Singapore Stock Market News

Recently (okay, not so recent), there is an article on straits times regarding the tuition nation. It's here, for those who wants to read it.

The article talks about Singapore having such a high tuition penetration rate, that for every 100 students, there are 97 students have tuition. Ignoring all the sampling biasness and sampling method, it's a whopping 97% tuition penetration rate. This phenomena is exacerbated by the fact that many of these students have multiple tuition, so in fact, we're looking at a penetration rate of more than 100% (if say, each student takes more than 1 subject for tuition).

Why had we come to this stage? I do not wish to comment on it in this posting.

Here, I just want to talk about the ironies of tuition/education/school.

1. Ex or current teachers are the preferred choice for parents when choosing tutors. These are highly paid, perhaps to the tune of twice the normal rate (I'm talking about $80 to $150 per hour). Students are sent to schools to be taught by MOE trained teachers. They didn't perform well enough, so they were sent to tutors who are preferably MOE ex or current teachers. If school teachers can't help them, will these teachers-cum-tutors help?

2. Classes in school have class size of around 30-40, with the norm being 40. Some of the tuition group classes I knew have class size close to 30. Yes, it's cheaper than private tuition (can be half the price of private 1-1 tuition). School is cheap too - that's why the class size swells up so much. Thus, the poor students go from one formal school to another informal school. Does it help?

3. Elite schools draw in the best students. They get the best results, which attracts the best students in. Chicken and egg problem? Which comes first - good schools or good students?

4. Elite schools with specialised programs (IB/IP) have teachers who think like this - students are so smart, I'll just give them worksheets and let them learn themselves. School fees range from a few hundred, easily a few multiples of government schools. Almost all of them have tuition because (I dare say) the teachers can't teach. Many parents have told me about that many of their kid's classmates are have tuition, and learn way in advance of school. In fact, teachers expected their kids to have tuition to 'supplement' school work.

5. Parents select their tutors based on their academic results. I'm guilty of being positively discriminated because of it. Does having good results mean that they can teach well? No, of course not. But most people think so. Perhaps lacking any other way of selecting good tutors, parents go for the overall packaging, much like people will buy a brand of salt because it looks more attractive. Academically good tutors, naturally self-motivated, might not have a way of dealing with unmotivated students because they might find it hard to understand why a student isn't motivated.

Can I offer a better way to select tutors? Yes.

Look for those who failed miserably and managed to stand up and high and tall in the academic world. Look for those whom teachers branded as failures yet return to the teaching force to save more students. Look for those nameless applicants who wanted to go into MOE to teach but their results are not good enough to even be called up for interview. If they don't mind their poor grades, why should MOE mind?

In the end, all I've mentioned here will still not be followed. That's why I still have a job.

Many students asked me why I do not want to join the school. I think I'll be kicked out in 1 month. I'm a maverick in this education business. I can't stand wearing uncomfortable office wear, don't mind student having long, dyed hair, don't mind students using handphone, don't mind them eating in class, don't mind them being so formal and afraid to ask what's truly on their mind. Exams to me are nonsense, I will give students the topics for the coming exams, rather than play hide-and-seek. I don't require strict discipline and I'm do not require their utmost respect. I earn my respect.

Why do I do that? I believe that people learn in a relaxed environment. There are passive inattention and active inattention. The former is what happens when a student stares at you, keeping quiet, but the mind wanders off. The later are those that are openly defiant. Most tend to control the latter, not the former. A little chaos can create the right mix of factors in a genuine learning environment.

Schools cannot tolerate me, so I cannot tolerate the school.

There seem to be a healthy discussion about the recent book review which I did, ‘The Black Swan’ by Nassim Nicolas Taleb. I crossed swords with Kennynah on Huatopedia regarding the applicability of normal distribution on everyday occurrences. The comments I received for the review is also very encouraging for me. All in all, a great experience!

I promised durio I’ll share the practicality of the things I’ve learnt from the book. I’ll try to put most of the practical advice towards investing and finance, but I stressed that the advice is equally applicable for the broader aspects of life. After all, life is much more than just the financial aspects.

1. Make a distinction between positive black swans and negative black swans. Black swans events can benefit or cripple. Once identified, expose yourself maximally from positive black swans, and limit exposure to negative ones

There are some situations where you do not want black swan events to happen, as it will cripple you. There are others where you sit around, waiting for black swans to happen, as the benefits are worth all the waiting.

For instance, networking is one thing that benefits from positive black swans. You never know (and can never expect) that the least likely person is the one who will pass you the contacts that will benefit you the greatest. Since there is no significant negative effect for not making the right contacts, one should expose oneself maximally to meeting different kinds of people.

In investing, we all try our best to be minimally exposed to negative black swans. Even though we’re ‘very sure’ of the prospects of a company, do not invest a substantial portion of your capital in. If we do that, we’re really hoping that the negative black swan events do not happen. Hence, there are many methods to reduce the consequences (but not the probability) of such events, such as strict cut-loss discipline, margin of safety, fundamental analysis etc. Different methods, but same underlying principle of preventing catastrophic losses.

In my tuition business, I’ll try to expose myself maximally to all different kinds of students. I’ll never know which student will be the one that will jump from F9 grade to A1 grade, and thus pass all the positive word-of-mouth advertising to potential future students. Downside (where student gets catastrophic results of A1 to F9 type) is actually minimized. How? That’s my little secret.

2. Invest in preparedness, not in prediction

I find the value investing philosophy ties in greatly in this. Didn’t the great gurus of the financial market say about gearing one’s portfolio towards bear market, not bull market? By thinking about the pessimistic scenario, one can avoid chasing the price but one’s capital is protected. Trading philosophy also mentioned about protecting the downside, and the upside will take care of itself.

3. Seize any opportunity, even those that looks like opportunity. This is the same as exposing one to positive black swans. Work hard, not in grunt work, but in maximizing one’s exposure to opportunities.

This is the same thing as point no.1 – exposing oneself maximally to positive black swan and minimally to negative ones. Perhaps here, I’ll mention one more example.

I’ve received very positive feedback that I’m a good writer and reviewer. It’s all very flattering until one looks at the ‘silent evidence’. I’ve written nearly 600 posts in this blog, perhaps only 10 such posts have very positive comments. Thinking in such a way, first of all, humbles me. But the point I’m making here is this: write more, you’ll hit one good article that everyone loves (and everyone remembers). If other articles are not as good, at most there are no comments, thus no significant negative consequences.

What should one do given such outcomes? Expose oneself maximally to opportunities where others can love your work – write more. I’m not saying skills are unimportant, I’m saying that skills are not the ultimate leverage in one’s success.

4. When caught between unknown probabilities of choices presented to you, focus on the (known) consequences of each choice and not on the probabilities. It’s also known as Pascal’s Wager.

Pascal’s wager is actually a debate on whether God exists. The consequences of not believing in God’s existence when there is actually God are much more severe than the consequences of believing in God’s existence when there is actually no God. The probability is incalculable and unknown; one should focus on the consequences of one’s choices, rather than the chances of the choices happening.

That is why one should cater one’s portfolio for the bear market, not for the bull market. The consequences of having big losses when one’s portfolio is too ‘optimistic’ are more severe than the consequences of not making big money when one’s portfolio is too ‘pessimistic’. Assuming one cannot tell the probabilities, the consequences matter more.

When one is stricken down by diseases that cannot be cured by western medicine, should one try alternatives methods? The consequence of not trying the alternative method when it does in fact work is more severe than the consequence of trying the alternative method when it does not work. The worse that can happen when one tries alternative method is that nothing happens.

Here’s a few lessons I learnt from the book:

1. Do not have a reductionist mindset, or what the author calls ‘Platonicity’.

2. Think about the silent evidence – evidence that show the contrary but are not widely publicized

3. Expose oneself maximally to positive black swans and minimally to negative ones

4. When presented with unknown probabilities of choices, focus on the consequences of each choice

5. Do not be quick to judge. Treat empirical data as it is and do not theorize too much. Be skeptical

6. Most importantly, be open minded

I have fond memories of this author – one of my favourites among the books I’ve read. I was hooked by his style of skeptical empiricism when I was introduced to his first book – ‘Fooled by Randomness’ – by serendipity. The author will be glad that it is through a series of black swan event that lead me to his first book, and consequently, to his second book.



Long time ago, my gf went to US for a conference on a paper she submitted. Man, in these conferences, there are people literally giving out books for free (to be fair, they did try to sell during the first few days of the conference, but towards the last day, book hell went loose). My gf, a typical free-must-grab Singaporean, grabbed a few of the books, regardless of race, language or religion (ok, I exaggerate). Among the horde of books, one of them is Nassim Nicolas Taleb’s ’Fooled by randomness’.

Talk about Black swan events (these are incalculable, low probabilistic and highly consequential events), my introduction to the author’s first book must fall squarely into such category. The author’s style is very refreshing, a logical salad mixed with lots of stories woven with facts, creating a potent mix of philosophical brouhaha.

Black swans are named as such because of this story. Imagine all throughout your life, you only saw swans which are white. Based on historical past, you can ‘extrapolate’ your data by induction that all swans are white. This is all jolly well and good until one day you saw your first black swan. This event totally tears away your hypothesis that all swans are white and is something that the past data can never predict. The probability of meeting a black swan is not calculable, though based on the past data it has a very low probability (which explains why you didn’t see one earlier) and has serious consequences. Here, ‘absence of evidence’ is misconstrued as ‘evidence of absence’.

Are we similarly fooled by such logic errors? I can think of a few:

1. From analyzing a company’s past earnings for say 10 years, I come to the conclusion that the earnings are stable and growing steadily. I treat the absence of evidence of ‘poor earning years’ as the evidence of absence of ‘poor earning years’, leading to my skewed over-bullishness of the company.

2. A man, having lived till a ripe age of 100 years old, declares that from his 100 years of non-dying, he is an immortal and thus will carry on living for a few 100 years more. He made a mistake of thinking that ‘no evidence of death’ is the same as the ‘evidence of no death’.

These are exaggerated examples to illustrate the points, but it blows my mind to think in this way.

‘The Black Swan’ carries with this style of writing, perhaps more brilliantly so. The new book talks about how we systemically and biologically ignore black swan events. In fact, he argued that the world is governed mainly by black swan events, not by regular and inconsequential events that are predictable. He goes as far as to say that what we do not know is far more important than what we know. Among the most important things I carried away from reading the book, is this notion of ‘silent evidence’ – how we are blinded by things that are not found in the sample size, hence we discounted them to the extent of skewing our perception of things.

Below is an example to illustrate this point:

Consider the world’s richest people – all of them exhibit traits of risk-taking, go-getter mindset, determined etc etc. Thus,

Rich people have a certain characteristics.
I have these characteristics.
Therefore, I’ll be a rich person.

This is logically flawed. Having a set of characteristics exhibited by rich people does not necessarily mean I’ll be a rich person. There are many examples of people with these characteristics but are not necessarily rich. Hence, these people who had these set of characteristics could be there based on pure luck.

I think these ideas ties in very much with the idea of causality. Correlation does not necessarily imply causality, though causality implies correlation. For example, almost 99.9% of cancer patients drink water (high correlation) but it does not mean that drinking water will cause cancer (no causality). We are often tricked into believing such logic errors, which tend to exacerbate the consequences of black swan events.

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The review is split into two parts because the books is exceedingly thick and I had to write down my thoughts halfway before it gets diluted and lost in transition.

This had to be the most the most relevant book I’ve read in my life. It’s like I’ve been born blind, then after a corrective surgery, I see the world as it is now but had been elusive to me before. I can never look at the world again because the book had permanently changed me. Don’t go out and grab the book because I said so…my experiences lead me to different perspectives when I read the book, which will be vastly different from another reader.

The second half of the books talks about more technical stuff. I confess I do not really understand the whole of it in the first reading. Perhaps, like Intelligent investor, the true gist of it will only be realized after subsequent readings. The author highlights the fallacy of treating everyday occurrences to fit the bell-curve (the Standard normal or Gaussian distribution). This fallacy is so rampant that it permeates most of the ‘scientific’ methods regarding a range of socio-economic disciplines like economics, sociology and finance. I’ve never believed in the Modern Portfolio Theory (MPT) and efficient market hypothesis (EMT), so this didn’t struck me hard enough to feel defensive about his ideas.

I guess the author wants us to follow a bottom-up approach rather than a top-down approach in everything. A bottom-up approach means using real, empirical data to look at the world. A top-down approach means learning ‘scientific’ theories and principles, then fitting data that follows them and ignoring or downplaying data that do not.

A simple example would be a stereotypical Western trained doctor who abhor using traditional chinese methods like acupuncture or herbs, judging it unscientific (though it’s very empirically based) because of top-down approach.

Am I also blinded by my own theoretical framework?

The author suggests a few ways to deal with the uncertain world:

1. Make a distinction between positive black swans and negative black swans. Black swans events can benefit or cripple. Once identified, expose yourself maximally from positive black swans, and limit exposure to negative ones

2. Invest in preparedness, not in prediction

3. Seize any opportunity, even those that looks like opportunity. This is the same as exposing one to positive black swans. Work hard, not in grunt work, but in maximizing one’s exposure to opportunities.

4. When caught between unknown probabilities of choices presented to you, focus on the (known) consequences of each choice and not on the probabilities. It’s also known as Pascal’s Wager.

I started this book being blind, and I finished this book knowing that I will never view the world the same again.

I watched a wonderful movie titled “Wanted” last weekend.


This movie had the philosophical depth of ‘Fight club’ (starring Brad Pitt and Edward Norton) and similarly, it had nothing to do with violence as any review of the movie would have you believe. The underlying theme of the movie is destiny and fate. Is one’s destiny in life determined by fate?

The main character is Wesley (it’s rare that I remembered the names of the characters). An accountant by professional, he suddenly found himself having the talents to be one of the greatest assassins in a brotherhood called the Fraternity. This brotherhood of assassin believes that the end justifies the mean – a theme explored by Niccolo Machavelli’s classic work “The Prince”. The assassins under the Fraternity will be issued a cloth, whose threads lay out a binary code which can be decoded to give the name of the person which had to be killed in order to preserve the fabric of life. Thus, there is a struggle within each assassin as they had to deal with the moral conflict of doing evil for a greater good.

To drive in the point of the main theme, the Fraternity also owns a yarn factory, where threads are woven into cloth. There is a special room where the encoded cloth is woven and decoded before given to the assassins to carry out the necessary. I half-expected to see three old hags inside, spinning threads into cloth. But no, they are not inside the movie, though the similarity in the Greek mythology of the old hags of Destiny and Fate – The Three Fates - is not lost on me. According to Greek legend, these old hags run a yarn operation. One of them spins the thread of life, the second allocates the length of the yarn and the third snips it off. Good and evil is all woven in one’s destiny and nobody can escape it, not even the Gods.

The story then goes on as the irony of it all unfolds. It’s not for me to reveal the ‘destiny’ of the plot in this review.

‘Wanted’ is a combination of the best of different movies – the philosophical depth of ‘Fight Club’, the awesomeness of John Woo’s slow-mo-matrix-like directing style and the hard thumping Ramstein-like heavy chugging soundtrack. In fact, the movie has the feel of ‘Nightwatch’ and ‘Daywatch’ that the main actor of these two movies even appeared in ‘Wanted’. As I was reading this review, I realized that both had the same director!

I’ll make a daring and bold statement – if you like watching ‘Daywatch’ and ‘Nightwatch’, you’ll love this movie even more. Watch it and think about what you’ve done lately to fulfill your destiny!

FY08 results analysis

This is just a brief analysis of popular. Time is too short to analyse too much on a company that I think does not constitute a good business. The report comes from here.



Turnover went up higher in FY08 than FY07, but gross profit doesn't follow through. In fact, gross margin fell from 17.1% in FY07 to 15.3% FY08. However, net profit margin increased slightly from 2.9% to 3.1%. They mentioned that the increase in turnover was mainly attributed to their retail and distribution business, due to more outlets opened in Singapore and M'sia.

Some important business news - they closed down their two english-learning schools and discontinued their school franchise business in Taiwan to minimise the risk and losses given the shrinking Taiwan economy and increasing credit risk in distribution industry. I did notice that their provision for doubtful debts increased from 155k to 370k in FY08, an increase of 1387%. They seem to do better in HK, where two of their pre-primary textbooks were adopted by schools, thus capturing a good market share to sustain their dominant leading position. More discounts were given (hinting you the strength of their pricing power) and more money spent on marketing their books. I think they should continue their pre-primary textbook business. I believe that based on Singapore's strong pre to primary textbook branding, they will do very good in this aspect.

Net margins, though improved slightly (might be just the usual business fluctuations, rather than real improvements), are still very low at around 3%. ROE improved to near 10% though. While current ratios seem healthy, their total debts to equity actually increased. We can see that their cash flow statement shows negative net cash from operating activities, negative investing activities but very positive cash flow coming from financing activities. Looking at it more carefully, there is an increase in long-term bank loan to the tune of $52,267,000 for their new property business. That alone constitutes a huge part of their cash/cash equivalent for the period.

Popular gave a dividend of $0.012 (tax exempt) in total this and last FY. Given last closing of $0.270, that's a dividend yield of 4.44%, constituting a payout ratio of 40%. PE (based on FY08) is 9x.