Pivot to Shareholder Activism as 8% Value Activist!

This post first appeared on 8percentpa.substack.com

Time files. It has been c.20 years since we started blogging here. Today, few people use blogger. Blogger itself became difficult to use, ads and clickbaits dominate the posts. As such we ported to substack, an innovative newsletter platform, a while back. But we continue to post here from time to time.

In 2025, we pivoted to talk about activist stocks i.e. stocks owned by diligent, smart, activist fund managers who have made good money for their investors. From 2022 to 2025, we have also covered a couple of free cashflow compounders. We will still touch on these great stocks, the basic investment related stuff periodically, where relevant.

Shareholder activism is coming to Asia and Japan, because there are too many undervalued names. Even though everyone’s focused on US and its exceptionalism today, value is in Asia. As of 2025, roughly half of Asia’s listed stocks trade below book. 40% of all listed companies in Japan trade below book.

What is Shareholder Activism?

Shareholder activism is about investors using their stake in publicly listed companies to change the companies they have invested in for the better. In activist marketing lingo, it’s called positive transformation.

Publicly listed companies are complex animals. Most companies today have hundreds to thousands and for larger caps, hundreds of thousands or even more shareholders. Executive management of these companies answer to the board of directors who supposedly represent all shareholders.

But sometimes, things don’t really work. 

Cosy management are supported by dysfunctional boards and share price languished for years. Hence we have so many companies trading below book and we need activists to shake things up.

How do Activists Make Money?

Activists invest in cheap companies stuck with certain issues and they try to unlock value by resolving those issues. It could be changing management, or divesting poor performing businesses, or even taking the entire company private. It has been a viable strategy and some of the best activist funds have generated stellar long-term track records. Interested readers please read the Harvard study link below:

Harvard study on activists: https://corpgov.law.harvard.edu/2023/08/01/do-activists-beat-the-market/

Activism is not new. Warren Buffett was the activist when he took over Berkshire Hathaway in 1965. In the early 2000s, the current version of activism came back to the US in a big way and the movement then grew globally into Europe and more recently Japan.

Family controlled businesses in Asia might need a bit more time before activists can work their magic. This is because families owning 30-50% of outstanding shares make it difficult for activist to do anything. But the time will come. It is a matter of when, not if.

We want to be ready. We hope to make money by identifying the best activist ideas. That’s the mission!

What substack has to offer?

We have published monthly investment ideas for the past few years. We started with the usual free cashflow compounder ideas but we pivoted to discuss activist names in 2025. Interestingly, many names turned out to have activist involvement. Since Japan is the biggest hotbed, we will discuss a lot of Japan ideas, but will also touch on interesting global and Asian activist names.

From time to time we will opine on investment basics, fundamentals, portfolio trades and updates, investment strategies, market analysis and more. This substack is targeting both aspiring and seasoned investors. We publish posts every 5-10 days on both invested and toehold ideas.

We invite you to start as a free subscriber on substack. We are also on X, LinkedIn and Telegram!

Let's also connect on: 

LinkedIn: https://www.linkedin.com/in/8percentpa
X: https://x.com/ArvelVista
Telegram: https://t.me/+zF0bRcOXXo4zOTc9 

The rest of the post is on 8percentpa.substack.com

Merry Christmas!

2023 is coming to an end. It has been a tumultuous year with two major conflicts, blowups in the China property market and crypto going all rollercoaster. Depending on your starting point, you could have made or lost a lot. That's just investing, it's just so tough. But at the same time, regular mom and pops are having the best year in a long while just by putting money in fixed deposits and T-bills. As of this writing, we can still get 3.8% return on the SGD!

Pls do not understand 3.8%. Over time, it will still return multiple folds. Based on the table below, very roughly speaking, 3.8% return will 3x in 30 years. This is how someone used CPF to save a million dollars and more. His name is Mr Loo Cheng Chuan and he started the 1M65 movement in Singapore.

Read his blog, this is wrong one bro :)

This post also serves to update the new format we hope to drive in 2024. As our team worked on the Substack platform over the past year, we found it to be more superior and both writer and reader friendlier. As such, we hope to prioritze substack while porting what we have written over here over time.

Our Substack platform is on:

http://8percentpa.substack.com

As such, posts will first appear on Substack on every first and third Friday of the month (the team's target, but sometimes can be OTOT* also). We will periodically add bonus posts on other Fridays or if an event calls for it, a totally ad-hoc post to mark certain days of significance like today, it's Christmas!

*OTOT stands for Own Time Own Target. A terminology used in the Singapore Army during live firing at in shooting ranges. When all soldiers are in position to fire their weapons, the officer-in-charge will shout "own time own target, carry on" meaning soldiers can start to aim and fire at their targets at will. In daily life, the term has evolved to mean do whatever you want, whatever time you like and carry on with life, which is the intent and purpose used here ;)

Some of these posts on Substack are paid posts for those who are paid subscribers (USD5 per month) on Substack. Some posts will become public over time and hence shared here. The following shows the process:

• Substack paid posts and not unlockable -> only available for paid subscribers
• Substack paid posts and unlockable -> port over here over time, say 2-3 months
• Substack free posts -> port over sooner than the above
• Substack related materials like podcasts, notes etc -> port over on adhoc basis

This would really help to streamline workflow and hopefully benefit even more investors by cross-pollinating readers on both sides. Thank you for all your support all these years and see y'all in 2024!

Wishing everyone Merry Christmas and a Happy 2024 ahead!

Huat Ah!

Goodbye Charlie Munger

Charlie Munger, #2 at Berkshire Hathaway passed away last week at the ripe old age of 99. The value investing community exploded online with outpour of grief, past interview videos depicting Charlie's wisdom (Mungerism) and praises for this extraordinary man.

His wiki page is also well updated, which I would recommend a quick read:

https://en.wikipedia.org/wiki/Charlie_Munger

I don't think I have anything unique to praise about Munger. He is basically the best example of how we should live our lives, soldier on come what may. He lost one of his children to leukemia, was divorced, lost his eyesight in one eye, almost became blind and yet lived a full life with fighting spirit, never calling it quits.

He loved Singapore and Lee Kuan Yew, giving us praises which we may or may not deserve in many interviews over the years. Thank you Charlie. May you rest in peace!

Thoughts #17: How much can one spend?

As the 1MDB facts come to light, we caught a glimpse of the capacity of crazy rich people. Or rather, the max limit if you have unlimited amount of money to spend. It was reported that Najib, his wife and several others spent 700m ringgit or close to USD 200m on 12,000 pieces of jewellery, 284 designer handbags, 423 watches and 234 pair of sunglasses.

In my mind, I believe this marks the possible cap for a lifetime of spending for rational people. No rational person would spend more than USD 200m in his lifetime. Note that the key word here is rational. Conversely, we discussed in the first post on this blog what is the lower bound for spending. I believe the numbers had not changed much. But I also came across an interesting concept which is not tied to a fixed absolute number.

According to Mr Money Moustache, if you save 50% of your income when you started work at 21, you can retire by 38. Here's his blog below:

https://www.mrmoneymustache.com/2013/02/22/getting-rich-from-zero-to-hero-in-one-blog-post/

Funny Quote of the Day

Look up this post when you are feeling down ;)

To just type it out: if anyone is having a bad day, remember that today in 1976, Ronald Wayne sold his 10% stake in Apple (AAPL US) for $800. Today (Sep 2018) Apple is worth 1,081,130,640,000 dollars.

Remember: compounding is the eighth wonder of the world.

Huat Ah!

Singtel bought out 8% for S$200m

Dear readers, it is a pleasure to make a splendid announcement today. Singtel has bought over this site for S$200m and all readers whom liked us on Facebook will get an equal share of the profits i.e. around SGD 500,000 per person. Woohoo!

Just kidding. Today is 1st of April after all.

Today we would like to share insights into some of the stocks that were discussed previously here. One of which was Colgate, the blockbuster toothpaste maker that dictate how Singaporeans brush our teeth. (Darlie is also owned by Colgate). It was reported that Colgate sales surged today as consumers found a new use that exhausts one tube in one hour.

Don't to this to your kids.

Another stock that caught the attention of readers was Herbalife. The firm that tricked users to buy tonnes of nutritional drinks to help lose weight. Alas, it didn't really work for most people nevertheless they continued to buy, deluding themselves that they will slim down someday. But when the nutrition was accidentally scattered on desktop PC keyboards, a strange phenomenon occurred.

Herbalife nutrition on keyboards

Herbalife stock spiked from $40 to $60. Again, please don't ever play this kind of jokes on colleagues on April's Fool. This is bad karma.

Okay, let's be serious. This is after all an investment blog where readers come to learn something. Today we discuss this issue of mind capacity. Investing is about having mind capacity. In this modern world, in today's time, we have to juggle much more than anyone in the history of humankind. We have to maintain jobs, health, family, friends and community and finally know more about investing and finance. We are parents, workers, subordinates, superiors, friends, brothers and sisters, sons and daughters as well as volunteers at the same time. There is so much to do yet so little time. Investing and finance usually comes as an after-thought. There is simply no time to manage portfolio, grow the nest egg and all the gimmickry talk about going for financial freedom and what not.

Or is it? Do we really have no time for anything?

The answer is not really. If we look hard into the details, like what we do when we analyse stocks. What we lack is mind capacity. Most of the "work" today does not need physical labour. We have it toughest when we are in the gym, probably. Most of the time, we operate in a sedentary mode. We write emails, make phonecalls, go for meetings. All these does not require physical effort. It requires mental effort. Our brains are wired to try not to think too much. We space out easily after some real mental work. In fact usually during real work and really important meetings. Most people cannot focus and concentrate for 30 minutes. We crave distractions. Actually some surveys showed that most office workers spend 30-40% of their time surfing the net and doing really non-work related stuff. Our minds simply lack the capacity to function a full day and carry out all the tasks that is required.

Think about it, most tasks usually do not take more than 1-2 hours. Be it writing an email to our CEO or Chairman or presenting to a group of 100 people. But our minds make it so dreadful that we can't even sit down properly to draft the email or the powerpoint. It's our limited mind capacity. For most people, accomplishing 2-3 real tasks per day seemed like the max. Some good ones can do 4-5. But in reality, shouldn't it be 10 or even 18 since we have 10 working hours per day and 18 waking hours per day?

Our capacity can definitely be increased. The question is how.

In the world of finance, this has been recognized for some time and there has been various methods mentioned to help people cope. We shall discuss three today.

1. Beginning the day with good intentions

2. Reducing distractions

3. Yoga and meditation

The start of the day is actually very important but the modern society has seemingly moved away. Singapore has a culture of starting later following Hong Kong and Tokyo. Most young people sleep to the last minute possible reaching the office just in time before 8 am or 9 am depending on when the firm starts. Parents are bounded by the primary school bell ringing at 7:30 am. But what's really productive could be starting way early like 5:30 am, have a good wake up routine that sets the tone for the day. Be it an early morning run and then spending a few minutes thinking through the tasks of the day and setting the best intentions to accomplish them. As the day flows, the mind capacity will diminish, hence it is important to work on the hardest stuff early on. The end of the day will be for winding down with light reading, playing with kids and so on.

Waking up at 5:30 am? Yes start the day early!

As such, investing and finance might need to come early in the day, provided it's an off day and work is set aside. If not, then it has to come during the weekend mornings. Do make it a habit to think through investing and personal finance maybe once a fortnight or at least once a month. Slowly building our knowledge over time. Let's hope to see traffic bump up on this site on Sunday mornings!

On reducing distractions, this has be taught for some time. It is about cutting ourselves off emails, phones, chats, Facebook when real work needs to be done. These are powerful distractions and we can hardly resist them in this day and age. We reach for the phones during meals, walking, driving, and needless to say during meetings when it gets bored. This is our cravings in control, not us. So do away with all these. Stipulate time for checking emails and whatsapp or Facebook. Do the real work when it is required.

Yoga and meditation relates to the first point. Some people put this into their morning routine and it works well for them. It might be worth a try. Both yoga and meditation are the modernized versions of very traditional Buddhism practices to calm the mind and free it up for more capacity. Our mind capacity is like an engine, it needs a good warm up daily. It is also akin to rebooting the computer when it is running out of memory. Hence lunchtime yoga is also very popular. There is also a growing trend for other religions to follow meditation given its benefits e.g. the meditation movement in Christianity. Also, praying is actually very similar to meditation as it focuses the mind on doing one very important task - connecting to the Ultimate Being. This is essentially the same as calming down the monkey mind.

Our monkey minds cannot stop jumping. We are constantly thinking anything and everything. We think about the past, the future, the next task, the last argument, the meal tomorrow but rarely about what is happening now. This is our nature. In order to increase our mind capacity, we have to tame it first. With every successful reset, be it a yoga session, or praying or meditation, the capacity increases a little. Hopefully over time, we can do ten tasks a day, one of which is thinking strategically about our investment portfolio.

Happy April's Fool!

PS: For those who haven't figured out, sorry Singtel is not buying this site YET. 

Advertisement for my other blog and penny stocks on SGX

After 3 years and 120 posts I think I have covered more or less 80% of value investing, and 50-60% of investment and finance in general. I reckon there are about about 50-60 core concepts in value investing and I have more or less touched on all of them: margin of safety, circle of competence, value trap, economic moat/barrier to entry, stock markets' mechanism etc.

There may be a few more stuff to expand on Financial Statement Analysis. But it's very dry and I don't really enjoy writing about Financial Ratio and Cashflow. I am sure most people read those posts only when they want to get some sleep.

In the past 2 yrs, new posts have been slow at about 2 weeks per post bcos I can only write when new ideas, key concepts enter my knowledge base and well, new ideas and key concepts don't really come by the minute, hour or even days or weeks.

Meanwhile I have been working on another blog which I have simply named "Industry Knowledge and Other Information" which contains snippets of useful stuff (I think!)

The link is here http://industryk.blogspot.com/

It's in a very informal style and lots of no.s and statistics are included. More useful for myself than for pple who don't really want to think about what the statistics mean. Yes, the messages in the posts are not so clear cut. And sometimes, no message at all! :)

Well the latest post is about an interesting statistic: 84% of the stocks, or a whopping 600+ stocks listed on SGX are penny stocks (ie trading below $1). Of course, we are in a bear market, so what do you expect right? But let me share another statistic: less than 10 stocks trade more than $10 and less than 20 stocks trade more than $5. And in my short investment career, actually I can't really think of that many stocks trading at a high dollar amount. (Yes I know dollar amt doesn't mean anything, market cap is much more impt, but I am arguing from a simplistic angle).

I think all these statistics reflect a point: finding a real ten-bagger on SGX is 1 in a 100 or even less probable. Why? Bcos if the SGX has been around for more than 20 yrs and you see less than 20 counters trading at $5 or more. Assuming no stock split, and stocks IPO at $0.50 or so, it means you must be really good or damn lucky to identify that handful of $5-10 stocks.

Yes there are stocks that IPO at 20c, rally to $2 which would make it a ten-bagger. But they subsequently falter and return to their IPO price of 20c or even lower. Hence in my definition, they cannot really be considered "real" ten-bagger, right? So what does this all mean? Food for thought huh? I guess I will share my conclusions in another post. :)

Hopes and Dreams

Flipping through the newspaper everyday, I see so many dreams asking us to fork out top dollars to make them come true. Proprietary trading systems to help you trade and earn big money, ways to become millionaires, weight loss to a perfect figure, teaching methods to make your kid a genius, and many more others. Most of the time, they don't work, bcos if they did, they won't need these advertisements, people will just flock to their shops by the truckloads.

But the sad truth is, people still pay top dollars to go through these useless programs bcos they are buying a hope, hoping that somehow these programs will make their dreams come true. Humans are given the gift of hope such that in the most desperate of times, we can mentally survive bcos we know things could be better. In prehistoric times, cavemen needed hope to tide through winter, our grandparents needed hope to survive the wars. Today, this has become a marketing tool to entice people to buy hope that their dreams will come true.

Alas, you reap what you sow. How can you expect to lose weight by just paying money while you continue your 3,000 calories diet every day? How is it possible that your investment will make you money if you don't devote time to study what kind of investment you bought? We live in a world of cause and effect. One has to put in the right effort in order to get the desired results. So even if someone told you that the programs did work, it is more bcos they themselves put in the effort to cause the change. Or they may be just lucky.

To make money from investment is just about that: putting in the effort to learn, to think and then execute, ie buy the right securities. Most of it is free. The learning can be found all over the internet and needless to say, on this blog! The thinking is up to you, whether you like mental workout or just let your brain rot. Like most of us let our bodies rot by slouching in front of the TV after a hard day's work. The execution, well, competition among the brokers have brought commission down. So it's not expensive anymore. Unless of course you get some relationship managers or private bankers to service you and you actually get enticed to buy their high cost, high commission investment products. Then sorry lah, you might be paying 5% or even more of your capital for buying stocks or other securities.

The bottom line is this: don't pay top dollars for investment seminars, brokerage services, private banking services, don't pay top dollar for trading systems, learning to invest or any other programs for that matter. The great lessons in life are usually free.

And how to tackle private bankers?

The private banking industry is booming in Asia and more so in Singapore. Hence we see banks like Citi, UBS, HSBC hiring bankers by the truckloads. They hope that their legions of private bankers will be able to capture AUM (Asset Under Management) and then they can churn their clients to collect lots of fees. Btw, that won't be the official stance, the official stance would be to help HNWIs (high net worth individuals), manage their wealth, do tax planning, investments etc. Sadly, 99% of them (my own guess) will fail to do their jobs.

Traditionally the private banking industry has done good segmentation and actually the name, "private banker" is only reserved for those in the highest hierachy, ie bankers that serve the richest clients, the UNHWI (ultra high net worth individuals, whoa, that's a cool acronym right? Go tell your wife/gf that you will become a UNHWI someday, hehe).

But now, everyone wants to call themselves private bankers, so even those behind the counters whose jobs are to con aunties and uncles into buying some crazy pdts by offering them free umbrellas call themselves private bankers.

Anyways, the job of the private banker is to help clients manage their wealth. But their commission is based on two criteria. 1. How much money they can con their clients to put with the bank. 2. How many pdts they can con their clients to buy.

The second criteria is what makes it most unethical bcos they must continuously sell clients new pdts in order to hit their tgts. ie like maybe 10 pdts per mth or something. And next mth, it's another 10 pdts. So they have to ask the client to buy pdt A today, sell pdt A next mth, then buy pdt B and sell B next mth and buy back pdt A etc. But we know that investments can only generate good return over the long run right? Btw long run means 10 to 20 yrs hor. If you buy and sell stuff mth in mth out, you are just generating comission for the banker, which is what they want and will not help you build your retirement nest egg.

So what is the best way to tackle the private bankers and the best way to do investment? The short answer is you don't have to talk to private bankers.

For most people, the best way to invest would be to buy index funds that have the lowest fees. Index funds are funds that try to mimick the performance of an index, like the STI, Hang Seng, Nikkei, S&P500 etc. They don't employ fund managers who claim that they can beat the benchmark, they just buy whatever is inside the index and hence most of these funds have no sales charges and minimal mgmt fees.

In Singapore, MAS has made some regulations on unit trusts/funds that cap the sales charge at 3% or something. That's actually still too high bcos investment on average only give you 8% per annum. So you pay on 3% on your first year of performance, you are left with 5%, that's a mere 2% better than fixed D! Imagine buying a PC and you need to pay the salesman 20-30% ie $200-300 of commission! On top of them, you pay 1% mgmt fee every year, usually for fund managers that will underperform the benchmark. So my own personal policy is to refrain from buying unit trusts whenever possible. But sometimes, unit trust can help you gain access to some sub-sectors that are not easily investable, eg. environment/green stocks or energy stocks etc.

Look for index funds that have 0% sales charge and probably 0.5-0.8% mgmt fee per year. Lower fees mean higher return back to you. One of the biggest index fund seller in the world is the Vanguard Group. It may be hard to get their pdts in Singapore though. That's when you get the help of the private banker, ask them to source all the index funds available. If they are any good in the first place, they can help you. My guess is: it's more difficult than striking lottery.

After you buy the fund, just leave it there. Don't be bothered by the daily or weekly or even monthly fluctuations, over the long run, all indices will go up, if history is any accurate, you will earn 8-10% per annum, ie you double your money every 6 to 8 yrs. When you have more money to spare, you should just buy more of the same. Of course, you can exercise some judgement and buy indices of growing economies, like China, India etc. Or diversify globally, ie. have some of these hot economies, but also of US and Europe and Singapore.

That is the simple truth about investment, just buy index funds, and you will do ok. Disappointed huh, why so much hype around financial advisers and private bankers right?

But what about stock picking? Next post!

So how to tackle the insurance agents?

I thought maybe I should provide some (even though still imperfect) answers to my questions in the last post.

On insurance, if the agent cannot help you then who can? For my own journey, I talked to other agents, then I talked to friends, and find out more from the net and newspaper and talked to experienced folks to try to get to the truth.

At first I thought surely there would be some good agents out there. After all, some agents do earn big bucks by selling insurance right? Sooo, I called up pple, asked for appointments, but soon realized that they were all the same. They are TRAINED to sell you the useless stuff, and TRAINED to "taiji away" the difficult questions.

Whenever I asked about term insurance, they would say,

"Oh, but they only cover you until 60 you know?"
"But after 60, my kids are grown up, I don't need too much insurance." I say.
Then they change topic, "But if you buy this life plan, it's like a savings plan, you still get your money back, plus 3-4% per year."
"But meanwhile I pay $2,000 per yr for the next 20 yrs to earn 3-4%? And get covered for $50,000?"
"$50,000 coverage will grow to $50,512 over time! Ok what about this investment link product, it is very good blah blah blah"
What the heck...

I even got one agent who claimed to have advised millionaires on how to buy insurance and still give me stupid recommendations. So in the end, I gave up. I started talking to friends and read up. And here are some conclusions that I gathered.

Use less than 10% of your annual salary on insurance, I recommend 5%. But agents will quote you 20%, saying its MAS regulation. I find it hard to believe. I don't spend 20% of my annual salary on ANYTHING, not even mortgage! 20% on insurance? WTF!

But for 5% you have to try to maximize coverage, it has to be at least 5 times your annual salary to be meaningful. So this is tough job for 99.999% of all insurance agents. Try to find one who can do that, someone young, willing to work hard and help you. My experience: no agent can, so you gotta do it yourself. And that is to buy SAFRA insurance, one of the cheapest around.

Don't get swayed by the agents. They try to bend your rules, like 5% is not enough! Or you cannot see it that way, bcos this 20% will go to your savings blah blah. They should follow your rules, not the other way.

Don't buy investment linked products, usually you overpay for commission and stuff. If you want to do investment, do it separately.

Agents like to blackmail emotionally. Like if you die, your family how? Your kids so young how? And they will say, "I know one friend, cancer, no insurance, pay $200,000 etc". Stop them. I KNOW it's a disaster to die without insurance. But tell me the facts. The premium, the coverage etc. And Get me the cheap value-for-money policy, damn it!

So the ideal scenario, if your annual household income is say $60,000, spend $3,000 on insurance, buy minimal life (you need life policy to get term), say $20,000 and get lots of term, say $250,000. So you spend $3,000 to get insured for $270,000. That's probably an ok deal.

Not sure if most rational people are doing this. Pls comment ok!

Asking a Best Denki salesman whether you need a LCD TV

If you walk into Best Denki or Harvey Norman and ask the salesman whether you need a $3,000 LCD TV, what do you think he will say? He will immediately recommend you the $8,000 50 inch Samsung High Definition LCD TV, and give you 1,001 reasons why you NEED that TV. Right?

I guess the message here is that the salesman cannot tell you whether you NEED a LCD TV. His job is to sell you the TV NOT to determine if you need one.

But our world is a strange place. In so many areas of our lives, esp those related to finance, we ask the salesman whether we NEED something and we expect them to have our interest at heart and tell us the answers. Think about the following questions.

Is it logical to ask the insurance agent what kind of insurance is suitable for you?
Is it logical to ask your broker or his analysts which stock to buy?
Is it logical to ask your private banker how you should manage your wealth?
Is it logical to ask an investment banker whether your co. should do M&A?

In most to these cases, the salesperson, middleman thrives on activity. This is bcos he takes a cut or commission on the transactions that take place. So it is NOT in his interest that he recommend you the best thing. Bcos it will not generate future activity. He needs activity to earn his keep.

The insurance agent wants to revisit you every yr so that he can sell you another policy even though he sold you one last year that would have taken care of your lifetime need. And he will only sell you a life policy or an investment link one even though a term policy makes more sense for you. Bcos the commission on those pdts are much higher.

The analysts change their ratings every 3 mths bcos that's their job. Their job is not to identify the long term winner. Their job is to churn and create lots of buy and sell orders. So it is not in their interest to help investors identify the real 10 baggers (stocks that will rise 10 folds). Even if there are genuine analysts out there who believe they should help investors, the system is in place to discourage them. That's life dear.

Similarly the private bankers cannot help you grow your wealth. Their job is to sell you investment products and earn their keeps. They need to sell new products every yr to hit their annual targets. So naturally they will recommend you to buy this, sell that and buy back what you sold etc year in year out. Even though investments can only generate good return by investing for the LONG TERM.

As for companies, when they reach a stage where organic growth becomes difficult, they seek to do M&As. But the investment bankers they consult to do M&A are at best, well, not much better than the Best Denki salesman. They cannot help to identify which good co.s to buy. Their job is to make deal, not to help the CEOs find bargain M&A. That's why most M&A fails (though they look good on paper).

So how? I am still searching for an answer, but by talking to people who have gone down the same path sometimes help, esp those that have more experience in life and have succeeded (ie. not a bloke lah, but getting advice fr a bloke may still be better than getting advice fr private bankers). People who have bought so many insurance policies and finally know what is really good. People who have talked to so many private bankers and finally know not talking may be the best. And of course, when you have the answers, contributing your answers to this blog will help too!

Investment, Golf and Hardwork!

Let's try to relate investment with a sports like say Golf. To put some things in comparison, we have

Golf Set = Bloomberg, Excel Spreadsheet, Brokers' charting tools
Golf Swing Techniques = Fundamentals, Valuation, Technical analysis
To win the game of Golf = a lot of hardwork and luck
To beat the Market = a lot of hardwork and luck

When you first start at golf, you will suck big time. You probably bought a golf set that cost S$299 and try out on the driving ranges. In investment, this is like engaging your local broker and their cock-up systems with their technical charts and then dabbling into your first purchase.

Then you realize that you need to put in more time and effort to actually play golf meaningfully and this is when you start to engage instructors to improve your swing, you read up golf books and practice a lot. In investment, this is where you also try to learn from other investors, attend sessions, read books, buy some software and really get your hands dirty with all the financial statements and valuation analysis. Or charts and RSI and MACD for the technicians.

So after a few years of practice, you are ready to compete with other golfers. Say there is a competition for all the world's golfers from beginners like yourself to pros like Tiger, where do you think you will stand? Will you beat say 50% of all the golfers? Or 80%? Or 99%? Similarly in investment, after a few years of doing some real company analysis and trading, can you earn average market return of 8-10%pa? Or the best returns of around 25-40%pa (over the long run ie. 10yrs or more)?

The success rate of being able to beating the average will correlate with the amount of hardwork you put in to either golf or investment.

What determines why Tiger beats the average? Most golfers know the swings and techniques like Tiger does. (Most investors know all about fundamental and technical analysis). Most golfers use the same tools (golf sets) like Callaway/Mizuno/TaylorMade golf sets. (Most investors use the same Excel/Bloomberg/Brokers' charting tools.)

Tiger beats the average golfer through a lot of hardwork and beats the best of the best golfers through luck. Some might argue talent is impt but studies have shown that talent may help but ultimately it's hardwork.

I think a lot of pple know Tiger started golf at the age of 3, and trained hard everyday to win his first championship at 18. That's 15yrs of hardwork btw. But he did not stop there, he continued to work hard to perfect his swing so that he can better himself. So if you are not training that hard, is it a wonder why you cannot beat him?

Don't believe? Read this article.

But at the pros level, Tiger, Vijay, Phil etc, everybody is training as hard as everyone else. So in the end, whoever wins the championship is probably a matter of luck.

So in investment, if you are spending 1-2hrs a day reading some annual reports, doing simple brainstorming about how the world will change tomorrow and how your investment will do, can you beat the market average of 8-10%pa? Of course the market is made up of some aunties and uncles, some novices, some semi-pros, and also pple like Buffett, Lynch, Soros, Jim Rogers, Peter Lim who spent their lives thinking about how the world will change and are very good at it. If you work hard enough, probably there is a chance to beat the average even though you cannot beat the best of the best.

As a side note, passively investing in indices will give you 8-10%pa which is quite good and this is actually one of those rare free lunches in life. Minimal effort for earning an average return!

If you do put in a lot of hardwork, so much so that you think you are in the league of the best investors globally including Buffett, Lynch, Soros, Jim Rogers, Peter Lim etc, then you can only beat these pple if you have luck. Studies have shown that only 10% of all investors can actually beat the average return of 8-10%. So it's a lot of hardwork to be in this top 10%. And to stay there, give a big smile to Lady Luck and hopefully she smiles back!

More Facts, this time Global Facts, don’t pray pray!

In this post, we shall examine two macro statistics, GDP and Population.

The Global GDP is USD 41trn while Singapore’s GDP is USD 120bn i.e. we make up 0.29% of global GDP, which is quite insignificant. So actually, calling Singapore a little red dot is already a compliment. So don’t be so yah-yah okay?

US, the world’s biggest economy contributes to roughly 25% of global GDP, while Europe makes up about 20%. Japan is No.3 at 11% and China is slightly less than 5%.

However, in terms of PPP which stands for purchasing power parity, a chim term which I shall explain later, China is already No.2 at 19% of global GDP, Japan at No.3 at 9% and India is No.4 at 8%. Developing countries or the new buzz word: Emerging Countries now make up close to 50% of global GDP in terms of PPP and growing fast! Maybe Singapore should call herself an emerging country, bcos that’s the in-thing now siah!

PPP tries to measure GDP by taking away the effects of exchange rate in goods and services. In layman terms, one Big Mac in US will have the same impact on GDP as one Big Mac in China. Whereas, in the conventional method of measuring GDP, the Big Mac in US will impact GDP 3-4x more than the same Big Mac in China. So PPP actually gives a better picture of how world GDP is structured.

So that’s global GDP, btw it’s growing at roughly 4% (for the past 5yrs), developed nations are growing at 2% and Asia at 7%. Singapore has been growing at 8-10% for the past 40 yrs and we might do 11% this year. This is actually quite amazing, so maybe we can afford to be a bit yah-yah. But it always pays to be humble though. Who likes a yah-yah person even when he is in a position to be yah-yah?

The other macro statistic that you should know by hard in order to call yourself a seasoned investor is population statistic.

Well if you have no clue, better memorize this list now!

Global population 6.4bn pple
China 1.3bn pple
India 1bn pple
Europe 900mn pple (this is tricky, bcos depends on how you define Europe, this no. will change)
US 300mn pple
Indonesia 220mn pple
Brazil 180mn pple
Russia 140mn pple
Japan 130mn pple
Singapore 4mn pple

Needless to say, demographics drive long-term trends. Why did the global economy grow so strongly in the past 100 yrs? A large part of it is probably bcos the human population exploded. In 1900, there was only 1.6bn pple in the world but now we have 6.4bn pple. That’s roughly 3% annualized growth rate. And we all heard about the baby boomers. It was this generation that brought about a few big trends in the past few decades, like the rise of automobiles, the mutual fund (i.e. unit trust) boom in the US etc. So bottomline, population matters! Why do you think our Gahmen keeps talking about not enough babies? Now they know relying on Singaporean babies is not enough, so can only import more pple here.

Anyways, going forward, the world population is expected to grow only 1.1% per year and will peak out in 2050 when the global population reaches 10bn pple. Will the global GDP still grow at 4%? And more importantly, will equities give you 10% return per yr? Food for thought huh.

Interestingly, here is a forecast of top 10 populous nations in 2050
India 1.6bn pple
China 1.4bn pple
Europe 825mn pple
US 395mn pple
Pakistan 305mn pple
Indonesia 285mn pple
Nigeria 258mn pple
Brazil 253mn pple
Bangladesh 243mn pple

This is why the whole world is so bullish on China and India. Though China is now in the limelight with strong GDP growth and a large population base, India is the dark horse (no pun intended!) that will win the race. India is the fastest growing population on Earth and will become the most populous country in time.

It is fortunate that Singapore has links to both countries and can definitely find a niche to play in the world theatre of tomorrow, be it integrated resorts, a private banking hub or something else.

For those interested to play the India story, I recommend Singtel (btw this is probably my first stock recommendation on this blog, so don’t bet your house on it). Singtel’s stake in Bharti will be worth more than Singtel itself in time to come. So buy it now while it’s cheap (PER 15x).

See also Secular Trends