Wednesday, December 01, 2021

Economics: Factors of Production

I have never studied Economics academically and always felt it was my impediment as an investor. Now that my kids are taking the subject in school, I got hold of their textbooks and took this opportunity to learn with them. Yes, learning never stops.

In the first lesson in Economics, we are taught that there are four factors of production that is needed to produce finished goods and services. These are the building blocks that form the basis of any economy. Originally, there was only three, but over time, as knowledge increases, the fourth factor was added.

1. Labour: this refers to people, workers and manpower that make things and create services. People are also consumers and as such the largest economies tend to also have the largest populations.

2. Capital: this actually refers to financial and working capital (ie money in layman's term), fixed capital (equipment, servers, buildings) and also other forms of capital such as R&D and intellectual property.

3. Land: this is raw land and also the resources like copper, oil and gold under the land. This also includes forests for timber and water reservoirs. 

4. Entrepreneurship: this is human innovation and the ability to harness the top three factors and ingenuity to generate economic growth.

In the early days leading to the independence of Singapore, economic theory postulated that we could never have created any kind of economy since we have limited capital, labour and entrepreneurship. The biggest problem was that we didn't have land. We didn't even have enough water. Our forefathers really reinvented themselves to lay the foundations of the country and the abundance we have today. 

But it's fortunate we started in the 20th century and it became possible to create an economy and relying a lot on entrepreneurship and innovation.

Huat Ah!

Monday, November 15, 2021

NeverGrande: Is this China's Lehman Moment?

Last month, we witnessed the fall for Evergrande, the world's most indebted real estate developer, and the subsequent semi-bailout in stealth. While we do not know for sure if the Chinese government did step in, we have to assume so at the moment. Without the government's olive branch, Evergrande could  plunge China into pandemonium as the 80,000 retail investors who had invested in Evergrande rebelled, and the millions of Evergrande's homeowners could cause further unrest, threatening "common prosperity". Evergrande's share price has collapsed 90% since Jul 2020.


To recap, Evergrande owed USD300bn of debt which was accumulated to fund its crazy built-up of over 1.000 projects across 200 Chinese cities. It was reported that the company pre-sold 1.5m homes to Chinese citizens. Evergrande had always had issues. It just side-stepped them by launching new ventures and borrowing more money. But triggered by the pandemic which has caused disruption in the global supply chain, business workflow and money flow, rumor was that Evergrande would miss its bond payments and this would be the last straw that was going to take everything down.

This was really the last straw.

In summer, the cement, dynamite and sh*t hit the fan (figuratively, of course) and everything blew up. The courts took control of the firm's finances and the Central Bank even issued a rare warning. Losing confidence in Evergrande, workers, home-owners retail investors marched in the company's HQ claiming they were tricked and demanding to have their money back. Employees of the firm were similarly tricked alongside overseas investors and probably stand to lose the most. 

Evergrande's fallout then spread to the other developers. Smaller peers have defaulted and impacted bond and stock prices. While not picked up by the media, I am sure many homeowners are affected, losing their life savings. Tragedies abound. The old adage comes to mind: caveat emptor, buyers beware.

The worst is not over. The following table below from FT details the upcoming bond payments. In March and April 2022, there will be USD3.6bn or principal repayment due. If Evergrande or the Chinese government cannot raise the money, we are looking at the next rollercoaster plunge and perhaps China's Lehman Moment (which arguably, started in September when the problem was picked up by global media).

Courtesy of FT

Analysts have long warned about Evergrande. Amongst the big developers, it always stood out with more debt, more aggressive accounting and more issues. As early as 2012, short seller Andrew Left raised issues with Evergrande but was silenced by the Hong Kong authorities at that time. He was charged with market disconduct and banned from trading for five years. His ban is still on today despite his thesis being vindicated! 

This is another example of how the global system is pretty broken at times. It reminds me of the how Jho Low got to defraud Malaysia and got away with wiring billions across the world via major US and European global banks, making a fool of the SWIFT system and nobody caught him. He is still at large today. Well, that's the truth, nobody knows sh*t. People who run systems sometimes really have no idea.

So, what can we learn from Evergrande?

I think there are two important lessons, one for investors and one for understanding powers at play. As investors, we have to bolt when we smell trouble. This is a lesson that took me a while to learn because psychology is at work. We hate losing money and loss aversion clouds our minds. I made the same mistakes with Hyflux, Bayer, Sembmarine and so many other stocks which is in the portfolio.

When trouble brews and you have a position, the first thing to do is not wait-and-see. It is to cut loss. There is always a "canary in the coal mine" that died to warn us of danger. We must be vigilant to understand the tell-tale signs and more importantly take action by selling! 

The following timeline (courtesy of Reuters) shows how Evergrande's problems were well known. On hindsight, there was an optimal point to sell around Jul 2020 when the stock rebounded with the markets with the pandemic recovery rally. But one would have save some money by selling at any point.

August 2017 

Evergrande vows to cut debt for the first time, aiming to slash net gearing ratio to 70% by June 2020 from 240% in June 2017. 

November 2018 

Central bank names Evergrande as one of few financial holding conglomerates on its watch that it said could cause systemic risk. 

March 2020 

Evergrande targets cutting its debt by 150 billion yuan ($23.3 billion) annually for three years. 

August 2020 

Regulators meet with 12 major property developers, including Evergrande, to introduce caps for three different debt ratios in a pilot scheme dubbed “the three red lines”. Evergrande sells 28% of its property management unit for $3 billion ahead of the unit’s initial public offering (IPO) in Shenzhen.

September 2020 

Company offers 30% discount on properties for a month to push sales. 

October 2020 

Evergrande raises $555 million in a slimmed-down secondary share sale in Hong Kong. 

November 2020 

It terminates the Shenzhen backdoor listing plan. Some strategic investors agree not to demand repayment. Evergrande Property Services Group Ltd’s Hong Kong IPO raises $1.8 billion. 

January 2021 

China Evergrande New Energy Vehicle Group Ltd raises $3.4 billion by bringing in six new investors. 

March 2021 

Evergrande sells 10% of online real estate and automobile marketplace Fangchebao to 17 investors for $2.10 billion in a pre-IPO deal. It aims to meet all three caps on debt ratios by 2022-end. It plans to list Fangchebao by early next year, and spin off its water and tourism units among others. 

June 2021 

Evergrande says it will sell over half of its 58% stake in peer China Calxon Group Co Ltd, worth $386 million. Fitch downgrades Evergrande to ‘B’ from ‘B+’ with a negative outlook. The developer arranges HK$13.6 billion ($1.75 billion) to repay a maturing bond and interest on all other dollar bonds.

July 2021 

A court orders a freeze on a 132 million yuan bank deposit held by Evergrande at the request of China Guangfa Bank Co Ltd. Evergrande says the loan is not due until March and it plans to take legal action. 

 Some banks in Hong Kong decline to extend new loans to buyers of two of Evergrande’s uncompleted residential projects. Evergrande scraps a special dividend proposal. S&P cuts its credit rating on the company by two notches to B- from B+ with a negative outlook. Fitch downgrades Evergrande to “CCC+” from “B”. 

August 2021 

Moody’s downgrades Evergrande’s corporate family rating (CFR) by two notches to “Caa1” from “B2”. Legal sources say lawsuits against Evergrande across the country will be centrally handled by the Guangzhou Intermediate People’s Court. 

Hui Ka Yan steps down as chairman of flagship unit Hengda Real Estate Group which Evergrande says is due to the termination of its backdoor listing plan. 

China’s central bank and banking watchdog summon senior executives and issues a rare warning that Evergrande needs to reduce its debt risk and prioritise stability. Evergrande warns of liquidity and default risks.

September 2021 

Chairman Hui Ka Yan leads a pledge-signing ceremony to promise buyers it will complete construction of their homes.

Hui Ka Yan - Evergrande's founder

The second lesson is to understand people and powers at play. Undoubtedly, Hui Ka Yan, the still billionaire founder of Evergrande (after losing USD25 billion of his wealth) was a shrewd businessman and wasted no time to curry favor the new Xi's government and disassociate past links as early as 2012 when he dabbled into soccer to help bring China to the world's stage. In 2018, he was on the official list of 100 outstanding entrepreneurs, a recognition of his efforts by the Chinese government. He is also still a member of the Political Consultative Committee that advises the government on policy. 

But he was never in the inner circle and could never be in. So when Xi's anti-corruption campaign started and even Jack Ma was brought down, we must understand that a government bailout will always be difficult. This is now made even more difficult with the focus on "common prosperity". With USD11bn in his pocket, he probably has to dough out more to help the 80,000 retail investors and 1.5m homeowners first before his own prosperity becomes common.

A change in dynasty and/or paradigm is always big. It means that what we know hitherto no longer counts. Xi's rising in 2012 was big but it took the world a few years to realize that. The Lehman Moment defined global financial markets for more than a decade. We are still not out of the GFC's shadows. In China today, this focus on "common prosperity" is one huge paradigm shift. As for the next disruption in the financial world, crypto could be one.

So, stay tuned! Huat Ah!

Monday, November 01, 2021

Thoughts #26: Tesla at USD 1 trillion

Tesla became a trillion dollar market cap company last week (end Oct 2021). This is a company that has not made positive cashflow since its inception. Yet, the market is saying this company should be in the exclusive club of trillion dollar companies, of which there are only six members today.

Trillion dollar club

In my view, Tesla meteoric rise is a testament of two factors:

1. QE Infinity

2. We are in the biggest bubble of all times

It is a true irony that I am half-way through reading Ben Graham's Security Analysis and yet living in this moment when fundamentals do not seemed to matter anymore. In Ben Graham's days, he did not even bother to look at earnings because it was not possible to project companies' earnings with confidence. So he only looked at the balance sheet and only with co.s that has more current assets vs its market cap (a.k.a. net-nets).

Value investing then evolved to look at earnings of stable companies. Then we look at good businesses with strong moats. These are companies that can generate stable, growing cashflows. Today, I am not sure what we are looking at. Tesla has very little equity, no earnings, no cashflow and no moat. Yet, the market is saying it is worth a trillion dollars.

Tesla's $1.1trn market cap

 However, stocks will always revert to their intrinsic values. That is the truth like how gravity pulls objects down or how the sun rises from the east. It could be the case that QE Infinity will cause intrinsic values to be recalculated off different risk-free rates and different risk premium (ie like 50x PE for good stocks can be the norm in the future because investors simply cannot get better returns anyways) but stocks will revert to their intrinsic values.

Let's see if Tesla's intrinsic value is truly 1,000,000,000,000 dollars.




Friday, October 22, 2021

Charts #41: Breakthrough Energy

Breakthrough Energy is one of Bill Gates' company that is big on sustainability. The following chart and link provides good info for future reference.


https://www.breakthroughenergy.org/our-challenge/the-green-premium

The sustainability problem will become one of the biggest topic for us and our children. Let's hope we can solve it!

Tuesday, October 05, 2021

Books #15: Bill Gates' How to Avoid a Climate Disaster

I picked up this book without much expectations. After all, so much has been said about climate change, is there anything new? Bill Gates was the world's richest man, still a billionaire and recently more of a philanthropist, how much did he know about climate change? What's more, his womanizing history caught up with him and he got divorced! So, can we actually trust this guy?

Well, I have also learnt some time back to think about the message. Brilliant truths are not about the messengers. Of course, someone respected and credible saying something is always the gold standard. But there are intrinsic truths utter by liars that will nevertheless remain true. As a simple example, if Donald Trump says π equals to 3.14159265, it is still true. Despite the speaker having a track record as a recalcitrant liar.


Bill Gates is not a liar. He has no reason the write a book about some topic that already has so much publicity. At a time when he is having trouble with his wife! So, let's pay attention to his message. As such, I wanted to put this down for future readers and for myself to remember the important message.

I believe there are three key takeaways:

1. Big numbers to define the problems

2. We must do something now, if not the problem gets bigger.

3. The solution is to reduce the green premiums to zero.

Bill Gates, being a geek, likes to throw out a lot of numbers and as investors, we should take note. Numbers are important. So these are the important numbers:

51 billion tonnes of carbon. Humans produce this every year and we need to get this to zero. 

The world needs of the current electricity generation capacity of 5,000 GW to be from renewable and zero-carbon sources. If we want to achieve this, it will take a lot innovation and willpower. He also believes we need to use more nuclear power.

On the second point, it's really self explanatory. A stitch in time saves nine. If we don't do it now, the problem gets bigger and it may become intractable. I did not remember if the number came from the book. But roughly speaking, if we don't do anything now, the cost to do something 10 years later will be 10x higher and we are talking about trillions of dollars here!

The last point on green premium is really the core of the book. For almost all situations, the zero-carbon solution will cost more. The point is to reduce the green premium to zero. There are examples that this has been achieved. For example heat pumps to regulate temperature in buildings. If we innovate and use technology to reduce green premiums, we can incentivise the world to go green faster. 

This is definitely a book worth keeping. Hope to read again if there's time. 

Huat Ah!




Monday, September 20, 2021

2021 HK Dividend List - Bonus!

Hong Kong and China has matured as stock markets over the last 20 years. In 2005, Jim Rogers famously said that the 21st Century belongs to Asia and China, especially, which was awakening to capitalism after years of structural reform. The big beneficiary was the Hong Kong's capital markets. Shortly after, China went ahead to drive the commodities supercycle, became the world's largest exporter and now on its way to become the world's largest consumer market. Yes, we will continue to see the growth of China. 

2021 HK dividend list

This is the first list of interesting HK and China names and we see the corollary from the preamble above. Anhui Couch, China's second largest cement company and China Resources Cement were the Chinese companies that drove the commodities boom. Alongside was Zoomlion, the excavator manufacturer, helping to build up China's infrastructure over the last decade. Qingdao Port, an execution arm of China's export capabilities and Haitian, one of the plastic injection mold companies benefiting from the export trend. Then we have a bunch of consumer companies like Want Want and Uni-President which will be compounding growth in the years ahead. 

ROE and ROA driven screen

The criteria are similar to the Singapore list generated a few weeks ago whereby ROA and ROE drives the screener. The first part of the list shown here cuts off at market cap of HKD 35 billion (c.USD 5 billion) which is good. We do not like companies with small market caps as it's just risky. Remember Singapore only has less than 30 companies with more than USD 5 billion in market cap. That said, if we have done good analysis and are confident that they won't go belly up, it is okay to buy small caps. Those are the names that can give 10x returns (except Hyflux, which was USD 1 billion when it went belly-up).

If I were to pick one name from this list, it would be Want Want. We know that snacks are irresistible, the market will grow at high single digit and Want Want has the track record to keep growing. The metrics look pretty good too. ROE at 24% and ROA at 12% and operating margins are over 20%. Most importantly, the stock is not expensive at teens PE. However, the screen is always just the starting point. We must do more work. The stock price has collapsed from its peak and not moved for a couple of years. We need to find out why. 

That's what screens are about. We use screens for a first cut and then do the deep dive. It is hard work!

As usual, here's the past lists:

2020 Dividend List
2019 Dividend List
2018 Dividend List - Part 4
2018 Dividend List - Part 3
2018 Dividend List - Part 2
2018 Dividend List - Part 1
2017 Oct Dividend List - Part 2
2017 Oct Dividend List - Part 1

Huat Ah!

Thursday, September 09, 2021

Charts #40: Meatless market

The meatless market has grown on the back of sustainability theme reaching USD 17 billion in size. The forecast below projected the growth to be flat but it's probably wrong.

Vegetarians used to have a hard time because people cannot understand why they want to stop eating meat. Living things have to eat livings to survive. I see them being ridiculed, sometimes it's not really fair.

With sustainability and vegan movements coming forth, the tide is finally turning. Now eating meat is increasingly a sin. But even if most of us cannot stop eating meat, we should eat less of it for Earth's sake. 

Be a flexitarian!


Saturday, August 21, 2021

2021 Singapore Dividend List using Poems Stock Screen

When we first starting discussing screens more than 10 years ago, there were no good screens out there for retail investors. But technology advances, today we can easily screen for stuff. Just google "stock screener" and you get tonnes of screens. Even screens for ETFs! It is true that most would be made for the US and other big markets. But still, you can get good stuff.

I have been using poems as described in last year's post. This year, I would also be showing the poems screen. Singapore has been hit badly by the pandemic and we do get a lot of interesting results. So, this year's screen will be the first time in a long while we discuss Singapore stocks.

Here's the criteria I used for this year's screen.


I have focused on ROE and ROA (which are proxies for ROIC or return on invested capital) for this year to as these two metrics are really key in assessing both the quality of the business and the quality of the management. ROA of 10% means for every $100 I invested into the asset base of the business, I will get back $10. This is a decent return for most businesses when it's sustainable. 

As such, I would say that ROE and ROA drive the screen, while Operating Margin, Dividend Yield are really just cherries on the pudding. Remember, while we are looking for good dividends, it is what makes good company capable of paying good dividends that is important. Lastly, I have the market cap cut off at SGD100m.

These are the names ranked by market cap: Thai Beverage at SGD17.5bn, ST Engineering at SGD12.2bn and Keppel and so on and so forth. Nothing really stands out in this first part. Some of the names are repeated from last year as well while some others dropped off (Jardine Cycle and Carriage and SIA Engineering) mainly due to their inability to maintain paying 3% dividend. I continue to own Vicom which was discussed a couple of years back. 

First part of Singapore's 2021 Dividend List

The second part of this year's Singapore screen have a few interesting names: Boustead, Silverlake and Propnex. All three names generate extremely high ROEs without using too much leverage. We know this because ROA is also good at high teens. Most importantly, valuations are not stretched. Silverlake Axis trades at 4.6x PER!

That said, Silverlake Axis was issued with a short seller report back in 2015 which caused the stock to crash after that. It never recovered. It has been 6 years now but nothing was ever brought to light. So, did they really commit accounting fraud? If so, then the regulators should have clamped down and got the company delisted. If not, why is the stock price so weak after so many years? Inexplicable. In such cases, perhaps it is easier to just stay away. 

If anyone have any insights, would love to hear more in the comments section.

Second part of Singapore's 2021 Dividend List

I do not own any of these names. So Silverlake is not so great but I have been told many times that Boustead and Propnex are good companies. Boustead was built by a legendary entrepreneur called FF Wong. It was a darling midcap until 2014 when it's share price was almost two dollars. It has since derated quite a bit. I have not looked at it recently, but if its core engineering services business is not being disrupted, it should do okay.

Propnex is just the right business in the right place. Singapore's national pastime is to buy and sell properties. This stock IPO at 50c and is now at 1.5. How I wished I took my friend's advice to look at it seriously back then. It is after all the largest property agent in Singapore. It is not shown here but this is a highly FCF generative business making SGD30-40m against its market cap of SGD500+m. What's more: it has SGD100+m in cash and no debt. If it corrects 20%, I think this is a buy.

As usual, here's the past lists:

2020 Dividend List
2019 Dividend List
2018 Dividend List - Part 4
2018 Dividend List - Part 3
2018 Dividend List - Part 2
2018 Dividend List - Part 1
2017 Oct Dividend List - Part 2
2017 Oct Dividend List - Part 1

Huat Ah!

Sunday, August 08, 2021

The Future of Education in China, Singapore and the ROW

Last week, the Chinese government decided to overhaul its USD100bn tuition industry by declaring that education and tuition companies should be strictly non-profit and will not be allowed to use the now infamous VIE structure to raise capital from foreign investors in foreign markets. Tuition stocks subsequently crashed as exemplified by New Oriental Education crashing 70%. There is no money to be made here. It is unclear if these companies can stay listed. If they do, great, maybe you might be able to make 100-300%. But if not, then you will never see your money again.

New Oriental Education from >USD50 to USD 17

There have always been qualms about how capitalism should not encroach certain sectors like healthcare/hospitals, public services such as waste management and, needless to say, education. If these institutions are run for profits, then they could just go full throttle to make money and fail to provide the necessary public services. In China's education landscape, this has happened. Or rather, it was structured to happen because the rich can always pay up and get their kids onto the best platforms or employ the best tuition teachers for their children. 

Hence the Chinese government decided to do something - by clamping down on education (and also property and internet giants). In this way, you can level the playing field if not the current generation, then for the next generation. The next step is to get the nation's kids off "spiritual opium" - additive mobile games that has glued all our children's eyeballs to those screens. As such, Tencent is also falling like a brick. 

Actually, Singapore and the rest of the world are not that different. Our tuition industry runs into billions of dollars despite our population and economy being only a fraction of China's. Kids from lower income families are losing out in our highly competitive, elitist education system. And mobile games, that's every Singaporean parents' nightmare. We are all smoking "spiritual opium".

Spiritual opium

Addiction is as old as civilization. Our brains are wired to respond to incentives and it requires a lot of willpower to abstain. Think prostitution, tobacco, alcohol, gambling which has caused so much problems despite everyone knowing their harmfulness. What are our odds now to beat addiction when the lures are now right in our palms. It is a huge social problem as with our global education system.

Yes, (*sigh*) the global education system.

It is well-known that our education system is very outdated. When we look at our lives across various aspects, it is really hard to think of system that has not changed. The way we communicate across distances have changed so many times that we don't even know where to start counting. Broadly, maybe it started with human messengers, then letters, then telegrams, phones, emails, whatsapp and now zoom but in between we also had pigeons, pagers, car phones and SMSes. It is a similar story the way we work, the way we consume music, the way we commute and run our governments and so on and so forth. Everything has evolved. It is amazing how the classroom has not changed. 

Classrooms have not changed for 100 years!

Is this really to best way to learn? I have written a lot about Singapore's education system. But as I learnt about other education systems across the globe, the bigger picture remains bleak. Not only has learning not changed much since humans rode horses, it is totally inadequate in preparing our children for the connected future. What is the point of memorizing Shakespeare when you can always just google it? The other day, my kid just asked me did I ever use the solution to the quadratic equation in my adult life. I did not answer him.

Learning has to be made fun, multi-faceted and more about harnessing creativity. It is no longer about memory work and brute force. How do we incentivise our kids to learn when screens, games and Netflix are competing for the same eyeballs? There are no easy answers. It doesn't help when the best brains have also gravitated to work for Facebook and Google to write algorithms that will capture those eyeballs rather than staying in schools to teach.

It's at uphill battle. We desperately need better teachers. We also need to better use media to teach in fun ways and ensure knowledge is retained. Parents have to play even bigger roles. We also need to make sure our kids can learn to relearn, because knowledge keeps getting updated. I remember my periodic table was much simpler!

Today's periodic table

Learning is also about discipline. It takes effort to force the brain to rewire itself as it learns new knowledge so that it gets stronger. Games, Tiktok and Netflix do none of that. It is a different state of mind. It's inducing artificial dopamine kicks after dopamine kicks without the effort needed. As such, Our kids are increasingly addicted, getting used to the effortless lazy mode. In future, they might find it way much harder to get in the "flow zone" of focused studying or training. 

The joy of learning is being taken away.

Learning is for life. It doesn't stop after we graduate. I learnt what's most important in life way after school: human psychology, value investing and valuable lessons from best selling books such as The Selfish Gene and Bill Gate's How To Avoid a Climate Disaster. We are not teaching these in schools. At least not yet. It is pertinent that our schools emphasize that learning never stops. The twelve to thirteen years of core education simply prepared us for the important tertiary learning and then ultimately the University of Life. If kids are taught that learning is about brute mugging and exams and they have to find dopamine kicks from "spiritual opium", then all is lost. 

As parents, perhaps we have to step up and encourage holistic education, induce a home environment of learning, replace spiritual opium with physical stimulus (more sports and physical activities, it's the Olympics fever after all) and enforce the mindset of learning to relearn, discipline and help our kids discover the joy of learning. 

If China is doing something, Singapore should follow.

Happy National Day! Huat Ah!

Sunday, August 01, 2021

Books #14: Daniel Pink's When

I have read two books written by Daniel Pink. Both were simple and good. The recent book was simply title When. This is a book telling us to be mindful of time and think a bit more how we should use it when. There were many gold nuggets. I shall list a few that were quite meaningful to me.

1. Every day, every project and every venture has a peak, trough and a rebound. We should be mindful of our own cycles and try not to make important decisions during the trough.

2. In the context of a venture or a project, the middle is a crucial moment where teams break or breakthrough. It is important to know this and garner all resources to make sure we handle the middle trough well. Daniel has the following four strategies to help us move towards breakthrough:

i) Go for small wins - if the task is too big and overwhelming, break it down and go for small wins.

ii) Moving beats stationery - walk around, exercise, do something. Not doing anything will mean falling down the slippery slope.

iii) Social beats solo - as retail investors, we tend to think alone, it is important to ask friends, seek help and advice. The wisdom of crowds beat solo thinking. This works in life, not just for investing.

iv) Outside beats inside - Daniel advocates that we should always connect with nature. It could be as simple as having plants around us. But nothing beats going to the park for a stroll to clear the mind.

3.  Here's the last bit about timing. There are times when we should go first and times we should not. We should go first when there are few competitors and we can make strong impressions. We should not go first when we are the default choice, or when there are too many competitors and when we are in an unknown environment.

Overall, I really like his style of writing. Simple and clear and hence worth the effort to jot this down for future reference.