Flexibility versus Lock-in

A common complaint by loyal customers of our telcos is that the latest promotions are only eligible for NEW customers only.

You signed up for that 2 year 100 Mbps broadband plan with glee thinking how smart you were. Especially if you compare the savings you are getting in relation to the more flexible pay-as-you-go top up plans.

You smart; others not stupid.

From the "others" perspective, you are the bird in hand for the 2 next years.

One year later, you find to your dismay for the same price, the telcos are now offering new customers twice the speed at 200 Mbps!? Throwing in free installation and other services to rub salt into wound.

You now wonder whether it would have been wiser if you had used the more expensive pay-as-you go top up plans for 1 year and then switch to the current promotional plan...
  


We face similar dilemmas in our investing and trading decisions.

Should I lock-in my money for 1 year, or do I go for the 5 years fixed deposit that pays a higher interest?  

Sames goes for bonds. Hmm... Is now the time to go for shorter maturities as in 1 to 5 years, or do I go for the longer maturities like 10 to 30 years?

Is renting now better or should I bite the bullet and buy with a 30 year mortgage? 

(This is can be a classic penny wise pound foolish scenario. Save small money here and there and always talking about low cost index funds to only find out your neighbour has bought their unit for $100,000 less than you. Ouch!)

Should I hold on to this losing speculative position, or should I just cut my losses short and retain my flexibility to pounce on future opportunities?


Flexibility has a price.

Lock-in may not be the bargain you thought it is. 

How to offend people without trying

1)  You bump into your friend who is with her two daughters. You point to the younger daughter and shoot your mouth, "Mei mei is so much cuter than jie jie!"

Right in front of jie jie and her now fuming mom.


2)  At the company's dinner and dance, after a few drinks, you went up to the mic and exclaim, "Peter is the best manager in the whole company!"

Your immediate boss (not Peter) is not smiling, and the CEO (whom Peter reports to)  is smiling uncomfortably.


3)  At the HDB heartland hawker center, you are scolding your son, who has just missed 1 point from getting full marks, "If you don't study hard, you'll be condemned to staying in HDB next time you grow up!"   

Everyone stops eating and is now staring at you. Yeah you!

let it go 讓它去

I tell you, there are lots of talented "amateurs" amongst our midst.

Excellent taiwanese (hokkien) cover of this Disney animation's super hit "Let it go" by Indina Menzel.

This song appears after an ostracized Elsa abandons her kingdom soon after her cryokinetic powers were discovered by the public. Realizing that she no longer needs to hide her incredibly powerful ice abilities, Elsa declares herself free from the obstacles that she's been faced with since childhood and rejoices in using her powers without fear.


Haven't we at sometimes in our lives felt the same way?

We have a gift or an alternative view of life; but we are afraid to reveal it to others.

Fear of being different. 

Fear of not fitting in. 

Fear of standing out.


1,2,3. Sing it out loud now!

Let it go! Let it go! Let it go!

Efficiency versus Effectiveness

Have you noticed a difference in buying burgers from McDonald's in recent years to 5-6 years ago?

Now it takes longer to have your orders filled right? 

But the burgers are now hotter ;)


In the past, can you recall you can physically see pre-made burgers sitting in a queue behind the McDonald's counter?

The quicker you move the customer queue, the more $ you make per minute or per hour right?

All in the name of meeting efficiency metrics and KPIs. No? 

Remember leaner, faster, cheaper?
 

When same stores sales fell at McDonald's 5-6 years ago (and their share price tanked), it must have raised alarm with management.

Kudos to McDonald's management for asking their customers what were they pet peeves eating at their restaurants.

High up on the customers' complaint list was - cold food.


Next time you visit McDonald's, do take a look behind the counter. Can you see your burgers are now made-to-order?

And if the queues are too long, before you complain or whine, ask yourself - do you prefer cold pre-produced burgers instead?



There are many examples of where we push the limits of efficiency so much that it works against effectiveness:

1) When educators (they are not teachers) discourage students in taking certain subjects as it's harder to score distinctions, and may affect the school's ranking... What's the purpose of education again?


2) I hate shopping at a local supermarket chain near Queenstown as it tries to cram everything into extreme narrow aisles and totally forget about the customer experience. 

It's main selling point is "cheap". Nothing else.

NTUC supermaket was once upon a time like them. I am so glad NTUC now offers a shopping experience almost equal to Cold Storage without sacrificing "fair pricing".


3) As employees, especially if you are the sandwiched middle-management class, I'm sure you have lots of examples of idiotic short-term efficiency goals that go counter to the values of the company, and/or the long term strategic plans of the company! 

Well, somebody have to meet the short term goals for the next quarterly report mah...



As investors and traders, there are 3 fingers pointing back at us (when we point our index fingers at others, our thumbs don't point back at us do we? I wonder where the 4 fingers saying comes from???).

Why do we invest or trade in the first place? To make money! Duh!

That's the one effectiveness we should not forget.

Take a count of those "efficiency" targets or concerns you are currently tracking and ask yourself - do they really matter in the big scheme of things?

 

 
   

The trouble with long lead-times

Once upon a time, I used to work in Supply Chain (self-taught through learn by doing).

And one of the lessons learned is that shorter lead-times are preferred over longer lead-times, all things being equal.


In a way, it's true.

Take for example a factory for DRAM memory chips or LCD panels. Demand good with high prices, what do  you do? Increase capacity by investing in a new plant of course!

If only we can add a new factory in one month instead of 1 to 2 years...

By the time the new factory is ready, DRAM and LCD prices may have tanked. All thanks to your competitors having the same bright idea as you; everyone built new capacities. You smart; others not stupid.

And to add salt to your wounds, now must contend with competiting technologies like in Flash memory or LED panels... 


It's much easier as a transport operator if you are planning for new capacities as in buying new taxis or buses. But if you are a shipping carrier... Perhaps that's why the share price is quite stable for one sector while the other is quite cyclical with roller-coaster rides up and down.


For those young adults who pick fields of study in tertiary institutions based on the latest starting pay surveys, you may one to keep the above scenarios in mind as there's a 3 to 4 years lead-time. What's hot today may not be so when you graduate. Unless of course you are great at forecasting!


Now comes the dilemma. 

Is it easier to predict the weather for the next hour or for the next day?

OK, now combine your answer with your own view on long lead-times.

How?

Makes you pause and think about long term investing and short term trading right? 

We may need to change ant baits

I don't like ants.

Especially in my food or drinks.

I've been buying those ant baits that will slowly poison the whole ant colony when the unsuspecting worker ants bring the "bait" back to their colonies.

It worked well for the first few times. Ants free for a few months until new Queen ants migrate into my HDB flat again...

I noticed that I have to change the brand of the baits a few times. But now, all these ant baits don't work anymore...

I suspect before the ants die, they must have left behind some chemical messages like what cavemen do for cave paintings - leave their stories behind. And warnings for future generations.

Now I am back to the tried and tested way of insecticides. I think I am slowly poisoning myself breathing in the poison mist as payback karma...



Last weekend, something interesting happened to our Big Daddy. I remember a time when pioneering ex-MPs wished for some preferential treatments from Lao Lee but were politely turned downed.

It seems we have a change of heart. New Daddy discovered new treatment of children is needed.



I guess its the same for wiser and enlightened parents. They discover they need to treat their teenage children differently. More equally as young adults than still hang on to the notion that as parents, they can still "control" their children like when they were 7 or 8 year olds...



As investors, have we not discovered that the same setups that worked during 2009 to 2012 didn't work as well in 2013? Especially after STI topped in May 2013.



Have you changed ant baits recently too? Care to share your experience?



 

There is a season for everything

The moon waxes; the moon wanes

The tides rise; the tides fall


So goes the fortunes of nations and man

Full of sound and fury; and then we are heard no more


There is a season for planting; there is a season for harvesting. 
When night recedes, the rooster crows it morning call

  

You mean you can learn from other people's mistakes?

Maybe it's just me.

You mean you really can learn from other people's mistakes?


If you are a smoker, what do you see when you buy a pack of cigarettes? Do you learn from the mistakes of others that's pasted in graphic gory details screaming right in your face?

If you are trying your luck at the casinos, you mean you never read or heard about stories how careers or families were ruined by excessive gambling?

If you are contemplating borrowing from "ah longs" (illegal money lenders), please don't bluff you never saw the O$P$ (owe money pay money) "works of art" at our HDB estates? Not even in the media?

When you ventured into investing, you never heard of people losing most of their life savings? And I don't mean speculators. These are honest to goodness salt of the earth savers who dollar cost averaged into equities. They just happened to need to draw on their investments during 1997/98, or 2008/09 for their retirement, immigration, or to bail-out their grown-up "children"...

When you quit your job and jump into the sea of entrepreneurship, surely you must know 90% of new business fold during their first 2 years? You mean these "failed" or "bankrupt" entrepreneurs never learned/read/attended a seminar about the common mistakes of starting a business? 


So what do we really mean when we say we can from the mistakes of others?

Or is this more about say say only? Regurgitating what we know instead of what we knew personally?

Just look back to your most memorable epiphanies, mind-flips, or "ah-ha!" moments.

Were the catalysts something you have read, saw, or heard?

Or were they more likely to be when you got your fingers burnt, or when the needle finally pricked your own skin?