Leonard Tan

Top Contributor (Feb)

118 upvotes received
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Top Contributor
(Feb)
  • 83

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  • Asked by Anonymous

    Leonard Tan
    Leonard Tan

    Top Contributor (Feb)

    83 Answers, 118 Upvotes
    Answered 3d ago
    Hey Anon! Basically a Kabuki DCF is a term used to describe the scenario whereby the analyst already knows the sort of ratios and numbers he/she wants to bring out from the DCF even before modelling it. In reality though, analysts- often sell-side analysts have hidden agendas behind promoting a particular stock. But, they can even go one step further, knowing the rough numbers for average industry comparables such as P/B, P/E and EV/EBITDA , they can rework their entire model and edit assumptions to hit their ideal valuation metrics for the company. This renders the DCF inaccurate as it basically just "prices" the stock instead of actually valuing the company.
  • Asked by Anonymous

    Leonard Tan
    Leonard Tan

    Top Contributor (Feb)

    83 Answers, 118 Upvotes
    Answered 3d ago
    Smart beta investing- is a term that has been thrown around quite abit. I believe it is more than adequately explained by Junus and Sandra and I agree, its definition is by nature very loosely termed. I've attended a talk given by Nomura attesting to their smart beta investment fund's outperformance against S&P500 benchmarks. While they explained they reevaluted beta using a slew of factors which they said was really not difficult(not exactly mentioned other than P/B), when I questioned them about their relative outperformance against other of Nomura's more traditional investment funds- they did not share any insights. While its largely logical they need to keep their exact quantitative strategy a secret perhaps from their other competitors, I am really skeptical about its true effectiveness. Shouldn't all companies embracing smart beta investing and ditch the CAPM beta if it was that easy and fullproof? And how exactly do you expect retail investors to buy into such a vague investment portfolio when you are so secretive about it?
  • Asked by Anonymous

    Leonard Tan
    Leonard Tan

    Top Contributor (Feb)

    83 Answers, 118 Upvotes
    Answered 3d ago
    Theoretically, for growth stocks, it is normal for these companies to be as leveraged as possible to maximise top line growth. Conversely for established industries later into their life-cycle you ideally want to see minimal debt leverage. Buffet often prizes value stocks with no debt. While you can measure company's financial leverage ratio through values such as equity or debt ratio, often its very hard to draw the line where a company gets too leveraged. Although a rough figure of
  • Asked by Anonymous

    Leonard Tan
    Leonard Tan

    Top Contributor (Feb)

    83 Answers, 118 Upvotes
    Answered 4d ago
    Yes indeed as Sandra mentioned Best Buy is certainly a very interesting case to analyse! While it may appear Amazon's business model was threatening Best Buy in 2012, Best Buy new CEO Hubert Joly took a page out of famous show- Undercover Boss, visiting Best Buy stores and working there for a week to speak directly to front line employees. Based off their feedback, he fixed broken systems like internal search engines, restored a beloved employee discount program, invested heavily into regular employee training. Moreover Joly knew customers used Best Buy to do showrooming, therefore he used that practice to his advantage by instituting a price match system. And as Sandra said they charged large electronic companies to feature their products at these "showrooms", opening a new revenue stream. Joly further built on their ability to connect with customers and starting an in-home advisor program. Best Buy could send consultants to the privacy of homes to offer advice and help you decide if you would like to purchase. Advisors are encouraged to establish long term relationships rather than close sales. Advisors are paid an annual salary and are told to "be comfortable not closing deals by day end" Ultimately, Joly understood he didnt need to beat Amazon to survive, but merely coexist alongside, and has proven exactly his point from its recent expectations beat.
  • Asked by Anonymous

    Leonard Tan
    Leonard Tan

    Top Contributor (Feb)

    83 Answers, 118 Upvotes
    Answered 4d ago
    It is hard to view Airline crashes as short term noise- as such incidences are few and far between and create sizable number of fatalities to generate international headlines. It can be argued going forward- the emergence of additional safety checks will add further costs to Boeing Aircraft production, spiralling costs down to Airlines. Furthermore, Airlines themselves will probably enforce stricter rounds of checks before flight takeoffs. The news might also frighten in SR people in that particular carrier and maybe other budget tier carriers, affecting sales of tickets in coming quarters. All these are things that will be priced in.
  • Asked by Anonymous

    Leonard Tan
    Leonard Tan

    Top Contributor (Feb)

    83 Answers, 118 Upvotes
    Answered 4d ago
    I would take the 10M because that would mean 10 years of ageing without stress- something I woudn't think I can achieve statistically speaking in this coming 10 years, especially stress free. Moreover I would forecast my coming years from then on to be more comfortable with greater financial stability. I can indulge in a mix of outsourced asset portfolio management, and dabble with my own equities trading myself as well. More importantly, I would also be able to persue more of my interests and take time out to travel the world while I am still relatively young and able. More or less I think I can make up for the loss of 10 years with the quality of my remaining years coupled with the $10M boost.
  • Asked by Anonymous

    Leonard Tan
    Leonard Tan

    Top Contributor (Feb)

    83 Answers, 118 Upvotes
    Answered 4d ago
    Just a little meme I found online:) But in all seriousness, I think a good simple reference point would be to look at Boeing before they announced their Airmax 737 model. I would assume instituitional and retail analysts then would have forecasted their future Cashflows based off that and priced in their stock. However that would not factor in the recent scare and fall in public confidence towards Boeing planes in general. This would be hard to calculate, but the good news is if you are looking to capitalize at an opportunity like this, the fall in public confidence is probably temporary in your opinion against the LR potential of the company. If so, unless you feel markets are underreacting to the current track of flight bans- or that the worst is not over, there already exists a good opportunity to buy into Boeing right now.
  • Asked by Anonymous

    Leonard Tan
    Leonard Tan

    Top Contributor (Feb)

    83 Answers, 118 Upvotes
    Answered 5d ago
    You could try things out on a stock investing simulator- but really trade with the mentality as though you are using your own personal savings. I think many people use simulators but ultimately dont find it useful because they don't feel the pinch. Ultimately, there is no one person in the world with perfect investing knowledge. Even Warren Buffet makes mistakes and has learnt plenty throughout his investment journey.
  • Asked by Anonymous

    Leonard Tan
    Leonard Tan

    Top Contributor (Feb)

    83 Answers, 118 Upvotes
    Answered 5d ago
    First of all, you must have a sizable capital(which I presume you already have invested in portfolio of stocks), of which a good amount is sitting liquid as cash. Furthermore you must be invested into good news platforms in order to take a postition quickly based off latest market news to ride swings and momentums. That is how I would do things if I were a swing trader. Like what Jonathan said- at the end of the day, it boils down to whether you are confident you can consistently generate returns from your investment strategy.
  • Asked by Anonymous

    Leonard Tan
    Leonard Tan

    Top Contributor (Feb)

    83 Answers, 118 Upvotes
    Answered 5d ago
    Working at a startup and being in charge of Employee Stock Options Programme before, I would say as the founder/co-founder, you would want your employees to take up as much stock as it is offered to them via the stock option. Otherwise, it goes to show they do not see value in being personally invested to growing the company. I would be interested as to their reasons if they take up less than what is offered and particularly concerned if they take up none at all.
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