Author: 8% Value Investhink

Is the Virtual Economy Taking Over the World?

Here’s wishing all readers a very Happy 2018! Thanks for all your support these 12 years! Today let’s talk about world domination by the internet! We discussed this topic some time back about how internet is taking over the world and real world and real life experiences are becoming a rarity. Today let’s delve a bit further. We saw how the largest companies in the world are now dominated by internet firms. So, is the virtual economy taking over the world? If so, exactly how big is it really gonna be? I think it will be almost as big...

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2017 in Review: Melting Up, Up and Away!

In a blink of an eye, we are now at the end of 2017. Last year this time, we did a similar review for 2016 and then talked about how 2017 would pan out. The following passage surmised what we discussed: Let’s talk about 2017. Remember it’s not prediction but preparation. It’s not easy but let’s try. In my view, 2017 could see the rise in animal spirits given the very bad 2016. Investment appetite especially with the US economy recovering could pull parts of the world up. Although China and Europe should remain tough with the bad debt...

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Chart of the Week #7: Living Longer

Here’s another Economist chart depicting one good reason that we are living longer – we are winning the war against cancer! We are seeing close to 100% five year survival rate for some types of cancer thanks to drug innovation and medical advances. As you might know, cancer is not one disease but actually many different types of ailment manifested in different ways. Some are caused by viruses while others are related to lifestyle choices like smoking, eating too much red meat, exposure to carcinogens and what not. But advances in medicine is slowly but steadily postponing death. The amazing...

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Chart of the Month #6: Pearl River Delta

Here’s an interesting report from the Economist a few months back. It described how the Pearl River Delta of China is now an innovation hub and a region of the future. The left chart shows that number of international patent applications. The data ends in 2016 but I suspect that China had already surpassed the US in 2017. China is now world’s largest patent market today. The right bar shows that the bulk of the patent filing comes from Shenzhen, arguably already surpassing the Silicon Valley. The city that Deng Xiaoping first visited on his Southern Tour and declared...

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Inspecting the Vicom Story – Part 2

This is a continuation of the previous post. Okay, in the last post, we discussed the basic stuff about Vicom. It is hugely cash generative and we are getting it at low teens PE, 13x to 16x PE for a 30% operating margin, 20% ROE business. This is really not expensive, albeit the growth angle could be questionable. Singapore is a mature economy, our vehicle population is maxed out, we don’t have enough roads for more cars. So how to grow? Maybe Vicom is cheap because there is no growth. Or is there really no growth? This is where...

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Inspecting the Vicom Story – Part 1

Vicom has been one of the most amazing multi-bagger in the Singapore stock market. It was trading at 50 cents 10 years ago, with a market cap of S$150m and over just one decade, it became a $5 stock with a market cap of S$500m, generating S$30m of free cash flow per year on a revenue of S$100m and piled up another S$100m of cash on its balance sheet. Despite such a huge run, I took a look at this stock again and believe we can still squeeze some juice out of it. In fact quite a bit of...

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Chart of the Month #5: Total Business Person!

This came from a book on restructuring businesses with an interesting analogy on how one should improve ourselves as a good business person simply by harnessing our bodies and senses better. How to improve ourselves as human beings? (1) Use our senses to first receive all the different inputs well(2) Use our brains to analyze, strategize, think(3) Use our heart, elevate our EQ and be able to empathize others deeply(4) Use our gut, have the courage to make the tough decisions(5) Use our composure, exhibit strength, character, lead by example(6) Use our mouth, to communicate(7) Use our arms and...

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Chart of the Week #4: Singles Day

11.11 has taken a new meaning since it was started in China by Alibaba a few years ago. It’s Singles Day! A day where everyone should buy bargain sales online. Somewhat akin to the Great Singapore Sale (which last one whole month in June) but it’s just one day. The same tradition in the US is the Cyber Monday for buying tech stuff and the infamous Black Friday. Here’s a chart comparing Singles Day and Black Friday.   In the second year that it was launched, Singles Day sales exceeded both Cyber Monday and Black Friday combined. The sales...

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2017 Oct High Dividend List – Part 2

This is a continuation of the previous post. We are at the second post of this October’s dividend stock list. This is the first year that we are doing a bi-annual list. This list has 54 names and we gone through half of those names already. Due to the configuration of Bloomberg, I was only able to capture 15 stocks each, which results in the list being divided into four parts. In the last post, we have Part 1 and 2. Now we shall discuss Part 3 and 4. This is not to be confused with the Part 1...

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2017 Oct High Dividend List – Part 1

As promised, this is the first bi-annual dividend list (started only in 2017!) with the first list out earlier this year. As usual, the criteria have not changed over the years and we have used three year average ROE, 4 year average free cashflow and EBIT margin. The dividend yield is cut at 3% and we have 54 interesting names. They are ranked by market cap. With the largest being P&G at c.USD 220bn. This is the world’s largest consumer staples company. While huge in absolute size, it pales in comparison with the internet giants at USD 600-800bn market...

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Chart of the Month #3: Life Cycle of Bubbles

The following are famous charts created by McKinsey (I believe), depicting the life cycle of bubbles as we have seen. This chart had gave a good explanation of at least three bubbles in recent history. The dotcom bubble, the Japan bubble and the 1929 stock market boom and bust that led to the Great Depression. The chart above shows the phases of development staring with R&D and then moving to first generation products and how early adopters will join first. This pretty much described how the internet and the dotcom bubble had evolved from the late 1990s till today....

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Market Trading Tactics – Part 2

This is a continuation of the previous post. In the last post, we discussed how lessons learnt from traders apply to investors. As market participants, we really have very little control over our destinies unlike most other activities. A tennis player can always decide whether to be aggressive or defensive, to target opponents’ weak backhand or serve to kill. A businessman, likewise, can also do a lot, such as using discount pricing or scale to squash opponents or headhunt the best talent in the market to run his business. But for investors and traders alike, we are in a...

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Market Trading Tactics – Part 1

I bought this book titled Market Trading Tactics for ten years ago and left it on the shelf. It stood there ever since, collecting dust. At the back of my mind, I didn’t want to read it. I couldn’t figure out why I bought it in the first place. I am an investor and as an investor, there was no need for trading tactics. In my mind, traders and investors were enemies. We were the Allied Powers and them, the Axis Powers. The markets were our fighting ground. So how can I read a strategy book devised by the...

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Chart of the Week #2: Bitcoin Bubble vs Today’s Markets

Bitcoin has been touted as the new currency. Since government legal tender notes may not mean much if they are all bankrupted and we really don’t want to go back to using gold to barter trade, one revolutionary solution might be bitcoin which is based on the newest, baddest blockchain technology that ensures safe encryption, traceability and eliminating the need for intermediaries like banks, credit card companies that had creamed more than their fair share of transaction since time immemorial.       Bitcoin had done crazily well over the last four years. It is said that someone who...

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Chart of the Week #1

Investment is pretty much about ideas and insights. Ideas about innovation, trends, moats help investing think through their stocks and find out those that could ride the trend while keeping competition at bay. Insights help us see what others are not seeing yet. A lot of ideas and insights come from charts and hence this series is to highlight charts, tables that bring across these clearly. In this inauguration issue, we look at the demographics of Asia. The chart above shows that Asia is seeing peak working population in the next decade. With the exception of India, most Asian...

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