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There are a lot of nicknames out there. It's just out of randomness that I decided to classify them according to noun, verb, adjective and adverb. My English isn't that good, so I only know there are these 4 categories of words. Heck, the definition below might not even be encompassing. Of course, there are other connective words like 'the', 'and' and so on, but let's not worry about them. Haha, I'm just doing this for fun :)

First of all, a brief description of each main category:

1. Noun - these are words that describe an object. Cat, dogs, paper clip, me, you, Peter are all examples of noun.

2. Adjectives - these are words that describe a noun and add depth to the noun. Black cat, lazy dog, rusty paper clip, silly me, funny you, dashing Peter are examples of adjectives.

3. Verbs - these are words that describe action. Running, walking, swimming, waving are examples of verbs.

4. Adverb - these are words that describe more about the action and add depth to the verb. Running quickly, walking briskly, swimming haphazardly, waving frantically are examples of adverb.



Here it goes:

Noun - I found out that there are plenty of nicknames which belong to this category. Steadybull, la Papillion, guest, bug, HH, KK, musicwhiz, cookieguy, noob, stupidbear, charlesming.

These people presumably wanted to portray a certain kind of idea or object that they are aiming towards, or they use the nicknames to describe themselves as they already are. For me, la papillion (french for butterfly) signifies a metamorphosis from a a newbie to a pro, or from TA to FA. I want to portray myself as changing drastically, something like from a caterpillar to a butterfly. A complete transformation yet an integral part of the whole cycle of life.



Adjectives - There are less people using adjectives but it's still possible to find. Grey is one. Stupid can be an adjective or a noun.

You are such a stupid person (adjective).
Hey stupid, come over here (noun).

I'll treat stupid as an adjective.

7777777 is an adjective too (though it can be a noun as in an idea. Seven 7s could be lucky to him, hence the seven 7s could be a idea, a symbol to him, hence acting as a noun). Like 500 eggs, or 20 burgers, the numbers are used to quantify or describe the noun (eggs/burgers). I saw a g01den from cna forum too, but it's definitely rare compared to nouns.

People who use adjective must be more concerned with concepts or details. Perhaps they have an idea of who they are, but somehow the quality of that idea is more important that the idea itself. As the saying goes, the devil lies in the details. Hence by choosing an adjective yet omitting the noun, these people are more concerned with the details regarding the object rather than the object itself. Seeking to differentiate themselves by focusing on details?



Verb - Very rare. I've only got one -Decipher. To decipher is to read or to interpret. Interpret what? Most likely market trends, market outlook etc.

Probably someone active would use verbs as their nicknames. I don't see a nicknames that goes like swim, read, jump or cry, have you? Not enough data to analyse :)



Adverb - I haven't seen anyone with the nicknames quickly, faster, steadily, crazily etc, have you? This is worth studying...why don't people give themselves adverbs as nicknames? Perhaps you need a verb in order to quantify it with an adverb. Without the verb, an adverb by itself is useless. For example, quickly. Quickly what? Hmm, very interesting, since I don't see another with such nicknames. Whoever had adverb as a nickname must be truly special and unique in his/her thinking.

Interesting isn't it?

Synear released a profit guidance for its upcoming 1QFY08 results. It's good that they update investors of any news that crop up, so that expectations can be managed. Here are the key points:

1. Sales is for 1Q08 is expected to be 10% lower than 1Q07, though higher than sales in 4Q07. This is due to the snowstorm in Jan 08 which had affected the transportation and sales of the Group's products to southern China.

4Q07 revenue is 595,609,000 RMB
1Q07 revenue is 719,923,000 RMB

Management is expecting 1Q08 sales to be between 595,609,000 RMB to 647,930,700 RMB.

2. Cost of sales continued upward trend in 1Q08. The group intends to focus on their premium brand products with higher prices to mitigate the drop in margins. Looks like synear is being squeezed on top and bottom.

3. Expenses due to advertising will be increased to create brand awareness. Short term, this will depress net margins further. But I think management did a good move - with proper branding, they will create a moat that will ensure long term success. It'll be truly disappointing to see them cut expenses due to the difficult circumstances they are in just to see a good quarterly report card.

4. New plants at chendu is back on track with a utilization rate of 30% in 2008. Trial operations begins by end of march 2008. With higher utilization of their assets, we could potentially see a higher ROE since they would have higher asset turnover. But dropping net margins might neutralize this partially or fully.

Lastly, management concluded by saying fundamentals remain intact. Demands for their products are still strong. Well, that remains to be seen. Let's see how the 1Q08 results work out.

As you've probably noticed, I've started to post less and less in the blog. Why? I've simply got less and less time. Actually, there's nothing much to talk about from the daily fluctuations of the market anyway. I've been reading intensely (as always, since the start of this year) and I've learnt a lot of things. I'm just wondering why I didn't start this intensive reading program of mine earlier, so I can compound the knowledge sooner

I started reading this excellent book, titled the 'Concise guide to Macro Economics' by David A. Moss. The slick black colour attracts me to at first, and after browsing through a couple of pages, I thought this is a must read for everyone who don't have a background in economics.


It's pretty short, hence the title concise. It skipped all the maths/equation parts about economics and zoomed in right to the principle and general understanding of it. It really opened up my eyes. I wondered how I lived my life so far without knowing what's the different between nominal, real GDP, the components of GDP, how depreciating USD to SGD doesn't always mean USD goods are cheaper etc.

Frankly, I've not read through the whole book but the knowledge I got from it already widened my worldview. For example, just now when I was cashing out my ERS, I noticed the dividend rate is given as 3% plus real GDP. Haha, my eyes opened up when I saw 'real GDP'. Books always gave me this feeling that my mental eye can roam further and see deeper.

Of the most important things I've read so far, I realised that the FED isn't the only one who can increase money supply. Banks can do that too. Assume that the bank's reserve ratio is 10%. If I deposited $100 into the bank, based on the reserve ratio, the bank can lend out $90 and have to keep $10 in the bank. Well, if I still have my $100 and someone had $90, then money supply had increased from $100 to $190, an increase of $90. Well, of course, it doesn't just end there. If that someone used it to buy some goods and the person sold the goods for $90 also deposit it into the bank, then the bank can lend out another $81 out, increasing the money supply further.

Okay, this bit is from my knowledge of geometric progression (GP). The amount of money forms a GP with first term as 100 and ratio as 0.90:

100...90...81...72.9...65.61...59.049... and so on ad infinitum

If we assume that everyone downstream puts the money into the same bank and the bank reserve ratio do not change, then taking the sum to infinity of the GP will lead us to $1000. I found that this is exactly the same as the formula quoted:

Money multiplier = 1/(proportion of leakage)

If the reserve ratio is 10%, then leakage is 10%.

Since initially I deposited $100 and the money multiplier is 10, the money supply increased to $1000 (100 x 10), exactly the same as what is calculated by my sum to infinity of a GP. Hence, we can see that banks can also 'print' money by taking deposits and lending out. What is amazing is that this supposedly highly leveraged position is the core business of banks, since they charge interest for the money loaned out. Can you imagine how much interest my $100 can generate for the bank?

If there is no credibility in the bank, people will start to withdraw their money all at once, causing bank runs. This is where other banks or the central banks have to lend money to this particular bank, in order for them to pay the extra $900 generated from my initial $100. If nobody wants to lend to this bank, the bank goes bankrupt.

Besides being amazed by the potential lucrative business in running a bank, I start to see the whole picture of Fed's action. This is no doubt helped by Stupid's excellent insight into L&S behaviour. By printing and injecting more money into the money supply, by making open market purchase into private financial institutions, by lowering the discount rate that FED lends to banks...they are employing all the tools of monetary policy. What's their aim? Definitely not to control inflation. This huge inflow of money will lower short term interest rate, possibly increase long term rates and in turn increase short term rates when inflation sets in. As Stupid mentioned, this inflationary environment is planned so as the assets being writedown will not go down so fast, creating an illusion that the situation is under control. This can happen since the assets are marked down to market value, and thus nominal and not real.

All this from reading just a concise guide to macro economics. Can you imagine how much insight I'll gleam from reading a not so concise guide? As they say, knowledge is power.

I thought it'll be interesting to analyse the business that I am now in - tuition. Specifically, I wanted to do a little more thought on the risks and economic moats relating to a private tutor in Singapore.

Here's the business risks about private tuition:

1. Low entry - there is no regulation nor certification needed to be a private tutor. Some of the stories I heard even involved people faking degrees and certs to have a better chance for assignments. Basically, tuition is one of the main thing that students/working adults do part time to boost their income.

2. Depending on the target segment, the tuition service is deemed to have little value added and is based primarily on price. This means that whoever provided the cheaper tuition rates will get the assignment, though I stress that this is only for certain target segment. Seems like little pricing power by individual tutor, since there are so many tutors around.

3. Hard to stand out - Advertising isn't too effective, unless it is consistent. Might have to rely on network of tuition agency, who will suck 50% of the first month pay of the assignment they passed over to you. Though there are free networks with no fees paid, there will be many people signing up for this network, hence net effect is still the same - hard to stand out.

Economic moat - pretty much non-existent. But really?

There is this powerful economic moat that can be established for this business, which is the networking effect. This effect is the reason why e-bay or microsoft OS is so hard to break through. How does this work?

Let's imagine a tutor is very good in what he is doing. Due to the low entry of tutors, there will be a lot of bad tutors around who are more interested in making a quick buck. As such, the percentage of better tutors are quite low. Once this good tutor manage to convince the parents and student of his capabilities, this family becomes a living advertising node of this tutor. Let's suppose that this family just introduce one new student to the tutor, very soon over a period of time, there will be a lot of advertising nodes for this tutor, all acting to introduce to their relatives/friends about this good tutor. Hence the networking effect works in two ways:

1. The number of students recommended will increase exponentially to the point that there will be too many students and too little time.

2. The student come with the mindset that this tutor is already good in teaching, hence there is less effort needed to impress and win over their hearts. It is positively biased towards the tutor.

When demand exceeds supply, the tutor will naturally gain pricing power over the rates charged. Not only that, a lot of families will also go out of the way just to have this tutor, hence again the effect of positive discrimination towards the tutor. By this same networking effect, there is no need for find agencies to recommend students and be subjected to a commission of 50% first month pay.

Another way to counter the price competition is this: look for another target segment that are not so price sensitive. Tuition service should not be a commodity and if one is providing this as if it's one, then of course pricing will have to be competitive. There are a certain group of people who do not mind paying a premium for quality educational help and this is exactly the type of people to target when choosing students. Tuition pricing is interesting - the cheaper it is, the less value you will add to the students since they feel it's cheap and hence will not value the service accordingly. Perception and personal branding is important here, as in all types of service industry.

Let's take a look at the factors that will determine the earnings growth.

Earnings growth factors:

1. Have more students (increase volume)
2. Charge a higher price (but not high enough to reduce the student intake significantly)
3. Teach more subjects, develop content (diversify revenue streams and cash flow period)
4. Teach in a group (charge cheaper but have more students to make up AND save on time)
5. Acquisition (buy over other people's time in exchange for passive income - save time)

The ultimate is to boost earnings through no.5. By doing that, one can achieve financial freedom and not use one's time to exchange for money.

Prospects:

1. There could be more regulatory control on tuition. Perhaps a license to operate as a independent tutor will be needed in the near future, something like that of a broker or insurance agent/property agent.

Impact: It's even better to regulate this industry. Less competition on all fronts and more serious tutors around. Better for both tutors and students alike.

2. Less children born could mean that parents will be more willing to spend a greater part of their income on education for their children. With more parents having 1 children, the propensity to spend on them is higher than for a family of 2/3 children.

3. More education reforms will be expected. It's hard to anticipate the kind of changes that will be forced down the road, so it's always good to diversify the revenue streams. I always remember the time when MOE basically rendered chinese tuition services out of business by reducing the importance of chinese in major exams. With ample diversification in different levels, a tutor can have a long term survivability in the ever changing landscape. It's also important to constantly update oneself on the changes in syllabus. This said, the long term prospects of education is not going to diminish as far as one can see.

Moral of the story? Be very good in what you are doing, if not, don't do it at all. Life is too short for a half hearted effort in the things you do.