Core Conviction #1: Nobody Has The Answer

core convictions Feb 17, 2020

The most common question that I get in my speaking involvement at various conferences in the region is: “What is your view of the stock market for the next year?”. It never fails to amaze me how often this question is asked time after time. And then there is the reporter’s request for a quote on what I think explained today’s movement.


The blunt reply is “I do not know, and your guess is as good as mine.” That sounds arrogant. But I am candid here. In truth, I am not trying to keep any secret to myself. All that I am saying is that nobody has the answer.

I would even go to the extent of saying that the chimps in the zoo have a good chance of being right as the “savvy” professional. The stock market is complex, confusing, not to mention perplexing, puzzling and unfathomable. This is a theme that I will keep coming back to. And because it is so complex, and nobody really has the answer. There will always be people who proclaim...

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The Implication of Cash Conversion Cycle on Liquidity

concept Apr 18, 2019

 By Puah Soon Lim

Today’s post is going to be about a question that I receive from one of my student at the recent weekend class at the SGX Academy. It concerns the CCC and its impact on a company’s liquidity. Specifically, this is the question that she asked:

“My calculations of the cash conversion cycle for Coy A is 179 days and for Coy B is (-74 days).  Does a negative number indicate more liquidity? In this case, is Coy B more liquid than A?”

She did a calculation for CCC and for Company A, it is 179 days and for company B, it is a negative 74 days. She asked “Does a negative number indicate more liquidity?  In this case, is Coy B more liquid than A?”


I feel that this is a good question to answer and I am going to answer it in this blog post. You may also write to us at this address and if we feel that this is a good question to answer, I will feature it in my blog post.

Just to give all of you a heads up, I have given two...

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What I Learned About Learning and Investing

behavior Apr 05, 2019

By Puah Soon Lim

Today I want to talk about learning. It is a subject that I am very passionate about. When I was growing up, I have difficulty learning. Particularly when I was in primary school. I failed all of my subjects and I have trouble staying focus and I was easily distracted.

Naturally, I have nightmares about taking an examination.  Some of those early nightmares stay with me till today. I still have anxieties attack in my sleep when I have dreams about going for an examination even though those days were long past me. I studied hard in my schooling years but I realized that knowledge doesn’t stay with me when all that I do is studying for an exam by rote learning and not through understanding.

I have already returned a large portion of what I learn to my school teacher and lecturer over the years. But I am someone that embrace lifelong learning. I am still having joy discovering new things, learning new things each and every day.  At the moment, I am...

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How to use Price-to-Book Value Ratio

techniques May 16, 2018

By Puah Soon Lim

To test my student's understanding of the price-to-book ratio in one of my investment classes called the “Building Blocks for Value Investing” held at the SGX Academy, I asked the class to guess if a stock's price to book valuation is better to be below one or greater than one.  Most of them were able to guess correctly, but when I asked them to explain why they categorize a stock's P/BV < 1 or P/BV > 1,  all of them have a hard time explaining the rationale. This is a ratio that is more complex than it looks.

In this article, I will attempt to provide more clarity on the price to book ratio and how to use it in your investment analysis. More importantly, as value investors, how to use this ratio as a value screen.

For those who are keen to test your take on this ratio, the eight companies that I used in class are the following:

Noble Group
CapitaLand Limited
Singapore Airlines
Singapore Telecommunication Ltd
Nestle (Malaysia)...

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Go Beyond the PE Ratio: EV/EBITDA

techniques May 01, 2018

By Puah Soon Lim


Today’s post is a fairly new development. It became popular during the dot-com bubble in the year 2000. I have received a lot of question on this one from newbie investors as well as the more experienced ones.

There are actually some academic researchers that purportedly claim that this is the single most important ratio in the valuation of a business. My view is that it is just one additional tool that investor should have in their arsenal. Both Warren Buffett and Charlie Munger have expressed their dislike for this number during the years leading up to the dot-com bubble.


I will start off by explaining the numerator first.

In the numerator, we have the Enterprise Value (sometimes also referred to as total enterprise value), primarily it is looking at valuing a company from the perspective of both the equity holder and the bondholder. If you are familiar with the concept of market capitalization, you are halfway there to...

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What's The Biggest Threat To Your Investment Portfolio?

behavior Apr 18, 2018

By Puah Soon Lim


I was part of a panelist on an investment forum organized by Moneysense and SGX recently whereby we were asked a very profound question, and I thought it makes sense to make this the theme for this week’s blog post.  

The question was: "What do you think is the biggest threat to your portfolio?"

The replies from the other panelist focus mainly on the economy, but when it was my turn to speak,  my reply generated a lot of laughter in the room. 

My answer was“What do you see is the biggest threat to YOUR portfolio?....YOU"

Although it generated waves of laughter in the room, I told the crowd that I am dead serious about what I just said. I explained that most investors think that it is most crucial to keep in touch regularly with the market and stay ahead of the curve to perform well. It is often assumed that knowing what is happening right now is the single most important thing that an investor must do...

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Never Run Out Of Investment Ideas with "The Magic Formula"!

techniques Apr 04, 2018

By Puah Soon Lim


Joel Greenblatt made his name running Gotham Capital and he made a lot of money doing it with annualized returns reported at 50% annually. He also wrote a very popular book “The Little Book that Beats the Market” which he shared in some of the public talks. He has the intention of teaching his children about investing and also to let them gain some insights into what a hedge fund manager does for a living. He wrote: “If you can’t explain the concept to a three-year-old, then you really do not understand it”. That is why I enjoy his book so much, and I have been recommending “ The Little Book that Still Beats The Market” in a lot of my talks. Greenblatt has a knack for explaining a complicated concept and distill them down to easy to understand snippets.

The central theme of the book is  “The Magic Formula” which is essentially a ranking system that he developed...

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Benjamin Graham's Net-Net Stocks

techniques Mar 21, 2018

By Puah Soon Lim


Cigar Butts Anyone?

Recognized as the father of securities analysis, Benjamin Graham argued for investing in stocks that were significantly undervalued relative to their intrinsic worth. Among the most widely adopted strategies of his is the cigar butts approach (also known as the Net-Net approach). This strategy alone brought him high profits in the 1930s to 1956. Buffett also successfully implemented this strategy during his Buffett Partnership years from 1956 to 1969.

The key measure of this approach is the ratio NCAV/MV which is the balance sheet current assets minus all the firm's (current and long-term) liabilities divide by market capitalization. Long-term assets (e.g. intangible assets and fixed assets) values are not counted. An undervalue investment will be one that has an NCAV that is above the market capitalization of the stock. In his classic book The Intelligent Investor, Graham recommended for a margin of safety to be built into this...

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Three Key Takeaways From Budget 2018

general Mar 07, 2018

 By Puah Soon Lim 


It is that time of the year where we pay attention to what the Budget will bring to the investor. There are many analysts who scramble to put out research report to try to translate the slew of adjustments to taxes and government scheme into how it will benefit specific industry and individual company.

Here is my attempt at interpreting the three most important things investors need to know about the Budget 2018:

1. Impact on stock market

Do not think that the $700 million bonus is going to affect the price of your stocks in any way. There was quite some analyst who thinks that the baby bonus handout of $700m is going to affect consumer plays like Genting Singapore, Sheng Siong, Dairy Farm International, Jumbo Group, Courts and FJ Benjamin. I am skeptical that it will create much of an impact. Just imagine the $700 m being distributed onto the revenue of these retail consumer play. It is really a drop in the ocean. There are simply too many...

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How to start to "do your homework"?

techniques Feb 22, 2018

By Puah Soon Lim 


Some twenty years ago, while sitting in front of my Bloomberg terminal, I remarked to my colleague sitting beside me that “doing your homework” is tough for an investor. Back then, I was already working in the finance industry for a few years and with my Accounting knowledge from my undergraduate days, and CFA Program, I was still grappling with “doing my homework".  

My colleague, who was a veteran bond trader, agreed wholeheartedly. He remarked, “Young man, you have a lot to learn.” Since then, I have always wondered how the rest of the retail investors cope with this task of “doing their homework.” 

Since then, I have always wondered how the rest of the retail investors cope with this task of “doing their homework.” We are advised by the experts to do our homework, study the report, and arrive at our buying and selling decisions. That is fine for some, but in my...

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