Hong Leong Finance

[weijian]

I think you may be somewhat abusing the phrase "asymmetric bet" here. I believe what Nassim Taleb was referring to something like you structure your "bet" such that if you win the bet, you make a small amount, if you lose the bet, you lose a large amount. The probability of a win being much greater than a lose". This is the classic description of the tail risk seen in the GFC. e.g. AIG insured a pile of AAA rated mortgage securities and received nice premiums for a few years until it all blew up.

In this case, I believe HLF does not have the growth potential of its big brothers. But neither (I hope) does it have the potential for a big loss event either. So its fairly symmetric and less risky (read volatile asset price). Since 2005, DBS max price was about $23 and min price $7.5 (at the depth of the GFC). HLF ranged from $4.2 to $1.7. The shapes of the charts are not dissimilar but the DBS variation in percentage terms is greater, not considering dividends yet (which I believe HLF is slightly better). Also, as I mentioned before, in terms of monitoring HLF, I mainly would have to look at the risk of an extreme property market and/or an extreme credit market - anything less, I would shrug off as "business cycle". I don't have to worry that HLF has done some risky bet, over exposed to some O&G company, has sold structured notes that it would get censured on, engaged in an over optimistic M&A, has exposure to some other country's credit bubble etc.

https://sg.finance.yahoo.com/q/bc?s=D05....&z=l&q=l&c=
https://sg.finance.yahoo.com/q/bc?s=S41.SI&t=my

@tanjm,
I have to admit I did not follow strictly the definition of "asymmetric bet" by NT. Maybe i shouldn't have typed out his name at all, since his name does seem to generate much "controversy on VB". Nonetheless, i apologize for using the wrong references, and hence delivering the wrong message across on an online forum that only communicates itself through words.

My usage of the word "asymmetric bet" was used in reference if i were to invest in HLF, versus investing in DBS. So, DBS has a larger capacity to ride the upturn than HLF due to it larger operating leverage from lower cost of funds. The bigger variation you observe or price gains, might be a manifestation of that. On the downside, while HLF is supported by a tycoon, it cannot be compared to that of the support by the Gov, of DBS. (d.o.g had kindly once listed out his past observations of the Gov's support for DBS in the last 20years during each crisis). So my asymmetry simply refers to the differences when i observe between HLF and DBS as a pair.