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Tuesday, 3 September 2013

We need more short sellers to help build up our muscles?

You know what?

After watching the short selling saga of both Olam and China Minzhong, I have a thought (I know, I shocked myself too!).

Imagine if these 2 short-sellers had stress-tested our SGX stocks a few years earlier? Before the blow-up of the long string of questionable and fraudulent S-chips AND Singapore born and listed companies (ACCS, Citiraya, Informatics...)?

Perhaps less retail investors will be hurt?


How do we build up our strength?

It's by subjecting our muscles to stress and strain.

Muscles wear; muscles tear.

It's through the process of healing and over compensating that our rebuilt muscles get stronger.

Now we are ready for the next level of stress and pain.

We don't get stronger by asking our maids to do the heavy lifting for us. 



  1. Hi SMOL

    Even though CMZ went back up, the saga is too strong for me. I think my heart would not be able to take it if it happens to me :)

    1. B,

      We can learn a lot from the emotions and actions of those who were vested.

      From fear and capitulation (sell all my S-chips!),

      to complacency and greed (hey! I was "right" all along and let's hold out for a higher price from Indofood).

      I knew I am weak in fundamentals; but Olam and CMZ convinced me the dangers of Value Trap echo chambers - CMZ is 70% of NTA, only 4x PE, etc.

      I am skeptical of Asian listed companies where the founding members are minority shareholders.

      You become an entrepreneur so you can help others get rich? We can do that by working for others.

      Asians like to retain control so can pass legacy to the next generation.

      I know nuts about numbers. I understand people better ;)

    2. I don't know if its because S-chips listed companies in Singapore doesn't need to comply with the MAS regulatory reporting and instead they need to follow their China GAAP back in their home country, hence we have a lot of "gaps" that short-sellers can attack in.

      I've asked my professor for Olam case also. He said that it's merely a different attack on valuation which one party can feel justified and another feels its overpriced. But the auditors certainly think it's fine and doesnt give any qualified opinions about it.

    3. B,

      Exactly. A short-seller's attack is no different from a bullish promo plug by analysts - they are just expression of opinions; from opposite sides of the same coin.

      We either choose "right" pipe piper to follow (rely on tips), or we do our OWN homework and have our OWN opinions ourselves.

      The market is not our mother.

      The market exists to facilitate the flow of dumb money to smart money.

  2. Only when you are down and out then you will know who are your true friends. Did anyone "avoding" when you started sabbatical leave?

    1. Money Honey,

      It's like our school friends. Once we leave school, some remain close; some drifted off...

      As a job-hopper (4 years in Shanghai and 3 years in Athens), there wasn't much difference before and after sabbatical since I was already away from Singapore...

      Those that remain in contact are because we have "chemistry" - distance and time don't matter.

      No chemistry see every day also not close.

      So yes, some people do avoid me; and I avoid some people too.


    2. Money Honey,

      Love your Nectar rules ;)

      Personalised is good!

  3. Hi SMOL,

    I agree with B. This kind of muscle training is akin to a lights out tekaning. Best to be avoided. I prefer to train slowly and steadily by myself.

    Most of the investors in CMZ should just be thankful that Indo is there to bail them out. And for those who bought at 50-60 cents, really hats off.


    1. Stoical Keynes (aka 15HWW),

      I'm too old for this kind of gyrations too!

      I did play the pennies when I started trading - jolly good fun when my trading account was tiny.

      Can make 50% in less than a month. But then, can also loose 20% in less than a week. Ouch! (A bit like the Myanmar play of the month pennies nowadays)

      Since not vested, I can have the peace of mind to study and learn.

      One lesson learnt: If I shareholder of Indofood - SELL!

      It's merely transferring of risk from CMZ to Indofood.

      Like bailing out too big to fail banks and transferring the debt burden to Sovereign and tax payers.


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