Friday, July 19, 2013

Physical Fitness Blog : confessions for my ups and downs in the past.

As a self-professed soldier, I must admit that I am much more better in the intellectual ability than the physical fitness ability. I have never quite passed physical fitness tests in school or in the army. So people say that I think too much aka the proverbial "thinking soldier". The only major times that I managed to surpass my expectations or even other people's expectations were in times of emergency crisis when I responded with adrenaline. During BMT, I lost 13 kgs. 

During the previous operation "Operation Thunderstrike" of 2006/07 pitting myself against  "Fat B**t**d H" as the target, I managed to lose 23 kgs. Nevertheless, he still did not concede defeat to me. This led me to think out of the box how to win without heavy fighting in the future. So I gradually embarked on my quest to succeed with people through diplomacy for mutual benefits in my career as the main option since 2008. I largely succeeded but there is still room for improvement in that department of interpersonal relations. Anyway, I had gone past beyond the stage of remembering him or even his name for that matter. It is just in the past as part of my combat history. The last time that I heard of him, is nowhere near where I am today. What is past, is past. 

Moving on for this "Operation Top Gun", the primary target is none other than myself because I am the greatest opponent for myself since I know my strengths and weaknesses in this battle after having been through this and that. Losing weight "Operation Thunderstrike 2" was a losing battle in the last 5 years (despite being advised nicely by a few friends whom I am grateful for), juggling work and studies together for "Operation Intellectual Jungle". As we say in economics, resources are limited while wants are unlimited.  I aim to lose at most 30kgs or 25 kgs at least for 2013/14 and keep it that way for once and for all. I would like to give thanks to my family and friends who support me throughout all this while in my determination to make it in my various areas of operations for the challenges of life. 

Former opponent's reply to me after I won : Something that made me realize that there will always be sore losers around no matter how hard I work. So the greatest opponent is actually none other than myself.

It seems that I've forgotten about the 1.4MB diskette size of your brain capacity and ability to process information. So I thought I'd put it in a much more simplified response to you:

1. Nobody gives a shit about your special olympics challenge. You're still retarded no matter what (even if you'd have somehow won by sheer luck), and we don't take handicap matches.

2. You're not a sportsman, you're not a military man, so to hell with your bullshit. Want a medal for slimming down? Go ask Expressions or Adonis for it.

3. By the way, learn to spell people's name correctly first and check your grammar before putting on something that will only put yourself to more shame (not that it matters since all your dignity is pretty much gone, but still make it at least look good).

4. You still hold your pink IC and you're not even American. So to hell with your American dream and get ready for more humiliations and discriminations over there. Congrats!

5. A good warrior is one that would never see the need to quote Sun Zi time and time again. Need I say more about that, diskette-brain? Your opponents are all here, and all you could do is run away to another country crying and snoozing your mucus all over. Talk about empty talk (yes, pun intended. Try digesting that)

6. You want apology? come and get it. I'll be waiting for you. You need a good lesson on how to mind your words responsibly, and how one should know one's own place. Maybe if you'd apologize for YOUR OWN MISDEED that caused all these nonsense today (yes, it's your own fault). I might give your request a consideration.

Fat Bastard H

Monday, November 1, 2010

NTU MInisterial Forum 2010 : SM Goh's message to young Singaporeans - pls be grateful for what we have given to you.

Last Friday Oct 28th 2010 - I attended the NTU Ministerial Forum 2010 in my capacity as a NTU graduate student. I looked around and thought that I am the only one from RSIS, considering tthhe fact at Trimester 1 has just ended. Pity! Security was tight

The title topic of the event was "Singapore: City of Buzz" SM Goh chose this because he thought that this is a 'timely topic'. (maybe elections coming ???)

SM Goh's agenda in coming to NTU was to challenge us - to make Singapore into a global city of buzz and a home for us as well. In my mind, this is a BIG challenge aka a tall order. From what I see anywhere else in the world (or even in history), there are (or were) few cities - global in outlook and local in nature. However, it is not impossible in the case of NYC, Tokyo, London etc. Then again, these global cities have a hinterland to fall back on. Singapore does not have the luxury of a hinterland since 1965. In history, very few cities had ever survived out there on it's own for long. Singapore will be defying the gravity of history if it hits 100 in 2065. Perhaps we can take the analogy of Sparta and Athens given by Mr Ngiam whom I respect a lot for his outspoken views. Mr Ngiam's interview given here in 2006, sparked my interest into looking deeply at politics along with the GE 2006.

Interview with former permanent secretary, Mr Ngiam Tong Dow:
Let’s look at Sparta and Athens, two city states in Greek history. Singapore is like Sparta, where the top students are taken away from their parents as children and educated. Cohort by cohort, they each select their own leadership, ultimately electing their own Philosopher King. When I first read Plato’s Republic, I was totally dazzled by the great logic of this organisational model where the best selects the best. But when I reached the end of the book, it dawned on me that though the starting point was meritocracy, the end result was dictatorship and elitism. In the end, that was how Sparta crumbled. Yet, Athens, a city of philosophers known for its different schools of thought, survived.

My thinking when I read about this statement said by him, was "WOW, what a amazing revelation! You mean that Singapore will stand a better of survival when there is diversity of thoughts?" Thereafter, I gradually started to push myself to develop my own sense of critical thinking without fear for the first time. Initially, I met a lot of brickbats. Nevertheless, I also learned to respect other people's views and be sensitive to others' feelings. I had come a long way till now in 2010.

And Mr Ngiam's answer here Over the last forty years since 1965, Singapore has survived economically without the Malaysian hinterland. In fact, in a WTO ruled world, the concept of economic hinterlands has become redundant. Singapore will thrive as an economy and as a state if we are able to apply knowledge intelligently. This is the challenge for our succeeding generations

Back to SM Goh's talk, he stressed heavily upon Singapore's past difficulties, success in overcoming the obstacles and today's status as a developed country status. He stressed heavily on the Govt's investment in education and training for Singaporeans. amounting to $175k for each university graduate (from primary school to university). Indeed, I am well aware of this and appreciate the 70% subsidy given by the Singapore Govt for my graduate studies in RSIS. Thank you very much. (But Govt also do give the roughly the same subsidy minus 1k to foreign students too.) I am just pointing it out to put things in perspective. Thanks once again.

Now onto the Q & A. I will not go deep into details. Essentially, the 3 usual kinds of Singaporeans appeared ( I had seen these 3 kinds of Singaporeans before in previous forums). The first kind is one who depends on the govt for everything - a crutch mentality. The second kind is one who exceedingly admire the govt, to put it in a very nice way. The 3rd kind is one who really bother to ask the govt to think deeper into it's policies, while at the same time give due credit to the govt for the things that it did well.

The most highlighted question is the one by NTU final year undergrad Mr Lim Zi Rui. I could tell that he was being overly polite due to his officer training. Come to think of it, I did mentioned these lines of thought to DPM DM Mr Teo in a previous forum. I did it during Young NTUC's YCIS Net Forum 2008 when I just returned from the States. But I did it in more crude and much more army barmy manner. Hahahahah ! Let's just say it wasn't pretty on DPM DM Mr Teo's face.

Now I am more mindful of the cultural constraints that we generally have in Asia. In America where people are more opinionated and not afraid to challenge politicians. As I pointed out to my facebook friends; in my alma mater SUNY Buffalo, Republican Karl Rove got jeered by students during his debate with General Clark (Democrat) in the run up for US Presidential Elections 2008.
Tony Blair got hit with a tough question about the Middle East by a UB political science student Nick Kabat.

Therefore, my style now is always to add some sweetness first before adding the sourness and bitterness into the dish to be served.I would like to ask this question " Why not let foreigners serve some form of national service, accelerating their application for PRs/citizenship as incentive ? This can serve as a common platform for locals and foreigners to bond together in the common goal of defending Singapore and having a stake in this island.

Just too bad that the moderator cut people off by saying time running out : (

Another noteworthy question came from the last student. His question was about how to strengthen the sense of belonging in Singaporeans with Singapore as home. This is the best question of the forum. Personally, I am a assistant organizer of Returned Overseas Singaporeans in Singapore (ROSS) meetup club for this purpose; to find out how do our Singaporeans who lived overseas and returned, still living overseas or living overseas on a long term or permanent basis (still come back to Singapore once a while) - what are our feelings about Singapore ? I collated a lot of viewpoints. Very interesting. Personally, I started my own 10 to 15 year project to see whether Singapore is still worthwhile to be my home. Till 2018 to 2023, I will make my final decision and pass judgement on Singapore.

Tuesday, July 20, 2010

The Relative Profitability of Analysts' Stock Recommendations: What Role Does Investor Sentiment Play? by Assoc Professor Michael CLEMENT, University of Texas at Austin

Abstract: This study investigates whether analysts who respond to investor
sentiment issue more or less profitable stock recommendations than their peers. We find
that, on average, analysts issue more favorable stock recommendations when recent and
future sentiment is more bullish. Additionally, we show that, on average, analysts who
respond to investor sentiment issue relatively less profitable stock recommendations.
However, analysts who follow stocks that are most sensitive to investor sentiment and
who follow recent trends in sentiment are able to offer more profitable recommendations
than their peers. Our results suggest that analysts recommend stocks based, in part, on
signals that may affect price but that are not theoretically related to firms’ intrinsic value.
Moreover, our results may help explain findings within the literature that suggest analysts
fail to fully incorporate their own earnings forecasts into their stock recommendations.

To be updated with a research summary

Saturday, July 10, 2010

NYU Profs research findings : Does the Stock harm investment incentives ? Behavioral corporate finance research paper commentary #1

How this idea of academic paper commenting came to my mind 
Hi Everyone ! On 7th July, NYU Prof Alexander Ljungqvist came to NTU to publicize his research findings. I saw this flyer about this while at NTU on July 6th doing my registration procedure. But I was unable to come to NTU again for this because of my prior fixed work meeting with my non-academic mentor John. As a alternative, I got hold of this Prof's paper on SSRN and decided to make this as my first foray into research commentary. Looking at Prof Alex's profile on NYU, he certainly has a impressive record and looks pretty suave. He is said to be the youngest tenured track faculty member while he was at Oxford. The other 2 contributors are Assoc Prof John Asker and Phd Candidate Joan Farre Mensa (both from Econs Dept). Ok I am done with citation for courtesy's sake. By doing this, I hope to train myself to be more meticulous in my way of looking at issues. Eventually, I also hope to reach this high level of research standards. So this is to inspire and motivate me. Last but not least, I would like to share with people the knowledge I gathered.   

Introduction to this research study
This research study examines the differences between public and private companies in terms of investment behaviour. The sample is provided by Sageworks Inc which has a sizable database on U.S private companies. In this paper, empirical research is done to see if stock market listings harm investment incentives. The researchers did so by comparing the investment decisions of U.S. public companies to those of similar-sized private U.S. firms in the same industry. They found some evidence that public firms invest less compared to private firms and strong proof of public firms being less responsive to changes in investment opportunities. These results are most evident in industries in which stock prices are most sensitive to current profits. These behavioural patterns are more in tune with managerial myopia rather than empire-building. Public firms tend to smooth their earnings growth, maintain or increase their dividends and avoid  reporting negative earnings, unlike private firms. From a investment viewpoint at least, it seems that the agency costs of a stock market listed firm outweigh the benefits of a reduced cost of capital, at least for the fast-growing entrepreneurial firms in the sample.

Agency Problems - happens everywhere
Why Private firms have lesser agency problems ? An Agency problem is defined as an conflict of interest arising between creditors, shareholders, suppliers, employees and management due to opposing aims of the various parties. First, the fact that the shares of private firms cannot easily be traded means that managers do not need to worry about the short-term effect of investing in long-term projects on the current value of their stock. Second, private firms are typically owned by a small number of shareholders who either manage the firm themselves or supervise management closely. As a result, their shareholders tend to have the same information together with the management, making it easier to control any agency problems. In contrast, Public companies face problems that makes information flow more difficult between shareholders and managers. They restrict the information flow to the shareholders for fear of disclosing information that could be used by rivals (Bhattacharya and Chiesa (1995)) and also to follow the SEC’s Regulation Fair Disclosure, which prohibits selective disclosure of private information. Private firms are subject to no public reporting requirements, so very little is known about their investment behaviour.

My initial impression of this paper
This is a review of the pros and cons between the public and private firms which are clear to all. 
For a public listed firm, the advantages are having a lower borrowing cost, bigger recognition and having more room for growth. The disadvantages are having to deal with increasingly complicated corporate structures as the company grows bigger, risk of losing control by takeovers and additional public accountability standards (which can be exploited by rivals for information gathering).
For private firms, the advantages are a flatter corporate structure which make it more nimble for decision-making, no fear of being forced to come under another company's banner and the right to keep it's information away from rivals. The disadvantages are higher cost of borrowings, smaller recognition and limited room for growth. 

The paper has several equations to predict managers' behaviour whether short-termism (overly cautious, only after short term gains so as to maintain or brighten the quarterly earnings report) or empire-building (expansionary investments which needs huge capital outlays and long term commitment). I shall not disclose these equations for the sake of simplicity and not making laypeople confused. After all, I am just commenting because I had not reached the high level like these esteemed researchers yet. 

End of Sample size statistics
Public and private firms also differ systematically in their profitability, cash holdings, and use of debt. Private firms have significantly higher return on assets (ROA), defined as operating income before depreciation scaled by beginning-of-year total assets. In the matched sample, average ROA amounts to 0.084 for private firms versus -0.06 for public firms (median: 0.123 versus 0.051). At the same time, private firms hold significantly lower cash balances (beginning-of-year cash and short term investments) and have significantly higher leverage (beginning-of-year long-term and shortterm liabilities divided by beginning-of-year total assets). A greater reliance on borrowing is not
surprising considering that, by definition, private firms have no access to the stock market and so face a higher cost of raising equity capital.

Finally, note that matched-sample firms grow significantly faster than full-sample firms. For public firms, annual sales growth averages 18.3% in the full sample and 25.6% in the matched sample. For private firms, the corresponding numbers are 17.7% and 32.7%. This suggests that the empirical focus on small public and large private companies identifies fast-growing entrepreneurial firms where making optimal investment decisions is particularly important.

The aim of this paper is to examine whether the stock market harms investment incentives. It has long been argued that the separation of ownership and control following a stock market listing can lead to agency problems between managers and dispersed stock market investors and therefore suboptimal investment decisions. The debate is still divided on whether overinvestment (i.e., empire building) or underinvestment (due to rational shorttermism) will result on whether effective corporate governance mechanisms can be established to ensure investment does not suffer (Tirole (2001), Shleifer and Vishny (1997)). The researchers embed Stein’s (1989) short-termism problem and the empire-building problem of Baumol 30 (1959), Stulz (1990), and Stein (2003) in a nested model to derive testable predictions that allow to empirically distinguish between the two. In order to test the model, a proxy is needed for “optimal” investment decisions that is for the investment decisions managers would have made with the absence of agency problems. Such a proxy is taken from a rich new data source on private U.S. firms provided by Sageworks Inc. The hypothesis is proven to be correct. 

Matching Sageworks to standard Compustat data on stock-market listed companies by size and industry, identify matched panels of (small) public and (large) private firms and then estimate standard investment equations. Using several distinct sources of identification, the results show that compared to private firms, public companies invest both less and in a manner that is significantly less responsive to changes in investment opportunities, especially in industries in which stock prices are particularly sensitive to current profits. These findings are consistent with short-termism and opposite to expectations if empire-building were the dominant agency problem in the stock market. However, another similar research conducted in Europe in 2009 (Mortal and Reisel using the Amadeus European database of public and private firms) showed that public firms have greater investment sensitivities than private firms. Unlike the U.S.A, the main agency problem in Europe appears to be empire-building. Back to this research for the U.S.A firms, results showed that public companies tend to smooth their earnings growth and dividends and are reluctant to report negative earnings. One interpretation for these patterns is that public firms treat investment spending as the residual after having paid dividends out of their cash flows, whereas private firms treat dividends as the residual after paying for their investment out of cash flows.
Overall, at least for the  fast-growing sample firms, the benefit of cheaper funding via the stock market appears to be outweighed by the distortions that short-termism induces in the investment behaviour of public firms, due to the agency costs associated with separation of ownership and control. 

Closing Comments
This paper's research methods are very comprehensive. The sample size is more than sufficient to be convincing enough. Besides, the time periods are also long enough to be quantifiable. On average, it is 4.4 years of pre-IPO accounting data. Looking at this research working paper, I really understand that I still got a long way to go before reaching such a high level. To do a Phd, it is really not for everyone. First of all, the time cost is a big turn off, not to mention loss of potential higher income as what Sgt Kelvin said. Even I myself am still wondering if I really want to go all the way to it. It is gonna take more than just courage, luck and intellectual curiosity to complete the whole course from attending research seminars, finding your original research idea, oral and written examinations and finally writing the research thesis. Oh well, I shall see how it goes for me at the upcoming Msc course at NTU. Whatever it is, I find meaning in being a bridge between academia and industry in whatever I do as a aspiring intellectual researcher and consultant in my chosen life's calling.

Thursday, July 8, 2010

To be or not to be

To be or not to be ? That's the question everyone has to face everyday

Tuesday, July 6, 2010

NTU - a official graduate student , in the midst of drafting my hippocratic oath of honour as a person who seeks to create value to people who trust and believe in me. I will be a competent financial adviser, innovative mgt consultant, a inspiring life educator plus motivational trainer & outstanding behavioral sciences researcher .

Yeah I finally got into graduate school ! This is one significant milestone for my dream to become a established name in the research field. No, not just that. I also want to be a significant player in the industry - well known as a capable person who stand by his words with solid research evidence. When People see me Bernard Leong, they will know that my words are as good as a ton of gold.

This is my promise to my prospective clients, my RSIS classmates and professors, my friends and family, last but not least - myself with my conscience. I will never seek to be a crook who exploit people for his own selfish gains. Bernard Leong - a trusted management adviser. I will never create Cannot Work Business Problems ! I will practise management on the straight and narrow path, away from the crooked and broad path so that I can sleep peacefully at night with a clear conscience. I will recommend to my clients based on rigorous research standards and ethics. No Churning on my books !

Next, I will also seek to digitize the vast amount of information on various subjects I collected over the years on this blog. I also intend to inspire people and myself who are down and out in life - to rise up above the challenges. My life story is a poignant and inspiring one which I will tell in time to come. Right now, I will tell a bit by bit. After all, I am still on this journey seeing how it goes. Last but not least as a researcher, I seek to share my knowledge with people for the betterment of society as a whole. 

Yours Truly,
Bernard Leong   

P.S  I used to be a hardcore military man. So I chose the name Bernard from British Army Field Marshal Bernard Law Montgomery when I was preparing to go to ubsim where 60% of the lecturers are Americans ( thought better to make things easier for me and them rather than twist my chinese name. I was also aware of Dr Bernard Leong aka the pragmatic idealist who was educated at Cambridge. Now he is a techno entrepreneur. A good role model I thought to myself in 2005. Now I am even more sure that this is what I want and will become - hopefully taking over from him as well. Only time will tell and I will work hard on it.