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If you have any questions that you “believe” I can answer you can write it on my wall.

[A kind note from AhYap: Grammar and Spelling don’t matter as well. What’s really matter is whether I can communicate the message to you. Sorry for the lame excuse to not write proper English, kekeke.]

Does democracy really matter? Is it an important factor to the success of a country? Well most people believe so. For me, I don’t. It doesn’t matter. I will explain why it doesn’t matter and tell you the 2 factors that are really matter. Please give me the time to explain before your “religious” political believes try to block your mind.

Democracy means every people has the right to choose whatever they want, which bring us to another magical word freedom. Freedom to choose, freedom to do…

Most people think democracy is good because they think it is fair. But is it? Nope, sorry. Democracy doesn’t equal to fair, democracy simply means the majority win. If the decision is always made by the majority, how can it be consider fair to the minority?

Example: A family with 4 children can vote someone to wash the dishes, clean the toilet, throw the garbage, massage the other kids… The 3 old brothers voted the youngest brother to do all the job. So everyday they vote the same, so everyday the small boy will be bullied to do everything for his elder brothers. Is this fair? Nope. But this is call democracy and this is the weakness of the system.

Now the second thing is, there is no such thing as 100% freedom. 100% freedom simply means 0 freedom. Why? If everyone can do whatever they want, they will definitely do something that you don’t want them to do. If a man can do anything they want, they can rob from you, they can rape your woman…

Freedom never exist, the closest thing to freedom is just half freedom. You can do this, but not this. Everyone can drive on the road but you need to obey the traffic lights. You can speed but there is speed limit. You can sing Karaoke loud but after please shut up after 12. So if there is no such thing as 100% freedom, democracy simply cannot be freedom. It cannot be something that never exist.

Now, the most scary part on why democracy sucks. If you give a man the freedom to choose, most people will choose a foolish or selfish choice. If you let your son choose whether he wants to play PS3 or study, what will he choose? If the government let the people decide whether they want to pay tax or not, which will they choose?

As written in the Bee and the Fly post (please read if you haven’t done so yet), most people on earth are flies. So if you give them a choice between honey and shit, what do they choose? SHIT!!!

That’s why democracy doesn’t really work that well, at least it doesn’t matter at all when it comes to determine the success and prosperity of a country. So what’s really matter to a country? Two things – VISIONARY LEADERS + GRIP OF POWER.

The best examples are China and Singapore. China has 0 democracy but they have full grip of power and they have the most visionary leaders in the world. Singapore is a “democracy country” with an “emperor”. The old one was Lee Guan Yew and the new one is his son (passing throne?). And both of them are visionary leaders with full grip of power, they can execute all the plans without interruptions/distractions from the opponent. Their country prospers.

Malaysia? We used to have an emperor for 20 years who have full grip of power. Yet, he lack the first factor – VISION. We do have something call “Vision 2020” but that is better known as “Dream 2020” [Dream is something that you hope is real but is not].

A leader with full grip of power and yet not visionary can be very destructive to a country. Look at our own country, look at Myanmar who is lead by a junta (at least they don’t have snatchers and don’t need to live in iron grilled house and you can jog around the street 5am in the morning and leave your bag unattended in the airport while you got to the toilet), look at the pre-reformed Indonesia under Suharto. Indonesia now has visionary leaders with grip of power. India has one now. Malaysia?

There might be visionary leaders in Japan, but none of them have a firm grip of power. They change their prime minister more often than we change our car lubricant. Japan has had 0% interest rate for so many years because they still can’t find a way to boost their economy yet. Without power, no matter how visionary you are, you are useless. Abdullah Badawi might be more “visionary” than the other prime ministers but he didn’t have the power. So as Tengku Razaleigh.

Look at Thailand, a democracy country. It doesn’t matter. Instead, it is too democracy and too much freedom that everyone can wear red shirt and go BBQ your car on the street [freedom?!!]. As I say, too much freedom = no freedom. If everyone has the freedom to voice their dissatisfaction, there won’t be any freedom for others. There is no one that is 100% satisfy with anything. Look at Greece, the origin of democracy!!! What happened to them now?

We live in a world that everyone has their own thought. What you want is not what other people want. This has been discuss in my post why the world cannot be perfect with thousands of examples (please read). If A wants X and B wants Y, how do we decide? How to be fair? The democracy system try to address this by letting the majority win. But as I have said, how can this be fair to the minority? Can an Indian be the Prime Minister of Malaysia if everyone votes? Dream…

Not only that it is not fair and as inspire by the story of the bees and flies, most people are FLIES and they only want to eat SHIT. They make foolish and selfish decisions when they can choose. Ask everyone should we just have 4 workdays and 3 rest days. Or even better, 3 workdays and 4 rest days. Or maybe just don’t need to work and get pay by the government.

That’s why the brutal truth is that, you can’t let people choose too much for their own good. This didn’t sounds good to the ear but unfortunately it is the reality. Most people don’t have the discipline, they are still like kids. Be democracy and let your kid choose whether to go to school or go to play and see what he chooses.

Take Singapore as an example. This country has one of the strictest rule in the world with the most heavy punishment for all sort of offences. Littering is one of them. You can be fined thousands of dollars and asked to sweep the street wearing colorful T-Shirt. I am sure they have the less littering problem in the world BUT still everyday the government can collect thousand of fines from littering and every week you can still see people “volunteer” to clean the street for free. Why? Most people are stubborn. Most people cannot discipline themselves. You have to really kick their ass and let them feel the pain before they can wake up.

Democracy has failed miserably in many European countries. The government can hardly do a shit because the flies people are too strong. In America, most news are political news, a lot of time and effort are spent by the leaders to strengthened their grip of power, instead of how to make their country better. This is similar to all other democracy country where the leader need to focus their energy to fend off their opponents. [Just see how much effort and time is wasted by BN and PR to attack each other before they can do real things for the people? See what happened in Perak assembly?]

Why we can always hear story such as China can build a new hospital in 2 weeks, build hundreds miles of railroads in a year, execute a disaster rescue plan within hours … and yet why Malaysia need 6 years (guaranteed to be extended with over budget) to build only 60km MRT network from KL to Kajang?

Without the grip of power, nothing can be done. Politicians will need to spend their effort on protecting their rice bowl. China and Singapore doesn’t have such problem. They can focus on doing the right thing all the time. So they can have full efficiency and productivity.

With the grip of power, you need to be able to do the right thing. And this rely on the ability of the leaders. It may depend a lot on “luck” and Singapore and China has been very “lucky” so far. Leaders with grip of power and yet not visionary (or brutal) can be very destructive to their country and even the world. Look at North Korea. “Same” government system as China with strong grip of power and yet lacking visionary leaders.

Any suggestions for Malaysia? Sorry none. At first I got high hope when Najib took the seat. He can easily have the grip of power and at first he is able to do a lot of right things, but after the last announced budget…

How about our opposition party? They first need to worry about the power, then only then can do things. But who and how many can be the visionary leader(s)? haha. You think yourself.

Pakatan Rakyat announced their missions to be accomplished within 100 days if they win in the coming election. Please bear with me that I don’t really read newspaper so I only got a few points from glancing that day.

- Raise teacher salary by RM500 each
- Waived water bills
- Waived toll!!!

How interesting? Why they offer to do such things? Because they don’t even have the grip of power! They need to offer sweets to flies rakyat in exchange for the power. Of course all flies rakyat will be happy to get those shits sweets but those are not what visionary leaders will do!!!

Did Singapore waive toll fee? They build more tolls. If our leaders are visionary, they should focus on the traffic jam issue and the poor public transportation system. Not waiving toll! Why still need to “touch” then only can go? Why can only reload on so little places? Why no setup some side reload station upon the road so everyone from every entrance can reload instead of just somebody who enter at specific entrance?

I rode KTM for 3 times and it broke down twice. For the one severe broke down, I got free sauna for 1 hour inside a sealed cabin with no aircon and I can see my sweat dripped on the floor. If you already have traffic jam when you need to pay, what if you don’t need to pay? More cars will be on the road.

Did Singapore waive the water bills? They increase their tariffs. They spend so much money on creating their NEWater from shit water. Why? Because the government is visionary. They don’t want to rely on their neighbor for water but on their own. For us? We take things for granted. Free water will only create more water wastage.

Singapore did pay teacher very very fat salary but that is because they pick the best people to become the teacher! Can you increase someone teaching ability by simply paying them more? No, it has to start early with a lot of planning and choosing. There is no magic pill worth RM500 that can do that.

If you look at the history, most prosperous country are usually lead by strong king/emperors with strong grip of power. And to get that power, a lot of people have to die including killing their own brothers and sisters and anyone that is consider a treat. In the modern world, the treat is the opposition party.

Is there any hope for Malaysia? Let’s look at what rakyat we have right now.

1. Rakyat who simply don’t care 
2. Rakyat who care but don’t know what to do or lazy to do (AhYap)
3. People who care and thought they know what to do but actually THEY DON’T KNOW!!! [Most of our politicians]
4. People who care and know what to do but don’t have the power to do. [Abdullah? Kuli?]

Unless the fifth type of rakyat appear, we might have some tiny hope.

5. People who care and know what to do and have the power to do.

Who? Who? Who? Masih tak ada lar bang.

And what did I do? I invest all my money in China (learn why) . And if our country become unsafe one day, I will migrate to Singapore.

Am I selfish? You can say that. But this is a reality to me. There are so many things happening within the 27 million people in our country and how can you possibly control all of them? I once read an article that said why many people choose to leave Malaysia instead of asking the trouble makers to leave? Wow wow, tell me how to ask a snatcher to leave. Tell me how to ask a corrupted cop to leave. This is their heaven. If you can’t change them, change yourself. It is more easy to change one man (yourself) than to change 27 million people.

And how can 1 man AhYap changes something when there are only 9 people who LIKE AhYap.com in Facebook?!?!?!?!?!?!?!?!?? Click the LIKE button now damn you!!!

As a newbie myself (owning an SLR since March 2010), I am surprise to find that most teaching materials for beginners are “exposure”. But after what I have gone through, I think the first thing to learn for a new SLR shooter is not exposure but something else. 

Exposure is something more technical and dry. Taking pictures are supposed to be fun, so as the learning process. I believe the best way to learn, is to start shooting immediately, come home, get disappointed and upset because your pictures don’t come close to anything seen in the magazine, and while blaming the camera for AF issues and suspect you get a bad copy, you start to admit that it is your own problem…

STEP #1 – LEARN HOW TO NAIL THE FOCUS

Please don’t bother about exposure (yet). Leave your aperture, shutter speed and ISO a side. Just set your camera to Aperture Priority (Av) mode and set it to the smallest number and shoot everything from that setting. I will explain why later.

Now, the first surprise many beginner SLR shooter encounter is that they notice their shots are not as sharp as their snapshots from the cheap point and shoot camera! How the heck it can be. You spend more money on the bigger and heavier SLR and it get lousier pictures than your compact camera?!!!

Point and Shoot camera doesn’t require you to have good focusing skill because no matter what you do (ok, unless you know how lar), you will have everything sharp from the foreground to the background! But for SLR, you have a choice to decide which part of the picture to be sharp and which part to be blur. I think you know that!!! That is the reason why we want an SLR, we want some part of the picture to be blur!!! Which I think you know is called bokeh. I repeat, most of us upgrade to SLR from compact because we want the creamy bokeh!!! [And this is the reason why beginners should shoot everything with the smallest number aperture to get the maximum bokeh to play/enjoy with]. Come on, you are paying for the bokeh man!

So the very first thing to learn is not exposure BUT how to focus so we can decide which part of the picture to be sharp and which part to be blur. When you bought your new camera, it will come with a default setting that assume you are an idiot (which is a good assumption) and so all the settings are meant to be used by idiot (especially the little green box icon). You won’t need to set anything. The camera decide everything for you. How cool!

Depending on what brands and what model, your camera will have different number of focus points for you to use. Most Canon models come with a 9 point auto focus system including the high end 5d Mark II (sob.. sob…).

Now in idiot mode (default factory setting), the camera will decide which points to use. “Usually” it will focus on the nearest subject. For example a girl with very huge breast, the breast is nearer to the camera so it will focus on the breast instead of the face. So the breast is sharper than the face. [Don’t laugh, this is true, just go to any forums with newbie shot on car show models. But some told me it is their intention to focus there and not miss focus...]

This is call something like “multi points selection”. There will be a lot of hit and miss, we want full control of the focusing so we will work another way round.

If you are shooting a crop sensor camera (Canon 7D and below, Nikon D300 and below, all Olympus and Pentax…) and you are using a zoom lens, forget about the extra focus points, you don’t need them, the more is not better here. All you need to do is to change to single point selection and just use the center point for all your shots and use the 1 million year old strategy known as FOCUS and RECOMPOSE.

[Something to ponder: Just because your Ferrari can speed to 300kmh doesn’t mean you have to… Just because you have 49 focus points doesn’t mean you need to use them all…]

Using the center focus point, you point at the subject you want to be sharp (face or breast, your choice) and half press your shutter button to FOCUS. Then you RECOMPOSE your picture by moving your subject to anywhere you want in the frame and fully press the shutter to complete the shot.

I have tried this on a few thousand shots and can nail down the focus 100% of the time [ok lar, 99%]. Why focus and recompose work? Because crop sensor has less “blur” (bokeh) than full frame technically and the best zoom lens has the maximum aperture of 2.8 [most others only 3.5 to 5.6] and so the “blur” is not strong enough to make your shots off focus using this method.

Focus and recompose won’t work when your gears has autofocus issue technically [no method will work other than sending back for service]. Focus and recompose becomes tricky when you are using Full Frame cameras (5d2, d700…) or when shooting with primes with very big aperture like the 50mm f1.8.

But since you are newbie, it doesn’t matter now. Just use the center point and do focus & recompose, focus & recompose, focus & recompose… and start to get impress with your 100% success rate.

STEP #2 – LEARN HOW TO USE WHITE BALANCE

As I said earlier, exposure is not the first thing you need to learn to shoot good picture, it is how to focus so you can decide which part of the picture to be sharp and which part to be blur (bokeh/soft/whatever term).

The second thing to learn is still not exposure yet, it is white balance. White balance (WB) can make a dramatic difference to your picture. But again, if you rely on Idiot Auto White Balance (AWB) setting to do the job for you, you will scratch your head and wonder why your shots are not as nice as other people.

White Balance is also known as Color Temperature. What you need to know is that YOU as the photographer must decide whether you want the picture to be more ORANGE/YELLOW or BLUE. It is called color “temperature” because it lets you decide if you want your picture to feel more warm [orange/yellow] or more cold [blue].

Camera white balance settings have funny names like shade, cloudy, tungsten, etc… that doesn’t tell you exactly what they do. Disregard of the name, they either do 2 things – add more orange/yellow or add more blue!!!

Shade – Add lots of orange/yellow
Cloudy – Add some orange/yellow
Daylight – Neutral, add nothing
Tungsten – Add lots of blue
Fluorescent – This one weird a bit, it adds something like magenta mix with something else… beginner just forget about this first.

Now here comes the MAGIC for you to shoot great pictures better than your friend who bought the camera together with you!!! In daytime shooting outdoor, do not use AWB but choose either cloudy or shade. It will add a warmer feeling to your picture that will instantly look better than AWB. Human skins look a lot better when they are warmer.

As a photographer, you want to take good pictures, not correct pictures. AWB might give you the correct white balance, but it didn’t give you the good white balance. We as photographers don’t want to fall in the trap of "correct” white balance, we are artist, we want the “creative” white balance, the one that make the picture POPS.

Now, testing your understanding, if you are shooting a sunset, what white balance should you use? Tip: what color do you want to add to your picture? More tips: You can only add 2 colors, Orange or Blue? So which one?

Add ORANGE. I hope you get it right. Which setting give you the most orange to add? SHADE!!! Set your white balance to SHADE and you get beautiful orange sunset!!! If you have shot with AWB, you may be so disappointed that you will want to sell your SLR the next day on lelong.com.

Do you know why all the kung fu movies like Ip Man and Wong Fei Hoong can give us a kind of vintage/retro/back-in-time kind of feeling? Because the movie creator add ORANGE (warm) to the movies. Because old movies has this orange tint, new movies made with this orange tint will immediately “trick” our mind and bring us back in time. Black & white and sepia tone have the same effect. There is no color in old pictures and movies. So they always felt vintage to our mind. Steven Spielberg best Oscar movie Schindler’s list is made in black and white! Why? Trick your mind to feel back in time.

At night under tungsten light, everything appear very orange. Our eyes will tune to it and won’t notice it. But once you put it into a picture, it will be very orange. So if it is very orange what color do we need to add to “balance” it? BLUE! We want to add blue. So we choose the “tungsten” setting.

But due to too many types of tungsten light in the world with totally different type of orange… the best setting when shooting indoor at night, is still using the idiot mode – AUTO WHITE BALANCE. Wakaka. It can get the white balance better than manually selecting tungsten or fluorescent.

Another example of creative white balance in action.

KKTan won the best picture of 2009 in PhotoMalaysia competition which this WOWing picture. Everyone will WOW. If you have shoot this scene with AWB, you won’t get the WOWing effect. So now, tell me, what color do you need to add to the picture? What is the best white balance setting to add that color? TUNGSTEN!!! You need to add a lot of BLUE. You use TUNGSTEN!!!

Good camera will allow you to select the exact color temperature you want in Kelvin, small number means more blue, large number means more orange. If you dial in say 10,000K to it, you will get very orange sunset.

Shade, Cloudy or Tungsten are just labels and they are actually just a Kelvin number. Depending on camera brands, Shade is around 7,000k, Cloudy 6,000k and Tungsten 3,500K. If you manually select your temperature as 7,000k, you get exactly the same result as choosing shade.

Camera makers have labeled them with names on when you should use it, shade when sky is shady, cloudy when sky is cloudy, etc. But it make more sense to understand what they do, as simple as “how much orange or blue do you want to add to your picture?”

And now if you look at your pictures (either on the LCD screen at the back of your camera or your computer) and notice that the picture looks BLUE, you now know you need to add in some ORANGE (warm it). On the other hand, if it appears ORANGE, you need to add in some BLUE (cool it).

All beginners will shoot in JPEG unless you are those geeky one. JPEG still allow you to fine tune your white balance in post processing (with computer software like ACDSee Pro, Lightroom, Photoshop, etc). Once you start to shoot more and appreciate the fact that white balance can make a dramatic difference to your picture, you may want to consider shooting RAW because RAW allow you to change your white balance later in post processing, which means you have 1 less thing to worry about when shooting. But still, for beginners, start with JPEG first and move to RAW when you understand why you need it because for everything you get, there is a price you need to pay, same for shooting RAW.

Conclusion

You see, for beginners, exposure doesn’t matter (yet), to let you fall in love in photography more, you need to be able to shoot more beautiful pictures quickly (at least better than your old point and shoot) and to do that, you need to know how to focus properly to get sharp picture (along with some bokeh, keke) and choose the most creative white balance to make your picture pop.

More to come later!!!

Namewee wrote a new song “fuck racist”. I am not judging him but just feeling a pity to him. Long long time ago, I already know he will have a hard road ahead due to his ‘strong’ character. He will sure to have more troubles ahead after this song. You will be able to follow the news yourself as the newspaper will magnify it 1,000 times. I am not linking the video here and I wish it will be removed (and will not be uploaded again by others) and hope that the news will cool down.

I hope you can really learn something helpful today. Back to the original post…

It would be better if the article title is “to diu or not to diu”, inspired after listening to NameWee new song, “DIU”! Diu is the Cantonese for fuck while diao is Mandarin.

[For non Chinese reader, the song is a revenge from NameWee to MyFM because they refused to broadcast his ads due to his ‘incorrect’ Chinese slang. He also condemned local Chinese who don’t protect their own local slang but instead pursue China and Taiwan slang]

Listening to the lyrics, this raise a question/dilemma/conflict that almost the 6 billion people on earth have encountered – to diu or not to diu?

Ok, it has nothing related to sex. 

It is about making the “right” choices when we need to decide whether to DEFEND or to COMPLY.

Defend what? Comply what? ANYTHING! From cultures, to values, to slang, to personal taste, to watch Ip Man or Iron Man, Chinese girl friend or Thailand girl friend…

Because when we deal with people, we will have different opinions. Should we defend our stand or should we comply with them? i.e. to diu (defend) or not to diu (comply)? You wan to watch Ip Man but your kids want to watch Iron Man, so which Man to watch?

In this post I am not talking about the big things that we need to defend, such as if your uncle want to borrow money from you to bet legally on world cup, you better not comply. [If I borrow from you, you should comply] Or a stranger ask you for your car key so he can drive it away, you better run away. And if an muscular man want to rape your ass, run!!!

I want to talk about simple things, like “should you follow someone slang?”. If you speak to an Australian angmo, should you use their slang or your Malaysia slang, or should you insist them to use our Malaysia slang? If you speak with an Indian, should you use Indian enge-lish sla-an-gg? If you are in China, should you speak Beijing Mandarin? Or they should speak Malaysian Mandarin?

And when you shake hands with others, should you make a strong grip or a soft grip? Do you feel offended when someone offer you a soft grip and you thought the other guy doesn’t give you a shit? This is very common, I have always heard people telling me that who and who is very lansi simply because that guy/girl (especially girls!) doesn’t shake his hand the way “he” wants it. [lansi = sombong = proud]

Or have you talk to somebody that will never look at you? [I’m one of them] Will you get pissed off.

These problems arise because almost everyone are conditioned to activate the DEFEND MODE without making a conscious choice. Their past conditioning of life taught them that the “right way” for other people to behave is to be the same like us.

When you talk to someone and you like to look into their eyes, because you believe by doing that you are showing respect to him, then if that guy doesn’t look back to you, you will feel like he doesn’t respect you. Because other people must behave the same as me to be called “right”.

Everyone told us that when we shake hands, we must grip hard hard to show our sincerity. But if some one just touches your hand without gripping you, you felt disrespected! Unconsciously, you always want other people to be the same like you, to act the same way you do. You get pissed when they don’t do want you want.

Huang Ming Zhi get pissed when other people are not happy with his slang, when the local are not defending their slang.

We will have a lot of conflicts when both parties activates the DEFEND mode. Ming Zhi insisted on his slang with MyFM while MyFM insisted that his slang is “wrong”, so this song came out as a counter attack.

When they choose “to diu” instead of “not to diu”, the consequence is always, “bei yan diu” again [fucked back]. They will just “diu lei diu hui” [you fuck me I fuck you].

We doesn’t know that there is another mode we can operate in – the “not to diu” mode, the COMPLY MODE.

COMPLY doesn’t mean you are surrendering! COMPLY doesn’t mean you are the loser. Actually if you can see the whole picture after this post, you will know the party who COMPLY is the winner which have the ability to control the final outcome! By complying, you get the most for yourself!

Why is that possible?

The NLP gurus realized that “people like other people who are like themselves”. Which is the problem mentioned earlier, which irony is also the solution.

We get pissed off by small thing like SLANGGGGGG or a handshake because we like other people to be like ourselves. Which means, we dislike other people who are not like ourselves. 

If he doesn’t shake hands my way, I dislike him.

If he doesn’t look into my eyes when talking to me, I dislike him.

If he doesn’t speak my slang, I dislike him.

If I smile to her and she doesn’t smile back, I dislike her.

If he swings his leg non stop creating an OSIM chair effect for me while I sit beside him, I dislike him [because I think swinging legs = no manners].

If someone talk very loud to me, I dislike him [because loud = disrespect].

But these are all mind made stories that we are conditioned to believe ever since we grow up, by our parents, by our teachers, by friends and even strangers. We carry them unconsciously. If our brain is like a computer, we have this software/virus installed in it without knowing about it.

When you realized you have this software installed in you and everyone else around you, you have an edge. A super edge that make you a winner.

[The name of the software is called “People like other people who are like themselves. People dislike other people who are not like themselves”. It is too long, so we call it PLOPWALT-PDOPWANLT. What a cool name!]

The Solution

#1. When you realized you have PLOPWALT-PDOPWANLT installed on you, you now have the ability to shut it off [uninstall it].

#2. When you realized other people have PLOPWALT-PDOPWANLT installed on them, you now know how to make them happy!

I need to clarify our objective when dealing with other people before I continue elaborating the PLOP-DOP shit.

What is our objective when dealing with other people? What is the outcome we want?

We want other people to like us, to love us! People will like us when we can make them happy! If we can do something to make other people happy, we know we are doing the “right” thing! And how to make them happy by doing the “right” thing?! That’s all about PLOP-DOP! People will be happy if we are same like them! 

But if you look around, you will notice that most people objective is not to make other people happy, they only want themselves to be happy. This is not wrong because everyone wants to be happy. But the problem is if you want yourself to be happy, you almost always do it by insisting that you are “right”. You will want everyone to do things your way so you can be happy. The outcome you get is always unhappiness.

Everyone wants other people to be like them and most of the time, they won’t get it, so they DEFEND, they diu back. They hope that by diuing them, they will COMPLY. But this is always not the case! The other party get pissed and DEFEND and diu back. So they keep diuing each other, making everyone unhappy.

Who is the winner? Are you the winner when you diu people? If both parties also unhappy, both parties are the losers.

If we are able to make people happy, many magical things will happen. If you like a girl and if you want her to be your girlfriend, do you think making her happy important?

If you want to do business with someone, do you think making him happy important?

The skill to make the other party happy, is to learn how to COMPLY. How to switch off the PLOP-PDOP in your head and how to “take advantage” of the PLOP-DOP virus in the other party, instead of falling into it yourself.

If you are a guy and you saw a girl that you like and when you shake her hands, BE SENSITIVE! There is no fixed answer on whether a hard grip or a soft grip is the “right” grip!!! The RIGHT grip is the grip that she gives you!!! If she hold you tight, you return a tight grip, but you will be surprised that most girls, unlike guys, give soft grip, or even just touching you by the finger! You do exactly the same as they do, based on their “right” way to shake. You comply with their “right way”. You do not insist on your own “right way”. You don’t get pissed off when the girl just touch you with a finger. Don’t get caught up by your own PLOP-DOP! Feed her PLOP-DOP instead!!!

You apply this PLOP-PDOP technique on everything you can apply on! If you notice she like to stare at you when she talk, do so, stare back. If you notice she is shy, you don’t stare like you are watching porn on your computer! If she speak loud, you speak loud. If she like to swing leg, you swing!!! If she like to say “diu”, you also “diu” back!!! Don’t say, “aiyer, why this girl say diu, so rude”. You may not like her to say diu but if you want to make connection with her, want her to like you, you do what she does.

Remember your job is to turn off your own PLOP-DOP and feed their PLOP-PDOP!!! Trick them, take advantage of them, even abuse them. Take full control!!!

The other party will be like having magic moments with you! They will feel like they know you from the past lives! Like instant best friend.

[If you have forgotten, PLOP-DOP is the short form of PLOPWALT-PDOPWANLT and is then the short form for “People like other people who are like themselves. People dislike other people who are not like themselves”]

The term in NLP for describing this kind of magic connection is called building rapport.

The more you practice, the more ways you can apply the technique. If that guy like to drink Tiger but you drink Carlsberg, what do you do? Drink Tiger lar, at least for the first impression (the initial rapport building). 

If somebody has some weakness such as can’t talk smooth like “she.. she… she… go… go… go…” you too need to IN SOME EXTEND try to mimic his style of speaking! Of course you will need to be very careful not to make him feel humiliated. At least you need to talk slow and follow his tone. For a guy who can’t walk smoothly, at least you need to follow his steps and pace.

There are too many things you can mimic. Walking steps, like army, LEFT … LEFT … LEFT RIGHT LEFT … which leg to cross? left leg, right leg? high cross, low cross? Some people like to touch nose when talking, you touch too. Some people like to put one hand scratching his head in 90 degrees! You do too.

Follow the slang, follow the language. If you are dealing with Western people who will hug each other and kiss on the cheek, do that! Do not insist on your own value and your own “right way” to do things! Turn off your PLOP-DOP, feed theirs! I am not asking you to kill people, this is merely greeting. If you are a girl and they want to kiss your hand, let them!

In quantum physics terms, these are explain by energy and frequencies. Things that shared the same frequency resonance together and become one. Both are now connected.

The magic is, when you feed enough to their PLOP-DOP creating the resonance between the two of you, miracle happens. Since both of you share the same frequency now, you can start to control him/her without her even knowing it!

You may say, “Let’s try some Carlsberg now.” And you will be surprise that he will no longer insist on his Tiger!

You may be talking business and you suddenly ask, “So how is my selling price? Cool for you?” and you will be surprise that he will say, “Ah! Consider that done! Let’s get back to your Thai girl story…”. [assuming your build rapport by talking about girls]

“Let’s have dinner tomorrow?” You don’t even need to play the choice trick here since you already built rapport with her, she will be very comfortable saying YES!

Have you seen how powerful this technique is? In ugly terms, like the choice trick, we are trying to take advantage of their weakness that they are unconscious about.

Viewing it in beautiful terms, we can say that we can trying to get what we want by making them happy. And most of the time, what we want is the same like them – happiness. If we can give happiness to other people, we will have it ourselves immediately. 

One of the most easy way to build rapport with a Chinese is the dialect we speak. We have Mandarin, Cantonese, Hakka, Hokkien, FokChow and a billions of others … If you hear someone speaking Hakka or you know he is a HakkaMan (friend of Ip Man and Iron Man), just go to them and speak Hakka and the rapport will be built almost INSTANLT. Chinese have very strong attachment to their dialect and their root of origin (not the 6” root).

Without challenging the value of remembering our origin, I just want to point out that this can be a weakness because someone with a bad intention can easily make you like him and take advantage of you. I have seen this so often with my dad. When he deals with someone, and they can speak Hakka, hua la!!! They become “instant best friend” can make quick deals. The car mechanics will be able to ask my dad to repair this repair that, change this change that because my father trusts his “bestfriend” so much just because he can speak Hakka! Hokkien says, Kakinang. [Orang sendiri, own people] 

Remember that since it is a technique, it can be used to do good things and bad things. Conmen are powerful user of this technique. By knowing it, it can also protect us from bad people trying to take advantage of us. We won’t be so “shock sendiri” by just because someone is speaking our dialect.

Because culture, language and dialect is the fastest way to build rapport. I believe it will be a good advantage to teach Mandarin in Malay school. By doing this, there won’t be so much misunderstanding between Chinese and Malay. It is very easy for Chinese to “connect” with Malay because Chinese knows a lot about Malay and can comply with them (and as I say, the one who COMPLY will later be able to CONTROL). But it is very difficult for Malay to comply with Chinese because they don’t even know what the Chinese is speaking and thinking or even just to read a business sign board! Chinese have been living here for 100 years and it is really really very shocked that almost all Malay can’t speak simple Mandarin or recognize simple Chinese words! The more the Malay DEFEND, the more they lose. This should be very clear now.

Ok, no more politics and racial issues. Let’s get back to dealing with people around us.

If dialect is a quick way to build rapport, what else?

They are the rude words! The quicker you can use rude words (or vulgar words or whatever) with a stranger, the quicker they like you!!!!!!!!!!!!!!!!!!!!!!!! [applicable to people who use rude words only which luckily consist of a big portion of our species]

If you know a guy who like to use “Ma Hai!” [Mother’s Hai] You just go and shout it at the same tone and the same slang like him. He will magically like you. Be it “Wah Lan Diii!” or “Chow Cibai” or anything else since you are probably more expert then me in this field. Remember, the “right” thing to say is the thing the other party like to say.

People who are thought that they are “religious” and with “high value” will have problem complying. These are fake people. Because someone who is really religious and with high value will have no problem complying. The real story below illustrates this -

Master Sheng Yan was on a flight and he sat beside a pastor.

The pastor said to him, “What a waste, talent like you should be in the ‘right’ religion!”.

Sheng Yan asked, “What is the ‘right’ religion?”

The pastor said proudly, “Of course it is Christian!”

And Shen Yan answered, “That’s right! You think Christian is the ‘right’ religion, so you are a Christian. I think Buddhism is the ‘right’ religion, so I am a Buddhist!”

The pastor is very impressed with the answer and they continue to have good conversation on the flight.

Master Sheng Yan didn’t DEFEND and say the pastor is wrong. He instead COMPLIED with the pastor and agreed with him that Christian is the ‘right’ religion. And by doing so, he is able to build the rapport and make strong connection. At the end, he can CONTROL and makes the pastor happy to accept that Buddhism is also the ‘right’ religion.

So if you think you are “religious” and your “value” is very high that you can’t hug a western woman, here is another story.

Master Hui Lü went to a family house for Dharma teaching.

The women was new to Buddhism and she didn’t know that monks are vegetarians (I hope you know!).

As an appreciation, the women took a lot of time to prepare the dinner for him for coming by, with LOTS OF MEATS!

At the beginning, Hui Lü was able to just pick the vegetables among the dishes, skipping the meat, but later he was served a bowl of chicken soup!!!

So how? He is not supposed to drink based on the “religious value”. But surprisingly, he drank it! Why? Because he understands PLOP-DOP! If he defends, the lady will be unhappy and he would have hindered a person for following Dharma which is not good for the lady. He COMPLY for the good of the woman and later he can CONTROL by teaching her Dharma since she is happy. You can’t influence someone who dislike you. But when someone like you, he will listen to you. Remember PLOP-DOP!

If you are stubborn and inflexible, you will have to eat a lot of “hard shits” in this life. You think you win when you diu back (defend) but at the end what you get is more people diu you back (attacks). Only by not diu back that you can take control.

Based on what Huang Ming Zhi is doing now and in the past, he will have a tough road ahead. He always wants to defend himself. I hope he won’t wrote a song to diu me just because I say so!

To bring this story to the extreme, let’ see how Liu Yong teaches his own daughter. (Liu Yong is a popular Taiwan author with lots of lots of books)

Liu Yong told her daughter that if she is so unfortunate that she has been caught and will be raped and there is no way she can escape, he begged her daughter to COMPLY! He asked her daughter to just let go and let them finish their “work”.

WHY SUCH ADVICES TO HIS OWN DAUGHTER?!

Because Liu Yong knows it is life that is more precious than anything else. What “value” that you can’t let go that’s more important than your own life? Almost all raped and killed are due to the victim defending and being killed in accident (it is not intended by the rapist!). By shutting down your PLOP-DOP (your ‘right’ about holiness, virginity …) and feeding the rapist PLOP-DOP (they want to feed their dick, not to kill anyone) you have a CONTROL on keeping yourself alive. Being able to still see your parents, being able to still see your husband, being able to still see your children! Isn’t that a greater value then anything you can possibly lost during that misfortune?

Summary

Insisting that you are “right” won’t bring you good outcomes most of the time because what you think is “right” is always not “right” for the other people. It will make the other party unhappy and counter attack you. And most of the “rights and wrongs” we attach to things are very minor things that there is no need to put a magnifier on it, such as a slang or a handshake!

Who say a handshake must be strong? Who say we must look into other people eyes when we talk? Who say we can’t swing our leg when we sit? Why make so much fuss on these small things? Why need to defend such minor things? What can you lose if what they want are just small things like these?

Comply! Comply and make the other party happy! You are the conscious one. They are the unconscious. They can’t do what you do. Only you can do it because you now understand PLOP-DOP. You now know how to make them happy (and how not to make yourself unhappy). Comply first. Build the rapport. Then teach them, inspire them, influence them and affect them!

You will certainly be very happy yourself if you have the power to make other people happy!

War cannot stop war, only peace can.

Darkness cannot stop darkness, only light can.

Other Related Posts:

- How to trick people to do what you want them to do by giving them choices

- What is “Right” and what is “Wrong”?

- Law of Attraction – How to get what you want

- Why the world cannot be “perfect”

I read the book in October 2007, so it gives me almost 3 years to share my experience after playing with it. I am very sure this will be very very interesting, especially if you have never heard of it before.

Law of attraction is simply saying that you can get want you want, by just thinking.

Cool? Which means, the people who believe in that law believe that everything in this world is manifested (created) by the mind. We think. We create.

It is not, we think, we do, we create. It is we think, we create! There is no “we do”. That is the surprising part. They believe that once you ask, you shall receive. The universe (or God) will take in your “order” and deliver to you, like a drive through McDonald service.

Unbelievable right? More unbelievable than “Ripley’s Believe It Or Not”.

It did sounds a bit unbelievable to me at first because it was missing the “we do” part. Previously my thought was at least you need to put in some effort to get something back. Not sitting there and did nothing. Means positive thinking will at least drive us to act which later lead us to results. There are ‘suppose’ to be actions.

But Law of Attraction doesn’t speak about actions. You ask, you will receive.

I try to be open minded so I want to investigate. I bought this book before the day I flew to USA alone. The flight will be around 17 hours if I remember it correctly, long fxxxing boring flight!

Read it the night before the flight and felt very interesting. Continue to read it in the airport and immediately wanted to give it a try.

Then I saw a pretty blonde wearing a whole black dress and a black cold wear in front of me. So I put down “The Secret”, stared at her and keep mumbling, “You sit beside me later… You sit beside me later… You sit beside me later…”

Something like this

Sounds like an idiot but I did that for 15 minutes! Yeah, 15 minutes. 15 minutes is not long if you compare to the 17 hours flight! A leng lui sitting beside you is definitely worth that 15 minutes of investment. [Another classic low risk high return! Head I win. Tail I lose a little.]

After that I forgot about it and kept on reading. Another 15 minutes we were called to queue for departing. I look at her again while she stood up and mumble my magic quotes again for a few times. And I forgot about it again to prepare myself for departure.

There were 300+ people flying that day. It is a huge 747 with 3 sections [3-5-3 seats arrangement]. Because MAS at that time was as lousy as Proton and Maybank, they were not fully booked, not even close to it. So it ended up that generous MAS is doing big charity and gave most people several seats to “sleep”. Means most people will get 3 seats on the left and right section. Some will get 5 seats in the middle!

And when I found my seat, the blonde was sitting right beside me. 1 out of 300 chance for this to happen. 1 out of 300!

Coincidence? Maybe. If this was so interesting, I shall not stop here right? I flew to Los Angeles for a seminar. There was slightly above 100 participants. Each of us was given a ping pong ball so we can wrote our name on it for lucky draw. I wrote my name “Yap”.

There will be 1 to 2 lucky draws a day depending on how “good” our behavior was for the day, an organizer trick to make us all “good boys”. [Boy boy, good ar, I give you sweet sweet]

There were 2 lucky draws the first day. On the 2nd day, when they pull out the ping pong box for lucky draw, I just came back from the toilet and was bouncing on a rebounder at the back of the hall [they provide rebounders and bounder balls at the back for people who felt sleepy to wake up and I was really sleepy!]

So I suddenly remembered the law of attraction thingy, why not give it a try? The speaker was searching for a ball and I mumbled again with full concentration. “Yap! Yap! Yap! Call Yap! Yap! Yap!” while bouncing up and down, up and down…

Next thing I know, the speaker shouted, “Yaaaapppppppppppppppppppppp!!!!!!!!!!!!” I bounce off the bouncer like a Spiderman and flew to the front to claim my prize.

And I am the official 3rd winner of the lucky draw among the 100+ participants. A 1% chance. And I only used ‘law of attraction’ once which is in the draw I won.

But my story didn’t end there! I flew back, immediately called an emergency meeting with my buddies and shared my experience. They were very excited too. So you know my friends are as crazy minded as me, believing in shits like this.

A week later my friend went all the way to KL in car pooling with his friend to his company annual dinner. I didn’t remember how many staffs were attending but probably a few hundreds. Again, there was a lucky draw. And the main prize? 32” LCD TV. Remember that was 2007 where LCD TV were far more expensive than today.

This friend, who is as sohai as me, saw a chance to try out this law of attraction bullshit. There are many prizes (mostly small) given out that day. But all he wanted was the LCD TV.

You know, the problem is, you got to do this sohai thing without letting people know you are doing it because people will really think you are a dai sohai. My friend walked to the TV and kept mumbling quotes like “This TV is mine… I will win this TV… I will go home with this TV…” stuffs like that. Went back to dinner. Lucky draw went on for small items until the grand prize – 32” LCD TV.

Rules was modified and they were not drawing for 1 person but 3 persons! Only one of them will win the TV and the other 2 will have to walk down the stage being eliminated like American Idol.

My friend kept mumbling his name like a monk again. He was called up to the stage among the 3 persons from the few hundreds! A very small chance in “statistic”. Without stopping, he kept looking at the TV and kept mumbling his name and all the magic quotes he could think of. He was already 1 of the 3 out of the few hundreds. There was only 2 competitors ahead!

Unfortunately, my friend was very unlucky. He came here with 3 friends in a small Peroduo Kancil and the poor him had to squeeze himself beside his new 32” LCD TV at the back of the car for the 2+ hours journey back to Ipoh.

The other friend tried that too. He was in another lucky draw in his company too. He didn’t get fancy things like a laptop or an LCD TV since his company is very kiamsiap. But he managed to get a 1 year free subscription to an investing magazine.

So 3 people tried out Law of Attraction within a month and 3 have outstanding results. Coincidence? Up to you.

After knowing this law, I suddenly remember something about my mum. Since I was small, my mum can always get something back from lucky draws. She never got big stuffs like car, TV or bicycle (which was BIG to me when I was a kid) and she always get something like cooking oil, cheap hand phones, etc. while I get nothing from the same draw.

She was a teacher and is now still a representative for the teacher cooperation. Every year there will be meeting at Genting Highlands with hundreds of participants. Every year there will be a lucky draw. She is the only person who has been able to draw a prize for 5 consecutive years! The next best known “performer” got only twice.

When I was small, I remembered there was a draw with a bicycle as one of the prize and all sort of house hold stuffs like laundry powder, baked beans, etc. and of course cooking oil. So many things. I remembered my mum told me that all she wanted was a cooking oil so she can give to my grandma. What I want is the bicycle. Yeah baby. But at the end, she got the cooking oil [out of so many things and so many people], and I got nothing. I was sad. She was happy.

But I didn’t know why. Maybe she is just “lucky”. Or else why we call these “lucky” draws? Whoever lucky will get the prize. Whoever unlucky like me will get nothing, not even some guli balls.

But once you understand Law of Attraction, it is really not just about luck. You will be able to control luck when you know how to use Law of Attraction, which happen to be that my mum unconsciously know it without the need to read any book. She is always doing the mumble thing when there is a draw. And that’s why she always get something, while most of us will just do nothing, or convince our self that we are not that lucky, or the probability will be very low, or that we are not suppose to be greedy … other than focusing on what we want. She just focus on what she want, the cooking oil. [She should aim for the bicycle for me lar, cooking oil?!]

How to Play Law of Attraction? The Basics

The basic is very simple, you need to believe that it works. If you don’t believe, it won’t work.

After you believe in it, then you need to know what do you want. Maybe you are looking for a parking space? Then you have to say to yourself in your mind or out loud (out loud will be better because it means your conviction is bigger). You say in the car, “Give me a parking space! Give me a parking space!” and focus all your attention on parking space around you. Usually you will get one very quickly.

But does it work all the time? Yes or no. There are still many basic factors in action. You have to believe it, and you got to focus on it and think about it. The next important thing is, you got to feel good about yourself. That means you got to have positive energy and frequency flowing in your body when you make that request. You won’t get it if you say “Give me a parking space mother fucker” while feeling very angry and frustrated.

So it is not easy. Got to believe, got to focus on what you want, got to feel good about it in a very relax way. And the another important criteria, not only you need to feel good about yourself, you need to feel and imagine that you already have it - the parking space. Before you got the parking space, you need to feel like you already got it!

Difficult right? But that probably explain why Datuk Lee Chong Wei always deliver a poor match in the final, e.g. Beijing Olympic 2008 while Lin Dan can always deliver good results. Their skill is irrelevant because they are both world class. It is that Lin Dan will always see himself winning even before he win, while Lee Chong Wei …

You need to feel like this even before you start the match

And that’s not all, another very important factor is that you need to say “Thank You” even before you get it. That’s gratitude. You can thank everyone, be it the Universe if you don’t have a religion, or God, or Allah [can I use this word in Blog?], or Buddha, or your parents, your teacher, your dog, AhYap, Phua Chu Kang, Frankie Foo, anyone… you need to have the feeling of gratitude even before you get what you want.

Complicated? Not really lar. You need to believe that it works, you need to know exactly what you want, you need to feel good about yourself, you need to feel like you already have it even before you have it and you need to start feeling gratitude even before you get it. Where got complicated? One paragraph can say all already.

A possible mistake that newbie make is to focus on what they don’t want. For example, I don’t want stress. You will attract stress. I don’t want to be poor. You will attract poor. I don’t want a bad boyfriend. You will attract a bad boyfriend.

Why? If I say, “Don’t think of a cow” what appear in your mind? Cow right? If I say, “Don’t think of the color blue”, what appear in your mind? Blue right? That’s why the Law don’t recognize whether your want it or you don’t want it, what appear in your mind will be attracted by you, whether you want it or not.

If you start to believe in Law of Attraction, one thing that is very important that you should remember now is never think of the stuffs you don’t want. And try not to have negative thinking, because the negative thinking will attract negative stuffs to your life.

Remember the story of the blonde that sat beside me and my friend LCD TV? If positive thinking can attract positive stuffs, even if you are not greedy and are not interested in attracting these, you need to make sure you don’t send out negative signals and get negative stuffs. That’s why it is very important to keep negative thinking out of your mind! Because it will manifest. It won’t just stay in the brain. It works like a magnet and will attract those things to you.

Law of Attraction is a Double Edge Sword

Unfortunately, Law of Attraction is a double edge sword. After playing it for so long and get burned by it, I have to warn you and share my experience. I no longer play with it but only use the essence of it that can help our spiritual growth.

If you are 1Malaysia student and you do study your sejarah, there is a small short line, just that a small short line that explain what Buddhism is in form 1 or form 2 text book. Please give some face lar, if only 1 line, please remember it, that’s all our education teach about Buddhism.

The teaching of Buddha – one sentence in 12 years of education in primary and secondary school.

Manusia sengsara kerana nafsu.

Human suffer because of desire/greed.

What is desire? What is greed? They are simply “wanting”. Want more, more and more, MORE and MORE! MORE AND MORE!!!

Want bicycle, want motorcycle, want Proton, want BMW, want Ferrari, want sailboat, want private plane …

DESIRE = never ending of wanting.

Buddha teaching is simple – you suffer because you always want more. And you thought that if you get what you want, you will stop suffering. But it didn’t! Why? Because as soon as you got that thing you want, it become worthless, you will want something else, you will target another thing, which means you will need to suffer again.

Once you got a Guess bag you will want a Gucci bag, then got Gucci bag, you want LV bag … so many bags. So many clothing, so many shoes…

Playing with law of attraction simply means more desire, more wanting. You always focus on what you want, keep thinking about it and it will make you suffer more and more. The more you get, the more you suffer because now you need even bigger stuff to fulfill your desire.

Buddha point out that the solution to human suffering, is to stop your wanting, to stop your desire, to stop your greed.

Of course, we are not Buddha, we can’t do what he do but we have to remember that he indeed give us a direction to follow. So it is your choice on which way you want to go.

No matter what, you can’t know exactly what you want. And because of that, you will encounter many surprises and side effects from using Law of Attraction. At the end, you have to make more and more requests just trying to “perfect” your attraction. But it will never get perfect.

For example, I got a beautiful blonde to sit beside me. I am able to attract her to sit beside me. But I didn’t ask for a friendly blonde. I ended up having a not-so-friendly blonde who don’t give a shit about me! So maybe to fine tune my “request”, I need to say “Sit beside me later … Must be very friendly … sit beside me … friendly …”

If I do that, maybe she will really sit beside me and is friendly. But maybe then her voice sounds like a man! So you need to fine tune your request to “Sit beside me later … Must be very friendly … Sweet voice … sit beside me … friendly … sweet voice …”

But then the surprises won’t end there. Your wanting will never stop. You just need more and more. You just can’t accept what it is which means more suffering.

Maybe your request will soon become “Sit beside me later … Must be very friendly … Sweet voice … Give me phone number… sleep eat with me…”

I won the lucky draw. I had to spin a fortune wheel to decide my prize. There are big prizes like free seminars or small “prizes” like act like a monkey which is more a “punishment” then a prize. My first spun ended with a “punishment” to pretend as somebody! Luckily I was given a second spin and I got a cook book. Yes, a cook book that remain in my bookshelf for almost 3 years without being read.

To prevent these side effects, I will have to make a lot of requests, one after another to cover all the side effects. But most of the side effects are simply unpredictable! It will just make our mind more busy and tired.

When I asked for a parking space, “parking space… parking space…”. I got one, but with a big hole there. So I changed to “nice flat parking space … nice flat parking space…” and I got a nice parking space and a yellow fire brigade water pipe there. Hmmmm, so next time I needed to say “nice flat legal parking space… nice flat legal parking space…” and it will just get longer and longer and longer and at the end I have to be so greedy and say “give me 2 nice parking space side by side…”

While my friend enjoy his LCD TV, he should have requested a bigger car too before he went to KL.

The other friend who got the subscription never read one issue of the magazine.

Having a busy mind and never ending stream of thoughts in our mind is the opposite direction of our spiritual growth. Spiritual growth is to become mindless, no mind and stop being the slave to our mind. Always focusing on what you want and thinking about it won’t help us in our spiritual growth.

The universe (again God or anything that you believe in) will try to fulfill your request no matter how silly it is.

[Praying is the best example of Law of Attraction, by the way]

A Taiwan best selling writer wrote about her experience with Law of Attraction. She went to a spiritual camp for a week. But after the first day, she regretted it and just wanted to leave. But this camp didn’t allow any camper to leave without a valid reason. So she keep sending signals to the universe that she wanted to leave, wanted to leave, wanted to leave…

The universe made that happened. She got sick with appendicitis and was sent to the hospital.

You never know how creative the universe will be. You never know what side effects and price you need to pay for asking what you want…

So does that means you learn nothing reading my blog post today? No. You will learn something that is very important to your life without the need to fall into the trap.

The Beauty of Law of Attraction

Early, I stated the factors for Law of Attraction to work. They are

- Believe in Law of Attraction
- Know exactly what you want and ask for it
- Feel good about yourself
- Feel like you already have what you want
- Thanks for getting what you want even before you get it

Our goal is for spiritual growth. We want to head at the right direction that will give us the ultimate joy of life instead of more suffering or becoming a salve to our mind. To avoid all the side effects and get all the good stuffs in life, what we need to do is to remove “exactly what you want” from the workflow. So it becomes something like

- Believe in Law of Attraction
- Know exactly what you want and ask for it
- Feel good about yourself
- Feel like you already have what you want the best in the world
- Thanks for getting what you want the best in the world even before you get it

You trust that the universe (or God) will give you the best that you can have. You always try to feel good about yourself because you know that your positive energy will resonance with other good energies and attract all the good stuff you can have in your life. Because you want the best in the world, you make yourself feel like you already have the best in the world. And you are always thankful and felt gratitude to all the things in the world.

What can you complain about life anymore, if you know that you are already getting the best and keep on getting the best? This is the beauty of it.

Remember to keep all the bad stuffs away from your brain and keep only the good stuff. Because you know now that even they are just sitting in the brain, they are affecting your life. Feeling bad will simply attract more bad stuff to you. Just observe people around you, look at the “unlucky” people and see what is their feeling. Then look at the “lucky” people and see what is their mode and feeling.

It is not that you feel bad because you are unlucky. It is that you are unlucky because you feel bad!

It is not that you feel good because you are lucky! It is that you are lucky because you feel good!

If you don’t know what you are attracting, just “feel” your feeling. Are you feeling good? Or feeling bad? And try to make yourself feel good and your luck will come. This is one of the essence of Law of Attraction.

Knowing this so important. You should try to avoid negative influences and information as much as you can. The biggest source of negative signals are from NEWSPAPER! They say smart people read newspaper. This is the common believe most people have. With this new perspective in mind we know that smart people don’t read newspaper.

The same to TV news. The same to horror movies. The same to depressing novel and TVB drama.

My gf and I were supposed to check in a flight 45 minutes before departure but we reached 15 minutes late. The staff told me the counter is closed and I am “supposed” to check in 45 minutes before departure. Instead of feeling bad and get angry or depressed (whatever negative thoughts), I try to calm myself down [I had been doing that long time ago since I already known I will be late long ago]. Instead of debating or arguing with her, I told her I knew I was late and was sorry and I hoped she can at least help me to ask the pilot if he was willing to take us.

So she tried to call the pilot but after 10 minutes of trying, she couldn’t get through. My flight will be flying in another 20 minutes. So she said sorry to me. I decided not to get angry or upset as I still wish my “law of attraction” will play off, I need to obey the law of “feeling good”.

I didn’t ask the Universe to let me enter the flight. All I asked was, “Please give me the best that you think is the best for me”. Who knows? Maybe the plane is going to crash later right? I did walk away from the counter and still giving me a “chance” by staying in sight from the counter staff.

Few minutes later the pilot called back and welcome us abroad. In less than 15 minutes, we had to collect our tickets, went through long immigration queue, went though X-Ray which requested my gf to open her bag for “liquid” checking [we are supposed to check in the luggage so there are plenty of liquid in her cosmetic bag which are forbidden on hand carry luggage] and then ran all the way to the plane while being escort by 2 staffs sent from the airline. The whole plane was waiting for us, I kept saying sorry to everybody. The plane flew away 1 minute after we joined them.

This experience allows me to appreciate the power of feeling good a lot more than ever.

Main Points Summarized

To make sure you get the main points of this post, they are

1. Negative thoughts will manifest, keep it away from us.

2. Just make sure you feel good all the time and you will attract all the good stuffs to your life.

3. Be thankful and gratitude to everything and everybody every minute and every second of your life.

The Universe/God will do the rest for you.

For Chinese reader who like to learn more about this, I recommend this very good book <遇见心想事成的自己> by 张德芬. There are several English books written for this topic buy I didn’t read them except the original book “The Secret” and the documentary movie. While the book does contain all the main points summarized above, many readers will end up focusing on “asking for what they want” (house, car, women…) which I think is a big trap. The Chinese book did explain a lot more on the trap so it is good. And better, the book is a “novel”. It teaches by telling story.

Good luck and have fun!

The story is quite simple, I am getting my hands dirty on photography. Like everything I have learned, I learn from reading (books, internet…). But reading can make you that good only on theory! I need more practical opportunities and I hope to have more guidance from experienced photographer.

There are many outings that I can find but most of them are in KL (some in Penang). Ipoh? We do have some where 300 photographers trying to shoot 4 models. What can you learn?

Then I found a guy who is in the business (a ‘pro’) for a very long time in Ipoh. So I went to see him and offered to be a FREE mobile-light-stand and bell-boy for him in exchange for his guidance. This is the first time I did this kind of thing so it is very fresh to me. I didn’t know what is going to happen.

Usually I can easily grasp the character of somebody after some chat, especially 2 hours. But this guy, I am unable to do so at all. Proud? Don’t look like. Humble? Don’t look like? Ego? Sometimes can see sometimes cannot. Do I like him? No. Do I hate him? No. It’s quite hard to understand and connect. A feeling of ‘so near yet so far’. [we will know why at the ending]

He invited me over, so I jumped out of joy and went straight to his office. He welcomed me too and we started to chat. Remember I am a stranger and he didn’t need to layan me at all but he ended layan me for 2 hours.

The first question was what camera body I am using. I told him I got a 7d before but have sold it. He was very shocked and asked me why. I told him I want to upgrade to 5d mark ii, a full frame camera. He kept showing his “unable to take it” look and make me so uncomfortable. He asked me why I need to upgrade since 7d is already a very good body. [In canon terms, 7d is a prosumer body, between consumer and professional. 5d mark ii is a professional body. Lower series are ‘consumer’ and higher are ‘flagships’ or simple ‘high end’]

Since I have done lot of homework and my “theory” in extremely good. I can basically write an essay on why. I can of course answer and tell him my reason but based on his “unable to take it” look earlier, you know that the point is not to be able to explain and make myself right. I don’t win by being right. Because I am the “student” here and he is the “teacher”, you want to challenge him? Especially you want to learn from him? So my explanation will be useless and I didn’t really say anything, just pretend to be an idiot.

He asked me, “Do you know what camera I am using?”. How do I know right? But I think everyone is smart enough to guess that he is going to tell you that he uses some low end gear, to create a big contrast about my choice and his. I said I don’t know.

He said he is using Nikon D70 to shoot all his works. He never uses “professional” cameras even he is a “professional”. D70 is more low end than I expected. It is the first consumer level digital camera from Nikon launched in 2004 (!!). We are in 2010.

He even told me that he can shoot his work using kit lens [cheap lens that comes with the body]. But luckily he did admit that lens is more important than camera body. Luckily.

He then asked me why I want to learn photography and what I want to shoot. Again, I am not a gugujiao who don’t know the answer. I already know what I want to shoot and I can write the exact list out, 1, 2, 3 and 4. And also the list of things I don’t want to shoot. So I am clear. [I won’t explain what is the meaning of gugujiao to you so if you don’t know, ask a 1Malaysia friend to make us closer to each other, but ask a guy not a girl]

Luckily he seems to be happy. My first answer is people. So he asked me why I choose Canon if I want to shoot people. My brain was like (!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!????????????????????????).

The reason why my brain looked like that is not because I don’t have an answer, but I thought isn’t the answer is very obvious to everyone? Why this question from him?

I told him the exact answer and also the main reason why I like Canon so much. I said, “I choose canon because of the skin tones. It looks better to me. Nikon skin tones look too orange to me”.

He answered me, “So you like the plastic skin of Canon?” He said that until today [very big conviction from his voice and physiology], Canon cannot produce the correct skin color of the people. He said if you print a photo out and put it side by side on the real skin, Canon cannot match the color but Nikon can.

The attack of Nikonian that said Canon skin look like plastic and the Canonista said Nikon people look like “orange man” is not rare. I do agree to a certain extend of it BUT there are many variables to it other than just the camera – white balance, color of light source, JPEG profile settings, etc.

I started to learn about photography March this year. There is a time where I get totally confused about what photography is all about? Is it trying to capture the “correct” and “real” image? Will Photoshop or changing color saturation make a photo “incorrect” and “fake”? Struggle for sometime… and later I wrote an article in my diary with the title – “Photography is a deception” which is stolen from a popular phase “Art is a deception” [mainly refer to drawing].

The article is not a good read so I am not wasting your time here. Mainly what I realized is, everything you see in a photo is fake, is a deception, no matter how you take it. No matter if you photoshop it or not photoshop it. Once you bring this 3d world into a 2d picture with 4 borders, it can no longer be real no matter what. Think about drawing. If you draw the Twin Towers, are the twin towers real? If you draw my face, is me real? So photography is also art. Its purpose is not about right or wrong, real or fake. It’s purpose, is about getting beautiful pictures. Exactly like drawing.

Just to extend my shit philosophy a little bit. Just look at black and white photographs. Are our world in black and white only? NO! Black and white itself is a deception. Because the “correct” world got color. But who cares? As long as it looks beautiful! Photography is an art. Understand this make me even more interested in photography.

So for the skin tone debate, there is no right or wrong skin color for me. It is a personal preference. I want good looking skin color, not the “correct” color.

He told me he used to use Canon but has switched to Nikon because of the skin color. Switching a system because of the skin color, you got to know how big is his conviction!

The main reason why this part of the conversation him is so important is because last month, I also spoke with another professional photographer who also make a lot of money taking pictures. He told me exactly the opposite thing!

He told me he is a Canon guy for a long time. Later get itchy because everyone told him how good Nikon is. So he switched to Nikon but later switched back to Canon. I asked him why. He told me that Nikon cannot get him the skin color he want no matter what!

2 professional photographers! 2 talking about the same thing! 2 different convictions! My God!

Because of this, it makes it clearer that photography is an art and is very subjective. It is your camera. It is your photo. Just make it the way you like it disregarding what other people is going to say about it! It is our choice! Our art! Our “master-piss”!

Suddenly remind me of religion too. I am Buddhist, you are Muslim, he is Hindu. All of us are doing what we think are right. None of us are wrong. What the best we can do is to stop telling other people that they are wrong and start respecting their choices!

When somebody tell you your decision is “wrong” and he is “right”, just tell him, “I respect your choice and I hope you will respect mine”.

That’s useful when debating in writing (such as internet forum) but I didn’t use it in real life. I do tell him the story of the other photographer I met, but I still let him have most of the ‘winning’.

Then later he told me the hierarchy system of his photographers team. I can’t remember the exact naming but it is roughly like this – newbie, assistant, standard, junior, senior and professional.

Newbie can only sit in classroom, doing lecture. Assistant can carry lights and bags only [which I am trying to interview for]. Standard can carry camera but can only be 2nd shooter and shoot non important stuffs like cakes and bridal shoes. Junior onwards can represent company to go out and take photograph. He himself is the ‘professional’ of course. Differences between them is the ‘quality standard’ and pricing.

He is very proud and satisfy with his team, so he shown me the sample of a junior work. Sample that is also shown to all potential customers when they come to the office. He keep saying things like, “We always maintain our quality”, “Customers like our work”, “If you can get this kind of quality, you say not good enough?” blar blar blar. What I want to say is that he is very confident with his works and standard.

I carefully opened the album and looked at the photos. This is the most struggling part in the whole conversation. God want to test my acting ability? I am totally unimpressed with the photos. If I am a potential customer, I will not want this photographer to take my pictures (he is not the photographer of this album, it is one of his junior, the lowest standard, and the cheapest).

There are photos that are blur/missed focus, all photos look yellowish and orange, they shoot a lot of white overexposed sky and there are telephone poles in the background and the wires crossing over bride and bridal head. For me, they are ordinary, like those photos we took with compact camera and print 3R and put in the free album the photo shop gave us.

I was so struggling. I wanted to comment but I feel difficult. He kept on repeating, “Like this not enough ar? Customers very happy lor”, “See our standard, see our standard”. For me is very clear, if I can only learn to shoot this kind of photos, I don’t want to learn photography. This is not want inspire me to become a photographer.

Then I beh tahan a bit and started to comment. I asked him why the photos so orange and yellowish. He is shocked a bit. He didn’t expect me to comment since he is so confident with the ‘standard’. He looked at the photos and said it is because of the clothing and wall. Then I asked him why so many blur photos. He said that is acceptable because the guy was using Nikon D90 and kit lens. He said that it is a trade off between kit lens and good lens. So this was not the photographer skill problem. I then talked about the white sky and telephone wire. He said these photos are used straight out of the camera without processing. If go through processing they can remove them or even make sky blue. He said again, “Customer like it”.

Since I am not impressed with the photos. I was feeling that if I were “pain in the ass” going there to get lectured. But I am very confused. He said he has shot for 20+ years and he has 3 generations of customers. Most customers are from mouth to mouth introduction!

I thought, maybe this speak for himself? Something wrong with me? He is still in business with lots of photographers and he always has new business. Maybe I have missed something. Maybe he is really very good. Maybe if I really follow him I can learn real things…

It was a 2 hours conversation, there are still many more similar sub stories. Like he told me that a photo on his wall win a competition. I asked him is that skin color correct [is it Nikon color] because it didn’t look good to me [composing is good, color is not]. He said no, it is already greenish. Hmmm, a picture that win competition with greenish skin. Many many more sub stories which I don’t want to bore you with …

I went home very depressed. Look like small matter but very depress to me. Very confuse. Very angry some more. Lots of mixed emotions. It is like suddenly I am no longer interested in photography and want to quit it for all.

At night I chat with my old course mate aka housemate in University, who is a good photographer shooting wedding days part time every weekend! He is a Canonista. We began our conversation with “Why you choose Canon over Nikon, especially you admire people like Joe McNally and Louis Pang so much?” [both are super heavyweight pro Nikon shooters. Pang charged more than 10k per shot!]

Our conversation went into my story of the day and I show him some of the photographs he has taken. I want to know if there is really something wrong with me. Fortunately I am not. His comment is that his photographs is so so only and he is “old style”. I immediately agreed with the “old style” description, thanks to his 20+ years repetition works?

And it reminds me that he is so confident with himself that he said he already gotten bored with taking photographs. He said he will not travel with an SLR anymore. Remind me of a Friends TV episode where Rachel met a gynecologist [doctor who deliver babies] who don’t want to have sex. He said, “You know, it is like drinking coffee every day for so long until you saw that coffee and felt, ‘what? coffee again?’” [got the humor? ]

So this guy seems to lose his interest and passion in photography. For him it is more on business and work. ‘Maybe’ he is already full and no longer interested in exploring new things as he always like to say, “Every time go there, so familiar, close one eye can shoot already”. Familiar might be a curse word for creativity and passion.

But I am still confuse about whether I should follow him to learn. Maybe the opportunity is worth it, especially in Ipoh? Especially I am a good ass kisser and can easily pretend that I am OK with everything while in my heart is not? Because my level so newbie, any teacher will be a good teacher? Is there something for me?

My lovely girl friend came to look for me. Again, she is the type of girl that is 100% opposite of me. While I need to worry about everything, she is not worry even if the sky fall down tomorrow.

I told him the story and why I am so depressed. I asked him should I learn from him. This is the kicker! She didn’t even need to comment on Nikon or Canon, plastic man or orange man, new style or old style, blur or not blur, telephone wire or no telephone wire … [she know nothing about these and she has 0 interest and problem holding an SLR].

She just said, “Your frequency and his frequency not the same lar, you better don’t stick with him”. Again, whether he shoot good or bad photos, use Nikon or Canon, is not a matter of consideration to her. For her, it is so simple, the frequency not good, both not matching, don’t stick together, sure won’t end up nice.

She then mentioned the other photographer that I chat with [the one who switched from Canon to Nikon then back to Canon]. She reminds me of how great my experience is when with him. The feeling is so good and I learn so much from him in 1 short day. Now I understand that is because we have matching frequency. She said I should learn from people like him.

This is absolutely brilliant to me, just a simple opinion from a few words and make my decision so much easier and feel so good about it.

Trust your feeling more. Feeling is hard to lie. Logical debating and rational thinking make no sense sometimes and can be totally useless [like my debate earlier]. It is the feeling that count ultimately. The most important is to be able to “feel good” [which means you got the right frequency].

To bring it a level higher, even if I am very impressed with his photos and that is exactly what I like to learn and shot, the decision should still be the same, if frequency not same, stay away. Have really nothing to do with who is right or who is wrong.

Feel more, think less.

Use wisdom, not knowledge.

Use heart, not mind.

My Favourite Photographers

Hassas

Hoffer

Ooi Eng Wah

Manny Librodo

While XinQuan has been the most favorable stock among the shoe companies to most people, it is not to me when compared to MSports and XDL. Why I like MSports has been written in my long Multi Sports Holdings review.

Unfortunately I didn’t have the time to write about XDL so I will try to tell you briefly about them.

Three of these companies are shoe companies but they have very different business model. While their market price move in tandem with each other because they share the same theme, i.e. China and Shoe, they are actually very different to each other.

MSports is a very simple business, they manufacture shoe soles and sell them to other shoe makers. Yes, plain vanilla with no added chocolate chips, just shoe soles. Their customers are other shoe makers.

Introduction to XDL (XiDeLang)

XDL on the other hand doesn’t even manufacture shoe soles! They might consider buying it from MSports or probably have been buying from MSports. Shoe soles are the most important component of a sport shoe and there are only 100+ among the 3,000 shoe companies in JinJiang that manufacture them.

XDL buy shoe soles from other shoe soles maker and use them to make complete shoes. They are not OEM shoe maker which means they are not making shoes for other branded shoe companies such as Nike or Adidas. They are manufacturing their own branded shoes XiDeLang and sell them in their own XiDeLang stores.

So, XDL is more a retail shoe companies with their own manufacturing capability and brand. MSports on the other hand manufacture and sell shoe soles. So they are very very different.

XDL also sell sports apparels for XiDeLang brand but they don’t manufacture apparels themselves. They source them from other makers. They are planning to manufacture the sports apparels themselves in the future using operating cashflow and the IPO proceeds.

They do not own the retail outlets themselves. It is more like “franchise” but not exactly that. There are 3 parties involved.

1. XDL which owns the brand and supply the shoes. They are in charged of the branding and marketing effort. They get around 38% of the final retail price.

2. Distributor – they mark up the price not more than 10% and sell to the retailers.

3. Retailers – Operate the stores and try to make money after paying for the shoes, rental and sales staff.

XDL customer in “accounting” terms is the distributor. But their ultimate customers that affect their sales is the end user who shop at the retail shops. If retailers can’t sell the shoes, they won’t buy from the distributor and distributor won’t buy from XDL. So XDL is a consumer retail business.

XinQuan = MSports + XDL

What about XinQuan? XinQuan is a mixed of both. XinQuan manufacture shoe soles and also manufacture own branded shoes AddNice and sell them in their own AddNice stores [also through distributors]. They even manufacture their own AddNice apparels.

So we shouldn’t generalize all these shoe companies and think that they are the same. They are not. They have different business model and they make their money in different ways.

Does That Mean XinQuan is Better?

For many people, yes because it has multi different income sources and is more diversified. For me, no.

Don’t get me wrong, XinQuan is a good business selling at a very very cheap valuation out now. What I am trying to do is to compare it to MSports and XDL. I am trying to explain why I like MSports and XDL more than XinQuan, not trying to say XinQuan is bad. XinQuan on its own is good enough, but not as interesting when compared to MSports and XDL.

Reason #1 – Too Much Cash

While most people assume a lot of cash is a good thing but it is not for me. I am trying to make an investment, investment that is suppose to give me good returns. But cash are – CASH! Cash are not investment because it can’t generate good return on it’s own unless it is invested.

Cash in a business is like the sugar in the coffee. We don’t want too much or too little. We are not drinking “sugar”, we want it to be just enough.

With quick approximation for better illustration, XinQuan is worth around RM500 million today (at RM1.64), but it has RM250 million net cash after paying back all borrowings! When you buy their stock, you are like making 2 investments. The first half in XinQuan business that manufacture shoe soles and sell AddNice products. The second half in something like a fixed deposit or a savings account.

I want to make money investing in “stocks” and “businesses”! If I need to put money in fixed deposit or savings account, I can do it myself and have full control instead of going through a company!

More discussions on the “cash debate” later in this article.

Reason #2 – Harder to Value

While it is cool to have a diversify business but I can get the same diversification through XDL and MSports and even better, I have 2 stocks and 2 market price instead of just 1 stock with 1 market price.

It is also slightly harder to value the business due to the business mix. Since both business (shoe soles and retailing) are very different in nature, the metrics that we are trying to get from the consolidated statements such as margin, days sales outstanding (DSO), inventory sales outstanding (DSI) will be a mixed making us harder to figure out which segment is doing better and which is not.

And as reason #1 has stated, you are technically investing in 2 investments when you buy Xing Quan – the business and the cash. You have to value the cash too and most of the time, RM1 is RM1. [No matter how hard I try, the most I can sell you my RM50 note is RM50, it can be less but not more]

The whole company is selling for RM500 million today and it has around RM250 million net cash.

So how much is the “fixed deposit” part worth? RM250 million max.

So how much is the business worth? RM250 million too. [RM500 million minus RM250 million cash]

The company makes RM100 million in the last 4 quarters, so what is the PE? PE is only 2.5 for the business! Yes it is very cheap, similar to MSports. But wait, when you buy MSports, you don’t need to make another investment in an ‘FD’. But if you buy XinQuan at PE 2.5, you need to put an equal amount in an ‘FD’ (that is out of your control) that give you maybe 2% return max.

So if you mix that “two” investment together, it no longer looks that sweet. 2% is nothing at all. It is like the cash under your mattress. Actually under somebody else mattress because you don’t have full control on it although technically it is yours.

Might as well use 50% of your money to buy XDL or MSports and put the remaining 50% in FD at a local bank? You have a real FD with full control and it doesn’t affect the valuation of your XDL or MSports.

But again, don’t get me wrong, all of these are coming from a comparison point of view with MSports and XDL. Without the 2 of them, XinQuan will look marvelous on its own. Why? Because even if you assume the cash never exist and you are buying XinQuan at RM500 million where is makes RM100 million a year, you are buying a PE5 stock, a very very very cheap valuation. What does PE5 means? If this is a private business, it means you are making a 20% return investment. Because you pay RM5 for a business that can make you RM1 per year, thus 20% return (We call this earning yield). Not bad at all.

Petronas Dagangan is selling for above PE10, Public Bank is selling above PE10 too. Both are considered fairly valued because you still get a good 10% earning yield. There are stocks like SP Setia that is selling for nearly PE20, a 5% earning yield which is expensive [at least for me].

Reason #3 – More People Are Interested

Surprisingly, more people prefer to invest in XingQuan then the other shoe companies. This can be seen by its current price as comparison with its IPO price and how much it has gone up from the bottom, which outpaced the other shoe companies. It is also owns by more funds then the others.

Why? Because they assume it is safer with that cash and the diversification mixed of their business. I have mentioned that for me it is a different story. If I need an FD, I can put it myself, no need to go through a company. And if you hold too much cash for me, I will need to worry that you are not taking good care of it! These money are not “free”, we pay for it when valuing the company as a whole. Remember we add RM250 million valuation to the company because of the cash?

And for the business mixed, I can have that by owning XiDeLang and Multi Sports. I then have 2 stocks price, 2 managements and 2 AGMs (means more door gifts, aha)…

What is a better investment? An investment that everybody interested in? Or an investment that no body interested in?

Not both, sorry I tricked you. A good investment is an investment that no body interest in RIGHT NOW but will make everybody interested in it IN THE FUTURE. There are more people interested in XinQuan right now compare to the other shoe companies, making it less favorable to serious investors.

On the other hand, MSports and XDL are better candidates as investments that not many people interested in NOW but ‘might be’ in the FUTURE.

REASON #4 – KIAMSIAP MANAGEMENT WHO DOESN’T KNOW HOW TO PLEASE INVESTORS

When they announced the Q4 earnings and dividend 3 days ago after market close, my first respond (and the second and third for the entire night and until today) is “WHAT THE DUCK!!!” [replace D with F]

These management certainly doesn’t seems to understand the importance of minority shareholders. They announced another 2.5 cents dividend making it total 5 cents for the year. [Their financial year end is June 2010]

The entire year earning is 34 cents. But management certainly failed their math in primary and secondary school. They have been promising shareholders that they will make 20% payout for 2010 and 2011 but hey, 5 cents is only 15%!!! It should be 6.8 cents or 7 cents rounded up.

7 cents over 5 cents is 40% more dividend for the shareholder.

Now they will explain to you that they didn’t promise you 20% payout, they are promising “up to” 20% payout, which is very different in meaning. They are playing with words! They think they are very smart and funny.

But this is not the whole point as we are not Karpar Sigh trying to fight in court. We as shareholders are using the 20% as reference point. If management pay 20%, we assume they are honoring their promise, keeping their words. If it is above, we will believe that we have found a great management that love us as much as our father and mother! But if it is below, we may think that we have been cheated by a bunch of duckers (you know what to replace the d with).

The management is correct in interpreting the phase “up to”. But what is the point for management to be “right” in that sense but totally “wrong” when come to fulfilling their responsibility to the shareholders? It is like the law that say it is “wrong” to beat the traffic light. So you are “right” when you try to block the ambulance from sending a man who has been badly hit by a meteor to the hospital. You can argue and “win” but what is the point? Do you feel proud with your winning and will everyone else like you?

What is more upsetting is that they have RM250 million of net cash! They make RM100 million for the year and the refuse to pay RM20 million to the shareholders as promised but choose to pay only RM15 million. They want to save RM5 million for what?!

What the duck! [yes, replace the d]

So what happened to XinQuan stock price? It dropped 13.7% in 3 days after the announcement. Padan Muka!

I hope they have learned a lesson here and do not repeat it in the future.

And for MSports (promised 20% payout) and XDL (30%), I hope they learn a lesson too from XinQuan mistake.

But the bad news is, it is very likely that they won’t learn it! We will see when they make the announcement in the next few days. Why? Because when I attended the XDL AGM a few months ago and even when the shareholders are shouting to them (I am one of them), the management still keep on debating the word “up to” and keep reminding us that they need a lot of capital.

I can forgive them on less dividend payout if they are buying back shares in the market. But they are not doing that!

Reason #5 – Slowing Down?

Ending June 2009

Ending June 2010

* EPS has been adjusted by assuming company has 307.33 million shares all the time

Again as I said in my MSports article, you don’t compare the results with previous quarter, you don’t compare Q4 with Q3 because of seasonality. You need to compare Q4 with Q4 of previous year.

Quick judgment cannot be done because it didn’t say anything very clearly. There is no dead body found, maybe only some fingerprints. We just got a few hints. These hints are:-

Revenue increased a lot. It increased 39% from last year. But Q3 increase even more at 59%. 39% increase is very very good, but is not better than 59% achieved in Q3.

But the key is that profit is almost flat! Why? There are a few reasons but the most alarming is the drop of gross profit margin. Gross profit margin drop to 31.7% which means they are trying to push for more sales (revenue) by giving a lot of discounts. They are trying to make more sales by making less money per shoe sold.

The other 2 reasons you got to be aware of is the tax rate, they no longer have much tax incentive left and is nearing the 25% tax bracket. You will have to pay this tax rate onwards.

The S&D (Sales and Distribution) expenses is quite high this quarter but I will “assume” that it is used for network expansion and other good purposes.

The only alarming factor out of these 3 reasons is the gross margin. We want to monitor this in the future quarters closely. It can means 2 things in the future, revenue remain high while profit margin improve – good news. Revenue drops while profit margin remain low – bad news.

But Q4 and Q1 are usual slow quarter for XinQuan. Q2 (year end) and Q3 (new year) are important quarters for them. So we need to pay more attention to Q2 and Q3.

XinQuan ROA and ROE still remain very strong, especially if you strip the cash from the assets/equity. They are just amazing.

Based on DSO and DSI, they also don’t have any problem collecting bills and they don’t have inventory problem.

More Cash Debate

The cash XingQuan is holding now is like armies. They can serve their purpose well when we need them. But did Angkatan Tentera Malaysia need to go to war? We invest a lot on them buying them M16 and submarines but all we need of them is when there is flood in Kelantan and when there are buildings falling down in Bukit Antarabangsa.

Cash in a company can be invested to make great returns for the shareholders. If you have a lot of cash, you can make a lot of investments. But the problem is you don’t have good investment hanging around all the time. So the cash will just sleep and do nothing when you are waiting for it. And this is a risk to the investor.

On the other hand, assume opportunity arise and Xing Quan is able to acquire a good business at a good valuation, for a good example the entire MSports which is worth exactly the cash they have right now (RM250 million)! Then that would means a very good use of the cash.

But the problem is, what is the chance of them being able to do that? It is difficult. So as a retail investor, I will prefer to keep that cash to myself so I can buy MSports or other stocks, instead of letting them sleeping in XinQuan bank account and hoping that one day they can find a good investment. I am sure I have more investment ideas and opportunities then them (because I am small and nimble, I only have that much cash).

Even if they start building factories and expanding their retail networks with those cash, it will take a long time before those cash are invested. With the strong cashflow from operation and their kiamsiap dividend policy, there will be a lot of cash sleeping all the time. They are suppose to raise cash from the IPO to invest but end up that they are now having more cash today then after the IPO.

Because XDL and MSports don’t have that ‘much’ cash [They do have a lot of cash, but a lot less when compared with XinQuan], they might not be able to make big acquisition even if opportunity arise. Management might be very upset for that but it is totally OK for shareholders like us!

We as retail investors are not trying to make money from their “once in a millennium” opportunity to acquire another company or their big aggressive growth plan to dominate the earth. We don’t need it to grow to the moon. Our strategy is to buy 1 dollar for 50 cents. We invest on them at very cheap valuation (such as PE 2.5 for MSports) and ‘wait’ for the valuation to increase to PE 5 or PE 8 or even PE 10. You see, we don’t really need them to grow to the moon or make big acquisitions. Because we are already buying them very very cheap, i.e. buying 1 dollar for 50 cents (maybe 25 cents for the shoe companies). We just need them to maintain the business as usual.

Since the cash factor plays an interesting role in XinQuan valuation, if XinQuan stock price drops 50% tomorrow, that would means it is trading at net cash value. You pay RM10 and you get RM10 in their bank account (assume they didn’t steal the money and fake the book) plus all the future cash flow which is 40 cents per year!

Conclusion

XinQuan on its own is still a very good investment even with all the reasons I “hate” about them because the valuation is too cheap. But due to the existence of better alternatives, I didn’t “weight” it so heavily when allocating my capital.

Disclosure: Long XinQuan, MSports & XDL. I might buy and sell anytime without SMSing you!

Disclaimer: This is not a recommendation to buy or sell. Information can be wrong. Invest at your own risk.

Multi Sports is a moatless business, with almost no competitive advantage. They make shoe soles that any businessman can do. Anyone can build a factory, buy some machines and start producing.

It is based in China JinJiang city, the “shoe production city” that produce 40% of the shoes in the world. It is said that there are 3,000+ shoe companies in JinJiang alone. 3,000 and increasing! Everyone what a piece of the pie.

We have 4 China companies listed in Malaysia and 4 of them are shoe makers! Why do they want to list in Malaysian instead of Shanghai or Hong Kong? Because they are too small. At first, they wanted to be listed in Singapore but due to some S-Chips issues (fraud, etc) and bad sentiment in Singapore, they changed their course and moved to Malaysia.

Multi Sports is definitely not a wonderful business. As a value investor, we “wish” to buy wonderful business at wonderful price (cheap price). But the problem is, wonderful businesses don’t go on sale very often. Even if we manage to buy, most of the time we are only able to buy them at fair price, not cheap price.

No matter how cheap a business look like, if it is a mediocre business that keep losing money and burning cash, we don’t want to buy it. Because the “look like cheap” price will soon become “expensive”.

Now, there is something in between. What if you can buy a fair business at very cheap price? Kekekeke, that is how the early Warren Buffett and the now Mohnish Pabrai makes a lot of money from.

If you say these shoe makers are suckers, their financial performance don’t look so!

Most of the MSports numbers above are pre-listing numbers. That means they can cook the books and fake all the numbers.

We have 4 reporting quarters from MSports post-listing in Bursa which I believe are more reliable numbers (2Q-2009 to 1Q-2010). I also managed to dig up 2 more early quarters from the same reports when they do a comparison with “previous quarters”.

* I have adjusted all EPS by assuming we have 360 million shares for all quarters.

Shoes have seasons (you buy more new shoes on Chinese New Year and more ice skating shoes in the winter). So you can’t simply take the last quarter number and multiply it by 4 to project the full year. Some quarters are meant to be strong, some are meant to be weak. Each quarter must be compared with the same quarter last year, i.e. 2Q 2009 with 2Q 2010.

Looking at the 6 quarters, we can compare 4Q and 1Q and notice the significant growth they have. Revenue grow an amazing 60%! Net profit and EPS grow 50%!

EPS in RM is 17 cents for the trailing 4 quarters. The shares are selling at around 42 cents, giving us a PE of only 2.5! There are only 3 possibilities.

1. MSports is a total fraud, they cook the books and fake all the numbers.

2. MSports is a lousy business, the numbers won’t last.

3. This is a killing stock, the next AXREIT/HAIO play.

The reverse or PE is the earning yield. At PE 2.5, earning yield is 40%. That means if you are able to buy the whole company at PE2.5, you can get a return of 40%! PE 2.5 also means you can get all your money back in 2.5 years PLUS the cash machine totally free (factories, employees, management, trade marks…).

PE2.5!!!

PE 2.5? PE 2.5? PE 2.5? PE 2.5?!!!?!?! Sorry for the repetition but PE2.5? Even lousy businesses and those who are accused of fraud are not trading at PE2.5?! Is PE2.5 justify for MSports?

Let’s say today you want to own a franchise business, something like Secret Recipe or Big Apples. You have to take up initial cash investment of 2 to 3 times “forecasted” earnings! (means PE 2 to 3). And you have to manage the store yourself, hire your own staffs, do the payrolls, pay the rentals, electric bills, make the donut and put some cream on it … you also need to do the accounting, file the tax return, etc. Not only you need to invest the money, you also need to invest your time and effort. You invest everything in 1 store and if the forecasted earnings cannot be achieved, you are screwed. You can’t sell a money losing business. Even if the business is profitable, you can’t expect high growth. Sooner or later, your landlord will increase you rental to take away more profits from you.

On the other hand, MSports is a listed company! You don’t need RM500k up front to make 1 investment. It’s OK to just buy 5k. And if something goes wrong with the company, say it lost a lot of money and it tanks 50%, you can still sell it with a few clicks for 2.5k. You can’t do that for a private business like Secret Recipe. Worst, you can’t even terminate it half way because you are locked in with your tenancy agreement. You might even lost more then what you have initial invested because you need to keep paying rents!

You also don’t need to manage a listed companies because the CEO, CFO and COCO are already paid to do the job. The most you need to do is your initial research and your subsequent follow up on each quarter results and other occasional  big events. Most of them are significant shareholders holding large stake in the business means they are on the same boat with you.

But we must ask, why MSports is trading at PE2.5 now? Will it remain at PE2.5 three years later? Can it maintain it’s E for the next 3 years? It helps a lot if we know why it is so cheap today and if we are confident that the “cheapness” won’t last, it can be a very good investment.

Hint: Do you know that if the PE double to 5, you get 100% gain? And PE5 is still “below normal” PE!

The Multi Sports IPO and Shareholdings

IPO 100,100,000 Ordinary Shares @ RM0.85. Listing on 19 Aug 2009.

Public Issue Of 57,600,000 New Ordinary Shares

• 18,000,000 Malaysian Public

• 39,600,000 Private Placement To Selected Investors;

Offer For Sale Of 42,500,000 Ordinary Shares – Private Placement To Selected Investors

It is difficult to explain thing this way, you can forget about the numbers above. Let’s explain it another way.

AFTER the IPO, we will have 360 million shares. Of this 360 million shares, 180 million (50%) will still be owned by the original owner (Mr Fire Stick!). 18 million (5%) shares are owned by individual like you and me and your grandma. 82.1 million (22% of the company) will be owned by rich-ass private investors and always-can’t-make-good-money-sucker funds.

Where does the remaining 23% goes? They are on the hands of 5 early investors – Lim Geok Tin, Fortune United Investments Ltd, Supreme Business Investment Ltd, Houton Ltd and Guoline Group Management which is owned by Malaysian billionaire Quek Leng Chan, the owner of Hong Leong Group. Quek alone holds 54million shares (15%)!

Uncle Quek. Sorry not your father.

Why The Price Free Fall From Day 1?

Investors who get in from the IPO must felt like parachuting or bungee jumping! The price almost free fall from IPO price of RM0.85 to around RM0.42 today, tanking more than 50%!

All thanks to our beloved Mr Quek.

Mr Quek started to dispose his 15% shares from the first day! He is not getting it at IPO price of RM0.85. He got all his shares on 12 May 2009 for USD $7 million through the “Novation Agreement” which I don’t know what is it. His estimated cost per share is around RM0.43.

In less than a month he has disposed more than 10% of his shares! 1 month! If he is able to unload all his stocks at an average of 50 cents, he will still make a good profit of 16% in 3 months!

It is believed that every other early investors has sell off too in the first few months. That means early investors that hold 23% of the entire company are running for the exit cashing for profits in the first few months!

What do fund managers do when a stock price tank? They sell. They are herds. That’s why mutual funds don’t make money! 23% of early investor sells. 22% of the fund herds follow to sells. What will your grandma do? Sell!

Titanic, “You run, I run!”

The price free fall. The good news is, the free fall has nothing to do with the fundamental of the stock. It is very normal for early investor to sell because they got their shares very cheap. It is their investment strategy to invest in a company in the early stage and cash out immediately in the IPO. Quek is not considered an early investor but as a “vendor”. Unfortunately I do not understand what it means so I cannot explain it.

What about the fund managers? Fund manager need to protect their high pay job and to do that they are not interested to beat the market. What they want is to mimic the market. If everyone sells, it is better for them to sell too because they need to be like everyone else, rather then being caught pant off holding the stock and get blame for keeping them.

The IPO is definitely not structured properly. Bursa should not have allowed giant investor like Quek to cash up immediately in the first day. But I am not here to debate right or wrong but to see if we can take advantage of this and make some good money. We might even need to thank Quek because without him, we might not have the opportunity.

Looking at the top 30 shareholders listing of MSports in annual report 2009, NONE of the early investors is still holding the stocks (as of 30 April 2010)! None! 23% of the early investors have fully sold off.

What about the funds and private investors? There are only 2 funds left holding the stock, i.e EPF and Uni Aggressive Fund. Both hold less than 1% shares in total! Almost 22% of the early funds has flee too (assuming no individual private investors)! All who left are the 50% owner Mr Fire Stick and your grandma and grandpa.

The good news, every big guys are out now, there is hardly anyone that can tank the price anymore. (Unless Mr ‘Stick’ sells his ‘stakes’).

I would like to say that for those who see Quek selling as a sign that MSports sucks is an incorrect observation. Quek is making lots of money selling his stake. He is not on the same ‘shoe’ as you, definitely not Multi Sports shoe. Again, his selling has nothing to do with the fundamental of MSports, it is profit taking.

Why Another Rights Issue In Less Than A Year?

They want to issue another 90 million shares in less than a year after the IPO. Many investors again think this sucks because they assume company asking for money a sign of weakness. They are also worried about earning dilution. But if you look at it carefully, it tells another story.

MSports has more than RM78 million net cash after borrowings in their bank account, why the F do they need to raise another RM20 million?! Their operating cashflow is so strong that they can just get the cash from there. So why?

Kekekekekeke. It has to do with Mr Fire Stick.

What a nice hair style! The most original Hokkien Lang.

Mr Stick has sold 19.8 million shares at RM0.85 in the IPO and cashed in RM16.8 million. He is now holding 50% of the company. Today, his company share is selling at only RM0.42. If he thinks his company is cheap, he can buy it back. Since he sell it at RM0.85 earlier, buying it back at RM0.42 is a very lucrative move (if he is confident with his company).

But buying back from the market will quickly move the price up, reducing the attractiveness at RM0.42. And because he is a significant shareholder holding more than 5% of the company, he needs to publicly disclose his buy and sell. If the public see him buying, herd-funds and individuals will rush in and push the price up very fast, making him difficult to acquire sufficient stocks cheaply.

The best way for him to quickly increase his stakes cheaply is to do a rights issue. With 1 rights for every 4 shares, he can easily increase 25% of his shareholdings effortlessly! What a brilliant idea! He doesn’t need to worry about pushing up the price. The price might even tanks more when uninformed investors start selling just because they hear the word “right issue”. What’s more amazing is that he doesn’t even need to pay for brokerage commissions!

The rights issue is not about raising RM20 million. The right issue is on how Mr Stick can acquire another 45 millions shares at throw away price effortlessly. I like brilliant management. It shows me Mr Fire Stick has brain.

Not only Mr Stick has committed to fully convert his rights, he is also committed to take up another 9 million excess shares if available. Brilliant.

I personally believe all 90 millions shares will be fully converted because 54 millions will be supported by Mr Fire Stick and 27.5 million rights changed hand in the last 5 days. These people who buy the rights from the market knows what they are doing and will surely convert all of them. I believe the remaining 8.5 million rights are being hold by original shareholders for conversion as well.

Dividend – The Market Price Catalyst

MSports suggests a dividend payout of 20% for 2010 and 2011. The bad news is that 20% is very little payout. The good news is that because it is very little, it can be done easily and there are also a big room to increase in the future.

Do you know what 20% payout ratio means when it is combined with a PE 2.5 stock? For every 1 ringgit that the company makes, you will receive 20 cents back as dividend. You are paying 2.5 ringgit to buy the company, you can getting a dividend yield of 8%!!!

Even if the stock doesn’t move at all, you will get 8% dividend every year! If the profit keep on increasing, so will your dividend!

MSports is still new (less than 1 year listed). When they start declaring dividends and honoring their dividend policy and when they are able to keep on reporting stronger and stronger earnings, the price has no way to go but UP. Remember my lesson #3 in my AXREIT/HAIO post?

Lesson #3. Some stocks have no other way to go other than UP! These are wonderful stocks selling very very cheap.

More Good News – It is Actually Cheaper Than PE 2.5!

PE2.5 are obtained without looking at the balance sheet, which is unfair to MSports because MSports is having more than RM78 million cash net of borrowings!

The market capitalization of MSports is 360M shares x RM0.42 = RM151 million. That means you can buy the whole company at 151 million. But they have RM78 million cash in their bank account (though most will be capex later), that means you are actually buying the whole company at RM73 million! This company is making RM62 million for the last 12 months and that is after expenses for the IPO! And the profit is expected to keep on growing.

Using the enterprise value (market cap – cash + borrowings), it is selling only at PE 1.x. That means if you run the company for another year with some growth, the company will have 151 million cash, the price you need to buy the whole company today.

Fundamentals, Fundamentals, Fundamentals

In value investing, we need to buy great companies at cheap price. We have done with the valuation and know this company is an extreme bargain selling at throw away price. But is the company great? Or at least good or satisfying? Because if a company is not good, the “cheap” price will soon become “fair” and later become “expensive” when the earnings drops.

ROIC (Return on invested capital) is the most important metrics of all. It tells us how well the management is deploying capital. But where is the ROIC in the table? There ain’t ROIC in the table, darling.

Since MSports doesn’t have a lot of borrowings, ROIC will be very similar to ROA (Return on assets). Since investing is not about precise science on how to cut a 0.00005 gram diamond so it can reflect 36 more light photons… ROA will work just fine. We can see MSports can do above 20% all the time, which is very very impressive.

Net margin tell us how much cushioning a business have in case the selling price drops and the expenses increases. With a net margin cushioning of 20%, it needs a harder hit before it can start bleeding (losing money). A competitor that has lower margin, say less than 10% will be slaughtered first in a market downturn which means stronger company can survived even stronger.

The tax rate is too low due to government incentive. But it will end next year and the tax rate will be 25% beginning 2011. This will reduce margin by almost 4%. Not significant but will affect the profits.

DSO (Days sales outstanding) is a measure of how many days they need to collect the money after a sale. At 40 days, this is a very very very fast collection period.

Cash is the most important cushion a business can have in bad times and the most important weapon for growth. At the end, it takes money to make more money. A company that can have high ROA can keep as much cash as they want as long as they can continue to deploy the cash at such high ROA.

Inventory turnover is the most impressive metrics of all. Inventory only need to sit on the MSports factories for 2 weeks and will be sold and turn into cash! That means not much money will be locked into inventory. Although I am quite skeptical about this performance but after comparing it with other companies and look at MSports business model, I think it is achievable. Shoe soles are commodity and they are all pre-ordered. Once you get the material and manufacture it, you can immediately ship it to your customers (which is almost all are in JinJiang city too).

Referring to the income statement table earlier, the drop in profit on Q2 and Q3 are due to the IPO listing expenses.

Although there are 3,000 shoe makers in JinJiang that makes 40% of shoes in the world. There are only 100+ that makes shoe soles (the most important part of the shoe) and MSports is “said” to be one of the biggest 5. And since it is the first sole maker that get listed and expanding fast, we hope it can attain first mover benefit and increase market share.

MSports factories are running at over 90% utilization rate. If they need to take in more orders, they will need more production capacity. That’s why they are very aggressive in expansion so they can increase their production capacity.

MSports growth will be explosive (hopefully). Our beloved Mr Fire Stick wants to triple the annual production from 24.6 million pairs to 74.6 million pairs in three years.

In 2008, Multi Sports had a 1% market share of China’s 2.1 billion pairs of rubber/plastic shoe soles production and 0.2% market share of the 10 billion pairs in the footwear soles sector in China, based on its output of 22 million pairs of sports shoe soles.

They also have an order book of 3 times it’s current production capacity. I don’t understand how come they dare to take up 3 times more order that they can produce but I believe they are confident that their new production line will be online very soon.

The money raised from the IPO has been put into use on increasing the production capacity by building more factories. A new land at Xibin has been bought that come with two 6-storey factories.

There are certainly a lot of room to grow and a lot or market share to take up.

What If The Price Remain Cheap For a Long Time? It Can Be Acquired!

The #1 shoe sellers in the world is Nike. The second? Adidas. But in China, Adidas is not #2! Li Ning, a China home grown sports brand has overtaken Adidas this year. It won’t take long before it beats Nike in China.

What/Who is Li Ning? Li Ning is a well known China gymnast who stunned the world by winning 6 medals in the 1984 summer Olympics. He is the man who “walk on air” around the “bird nest” in Beijing Olympic to torch the Olympic fire! And now he is managing a company that just beats Adidas in China.

Imagine if MSports remains cheap for the next few years while the fundamental never deteriorate. They continue to churn out cash and pay out dividends but it just remain at PE2.5. What can happen?

Big shoe companies like Nike, Adidas or Li Ning can just buy over the entire company! These stocks are traded at PE over 10 all the time. If they can buy a company at PE3 and merge their E into their parent company, they will increase their profit and market price a lot!

If a company makes 1 million and sell at PE10, it is worth 10 million. If this company buys another company with 100k profit at PE3, it only needs to pay 300k but his new combined company will now make 1.1 million and so worth 11 million (PE10) in the market! It “creates” extra 700k of “value”. This is how big companies like to “grow”.  It would be even fancier if this big companies can just issue shares to acquire the company, issuing a PE10 stock certificate to buy a PE3 stocks.

Multi Sports business and production can easily fit as a subsidiary for the big shoe companies, we have many such big companies out there that are competing with each other, Nike, Adidas, Asics, Li Ning, Anta, DongXiang, XStep, etc. This is not a company that build space ships, we can easily find a buyer for the whole company.

What Else Is Depressing The Price Right Now?

The early investors (QUEKKKKK!) dumped the stock earlier. The fund managers followed like herds. The rights issue scares away even more investors. What else is depressing the stock?

China Hong Xing, another shoe company listed in Singapore saw their profit drops by 90% in a quarter. They have so many cash that their stock is traded below net cash! Surprise! But it is very weird that the company still doesn’t want to pay out dividend. Management is giving a lot of lame excuses. Investor are now questioning if the cash is really there! China Hong Xing does look like a fraud to me.

There are many other China listed stocks in Singapore (known as S-Chips) that is having problem right now. You can easily Google for more information. Even Chinese companies listed in the US are being accused of fraud, i.e. NEP, CSKI, ONP, CMFO, LIWA and FUQI just to name a ‘few’.

Sentiments on these China stocks are very bad all over the world.

What If It Is Really a Fraud? Another Hong Xing?

Yes, it is possible. That’s why you need to do your homework and have your own conviction. If it is selling at a normal PE of 8 or 10, then it is really not worth looking at. But at PE2.5 it deserves a look because by just doubling the PE to 5, we will double our money. And PE5 is still a very conservative PE because most of those fraud companies in US still trade higher than this based on the “fake” E!

So if it is really a fraud and it fake its numbers by 50%, we end up owning a PE5 stock with a 4% dividend yield. Still look great! The PE2.5 itself is already pricing it as a fraud-lousy-dirty-bitch company. So if it is really one, how much more can it drop? BUT, what if it is not a fraud? Use your imagination.

A look at the financial numbers doesn’t show any concern. A comparison with other companies in the same industry shows that they are in the same trend. The problem is more on the competition and maybe over supply in the future instead of fraud. But I am not betting on it for 5 or 10 years. A 3 year holding period is sufficient. If after 3 years we get a PE of 6 with some reasonable growth plus the 20% dividend payout ratio, we will be very very fat.

There are 3,000 shoe companies in JinJiang alone. Many of them will be slaughtered. But some will survive and become stronger. Because we will always need shoes! The question is, which one will survive and which one will be slaughtered? How long more can MSports maintain its margin and utilized its production capacity? How will the increase of China labor cost affect the business? These are more serious concerns. But at PE2.5, I am willing to take all the risk and bet big on it.

Padini makes almost the same amount of money as Multi Sports. Padini is selling at PE10. Is Padini 4 times safer and better than Multi Sports? Petronas Dagangan (PetDag) is a stable business that operates all Petronas stations in Malaysia. It is safe but at PE12.5, is the risk and reward 5 times better than MSports? MSports risk is insured by the very low valuation and high dividend yield, but the upside is massive and explosive. Big shoe companies can take it over by a snap of fingers.

Head I win, tail I lose a little.

Credit: A post on China Apeks in Bursa that sparks my interest. A great blog.

Disclosure: No Positions.

Disclaimer: This is not a recommendation to buy or sell. Information may be wrong. Invest at your own risk.

Related:
- Multi Sports Homepage
- Multi Sports Annual Report 2009 (PDF)
- Multi Sports IPO Prospectus (Recompiled Searchable PDF)
- Multi Sports Rights Issue Prospectus (Recompiled Searchable PDF)
- Multi Sports News Tracking at PG8.net
- Multi Sports Arbitrage Play

Initially MSPORTS has 360 million shares. They issue 1 rights shares for every 4 ordinary shares, so you get 1 right share for every 4 shares you have. They are issuing a total of 90 millions rights shares (360 divided by 4).

The 50% owner of MSPORTS (whose Chinese name translated to Mr Fire Stick!) are committed to convert all of their rights shares, so 50% of the rights shares will not be sold in the market. We are left with 45 millions.

Monday we saw 2.5 million right shares traded.
Tuesday 2 million.
Wednesday (today) 7 million!

We think people are logical, but most of them are not. We have 12.5 million rights shares traded in 3 days. Who are the sellers? What is in their mind? Do they know they are throwing money away?

Are there really people who is stupid enough to throw away money? Yes, in the stock market, they do it all the time! That’s why, sometimes money really fall from the sky and you can pick them up in the stock market.

Only people who initially own MSPORTS shares will get MSPORTS-OR (the rights). That means the main sellers of MSPORTS-OR must be the initial shareholders of MSPORTS.

Let’s make some numbers. Please get your calculator ready and keep punching the numbers.

Assume Mr Ice Wood (brother of Mr Fire Stick) has 300,000 shares of MSPORTS, he will receive 75,000 MSPORTS-OR rights shares (300,000 divided by 4).

Each MSPORTS-OR can be converted to MSPORTS by paying RM0.38 per share at the end of the month. The converted MSPORTS is exactly the same as the MSPORTS you can buy in the market today.

Normally, we will think Mr Wood has only 3 choices. He can

#1. Take out additional RM114,000 (75,000 x RM0.38) and convert all rights shares to ordinary shares. He will end up having 375,000 MSPORTS shares. Note that he needs to take out extra cash.

#2. Sell MSPORTS-OR in the market and get some money back. He will still have 300,000 shares. People thought that they should choose this when they don’t have the money to convert. But that’s not correct, we will see why.

#3. Do nothing and let MSPORTS-OR expired. He will convince himself that he has not lost anything because he is still having 300,000 shares.

Choice #3 is obviously a sohai choice because it is the same as throwing money into the sea. But don’t laugh! There are many sohai like this because they don’t know what to do with them and before they figure it out, they are already expired! The only valid reason to choose #3 is that you have too little rights shares that selling them cost you more brokerage fee than what you can get back.

What we are seeing now in the market for the last 3 days is that people picking choice #2. Since it is worth only a few cents, they decided to sell it because they thought it is insignificant. As I said earlier, this is not a smart choice.

Choosing #1 make the most sense because you initially own MSPORTS and now you are allowed to buy more of it at a discount to the market price, it is very logical to top up as long as you have the cash. Because if you don’t like it, you shouldn’t have bought it in the first place. You won’t have MSPORTS and you won’t have MSPORTS-OR and you have nothing to worry about.

Now, even if you don’t have the cash to convert your right shares, you shouldn’t choose #2! You have a 4th choice that most people will miss. Let’s learn from Mr Wood.

Mr Wood is an intelligent investor. Not only he will keep all his MSPORTS-OR, he is also going to take advantage of the people who are selling MSPORTS-OR (i.e. choosing #2) by playing what Warren Buffett calls – the arbitrage.

The volume is very high today for both MSPORTS and MSPORTS-OR. MSPORTS-OR can be converted to MSPORTS for RM0.38. Since a converted MSPORTS is exactly the same as the MSPORTS that you can buy from the market today, they should be worth the same.

MSPORTS-OR “should be” selling as MSPORTS market price minus RM0.38. But as I say, stock market is a monkey forest where sohai will do a lot of monkey stunts and still think they are funny.

For the last 3 days, you can easily get MSPORTS-OR at a discount to MSPORTS in the range of 1 to 2 cents. Please be reminded that 1 to 2 cents for a 40 cents stocks is equaled to 2.5% to 5%!!!

Mr Wood can easily make a profit of 2.5% risk free with a few clicks if he accepts the fact that there are really many people who enjoy throwing money away in the market.

Mr Wood doesn’t even need any cash! All Mr Wood needs to do is to sell all his MSPORTS shares and purchase an equivalent amount of MSPORTS-OR! It doesn’t matter how much he bought his initial MSPORTS (doesn’t matter if it is RM0.20, RM0.40 or RM0.60). He just needs to sell them and immediately pocket some free money.

[Note: I really did what Mr Wood did]

If Mr Wood sell all his 300,000 MSPORTS at RM0.42. Assume he does it with HleBroking.com, his brokerage rate will be 0.21% (0.42% if the traded amount is below RM100,000). The net price received will be RM0.4186 after ALL brokerage fees, stamp duty and clearing fees.

Since MSPORTS-OR is always selling at a discount, Mr Wood can easily buy in 300,000 MSPORTS-OR at RM0.02 to RM0.03. Of course the cheaper he can get, the more free money he can get.

The good news about converting a right share to ordinary shares is that you don’t need to pay any brokerage fee, clearing fee or stamp duty!!! These fees will easily add up to 0.5% in normal trading.

The fee you need to pay to convert right shares to ordinary shares is only RM12 at Maybank2u and RM26 at HleBroking, which is really insignificant.

The following chart shows the % gain Mr Wood can get based on 3 different purchase prices of MSPORTS-OR.

Did you see it now? Even if he is buying the right shares at 3 cents and selling the mother share at 42 cents, he can still pocket a 2.1% gain after fee.

It doesn’t matter what exact price Mr Wood is selling his mother shares and what price he is buying the rights shares. What matter is the spread between the selling price and the final conversion price (rights price + RM0.38). To get a 1 cent spread, he can sell mother shares at RM0.43 and buy right shares at RM0.04, or he can sell mother shares at RM0.40 and buy right shares at RM0.01.

There are 68 million MSPORTS shares and 71.5 million MSPORTS-OR shares traded today. Volume are very high on the evening session. Looking at the day charts below, any MSPORTS holder can easily use Mr Wood’s strategy to pocket some free money. And they can even get a 1.5 cents or even 2 cents spread easily!

Now you can see why people who choose #2 earlier, i.e. selling the rights shares to get a few cents back is not intelligent. Because even if he doesn’t have the cash to convert the right shares, he should have sell the mother shares and not the right shares and later buy back sufficient amount of rights shares that he can afford to convert. By doing this he can get free money from the market. It doesn’t make sense to sell the right shares because doing so means you are the one giving out the money (to people like Mr Wood)!

Now, if people who are selling MSPORTS-OR are sohai, did you notice that those who buy MSPORTS in the market are also sohai? Why on earth should you do that?!! That is totally insane.

If you buy at market, you need to pay 43 cents. If you buy the rights shares at 3 cents and convert it into ordinary shares, you only need to pay 38 + 3 = 41 cents! Why on earth you want to pay more for the the same thing?! Some more, converting right shares cost only RM26 but buying at the market is subjected to full brokerage fees!

There are RM2.9million traded on MSPORTS just today. Are you shock with the amount of sohai we have in the stock market?

Back to Mr Wood, he will receive RM125,571.60 selling his 300,000 MSPORTS at RM0.42. He needs to pay RM9,030.60 for buying back 300,000 rights shares at RM0.03. Then he will need RM114,000 to convert them back to MSPORTS. His conversion fee is only RM26.

He just pocket RM2,515 net of all fees with just a few clicks online with no cash required! All he needs is a little understanding. (RM125,571.60 – RM9,030.60 – RM114,000 – RM26) He can easily get more than that by selling MSPORTS at higher price and buying MSPORTS-OR at lower price, i.e. getting a bigger spread.

What is happening this week won’t happen everyday. And even when it happens, you are still not making big money. But the whole point is that, this money is given to you FREE without much effort. If you already own MSPORTS, understand it and want to continue holding it, it is basically FREE MONEY from the market. It needs just a few clicks with no extra cash required. You are taking advantage of market discrepancies, you are doing arbitrage. 

Why choose to do nothing when doing almost nothing give you some FREE money?

Disclosure: Long MSPORTS-OR that will be fully converted. Why hold MSPORTS?

Related: Multi Sports Holdings Ltd Company Review.

What is so confusing and interesting is this -

SINOTOP is actually selling for RM0.65 while the right is sold at RM0.12. It means, if you want to own SINOTOP shares, you can either buy directly at the market now at RM0.65, or you can buy the right share (SINOTOP-OR) at RM0.12 and exercise it to get new shares at RM0.20 with a total cost of only RM0.32!!! A discrepancy of RM0.65 to RM0.32, 100% differences!!!

What went wrong? I don’t know yet. But at least what we know is, if you are a holder of SINOTOP shares, the only sane thing to do is to sell every SINOTOP you have and bought an equivalent amount of SINOTOP-OR and fully exercise them. By doing that you will reduce your cost by 50% immediately!

Again, I know nothing about this business. And I don’t like textile company either (Berkshire Hathaway used to be a textile company that failed, a Warren Buffett investment ‘mistake’).

Calculating the pricing or market share price and the right price is not simple mathematics (at least to me). It reminds me of the time where I needed to calculate the amount of electrons in a silicon and the dy/dx… I hate those and doing this right issue calculation now make my head spin again like old time. But still, let me try my best on it and we learn together.

Every time there is a right issue, you need to make 2 formulas (actually 3). The 2 formulas allows you to link the market price BEFORE the right issue with the market price AFTER the right issue. Because after a right issue, the market price will immediately drop. You can only compare the BEFORE and AFTER price if you can either convert the AFTER price to BEFORE equivalent or convert the BEFORE price to AFTER equivalent.

It is like changing from kilograms to pound or kilometers to miles … you can only compare the market price either using the AFTER metrics or BEFORE metrics. Say today the AFTER rights price is RM0.65, what is the equivalent price BEFORE the rights issue? And 1 month ago, the BEFORE rights price is RM0.85, what is the equivalent AFTER rights price today?

The 3rd formula is actually the SINOTOP-OR (the right share) price. This is the most straightforward formula. We will later use this formula to get the other 2 formulas.

Rights Price = Market Price after rights issue – Rights Issue Price

(note: rights price is the rights market price, rights issue price is the strike price, the exercise price)

SINOTOP-OR = SINOTOP AFTER – RM0.20

The right shares, like call options and stock options, allow you to buy the underlying share at a fixed amount, that’s RM0.20 (geeks call this ‘strike price’). So technically, the right price will simply be the market price minus the strike price. Because you either buy directly at market price, or you buy the rights shares first (like paying upfront deposit) and pay the remaining later when you exercise it. No matter which way you do, you are getting the same thing in the end, the SINOTOP shares, the same apples.

If SINOTOP-OR is trading below SINOTOP AFTER – 0.20, we say it is trading at a discount, because by buying this ‘apple’ via the rights issue, you get the apple cheaper by buying it directly in the market.

On the other hand, if SINOTOP is trading above SINOTOP AFTER – 0.20, we say it is trading at a premium, because this apple is now more expensive than the market price.

“Usually”, we seldom see behavior like SINOTOP where there is a significant difference between the rights price and the market price (a big discount in this case). Usually they are almost the same, either slight discount or slight premium.

Uninformed investor who sell SINOTOP-OR is understandable because rights shares have short life, usually a week (geek call it the ‘expiry date’). After this date, your rights is worthless and you can no longer sell it in the market, the only thing you can do is exercise it at the strike price and get new shares. So the only reason you want to hold rights shares is to exercise it. To exercise it, you need to take fresh money out from your wallet. So if an existing shareholders who doesn’t plan to exercise the rights or have no money to exercise the rights, he will have to sell the rights shares before it expires to get some money. Or else, he will get nothing after they expire!

And since SINOTOP is issuing a massive 10 rights share for 1 existing shares, existing investors suddenly have 10 rights share, they either have to come up with the 10 rights share money or they will have no choice but to dump it at the open market. And they can only sell within a week! Lots of supply in a short period of time, but no demand.

That’s why next time if you encounter such scenario where one of your stock holdings is issuing massive rights and you still want to own this stock, sell some of it before you get the rights to raise your cash and then buy back back again through the rights. Do not plan to sell the rights because many people are trying to do the same and you won’t get good price for your rights!

[Many companies issue rights but usually they don’t issue 10 right for 1. They normally issue say 1 right for 4, or 1 right for 8 so that is acceptable and it won’t create too much sell supply to the rights shares, like BSTEAD and AXIATA previously]

What went wrong with SINOTOP is still unknown, and why got sohai buying up at the market is also unknown! Because I have shown you, it didn’t make sense to buy at market price and sell the rights! Instead you should do the other way, sell at market price and buy the rights!

If you do not have the 2 formulas in hand, you can’t compare the differences BEFORE and AFTER and so you won’t be able to know how much the market price of SINOTOP has shot up since the rights issue. Let’s derived the 2 formulas.

Market Price before rights issue = Market Price after rights issue + ( Ratio x  Rights Price )

The Ratio is 10:1 so is 10. The Rights Price has been derived earlier. Replacing the ratio and rights price, we get

SINOTOP BEFORE = SINOTOP AFTER + 10 ( SINOTOP AFTER – RM0.20 )

SINOTOP BEFORE = SINOTOP AFTER + 10 SINOTOP AFTER – RM2.00

SINOTOP BEFORE = 11 SINOTOP AFTER – RM2.00 … formula (1) to convert the AFTER price to BEFORE price equivalent for comparison.

By reversing the formula, we get

SINOTOP AFTER = ( SINOTOP BEFORE + RM2.00 ) / 11 … formula (2) to convert the BEFORE price to AFTER price equivalent for comparison.

Actually they are the same formula, depending on whether you want to convert km to miles or convert miles to km.

Since the right will expire very soon (in a week) and cease to exist, so this 2 formulas are more important than the rights formula earlier. The rights will be RM0 after it expires.

To make sense of SINOTOP, just the day before the right issue, it was traded around RM1.60. Just a day after the right issue, it was around RM0.40. To link this 2 numbers together, you can either convert the BEFORE price to AFTER or the AFTER price to before. You can use either formula.

If it is RM0.40 AFTER, what it is the equivalent BEFORE?

SINOTOP BEFORE = 11 SINOTOP AFTER – RM2.00

  = 11 x RM0.40 – RM2

  = RM2.40

That means SINOTOP has ‘technically’ shot up from RM1.60 to $2.40 in terms of BEFORE price, a 50% raise in high volume in 1 day!

4 days later, the AFTER price shoot up to RM0.65. Converting it to BEFORE price, it would be RM5.15!!! 220% gain from RM1.60 in 4 days after the rights issue. No wonder BURSA is issuing them questioning letter. But the directors responded in the same way, “we are not aware of anything.”

This is more mysterious when you take into consideration that just 1 month earlier, the BEFORE price is only RM0.85. An increase from RM0.85 to RM5.15 in 1 month is 500%!

And even MORE mysterious is that there are rights shares pending that sell for only RM0.12 with an issue price of RM0.20! Again who is the sohai who buy SINOTOP at the market but refuse to buy the SINOTOP-OR and exercise it to get SINOTOP shares for 50% discount to market price?

It is possible that I did the wrong calculation above, if you spot any mistakes, please let me know as I am eager to find out too.

To make more sense, let’s get back to basic formula that normal investor can understand easier.

A BEFORE investor who buy at BEFORE price will now be holding the same stock at AFTER price + 10 rights shares. This is our basic formula.

Market Price before rights issue = Market Price after rights issue + ( Ratio x  Rights Price )

SINOTOP BEFORE = SINOTOP AFTER + 10 Rights Price

The investor might be thinking that since BEFORE the rights, it is at RM1.60, and AFTER the right, it is RM0.65, so they estimate that the “right” rights price should be

Rights Price = ( SINOTOP BEFORE – SINOTOP AFTER ) /10

That way they get the rights price at (RM1.60 – RM0.65)/10 = RM0.095. If they are able to sell their rights shares above RM0.095, they are still much richer than before by holding the “inflated” RM0.65 SINOTOP shares.

But I don’t think they should be too happy because the pricing of SINOTOP after right issue is far way off from logic. As I have shown you, RM0.65 means an equivalent of RM5.15 for the BEFORE price! A jump of 220% in 4 days! Unless you have unloaded everything (both the shares and the rights), you are “richer” because you are relying on the inflated SINOTOP share price.

Problem #1 – SINOTOP price is highly inflated. It jumped 220% in 4 days.

Problem #2 – 50% mispricing between SINOTOP and SINOTOP-OR. Buying SINOTOP-OR to get SINOTOP is 50% cheaper than buying SINOTOP at market. But they are the same apple!

Let’s turn the mirror and use formula (2) to compare in AFTER price.

SINOTOP AFTER= [ SINOTOP BEFORE + RM2.00 ] / 11 … formula (2)

Before the rights issue, SINOTOP is trading at around RM1.60. So technically, SINOTOP AFTER should be worth RM0.33 after the right issue if it is equivalent to RM1.60. But it is RM0.65 now! Almost 100% jump in 4 days.

The pricing of the right is about “right” right now [sorry for using 3 right words in 1 sentence].

Because if you get the right at RM0.12, and exercise to get the stock at RM0.20, your total cost would be RM0.32, almost equivalent to the RM1.60 price before the right issue. So now we know getting the shares through the rights “right” now is almost the same as buying it at RM1.60 before the right issue.

And since one month ago it is traded at only around RM0.85, the equivalent AFTER price would be only (RM0.85 + RM2.00) / 11 = RM0.25!!!

I also think formula (2) is a better metric to use than formula (1) because it can explain in this way – If you have bought the SINOTOP shares before the right issue and you exercise all your rights, what is your average cost for your SINOTOP shares? If you bought it at RM1.60, and exercise all shares at RM2.00, you got 11 shares in return. So averaged cost is RM0.33, which is formula (2). Selling it later at RM0.65 gives you a profit of almost 100% based on your cost.

Formula (2) is also the formula to adjust historical pricing in stocks charts before the rights issue.

So if you are a SINOTOP shareholders or plan to buy SINOTOP, it is your homework to know if SINOTOP is really worth RM1.60 BEFORE the rights issue (which is equivalent to your cost of RM0.32 right now if you buy through rights). If it is not worth RM0.32 right now, it is definitely not worth RM0.65.

The market price now is inflated to RM0.65, if you are buying the rights to get the shares, do you think the stock price will still be RM0.65 after you get the shares (around 1 month)? If yes, you will make a 100% profit! You will be profitable as long as it is above RM0.32. But really got naked woman walking on the street? Some nude beach got but is this the rare nude beach?

I got itchy and bought a little bit of SINOTOP-OR before I do any homework (bad role model). I do so to motivate me to work out the numbers (lame excuse) and now I have to admit that I wish I have not bought any. I either have to sell it at a loss tomorrow or work out the real fundamentals numbers of Be Tops before I decide if I want to go ahead and exercise the rights.

Ahhh, pain in the ass. If you know anything about SINOTOP or saw any mistakes I made in the calculation, please write a comment below. Thank you.

p/s Why using formula (1) gives us 220% gain while formula (2) is only 100%? This is because when we compare in BEFORE price, the new rights shares haven’t exist and we need to deduct the cost out from it ($2). So the % gain is based only on initial cost buying the pre-right shares only (without including the new cost to buy the new shares). On the other hand, formula (2) which is more realistic, averaging the gain with all shares and cost. I have to admit, I am confused myself.

If an investor bought RM10,000 of shares before the rights issue at RM1.60, he got 6,250 shares. After the right issue, he will get 62,500 right shares and if he exercised them all at RM0.20, he will need another RM12,500, making his total investment RM22,500 and he will now have a total shares of 68,750. If the stock is selling at RM0.65 today, his whole investment will be worth 68,750 x RM0.65 = RM44,687, which is almost 100% gain. Which is formula (2).

On the other hand, if we use the “unrealistic” formula (1), we need to get back to the time where there is no rights issue. So although the whole investment is worth RM44,687, we need to deduct the investment cost of RM12,500 to it, and get RM32,187. That will be a gain of 220% comparing to the cost of RM10,000. We have assume 0% gain from the shares obtained from the rights shares and attribute all profits to the pre-rights shares. Not an accurate representation.