better to think about the dream of Rome. Right? Actually Rome is just the result, the bricks are the system. The system is greater than the goal . Focusing on your habits is more important than worrying about your outcomes. Of course, there’s nothing necessarily impressive about laying a brick. It’s not a fantastic amount of work. It’s not a grand feat of strength or stamina or intelligence. Nobody is going to applaud you for it. But laying a brick every day, year after year? That’s how you build an empire." [Excerpt from James Clear ] I've seen too many people attempt to be "heroes" in their organisations. They seek the recognition, adulation, whatever you call it. But a five-minute fame is short-lived. At the end of the day, it is about whether you and the company can bring home the bacon. That's all that matters. In a fast moving and digital world that seeks instant gratification, patience and foresight , are two highly underrated attributes amongst the young and inexperienced.

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

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

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.

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.

Finally and for the first-time, I took the high speed rail from Hong Kong into Shenzhen. Despite the lunar new year festive period, the station didn't seem as crowded as I remembered it pre-COVID. I got my tickets online from 12306.cn, the official site of China Railway for all rail passes in China. I collected the hard copies from one of the counters the day before to avoid any long queues on the day itself. Once you pass through the gantry, numerous signboards will prompt you to fill up an online health and itinerary declaration form, which will generate a unique QR code for scanning at the border control points. While there are no swab or PCR tests at this point, you are required to obtain a negative PCR report within 48 hours before departure. And that's it - this post is as short as the journey on the high speed rail.

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.

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

I have been on a bit of a hiatus lately, but that does not mean I have stopped moving, thinking... or writing. It is common to find a copy of the bible in the drawer of the bedside cabinet at most hotels. Almost always, I ignore this. Partly because I don't have any affinity for the bible but also, like most travellers, I tend to overlook and treat this as simply part of the hotel room fittings (apologies to the folks at Gideon International ). So as I was searching for some writing material in my Marriott hotel room in Shanghai, instead of a bible, I stumbled upon a book titled " Spirit to Serve - Our Stories" . The book basically showcased the lives and experiences of various hotel employees from all over the world, each summarized with a caption and a 1 to 2 page writeup. I am not usually fond of reading corporate marketing material but ended up flipping through the pages. Inside were interesting stories about Marriott's employees - from hotel managers, room attendants, concierge staff, chefs to butlers and bellboys / bellmen. One of those stories included a head bartender who moved from Cambodia to Washington DC more than 30 years ago and he described how many memorable friendships were forged with the returning guests. There was also a story about a mother of four and how she juggled work at the hotel and family time at home. I found many of these stories intriguing and ended up going through most of them. Towards the end of the book, I came across this afterword which I thought was quite meaningful and that it should have been placed right up front: Continually challenge your team to do better. Take good care of your employees, and they'll take good care of your customers, and the customers will come back. Celebrate your people's successes, not your own. Know what you're good at and mine those competencies for all you're worth. Do it and do it now. Err on the side of taking action. Communicate. Listen to your customers, associates and competitors. See and be seen. Get out of your office, walk around, make yourself visible and accessible. Success is in the details. It's more important to hire people with the right qualities than with specific experience. Customer needs may vary, but their bias for quality never does. Eliminate the cause of a mistake. Don't just clean it up. View every problem as an opportunity to grow. I have stayed at my hotel in Hong Kong for nearly three years now. Truth be told, the guest-facing staff hasn't changed that much. In fact, most of them recognise me, even if I had gone on an overseas trip for a long time and haven't been back for weeks. I know this because they always pass me my courier packages as soon as they see me step in through the main lobby entrance. In fact, some time back, I heard that it is quite common to see hotel employees working with the same hotel for more than twenty years. I don't think many of them are paid top dollar, and the skills for the service industry are somewhat transferrable. On the contrary, for many white-collared jobs, it is relatively more commonplace to see people moving around only after a few years. So it got me thinking: Assuming we say that Marriott is a successful brand / corporation, if it's not about the money, then what keeps these people working at the same place for years and even decades? Is there a hidden incentive scheme that I am unaware of? Or is it the familiarity of the environment? The social support that comes with forging familial relationships with colleagues? A genuine sense of satisfaction from a customer service role? A good line manager? Or is it mostly just a lack of better options out there? For corporations that are religiously fixated on pursuing performance and the bottom-line results, have they sacrificed some aspects of their corporate branding and employee loyalty in the process of being successful? "Today's analysts will be tomorrow's managers. Today's managers will be tomorrow's Vice Presidents. Today's Vice Presidents will be tomorrow's CEOs and business owners."

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

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

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

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

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