Mr Cheah Cheng Hye is the founder of Value Partners - a Hong Kong based value shop focusing on investment in China.
1. Great emphasis on culture. Every new joiner is required to sign the "My Promise" - like the Johnson & Johnson Credo and Mr Cheah adopted various rituals to brainwash his men. The whole idea is that you can't have a good product without good people.
2. Try to move away from star fund manager approach and "industrialise" the product manufacturing process. Mr Cheah divided the investment process into several skills. He mentioned one hard skill to train is "decision making" and a useful way is the Buddhist "selflessness" approach.
3. Keep the investment universe aways from large cap SOEs and do detailed research on private enterprises. Often use private placement to gain advantage. However he cautions that diversification is essential to manage the risk and his fund generally owns 100 or so names.
Thursday, May 12, 2011
Monday, November 22, 2010
Conversations Richard H. Thaler
Richard Thaler is the author of the book "Nudge" and a professor of behavior economic at Chicago. This conversation is a pretty good outline of key thoughts in behavior economics and its potential application in many social issues. As Charlie Munger said: "If economics is not behavior, then what is it?", real life can only be properly understood by multiple models...
Saturday, November 20, 2010
Pretty Good for Government Work
Following is the open letter from Oracle of Omaha published at The New York Times.
DEAR Uncle Sam,
My mother told me to send thank-you notes promptly. I’ve been remiss.
Let me remind you why I’m writing. Just over two years ago, in September 2008, our country faced an economic meltdown. Fannie Mae and Freddie Mac, the pillars that supported our mortgage system, had been forced into conservatorship. Several of our largest commercial banks were teetering. One of Wall Street’s giant investment banks had gone bankrupt, and the remaining three were poised to follow. A.I.G., the world’s most famous insurer, was at death’s door.
Many of our largest industrial companies, dependent on commercial paper financing that had disappeared, were weeks away from exhausting their cash resources. Indeed, all of corporate America’s dominoes were lined up, ready to topple at lightning speed. My own company, Berkshire Hathaway, might have been the last to fall, but that distinction provided little solace.
Nor was it just business that was in peril: 300 million Americans were in the domino line as well. Just days before, the jobs, income, 401(k)’s and money-market funds of these citizens had seemed secure. Then, virtually overnight, everything began to turn into pumpkins and mice. There was no hiding place. A destructive economic force unlike any seen for generations had been unleashed.
Only one counterforce was available, and that was you, Uncle Sam. Yes, you are often clumsy, even inept. But when businesses and people worldwide race to get liquid, you are the only party with the resources to take the other side of the transaction. And when our citizens are losing trust by the hour in institutions they once revered, only you can restore calm.
When the crisis struck, I felt you would understand the role you had to play. But you’ve never been known for speed, and in a meltdown minutes matter. I worried whether the barrage of shattering surprises would disorient you. You would have to improvise solutions on the run, stretch legal boundaries and avoid slowdowns, like Congressional hearings and studies. You would also need to get turf-conscious departments to work together in mounting your counterattack. The challenge was huge, and many people thought you were not up to it.
Well, Uncle Sam, you delivered. People will second-guess your specific decisions; you can always count on that. But just as there is a fog of war, there is a fog of panic — and, overall, your actions were remarkably effective.
I don’t know precisely how you orchestrated these. But I did have a pretty good seat as events unfolded, and I would like to commend a few of your troops. In the darkest of days, Ben Bernanke, Hank Paulson, Tim Geithner and Sheila Bair grasped the gravity of the situation and acted with courage and dispatch. And though I never voted for George W. Bush, I give him great credit for leading, even as Congress postured and squabbled.
You have been criticized, Uncle Sam, for some of the earlier decisions that got us in this mess — most prominently, for not battling the rot building up in the housing market. But then few of your critics saw matters clearly either. In truth, almost all of the country became possessed by the idea that home prices could never fall significantly.
That was a mass delusion, reinforced by rapidly rising prices that discredited the few skeptics who warned of trouble. Delusions, whether about tulips or Internet stocks, produce bubbles. And when bubbles pop, they can generate waves of trouble that hit shores far from their origin. This bubble was a doozy and its pop was felt around the world.
So, again, Uncle Sam, thanks to you and your aides. Often you are wasteful, and sometimes you are bullying. On occasion, you are downright maddening. But in this extraordinary emergency, you came through — and the world would look far different now if you had not.
Your grateful nephew,
Warren
Warren E. Buffett is the chief executive of Berkshire Hathaway, a diversified holding company.
DEAR Uncle Sam,
My mother told me to send thank-you notes promptly. I’ve been remiss.
Let me remind you why I’m writing. Just over two years ago, in September 2008, our country faced an economic meltdown. Fannie Mae and Freddie Mac, the pillars that supported our mortgage system, had been forced into conservatorship. Several of our largest commercial banks were teetering. One of Wall Street’s giant investment banks had gone bankrupt, and the remaining three were poised to follow. A.I.G., the world’s most famous insurer, was at death’s door.
Many of our largest industrial companies, dependent on commercial paper financing that had disappeared, were weeks away from exhausting their cash resources. Indeed, all of corporate America’s dominoes were lined up, ready to topple at lightning speed. My own company, Berkshire Hathaway, might have been the last to fall, but that distinction provided little solace.
Nor was it just business that was in peril: 300 million Americans were in the domino line as well. Just days before, the jobs, income, 401(k)’s and money-market funds of these citizens had seemed secure. Then, virtually overnight, everything began to turn into pumpkins and mice. There was no hiding place. A destructive economic force unlike any seen for generations had been unleashed.
Only one counterforce was available, and that was you, Uncle Sam. Yes, you are often clumsy, even inept. But when businesses and people worldwide race to get liquid, you are the only party with the resources to take the other side of the transaction. And when our citizens are losing trust by the hour in institutions they once revered, only you can restore calm.
When the crisis struck, I felt you would understand the role you had to play. But you’ve never been known for speed, and in a meltdown minutes matter. I worried whether the barrage of shattering surprises would disorient you. You would have to improvise solutions on the run, stretch legal boundaries and avoid slowdowns, like Congressional hearings and studies. You would also need to get turf-conscious departments to work together in mounting your counterattack. The challenge was huge, and many people thought you were not up to it.
Well, Uncle Sam, you delivered. People will second-guess your specific decisions; you can always count on that. But just as there is a fog of war, there is a fog of panic — and, overall, your actions were remarkably effective.
I don’t know precisely how you orchestrated these. But I did have a pretty good seat as events unfolded, and I would like to commend a few of your troops. In the darkest of days, Ben Bernanke, Hank Paulson, Tim Geithner and Sheila Bair grasped the gravity of the situation and acted with courage and dispatch. And though I never voted for George W. Bush, I give him great credit for leading, even as Congress postured and squabbled.
You have been criticized, Uncle Sam, for some of the earlier decisions that got us in this mess — most prominently, for not battling the rot building up in the housing market. But then few of your critics saw matters clearly either. In truth, almost all of the country became possessed by the idea that home prices could never fall significantly.
That was a mass delusion, reinforced by rapidly rising prices that discredited the few skeptics who warned of trouble. Delusions, whether about tulips or Internet stocks, produce bubbles. And when bubbles pop, they can generate waves of trouble that hit shores far from their origin. This bubble was a doozy and its pop was felt around the world.
So, again, Uncle Sam, thanks to you and your aides. Often you are wasteful, and sometimes you are bullying. On occasion, you are downright maddening. But in this extraordinary emergency, you came through — and the world would look far different now if you had not.
Your grateful nephew,
Warren
Warren E. Buffett is the chief executive of Berkshire Hathaway, a diversified holding company.
Saturday, October 16, 2010
Jeff Bezos Princeton Speech
"Sometimes it is harder to be kind than be clever..." another inspiring speech from the founder of Amazon.com.
Sunday, October 10, 2010
Mike Novogratz Interview
This is an excellent interview with one of the leading global macro traders.
1. There is a tremendous amount of instint in trading - pattern recognition, learn to trust your intuition, put multiple piece of information together (both fundamental and technical).
2. Create your own version of trading rules that you will abide by and that is the discipline part of the game.
3. Great traders buy when he is bullish and sell when he is bearing. But 9 out of 10 people in the business can't do that.
4. Primary focus is on risk - in the same vein and also different from fundamental, stock investor.
1. There is a tremendous amount of instint in trading - pattern recognition, learn to trust your intuition, put multiple piece of information together (both fundamental and technical).
2. Create your own version of trading rules that you will abide by and that is the discipline part of the game.
3. Great traders buy when he is bullish and sell when he is bearing. But 9 out of 10 people in the business can't do that.
4. Primary focus is on risk - in the same vein and also different from fundamental, stock investor.
Friday, October 8, 2010
Saturday, September 25, 2010
A conversation with Charlie Munger at University of Michigan
A recent two-hour long dialogue with Charlie Munger includes many gems of the wisdom and advice of the 87 year old investment guru.
1. Ability can get you to the top. But it is the character that can keep you there.
2. The safest way to get what you want is to deserve what you want.
3. Don't worry too much about macroeconomic issues. Focus on what you can do everyday. In a long life, you will have your fair share of good tide and bad tide.
4. Many human systems have perverse incentives: short-termism, CEO culture, failure of accounting (reporting misleading earnings) etc.
5. Believe energy is the single most important issue and strong advocate solar power.
6. Cynical about philanthropy - Costco contributes more to human civilisation than Rockefeller foundation.
1. Ability can get you to the top. But it is the character that can keep you there.
2. The safest way to get what you want is to deserve what you want.
3. Don't worry too much about macroeconomic issues. Focus on what you can do everyday. In a long life, you will have your fair share of good tide and bad tide.
4. Many human systems have perverse incentives: short-termism, CEO culture, failure of accounting (reporting misleading earnings) etc.
5. Believe energy is the single most important issue and strong advocate solar power.
6. Cynical about philanthropy - Costco contributes more to human civilisation than Rockefeller foundation.
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