5/01/2018

Big money invest in big biz, not in kachang putehs

Warren Buffett's Berkshire Hathaway, invested US$232m in a Chinese company, BYD, a Shenzhen-based battery and electric car maker. The $232 million investment in 2008 is now worth about US$2.1 billion.

“When you got over $100 billion, you’re looking at any big market. We can’t go into tiny markets and really deploy enough capital,” he said. “We want to invest money intelligently. And obviously, big economies and growing economies have the potential.” Warren Buffett Yahoo News

The above comment by Buffett is what investment with big money is all about, invest in big economies, in big companies. How silly it is to have hundreds of millions invested in kachang puteh companies in sick economies. How silly it is to invest hundreds of millions in low skill, low tech, low capital and low barrier of entry companies.

Guess what type of big investment funds, with hundreds of millions to invest, would do exactly the opposite of what Berkshire Hathaway is doing? Would anyone with hundreds of millions of dollars to play with invest in tontine companies, in low level engineering companies, in hawker centres, in bakeries, in low tech, low skill mechanical workshops or in tuition centres?

Buffett said, invest intelligently in big economies, in growing economies, and in growing companies. Growing economies and growing economies must be really growing not by shouting that the economy is growing, the company is growing when they are not, not when growth is fiddling with numbers, juggling with numbers to make the icing looks good but in reality a rotten apple, rotten economies and rotten companies.

Is it so difficult to tell whether an economy or a company is all hype and nothing else? Oh, there are fake growth economies and fake growth companies, just like fake degrees and CVs. There are many con men everywhere with slippery tongues.

Is there anything to learn from Berkshire Hathaway? Or is it too late?

26 comments:

Anonymous said...

Nowadays many foreign investors think bout investing in Sin City, they would think thrice. Look at Microsoft, Google & Facebook, would they think of investing in this tiny island where the white elites call the shot, maybe they would avoid it as if it's like a virus disease.

Speedwing said...

Uncle Redbean, your money and the money belonging to all Singaporeans are intelligently invested. Have no fear, Singaporean money has been well handled by clever and knowledgeable experts. People who can control the SAF can surely manage the wealth of Singapore. Redbean, please sleep easy, do not lose any sleep. Your money is safe.

Anonymous said...

" People who can control the SAF can surely manage the wealth of Singapore. Redbean, please sleep easy, do not lose any sleep. Your money is safe."

r u so sure? How bout the CeePeeFxx & HDB lease scheme?

Anonymous said...

#People who can control the SAF can surely manage the wealth of Singapore#

How bout aSSMrT Ceo Kuek? Did he manage well? How bout the Kim Yat Chung ex-CEo of NOL & current aSpH chief did he manage well ?

Chua Chin Leng aka redbean said...

Thanks Speed, for the joke.

Speedwing said...

No joke

Virgo 49 said...

Aiyo, now want to throw MONIES on What's Food Innovations. You can beat China's Wang Wang or PHeng Heang Tow Sar Peang???

Just because Our Poh Peang made some inroads long time ago. You must have foresight for investing in your own backyards or joint ventures with those in future futuristic industries like the electric car markers.

Create jobs For millions if not thousands not just hundreds. The Koreans even brought their own brand maggi mee to the remote African countries.Does Sinkies have the guts, preservances and contacts to market their food products? ?

Stay in City limits to even Tuas Industrial estates or Jurong Island also too far. Food businesses only for those countries that have no other sound manufacturing industries to feed their own population.

Just like many Taiwanese and Matland states with no economy activities, most are hawkers. Sinkieland wants to be First World City Hawkers???

Also, DONT put too much eggs in the MONIES lending or laundering businesses. If world economy in doldrums, Chiak Sai.

Anonymous said...

HDB lease scheme problem is one big issue that is a time bomb, as more and more older flats gets more difficult to sell, not to mention the fake myth of the flats appreciating in value due to upgrading.

Sure, most private homes are also on 99 year lease with the same problem, but this is not a problem for the Government to solve or be responsible for. Further, you can buy and sell private condos as many times as you like. Not with the HDB! The aging HDB flat problem is a monumental headache for the Government. Maybe only paper generals can solve it!

After squeezing dry the CPF of Sinkies with high price housing, and being led to believe in the myth that asset enhancement will add value to their flats, even as they get older, the truth is going to hit them like a ton of bricks.

Anonymous said...

Wi think temasick is investing in childcare and tuition center in a big way too. Like in Australia big economy with almost 500 million in childcare, a growth sector in Australia. But unfortunately in a wrong company so Kena kaput Lor. Knn what else to say.

Anonymous said...

The short lease of private properties especially in city areas would still have higher residual value as they are easier to rent out. But the fate at end of 99 years is the same.

Ginger said...
This comment has been removed by the author.
Ginger said...

@ Speedwing @ May 01, 2018 8:42 am:

Uncle Redbean, your money and the money belonging to all Singaporeans are intelligently invested. Have no fear, Singaporean money has been well handled by clever and knowledgeable experts. People who can control the SAF can surely manage the wealth of Singapore. Redbean, please sleep easy, do not lose any sleep. Your money is safe.


Speedwing, I will take it as a MAY DAY JOKE, even you can swear that it is no joke.

Alternatively, I will consider either you are still sleeping and having a sweet sunny day dream on a sunny island, or you are high on hallucinations drugs.

It will be less painful to imagine that the nest has no eggs. All swallowed by pythons. When you have a Jinx fiddling with your hard-earned savings, going round the world on a shopping spreed with cursory due-diligence (e.g buying Thaksin's telco Company, hiring Chip Goodyear, buying toxic banks' toxic instruments, declaring bankruptcy in China, etc), inly a pee-brain will give 100% confidence to such people.

When one sold NOL for a song after playing toy-soldiers with it and made losses after losses for many years, but the buyer turned it around and makes profits within one year, there can only be one conclusion about people who "can" run the SAF.

When SMRT's problems not only have not been solved but further aggravated with tunnel flooding due to sheer neglect, killing of own staff by the train due to neglect and train hitting train due to carelessness, there is only one conclusion about SAF Scholar Generals' ability in real life peace-time businesses. Don't need to talk about war-time businesses.

When SPH is being run by an ex-SAF General, it suffered a 25% drop in profits immediately, and a few of the newspapers had to close-shop.. Good track records?

Do all these give us confidence to their real abilities? The answer is quite obvious. NO!

Anonymous said...

How silly it is to invest hundreds of millions in low skill, low tech, low capital and low barrier of entry companies.
RB

Aiyo, sometimes no choice lah, because big business, high tech, high capital and high barrier entry companies may not want your big money lah. They want Warren Buffett's money, not your money.

So what to do? No fish, prawn also good lor.

No better talents want to come, so 3rd world degree holders, maybe even fake, also good lor. And not getting is also not an option. Not investing is also not an option.

Anonymous said...

When an idiot is given a bag of money to invest, he will invest not because there is a good deal but because he needs to place a bet, you know what will be the result.

It is betting and hoping to win. Buffett invest only when there is a good project. Buffett does not need to bet when there is nothing good to buy.

An idiot with a lot of OPM just places his bet, good or bad, never mind.

Anonymous said...

Right. The difference is investing with your money and investing with OPM.

Further, no one knows exactly how much is that OPM anyway, so transparent or not, just 'chin chye' place the bet and hope for the best. If by stroke of good luck the investment makes some money, there will be shouts and followed by a song and dances about it. If by stroke of bad luck, just like MRT breakdowns, they lose some money, they will just shrugged it off and tell us it is a 50 year thing.

So far, has anybody involved with GIC or Temasek investment losses ever been taken to task?

Virgo 49 said...


Silver Serpents and Army Boys are not acute and schrew business men. Their brains are square square only gives orders and takes orders. Like Mr Lim Tean said.Know how to made ends meet or not? ?

Not Ah Kong unlimited FUNDS and just throw MONIES at random.

Learn from Mr Lee Kai Chrrn, oops Mr Lee Kai Shin.

Invest and sold and made piles.

Not throw MONIES on bad and into drains.

Anonymous said...

@9:54 "Sure, most private homes are also on 99 year lease with the same problem, but this is not a problem for the Government to solve or be responsible for"

Private 99-yr lease NOT SAME as HDB 99-yr lease.

Private -- got land title deed. HDB -- No land title deed.

With land title deed, owners can own time own target call for enbloc. Even if currently not interested to enbloc, or enbloc unsuccessful ... it is only a matter of time before most owners will agree to enbloc when time is right.

Look at old Pearl Bank Apts --- residents there have been talking on & off about enbloc since 1996, more than 20 yrs ago. It is only when the current hot enbloc timing, and the realization by most residents that time is not on their side ... then they finally go all out to enbloc.

So far you don't hear about private property owners lan-lan just wait until end of lease & surrender to govt. They will enbloc & sell to redeveloper long before end of lease. So far the stories about houses being confiscated back by govt at the end of lease is all HDB or old SIT properties.

HDB is totally different --- only the govt can decide when to SERS or not ... becoz they are the actual land owner with title deed lodged with SLA. Your "deed" lodged with SLA is NOT land title deed ... it's only deed of lease of the specific apartment unit --- I actually saw my parent's original HDB hardcopy "deed" at SLA (must pay $$ to see).

With HDB flats, the only thing you control is when & how much to sell your own unit.

So far from 1965 to Apr 2018, only 4% of HDB properties got SERS. Each SERS cost about $0.5 Billion in both actual plus opportunity costs. So PAP will be VERY CAREFUL in calculating whether to have SERS or not. They need to project that new buyers will be able to cover at least 50% of the total costs.

Anonymous said...

There are actually quite a lot of 40+, 50 year old rental HDB blocks that are not SERS. Instead HDB has been renting them out to foreign workers & students. This is much more profitable & cheaper than redeveloping the land with new HDB, new shops, new infrastructure etc. Govt is probably waiting for these flats to become too old to even rent to banglah workers, then they will tear down & redevelop.

Anonymous said...

@9:04 "How bout aSSMrT Ceo Kuek? Did he manage well? How bout the Kim Yat Chung ex-CEo of NOL & current aSpH chief did he manage well ?"

You can mock or curse them all you want.

Hard truth is that they manage to collect more $$$$$$ than RB and all the readers here put together.

So the answer is YES, they managed very well ... but for themselves & their families!

Anonymous said...

The only way to solve this problem is therefore to push as many HDB owners to go private as possible, and for this reason, the government seems to be going all out to sell land to private developers to build more and more condos everywhere. Then the problem will go out of their hands for good for those who can afford that, while they still get back the land from private condo owners after 99 years.

It is a win win situation for the Government. By pushing up the prices of HDB flats they expect HDB upgraders will go private eventually, while at the same time private developers will bid high for the land to build more condos with the increasing demand. Foreigners will figure less in the equation for private housing eventually. They will only cash in and leave for good. This would be the likely scenario in the housing landscape in years to come. And the younger generation will have to pay the price for much more expensive housing for sure.

Cheap Government subsidised housing in Sinkieland is becoming more a myth than a reality.

Anonymous said...

/// Is there anything to learn from Berkshire Hathaway? ///

The shares of Berkshire Hathaway is listed in the New York Stock Exchange.
If only we had bought $500 million dollars worth of Berkshire Hathaway shares during the Great Financial crisis in 2009.
- we would have the investment genius of Warren Buffet working for us for the last 9 years ... for FREE.

But stupidity has no cure.

Anonymous said...

What d use of money when one is not happy.

Ginger said...

The USA has been secretly preparing for war with Iran. Israel will be utilized as the spearhead of this coming Middle-East War to test new weapons built by Israel and US over the last 10 years.

The aim of the war is the capture of Syria and to draw Russia into open and direct conflict and confrontation.

Kiam Chye Salted Eggs Buffet vs Lobster Bird Nest Buffet said...

Lao Hero //Warren Buffett's Berkshire Hathaway, invested US$232m in a Chinese company, BYD, a Shenzhen-based battery and electric car maker. The $232 million investment in 2008 is now worth about US$2.1 billion.//


Wah ... Jiak Buay Liao ...

Warren Buffett's Berkshire Hathaway shareholders (their family members, relatives, friends etc etc) can JIAK buffet (Las Vegas Lobster buffet, St Regis once a week dim sum buffet, W Hotel seafood buffet etc etc) every other meal and still have tons left over for property "buffet", holiday "buffet", flashy cars "buffet", retirement "buffet", education "buffet" (for their children or grandchildren) etc etc?

For some "shareholders" in some other "investment fund", also can JIAK "buffet" lah ... salted eggs and kiam herr and plain porridge buffet or plain bread with plain water buffet ... not "too bad" also ...?

Anonymous said...

(You can mock or curse them all you want.

Hard truth is that they manage to collect more $$$$$$ than RB and all the readers here put together.

So the answer is YES, they managed very well ... but for themselves & their families!)


u r the one who mock & curse at that aSmrt guy who just left.
Let the Universal Law of Cause & Effect do the work, mocking & cursing no use, if Heaven got eyes the effect would be seen in that guy n family asap.

It's so sad a young chap died of heat stroke few days ago cos of sadistic insane army instructors, the product of the local white elites leedershits.

Leo 81 said...

@ Mr Chua: “When you got over $100 billion, you’re looking at any big market. We can’t go into tiny markets and really deploy enough capital,” he said. “We want to invest money intelligently. And obviously, big economies and growing economies have the potential.” Warren Buffett Yahoo News


Good morning Mr Chua, below an attachment for your consideration to post in MSN. Thank you in advance.

Part 4: Firm's Objectives - Profit vs Non-Profit

Fundamentally, the management structure in Warren Buffett's Berkshire Hathaway is arguably the best incentive-driven to yield maximum returns, that is, investment-wise it is stable in the setup in relation to motivation and incentive to perform.

Warren Buffett and his right hand man bullionaire Charlie Munger are quintessentially significant sharehokders in their investment holding company and the classical economic theory of profit maximisation for firms fits in nicely.

But when there is significant "gap" in ownership-management relationship aka known in economics as principal-agent relationship, then economics theory has long acknowledged that the classical profit-maximisation theory would not hold but alternative goals of firms take precedence. It is especially so when executives KPI and incentives are "not non-perversely structured".

In such firms, not only is the classical economic condition (MR=MC) of profit-maximisation violated, some other objectives such as "SATISFICING" are deep-seated in their management corporate culture.

The performance-incentive relationship in such firms is essentially "not stable" and "distorted". One theoretical analogy can be in what is known as the Nash Equilibirum which is the cornerstone of Game Theory widely taught in or part of economic courses. Paramount to this concept is that the dominant strategy of both or all parties ends up in a Nash Equilibrium and no party has the incentive to deviate from it as it yields the best outcome for all. In short, it is a self-sustaining stable relationship.

But what if such a Nash Equilibrium is terms of the company structure is not forged and thus one party has the incentive to deviate from agreed goals such as profitability? One example is what happened in the risk-taking by executives in some financial firms leading to the last GFC in 2008. In their investment venture (or "adventure"), it was almost unmistakably "heads they win, tails they walk away" (often with a golden hand-shake). In a way, such "skewed-" incentives driven deep-seated culture is "perverse".

Arguably, the shareholdership-management structure in Warren Buffett's Berkshire Hathaway is far more superior and stable and creates almost always a win-win scenario for both management and shareholders.

Sadly, from the financial carnages witnessed in the last GFC, the corporate governance in terms of incentives structure in many firms are found wanting and the executives' incentives are often "perversed" than not.