Thursday, May 31, 2012

Are we there yet?


The market is still hardly corrected. Despite of all kind of scary headlines and worries, the VIX which gauge the fear factors of investors and speculators remains low. We're no where near 30 - 40 which is more likely to shake out some weak hands.

Monday, May 28, 2012

Do I need an MBA? Final part


I'm neither rich nor smart enough. I still need to count how much money I have as oppose a real rich person does not know how much money he/she has in the banks, stock markets or properties. And I don't have an MBA. The below opinions are purely based on my observations on people over the years. Other than speaking my minds, I do not have any other authority - so take it with a pinch of salt.

Having quoted some articles recently must make you feel that I’m against having an MBA.  I do not have a particular bias against MBA holders. I’m only feeling uncomfortable with people who are abusing others with MBAs.

Come to think of it, I’ve met people from Harvard or MIT(sorry for showing off here), yet they are down to earth and humble. Many of us think the rich are like those in TV drama that they are stuck up but many times they behave the opposite – frugal and humble. Surprisingly, it is easier to encounter nasty and abusive people who had just tasted a bit of power or money.  It's more likely they will want to show off or flaunt by showing their outward appearance, mostly by incurring debts.

When come to abuses, some of them think they’re a class above others. Or they think they’re smarter than others. Personality asides, B school mold them to be too stereotype, keep drawing same text book solutions to real life business problems.

They’re others trying to hide their insecurities with an MBA blanket. Just like many professionals in Singapore having a taxi license, many think they can go to business school to teach when they’re unemployed.

When you look into the 10 top college dropouts that I posted earlier, you will notice one thing. The obvious common thread is these people were already successful of what they were doing. They were so successful that they were having a hard time to concentrate full time studying. Their businesses are flourishing so much that causing them to dropout.

There are many reasons to do an MBA but there are also reasons of getting by okay without an MBA.

  • You have done a basic business degree. If you’re already done a BBA or Management course, I think an MBA is waste of time and money. It will add more value to those with a technical degree.
  • The key value to MBA is learning from your peers. Unless you are enrolling in a business school that attracts top talents, it’s unlikely that you are benefiting much other than killing time and earn you a paper qualification. I was once met with an MBA student from a prestigious B school in the US, she told me that most of her classmates are already highly successful and holding many important posts. The friendships and networking that come along with MBA are really valuable. Having a group of peers who are critical that come along with real experience running business will sharpen a person considerably. I was once heard a story some students pretending calling sick to avoid questioning time presenting their cases. Oouch!.
  • A type who prefer to self-learning rather than going through a structured course. Once you enrol in an MBA, the world will not wait for you. The train will have to keep running according to schedules. Don't do it when you feel it's a burden and not a joy!
  • You’re already highly successful in your career. Don’t get me wrong that a successful one should be conceited that they don’t need education. What I’m saying it is better to focus on your strength rather than diluting your resources.
  • You work with organization that focus on results and you do not need any impressive paper qualification to sell yourself. There are organizations who will want to use your education to throw a bit of weight to get them consultancy contracts, etc - then an MBA is a must - non-negotiable.
  • You work with bosses that like chairman Mao who does not care whether you are a white or black cat as long as you catch a mice. If you work for people who are full of themselves - it's either you find a new job somewhere or play along.
  • Having insights of what motivate you to get an MBA is important. Technical skills enhancement? Security blanket? Insurance? A pass to climb corporate ladder? Peer pressure? A wrong motive may make you a worse person after earning an MBA. 

Last words, having reading Ben Graham Security Analysis will not guarantee us to be another Warren Buffett. Reading Job Steve biography will not help you to create another iPod, iPad or iPhone. It does help us to have more intelligent conversations, that's all. Able to carry out an intelligent conversation is not equal to results. Having an MBA will not guarantee us to be a better business person, analyst or manager. Search our heart and getting the right motive is probably the most important step before we start.

Monday, May 21, 2012

Do I need an MBA? Part two


Top 10 college dropouts

By JOSEPH LIN Monday, May 10, 2010

1. Bill Gates


Top Ten College Dropouts















2. STEVE JOBS




3. Frank Lloyd Wright










































4. Buckminster Fuller




































5. James Cameron



















6. Mark Zuckerberg



















7. Tom Hanks















8. Harrison Ford












9. Lady Gaga


10. Tiger Woods












Thursday, May 17, 2012

1400 or Now?

Yesterday was a mad day. 97 gainers, 822 losers. 8 losers to 1 gainer. 25 points drop. Local institutional and foreigners are dumping.


I have been following the markets a little bit closer this week. Monday and Tuesday were already building up the pressure with loser to gainer ratio of 7 to 1, not  a pretty picture. Yesterday was definitely was a mini panic selling. The next stop that everyone is eyeing is 1400.

Those who missed the October 2011 rally will certainly feel the urgency to get back into the market as they saw the stocks have became cheaper. Some of the stocks have even reached March 2009 lows. There is a fear of missing the boat, will some of these stocks bounce off ahead of others? Yes, in the world of investing, anything is possible. However, remember this.

Whether this is going to be an orderly correction to 1400 or dis-orderly correction is still remain unknown. And it is futile to predict the future.

It is critical to sell before everyone sells but it is also equally important to wait patiently to assess the situation  until we reach 1,400. For now, unless you are playing a technical rebound, it's certainly still too early to play aggressively.

Wednesday, May 16, 2012

Do I need an MBA? ....... Part One.


CEOs Don't Need an MBA to Get Rich

New research shows that fewer than half of the highest-paid CEOs at big companies have MBA degrees

Ever since the dot-com bust, and particularly after the financial meltdown that began in 2008, all anyone in business schools seems to talk about is whether or not the MBA is still a relevant and practical degree. Do people need MBAs—particularly degrees from elite b-schools—to become successful chief executive officers with hefty paychecks? Exclusive new research suggests the answer is "no".
Bloomberg Businessweek asked compensation consultancy Equilar to analyze the pay disclosures of companies with annual revenue of more than $1 billion and to compile a list of the highest-paid CEOs. Aaron Boyd, head of research at Equilar, reports that more than half of the 50 highest-paid executives on the list lacked MBAs. Of those who do hold them, surprisingly few attended top-tier schools. (For the complete list, view our slide show.)
In all, only nine of the 25 highest-paid executives with MBAs got them from B-schools with full-time MBA programs ranked in the top 10 by Bloomberg Businessweek in 2010. There were three apiece from Harvard Business School (Harvard Full-Time MBA Profile) and Columbia Business School (Columbia Full-Time MBA Profile).
Eighteen of the 25 highest-paid executives with MBAs got them from B-schools that ranked inBloomberg Businessweek's top 30, including two from New York University's Stern School of Business (Stern Full-Time MBA Profile), and one each from the University of Virginia's Darden School of Business (Darden Full-Time MBA Profile), Dartmouth's Tuck School of Business(Tuck Full-Time MBA Profile), and the University Texas-Austin's McCombs School of Business(McCombs Full-Time MBA Profile).
Also on the list were executives from such lower-profile schools as Xavier University, Pace University (Pace Full-Time MBA Profile), and Bellarmine University.

DOES LIFE EXPERIENCE OUTWEIGH AN MBA?

One possible explanation for the preponderance of non-MBAs on the highest-paid list—one that B-schools might not want to hear—is that an MBA simply doesn't equip graduates better to run a big business. In a study recently published in the Journal of Applied Finance, Aron Gottesman and Matthew Morey of Pace University's Lubin School of Business found no relationship between company performance and the chief executive officer's educational credentials. Gottesman points out that executives without MBAs might have to work harder than MBAs to get ahead and says that at the CEO level, life experience may count for more than lessons learned in B-school.
"Business schools tend to focus on technical skills," Gottesman wrote in an e-mail, "while success at the executive level is a function of broader, more subtle skills such as communication skills, interpersonal skills, and the ability to make bold decisions quickly."
There's no question that the 25 highest-paid executives made bundles, but how high is high? On average, the top 25 earned $22,847,350 in total compensation, a figure that includes salary, cash bonuses, and other compensation such as perks, as well as the grant-date fair value of options and the grant-date present value of stock awarded in the most recent fiscal year. Looked at another way, they averaged $14,440,827 in take-home pay, which excludes the value of new stock and option grants but includes the value realized from the vesting of previously awarded stock and the exercise of previously awarded options.
Those averages tell only half the story. Gregory B. Maffei, CEO of Liberty Media (LINTA) and a Harvard MBA, had the biggest haul—$87,489,469 in total compensation. (Maffei could not be reached for comment.) Michael S. Jeffries, chief executive of Abercrombie & Fitch (ANF) and an alumnus of Columbia's MBA program, came in a distant second with $36,320,099 in total remuneration. At No. 3: Marc Casper, president and CEO of Thermo Fisher Scientific (TMO); this Harvard MBA earned $34,123,808.

NO MBAS: JOBS, BEZOS, LEAHY

Morten T. Hansen, a professor of entrepreneurship at INSEAD (INSEAD Full-Time MBA Profile) and Haas School of Business (Haas Full-Time MBA Profile) at University of California, Berkeley, has researched the long-term performance of CEOs. He notes that some of history's most successful chief executives achieved their success without benefit of an MBA.
"You do not have to have an MBA to be a stellar CEO. Steve Jobs of Apple (AAPL), Jeff Bezos of Amazon (AMZN), and Terry Leahy of Tesco (TSCO:LN) don't have MBAs," wrote Hansen in an e-mail. "There are many ways of learning to lead and be an effective chief executive. The classroom is just one possible step in that direction."
In research published with INSEAD colleagues Herminia Ibarra and Urs Peyer earlier this year in the Harvard Business Review, Hansen ranked chief executives around the world according to their long-term performance. Although Jobs, who has no MBA, topped the list of best performers, their research showed that an MBA can prove useful in the corner office. On average, just 32 percent of 1,109 CEOs they studied in Germany, Britain, France, and the U.S. had MBAs; on average, however, they ranked 40 places above the CEOs without the degree. "This finding suggests that MBA CEOs have not destroyed value, as some critics would have it," concluded the report.
A further factor to consider is that many executives on the highest-paid list received MBAs in the 1970s and 1980s, long before the degree became a near-certain ticket to instant riches—and long before brand-name schools such as the University of Pennsylvania's Wharton School(Wharton Full-Time MBA Profile) and Northwestern's Kellogg School of Management (Kellogg Full-Time MBA Profile) became synonymous with quality. With U.S. business schools alone churning out more than 150,000 new MBAs annually, the number of graduates reaching the C-suite—and being handsomely rewarded for their efforts—is sure to rise.
Di Meglio is a reporter for Businessweek.com in Fort Lee, N.J.
My comments will follow in the next post.


Monday, May 14, 2012

The rising cost of education

There was a lot of noise when Pakatan said they want to cancel RM 43 billion PTPTN student loans(http://www.freemalaysiatoday.com/category/nation/2012/04/20/student-loan-issue-has-little-impact-on-bn/), if they win. The main argument: it is better off to forgive the education debt of young generation than sinking the funds into corruption black hole by the current ruling government. The opposing camp is saying we are encouraging moral hazard. Both arguments have valid points, better use of funds vs. moral hazard. Forgiving the debts is only one off issue. The long term  implication, are we going to give free education to everyone?

The reality is free education does not exist around the world.

http://www.mohe.gov.my/educationmsia/education.php?article=study

As parents, we cannot depend on what politicians will do. It's too dangerous to put well being of our children in their hands. We need to prepare for the worst case scenario and waking up to the hard reality. At some point of time, we need to know that there is no one to help us or our children will have to resort themselves to borrow even before they can earn. The education inflation cost is very real. 18 years from today, it is going to cost RM 160 k to study in Malaysia, RM 455 k ~ RM 500 k to study in Australia or Britain. To achieve that, parents need to set aside RM 400/month ~ RM 1,300/month(assuming 6% p.a. return) the moment your child turns one year old. You probably will set aside even more if you start later. 


http://biz.thestar.com.my/news/story.asp?file=/2010/9/18/business/7048908&sec=business

If you are in the late 20s or early 30s, RM 400/month ~ RM 1,300/month can be burdensome if you already have house and car loans. It is even harder if you yourself already have RM 50 ~ 100 k of your own education loan hanging on your neck. 

The solutions are really difficult. If parents and children were take 100% of the responsibility, they will be forced into a corner -- no where to run. On the hand if the government was to give free or minimum tuition fees, that will only lessen half of the burden. Individual will still need to cover the living costs. Parents: please don't overlook this area in your saving plan on top of your retirement planning. 

My personal opinion  is to strike a balance between individual responsibility and better governance from the government. We will save and invest our ass off but the government must do their parts. Stop the bloody leakages and corruptions, raise the quality of education and lead our country out from middle income trap. 

The worst nightmare parents can have is invested a huge sum of money in their kids' education but their children cannot even speak proper English or think for themselves. It is also a nightmare for parents if their children cannot find a decent pay job simply because there are not enough high value added jobs. 

We are not asking what the country can do for us, we certainly will do things for our country. When we do our parts, can the present government do their parts???

Sunday, May 13, 2012

Market Updates: China, US and sentiments

China slow down is more evident



From the WSJ
  • China's economy slowed sharply in April—from industrial output to bank lending to foreign trade.
  • Bank of America's China economist cuts second quarter forecast on Friday to 7.6%, year-over-year, from 8.5%
  •  Nomura research. "The economy has now slowed down so much that there will be a consensus to promote growth."

If 2012 is a year of slowdown despite of 40 elections going on around the world, I think Jim Rogers is right that 2013 will be a year that we need to be very concerned. I've seen plenty of this kind of forecast by the strategists that think 2013 will be stronger than 2012. 


I think this is just not possible. It will be difficult for the US to achieve higher than 2% growth and the EU might be still in recession, finally China growth can be below 8%.


The ECRI re-affirms the US will tip into a recession but a mild one

From the ECRI: Has personal income growth ever remained this low for three months without the economy going into recession? The answer is no.

Individual investors are not stupid !


From the bespoke. American Association of Individual Investors (AAII) bullishness drop as the S & P 500 goes up. They seem to got it right last year. I think they finally gotten smarter after being screwed by the big boys badly.

Friday, May 11, 2012

Been a while......

It has been a while I shut my radars on the markets. Though the market momentum begin to let go some steam off, it's still not good enough to entice me to get back into the markets both from big picture or stock level.


I think we all saw the headlines of changing political landscape in the Europe had created some uncertainties and fear. Continuity of earlier pledged austerity programs are under scrutiny now. It has certainly added some downward pressure but I do not think it is the main cause. The US regional bank index was already under pressure since March and now appears to be in correction mode on the down side. Whether this will trigger a free fall or not, like last late July or August, we will have to wait for a while.


The trading participation in our Bursa seems to have a slight change in trend. The local institution trading is backing off slightly but foreign participation is picking up. The local retail group is in bearish or cautious mood. Blue chip may have some support but penny stocks may experience some pressure.


The crude oil is finally get under $ 100 per barrel. I'm not sure whether this is a sign of weakening of global economy but again we should wait a little longer to let more cards to be revealed.

As of now, classic signs of sell in May and go away are getting clearer. Take care.

Friday, May 4, 2012

Most expensive artworks sold at auction

Wow! So many artworks top US 100 million at auction Blink. Blink. No mistakes. It's US $ 100,000,000 !!!! ONE HUNDRED follows by SIX ZERO.



Let's just list out the top 3.





What 'The Scream' Says About The Art Market @ http://www.forbes.com/sites/susanadams/2012/05/03/what-the-scream-says-about-the-art-market/


Tuesday, May 1, 2012

The next society

Among many so called management gurus, the one that I respected the most is Peter Drucker(1909-2005). I don't why I think of him today as I sit relaxedly in my hall on this labor day.  Perhaps it's a good day to think about some issues that are affecting all salaried men. He saw a few things happening in the developed world:


  • the rapid growth in the older population and the rapid shrinking of the younger generation.
  • people will have to keep working until their mid-70s.
  • those over 50s will work as temporaries, as part-timers, as consultants, on special assignments and so on.
  • borderlessness, because knowledge travels even more effortlessly than money.
  • upward mobility, available to everyone through easily acquired formal education.
  • the potential for failure as well as success. Anyone can acquire the “means of production”, ie, the knowledge required for the job, but not everyone can win.
  • industry and agriculture sector tend to shrink over time as the country transitioned from developing to developed status
  • Since the second world war, manufacturing output in the developed world has probably tripled in volume, but inflation-adjusted manufacturing prices have fallen steadily, whereas the cost of prime knowledge products—health care and education—has tripled, again adjusted for inflation. 
  • Multinationals now tend to be organised globally along product or service lines. The multinationals of 2025 are likely to be held together and controlled by strategy.

If you are interest in the full article, please visit http://www.economist.com/node/770819 and http://www.economist.com/node/770861
There a couple of things are worrying me.
  • As the developed countries shifting their economy structure from manufacturing and agriculture to services, this has benefited many of us. What ever that we are enjoying now may not last another 20 years. 
  • Our country is still relying very heavily on manufacturing and agriculture.
  • We probably should have learned that as our government is trying to transform our economy to service based,  manufacturing and agriculture sectors need to increase their productivity by three folds. If not, good luck to those in these sectors.
  • Pushing towards service based economy without knowledge workers is probably making things worse. Take Philippines for example, the quality of life is terrible even though it has high percentage of services/GDP.


  • A country can only enjoy high quality of life when their knowledge and productivity rise accordingly and not oversimplify thing. Killing manufacturing and agriculture sector and replace them with service sector is a stupid move.
  • Don't get wrong that I'm anti-service sector or pro-industrial or pro-agriculture. Rather, I'm trying to make a few points. Productivity is not simply squeezing more with more working hours.  Most people think productivity is moving up making products with higher value added. The key to unlock productivity is knowledge and innovation. If you look at chart below, you will notice countries with high patent activities are Japan, USA, China, South Korea, UK, Germany, etc.......




  • We all may have heard that Samsung has taken over Nokia as # 1 hand phone maker in the world recently.  http://www.forbes.com/sites/ewanspence/2012/04/28/three-areas-samsung-will-focus-on-to-avoid-smartphone-complacency/ 
  • This came no surprise to me if we look at their efforts they put into R & D and number of professors that they produce. This is also a country that has high % of industry in their GDP composition. Industry made up 39.4% while services made up 57.6% of GDP. 
  • The next country that has tremendous potential is China by just looking at the number patent activities that they engaged. As China is transitioning into more service based economy, I think they can continue to do well because they have laid strong foundation in knowledge-based economy.
  • If we look at Japan, they seem to have very strong innovation foundation but unfortunately I do not know why they have lost two decades and going into third lost decade. One of the  theories that people put forward was dysfunctional politics. Dysfunctional politics have hindered them to take serious reform.
  • I am getting more and more worried about our country because we have not invested much in R & D, automation(instead of relying on cheap foreign labor), declining education system(despite of many perks nowadays), getting a bit of Japanese dysfunctional politics virus, etc................
  • The Economic Transformation Program actually is nothing more than a marketing program. They just repackage what is already there. I will comment more later on.
  • All these have serious long term impact on our KLSE.