Emails

(Copy of emails between two friends of mine - on 22 January 2008.)

Dear Warren,

The index closed below 22000 this morning. If Branicke announces some drastic strategies tonight e.g. immediate interest cut >0.75%, there will be a rebound tomorrow. Otherwise, the HSI will continue to fall tomorrow. The latter is in fact a good thing because rapid and deep correction will usually finish early. If you are not holding many stocks and your aim is long-term investment, I think you can start considering the following stocks if their prices fall further by another 5-10% e.g. 2628 (current price $28), 941 (current $110), 1800 (current $17.46), and 5 (current price $106). For myself, I have enough long-term investment from my xyz retirement funds/stocks. Now I am holding a lot of cash for short-term technical rebound - remember my "10%-RULE" if you want to play short term game.

What do you think?

GS

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Dear GS,

Bull market is dead.

However this will be a relatively gentle bear market so the magnitude of drop won’t be more than 50% from the peak. I guess a reasonable trough would be around 15800-17380 (~45-50% drop).

It doesn’t mean that HSBC will drop at the same magnitude to $75. If that’s really the case, it will be traded at PE of 7, PB 0.9 and dividend rate of 7.5% (similar to a cheap industry stock). I will beg/rob/steal/lend so that I can buy more HSBC shares. On the other hand, for those hottest stocks in hottest industries (Chinese insurance, property developer, retail), their share prices will vaporize by 60-80%. To me, the current prices for these companies are still exceedingly high.

10% drop from maximal gain usually means a few % cut loss from the capital because it is very difficult to gain 11% by speculation in bear market. That’s why most short term speculators will disappear at the trough of bear market when they become hopeless or cashless after repeated cut loss.

In fact the most difficult question is: how long will the bear market last? I have no idea but Joseph Yam (Monetary Authority CE) and Steven Green (HSBC Chairman) may give quite accurate estimation. Previous statistics suggests duration of 1.5 year and trough will be reached in 12 months time.

Warren

Conflict

If we take aside the name of the parties, we would find some similarity between our election and what's happening in Thailand.

Samak Sundaravej, the current prime minister, came to the power by a democratic election. He gained much of the support from farmers in the village and rural areas - because his policy includes major subsidies to the poor and less well developed parts of the country.

His opponents, who are largely middle-class in Bangkok and other large cities, tell another story. The subsides are no different from bribery for votes. (Some say Samak does buy for the votes.) Policies that are in favour of the poor also mean they put the middle-class people into disadvantage, and the voice of the latter group is never represented because they are out-numbered in a fair election system of one-person-one-vote.

Yes, you may say there is much corruption amongst government officials of Thailand. Nonetheless the conflict at hand is not because of a corrupted government, but that the current government, by her corruption or policy, harms a few badly but gives a trace of sweetness to many - with the officials pocketing all the margin.

Well, I decide not to declare there exists any difference in our own government - once I think of the recent happenings of Leung Chin-Man (梁展文).

PS. Another similarity is, of course, the presence of an ultimate power - the King Bhumibol Adulyadej in Thailand. I shall not elaborate further.

Communist

Dined with Jenny, my sister, on Saturday. We were again discussing who to vote on the coming Sunday.

"Are you going to vote for the lawyer's party ?" She asked. (Jenny, Louis - her husband, and I worked in three different sectors; all we could discuss was the Geographical Constituency and some general principles.)

Vivian gave me the same question some days ago. My answer has been rehearsed for so many times that it has become the official one: I do not have strong objection against nominal communists, but I shall never vote for real ones !

Alas, I have very little doubt that the objective of those barristers is a noble one. Nonetheless they are probably direct descendants of Karl Marx or Sun Yat-Sen without any evolution. Their ideals, if materialized, would be nothing but a road to serfdom - leading us to the Utopia of absolute zero.

PS. It doesn't necessarily mean that I shall support those nominal communists. A few of them are really things other than cream but rise to the top.

Poem

You consider my dream yesterday weired ? Not at all.

On a second thought, the Chinese man who should be most thankful for not being awarded with the Nobel Prize should be Lao She (老舍). (Well, he did not get the prize because the Nobel Prize committee only came to know that the famous Chinese writer had already drowned himself by the time they decided to give him the long deserved award. As you know, the prize is only meant for living people.)

Alas, if our great novelist did get the prize, he would certainly be asked to follow the footsteps of Cao Zhi (曹植) and demonstrate how to write a poem in seven paces: by the overjoyed audience or the Red Guards - who could tell ? And is there any difference ?

PS. Although the poem on bean and beanstalk is all too famous, our ancient giant of literature actually wrote two poems within seven paces each. Here is the other one:

兩肉齊道行，頭上帶凹骨。
相遇凸山下，欻起相搪突。
二敵不俱剛，一肉臥土窟。
非是力不如，盛氣不泄畢。

Don't be taken aback if you do not understand, Cao Pi (曹丕) didn't either. Otherwise there would not be the second one !

Performance

It comes as great news that Professor X, the prominent scientist of our country, is awarded the Nobel Prize in Chemistry this year.

Although he is not the first Chinese who wins this prize, he is certainly remarkable - he was born and educated in the mainland; all his work was done under the Republic College of Science, of which he is a fellow.

The government of the Special Administration Region is no less joyful. To allow the citizens of the SAR to share the happiness of the whole country, the People's Government has asked Professor X to visit Hong Kong - right after he's back from Stockholm with his medal.

You may wonder what the great chemist is going to do here. A scientific lecture ? Oh, that's beyond the comprehension of the general public. Our government has reserved the Hong Kong Stadium to welcome our distinguished professor.

And, the Nobel Laureate will be singing a few songs as well as showing the ex-colonial people his talent in chemistry.

How ? By vanishing the China Bank Tower, walking across the Victoria Harbour, and many more conjurations !

How thoughtful is our government.

You may think Professor X would not be all happy. On that, you are wrong. He finds it quite a relief - once he knows that his colleague who get the Nobel Prize in Economics is asked to demonstrate how to compare prices between local supermarkets, and the Prize in Peace winner to show how to settle an argument between certain Mrs. Yip Lau and the Long Hair !

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Oh, I just doze off in the middle of the performance of those Olympic medal winners. My apology.

Evaluation

Shared the same table with Y and TL during the farewell dinner of CSC. Our discussion inevitably fell on to the plan of revising the current system of our teaching evaluation.

For sure the problem began when the university tried to evaluate the quality of teaching of individual academic staff by the students. (We never dreamed of such a thing when we were undergraduates.) Well, there's nothing wrong with this assessment - except the fact that the evaluation was entirely by the students and, at least it appears possible that, the system favours lecturers who are good at telling jokes and giving tips during examination.

And Y, together with LY, was asked to consider how the evaluation could be improved.

Many of the recommendations are workable and entirely reasonable; I shall not elaborate here. The only courageous (as defined by Sir Humphrey Appleby) suggestion, however, is to take a video for one bedside teaching - yearly for each academic staff - for the evaluation by other colleagues within the department.

I gasped before the vibration wave of Y's vocal cord settled. (My face probably turned green - I hallucinated someone asked if I needed some oxygen.)

PS. On a second thought, Socrates would not survive with such an assessment: his tutorials would be nothing but kept firing questions to his students - without even knowing the answer himself !

Farewell

Went to the farewell dinner of CSC last evening.

To the surprise of many of us, we found our dean and two previous deans amongst the guests. Our previous Secretary for Education and Manpower remained handsome and full of humour; the only trace of aging was the wrinkles on the face - of his secretary. In contrast, I have not seen the surgeon after he's back from New Guinea. Is he an incubating Sir Arthur Conan Doyle or Futaro Yamada (山田風太郎) ?

(As the part-time endocrinologist himself commented: Old deans never die, they just lose their faculties.)

TW was certainly naive on this because each of them did make a short speech and everything became very artificial. I was about to come to the conclusion that the last tribute we paid to the retiring general physician was to give face and attend a dinner of this kind.

PS. There was also a saying that old teachers never die, they just lose their class. I'm sure our English professor has a class that will not be easily replaced by the younger generation.