Seeing the world upside down

Is the glass half full or half empty? What’s your answer? When you are assessing a company and its economic context, can you see what others can’t?

Think about “areas that other people are not thinking about.” Jane Siebels remarks in the book about Templeton’s passion to “open other people’s minds and broaden their scope.”

1) Competitive Industry. Top names like SIA / Emirates / Qatar are in a highly competitive unregulated over-saturated industry. Samsung / LG / Sharp / Apple are also in the cut throat LCD TV and Smart phone industry. Tough luck – tough making money. Or as Warren Buffett might have said, it is pointless to jump a seven foot hurdle (rather than a one foot hurdle) in business.

Competitive industry bad for profit? Or is it? In fact the more competitive the industry is, the more lucrative it is for the “supporting” companies like SIA Engineering, SATs and Corning glass.

 

2) Private Property counters in limbo due to cooling measures. (read here) Overall, the Singapore Properties Equity Index, representing all property-related counters, suffered a 5.81 per cent drop in market value for the full year of 2014. Bukit Sembawang, GuocoLand, Wing Tai and Ho Bee Land, all hit by hefty share price falls. Oh no….

On the other hand, HDB will offer 24,300 flats in 2014. 25,100 units launched in 2013. But how to profit from the stock market with HDB??? Deh…

However, after the housing boom, comes the maintenance boom. :p

Eight PAP town councils to raise service and conservancy charges from 1 April 2014 (read here and here).

ISOTeam is doing booming business with more and more maintenance projects (ISO TEAM: Expanding Its Suite Of Services). Colex and 800 Super are both getting more lucrative contracts providing refuse collection services.

 

3) Recession is bad for companies. During a recession, the middle class & low income sector is feeling the pinch, companies find it hard to make a profit. Some may argue that certain industries thrive during these dark times. Stock brokers start promoting Pawnbroker companies stocks (read here and here) Vice /Sin Industry? (read here and here and here)

Think Value Max, Money Max, Thai Beverage & British American Tobacco (Malaysia).

Item 3 is a bit subjective – stock prices will probably still dip in a recession. In the case of Value Max and Money Max, their stocks have not ‘experienced’ a true recession yet since they were only recently listed (and frankly I don’t think they have strong fundamentals either). Thai Beverage and British American Tobacco share prices dipped in the 2008/09 recession. And there are the Gaming stocks that do booming business in good times as well, but share prices dipped in a recession eg. Nagacorp. But then again – it is stock prices, they may not be a true reflection of their earning growth during the recession.

 

The Matrix (1999) Quotes

• Spoon boy: Do not try and bend the spoon. That’s impossible. Instead… only try to realize the truth.
• Neo: What truth?
• Spoon boy: There is no spoon.
• Neo: There is no spoon?
• Spoon boy: Then you’ll see, that it is not the spoon that bends, it is only yourself.

“As far as you are concerned, the stock market does not exist. Ignore it.” Warren Buffett

 

Pacific Rim (2013) Quotes

• Construction Foreman: Ration card time! Come on, come on! Let’s go!
• Construction Foreman: Now, I’ve got good news and I’ve bad news, fellas. Which one do you wanna hear first?
• Construction Worker #1: Bad news!
• Construction Foreman: Bad news, three guys died yesterday working on top of the wall.
• Construction Worker #2: What’s the good news?
• Construction Foreman: The good news is, I got three new job openings, top of the wall. Okay, who wants to work? Who wants to eat? Come on!

Here is what Marks writes in his seminal book, The Most Important Thing…

• First-level thinking says, “It’s a good company; let’s buy the stock.” Second-level thinking says, “It’s a good company, but everyone thinks it’s a great company, and it’s not. So the stock’s overrated and overpriced; let’s sell.”
• First-level thinking says, “The outlook calls for low growth and rising inflation. Let’s dump our stocks.” Second-level thinking says, “The outlook stinks, but everyone else is selling in panic. Buy!”
• First-level thinking says, “I think the company’s earnings will fall; sell.” Second-level thinking says, “I think the company’s earnings will fall less than people expect, and the pleasant surprise will lift the stock; buy.