Speed Reading - Part VI

INSPECTIONAL READING - SUPERFICIAL READING

We are still at the Inspectional Reading Stage focusing on ‘What is the Book about?’ Inspectional Reading itself comprises of two stages:

1. Systematic Skimming; and
2. Superficial Reading.

Systematic skimming has already been covered in my earlier post. This post will cover the second stage, namely Superficial Reading.

The purpose of Superficial Reading is to enable us to read through the book continuously, so that we can grasp the flow and general thrust of the book. By doing so, we can understand the major points highlighted by the author and follow his line of reasoning.

There are three main steps to Superficial Reading:

1. Continuous Reading
In Superficial Reading, especially when reading a difficult book, read through without ever stopping to look up or ponder on the things we do not understand right away. Just pay attention to what we understand and read past the points that we find difficult to grasp. Continue with the ‘flow ‘of the book and ignore any potential stumbling blocks in our way. Even if we understand less than half the book, we will have grasped the overall thrust of the book. This will help us when we reread the areas we did not understand earlier.

2. Do not consult Extraneous Materials
Never consult a dictionary at this stage! For most of us, English is not our native language. As such, we have a tendency to refer to the dictionary for every word we don’t understand. DON’T DO THIS! Do not consult any dictionary, encyclopedia, footnotes, scholarly commentaries and other extraneous materials at this stage. JUST KEEP ON READING!

3. Look at the Forest, not the Trees!
At this stage, imagine that we are eagles soaring high above the sky. Our aim is to obtain a bird’s eye view of the forest. We want to see the BIG PICTURE and understand what the whole book is about and enjoy ourselves.

Conclusion:
How many times have we picked up a book, only to interrupt our reading by consulting the dictionary? We then jot down the meaning of the word on the book and try to continue reading. Suddenly, we find that we’ve forgotten what we read earlier and have to start all over again.

If you do this, it is very likely that you will NEVER finish reading the book. Most likely, you’ll stop at page 10 and that’s the last you’ll ever see of the book. So, avoid this temptation! I promise you, if you read continuously as suggested, your reading skills will improve!

My future post will cover the Third Stage of Reading, Analytical Reading. This stage of reading is intensive, so stay tuned, if you are interested in learning about Analytical Reading.

Basics of Investing - Part VIII

The Oil Corp Saga: A Vexatious Variation Order!

Before investing, it is important for one to understand the role of external auditors and regulators. Since most people base their investment on the Annual Audited Financial Statements, there must be integrity in these reports.

Here’s an intriguing case on a dispute between Oil Corp Berhad, a public listed company in Bursa Malaysia and its’ auditors, Messrs. Baker Tilly Monteiro Heng (BTMH).

The Issues:
BTMH was adamant in its' stance that the value of the contract awarded to one of Oil Corp's subsidiaries by PBC was only worth RM90 million despite Oil Corp's insistence that it was worth RM110 million.

To resolve this dispute, Oil Corp then engaged Messrs. Horwarth (also an auditor of PBC) of to carry out an Independent Verification Report on this contract. Messrs. Horwath agreed with the valuation of RM110 million on the contract, subject to several disclaimers.

However, BTMH refused to budge and insisted on issuing a disclaimer of opinion on the audited financial statements of Oil Corp Berhad. A disclaimer of opinion means the auditors are unable to form an opinion on the truth and fairness of the audited financial statements. Such an opinion basically mean something is *VERY* WRONG with the audited financial statements.

As a consequence, Oil Corp's shares are suspended from trading as they are under PN17 status.

Timeline of the Oil Corp Saga…

The Implications:

1. External Auditors Taking a Stricter Stance towards Clients
It is very rare for external auditors to take such a strong stance against their client. I believe that the perception in Malaysia is that external auditors often take a very soft stance towards their clients. Where there is a benefit of a doubt, they would tend to agree rather than antagonize their audit clients. Surprisingly, BTMH here is willing to take such a strong stance against its’ former clients. Does this herald a change in the mindset of auditors? Or is this just a one-off case?

2. Corporate Governance Safeguards do not appear to be working
It is puzzling that Oil Corp's Independent Directors and the Audit Committee failed to act to prevent this issue from imploding. The Audit Committee is established for the very purpose of ensuring a frank and clear communication channel between the Board of Directors and external auditors. The various contentious issues highlighted should have been brought up much earlier and resolved. Do you think further improvements are necessary? If so, what do you suggest?

3. Importance of Mutual Trust and Communication
The document available on Bursa Malaysia suggests that mutual trust and communication between BTMH and Oil Corp had diminished substantially. On one hand, Oil Corp did not endear itself to BTMH as they submitted the relevant documentation at the very last minute, leaving BTMH very little time (or indeed, none at all) to vet through and perform an independent review on the contract. As for BTMH, perhaps the issues could have been communicated more clearly to the Audit Committee and the Board of Directors. If they had foreseen that this would have resulted Oil Corp being placed in a PN17 status and followed by bad publicity, this may have encouraged them to act more quickly and avoid this traumatic episode. What do you think?

Conclusion:
I invite you to comment on this rather contentious issue.

The Way of the General - Part IV

What Hurts the People?

There are five things that hurt the people:

1. There are local officials who use public office for personal benefit, taking improper advantage of their authority, holding weapons in one hand and people’s livelihood in the other, corrupting their offices, and bleeding the people.

2. There are cases where serious offenses are given light penalties; there is inequality before the law, and the innocents are subjected to punishment, even execution. Sometimes serious crimes are pardoned, the strong are supported, and the weak are oppressed. Harsh penalties are applied, unjustly torturing people to get at facts.

3. Sometimes there are officials who condone crime and vice, punishing those who protest against this, cutting off the avenue of appeal and hiding the truth, plundering and ruining lives, unjust and arbitrary.

4. Sometimes there are senior officials who repeatedly change department heads so as to monopolize the government administration, favoring their friends and relatives while treating those they dislike with unjust harshness, oppressive in their actions, prejudiced and unruly. They also use taxation to reap profit, enriching themselves and their families by exactions and fraud.

5. Sometimes local officials extensively tailor awards and fines, welfare projects, and general expenditures, arbitrarily determining prices and measures, with the result that people lose their jobs. These five things are harmful to the people, and anyone who does any of these should be dismissed from the office.

Application:
The Han Dynasty arose like a Phoenix from the ashes of the Qin Dynasty. It would last over a period of four centuries and is commonly considered to be one of the greatest periods in China. Conversely, the Qin Dynasty was torn asunder within a decade of its’ establishment? What contributed to the rise and longevity of the Han Dynasty? This was largely due to its’ policies that avoided hurting people:

No Personal Benefit Allowed, Crime and Vice Punished
Emperor Wu-Di combined Legalist methods with the Confucian ideal that led to a civil service nomination system and compulsory knowledge of Confucian classics among candidates for the imperial bureaucracy. Officials were graded by rank and salary, were appointed to posts based on the merit of their skills rather than aristocratic clan affiliation, and were subject to dismissal, demotion, and transfer to different administrative regions. Thus, local officials performed their duties up to the standards required and kept the Empire at peace.

Inequitable Laws Avoided, Just Laws Perpetuated
The legal spirit of the Han dynasty was the fullest under Prime Minister Dong Zhongshu, a Confucianism who served during the reign of Emperor Wu-Di. Under Prime Minister Dong, every legal decision or ruling had to be accompanied by an explanation that explained why the decision was made and under what law the ruling was based on. Prime Minister Dong further suggested that masters not be able to kill their slaves at will. This idea took root and remained in China. Thus, the just laws of the Empire maintained the safety of the nation.

Taxation Minimised and Frugality in Expenditure
The entire Han Empire was heavily dependent upon its county governors responsible as they could decide military policy, economic regulations, and legal matters in the county they presided over.

The main tax exacted on the population during Han times was a poll tax, fixed at a rate of 120 government-issued coins for adults. For adults there was also the addition of mandatory labor service for one month out of the year. Besides the poll tax, there was also the land tax administered by county and commandery officials. This was set by the government at a relatively low rate of one-thirtieth of the collected harvest.

With a large amount of revenue in stable times, the Han government was able to fund various public works projects and state infrastructure. In the year 3 CE, a formalized nationwide government school system was established under Emperor Ping, with a central school located in the capital Chang'an and local schools in the prefectures and counties. Judicious use of the Empire’s finances benefited the people resulting in a prosperous and virtuous cycle.

Conclusion:
The Han Dynasty flourished and prospered for over four centuries by attending to its people’s needs. The earlier Emperors were wise and not given to excess. The officials were upright and attended to its’ duties. During this Golden Age, intellectual, literary, and artistic endeavors revived and flourished during the Han Dynasty. These included the invention of paper, forging of high durable steel, hydraulic-powered armillary sphere and seismometer. Thus, do not hurt the people and the nation can be kept tranquil and peaceful.

Coming back to the present, do you think our Malaysian Government is governing in accordance to Zhuge Liang's principle of not hurting people? I would appreciate your views on this.

Philosophical Musings – Part I

Of Mice, Mom & Me

A mouse
'A mouse! A mouse in the house!' shrieked my mom as we saw the mouse scuttle around, playing hide and seek. Not a normal mouse, mind you but an intelligent mouse, with brains as big as the one above. He roamed and lorded over our house as night whilst we were sleeping.

And when we awoke? Gasp! What dastardly deeds had Mr. Mouse committed in the depth of the night? Handfuls of rice, a couple of sweet potatoes and even a packet of 3-in-1 instant tea were gone! Vamoosed! And there was not even a single trace of the Mr. Mouse’s tracks.

Every night, our family trembled in fear of Mr. Mouse exploits. What would go missing next? Silent, still and swift as the night – Mr. Mouse went about his business carefully, cautiously and calmly. For a month, he plundered and pillaged, till our house was barren and bare. Fortunately, Mr. Mouse had very good housekeeping habits and our house was clean though bare.

My Mom
‘Confound it! No mouse is going to get the better of me!’ my Mom remarked. Thus began the Battle of Wits between Mom and Mr. Mouse. She first set a mouse cage on the floor with some alluring bait to lure the Mr. Mouse into the trap. Unfortunately, Mr. Mouse preferred fine dining at my house table and refused to stoop so low.

Mom then packed all the foodstuffs and placed them into a plastic food basket. Heck, she even placed some canned foods on top of the food basket cover to prevent Mr. Mouse from getting his greedy paws on it. And the very next day, she found Mr. Mouse had nibbled through the openings in the basket to treat himself with some instant 3-in-1 coffee.

‘This means WAR!’ uttered my mom. With all manner of canned foods and condensed milk, mom began fortifying her food basket until it was a veritable fortress. Not even a Herculean mouse would be able to penetrate that fortress. She then placed even more enticing foods into the mouse trap!

Voila! After starving for several days, Mr. Mouse couldn’t resist and made for the mouse trap. The very next morning, Mr. Mouse had been caught.

Me
Mr. Mouse looked very pitiful in his condition. When I first looked at Mr. Mouse, the cage stank of fear and refuse. He was in a pitiful condition and the fear was palpable. At that instant, I thought to myself:

‘WHAT RIGHT DO I HAVE TO TAKE THE LIFE OF A SENTIENT BEING, EVEN BE IT A MOUSE?’

I talked to my mom and she agreed. Taking away a being’s life is easy. Yet, can we succeed in restoring a being’s life, after it is taken away? So I took the mouse cage and walked to an open field, far away. As I held the mouse cage, I felt Mr. Mouse huddled at the cage, shivering and trembling.

That very instant, I had an epiphany! Was I any different from the mouse in the cage?

Me vis-à-vis Mr. Mouse
1. A not-so-intelligent being, entrapped due to foolish desires:
Mr. Mouse caught due to hunger for Food and me in my abandon, yearning for Wealth and Fame.

2. Regretful of the Past, Heedless of the Present and Fearful of the Future
Mr. Mouse and me were the perfect couple, both mindlessly living our mundane lives.

3. Audacity of Hope
Mr. Mouse had the audacity to hope that a human being, would be kind enough to release him. Me? I too, have the foolish hope that I, my family and all sentient beings will be happy and free from sadness and pain.

Three Leaps to Freedom
So, as we walked to the open field, I pondered long and hard. And I set the mouse cage on that open field and released the gate of the cage. Mr. Mouse did not dash out as I expected him to. I had to nudge him, once, twice and thrice before he finally sprinted out.

It was almost as if, he could not believe he was freed. At the end of the field, I saw him jump thrice. His initial skip, seemed to signify gratefulness. His next – was one of joy. And his final huge leap, was one of freedom and happiness of being free, in the present moment. Thus, he leaped out of my sight.

Conclusion:
Was I dreaming? It was such a small thing, releasing Mr. Mouse. Yet, at that very moment, I realize an important thing. Happiness is fleeting, true. And yet, true happiness requires so very little, only gratefulness and staying true to the present moment.

Speed Reading - Part V

INSPECTIONAL READING - SYSTEMATIC SKIMMING

Today, we are ready to learn about Inspectional Reading. Just to recap, Inspectional Reading is at the Second Level of Reading, focusing on ‘What is the Book about?’

This level of reading is characterized by its special emphasis on time. At this stage, a student might be allowed a set time, to complete a certain amount of reading. Inspectional reading is the art of skimming systematically the material. Here, one attempts the best and complete reading that is possible given a LIMITED amount of time.

Inspectional Reading itself comprises of two stages:

1. Systematic Skimming; and
2. Superficial Reading.

This post will review the first stage of Inspectional Reading, namely Systematic Skimming. Here, the main purpose of Systematic Skimming is to allow us to understand the main contents and purpose of the book. By doing so, we can discover whether the book requires a more careful reading. It also allows us to place the book in our mental catalogue, so that we can refer to it, should the need arise.

Systematic skimming consists of the following steps:

1. Look at the Title Page and Preface
Our aim here is to attempt to place the book under an appropriate category, together with other similar books. Further, we need to consider the scope, aim and the author’s special angle on his subject.

2. Study the Table of Contents (ToC)
Reading the ToC with the chapters and sub-titles broken down, enables us to obtain a general overview of the book’s structure. Some books even have an extensive analytical ToC for each chapter, allowing us to understand the structure and ‘flow’ of the book in greater detail. In short, the ToC is extremely useful, as it acts as a roadmap to the entire book.

3. Check the Index
After looking at the title page & preface, and studying the ToC, we should have a fairly good idea as to what are the important terms in the book. For those crucial terms, we should refer to the index and look at the passages where these terms are cited. Within these passages, one may discover the crux of the author’s thesis.

4. Review the Pivotal Chapters
Based on the overall tone of the book, look at those chapters that seem pivotal to the arguments postulated by its’ author. If these chapters have summary statements in their opening or closing pages, read through it carefully. These are passages, which may summarize the major contentions being opined by the author.

5. Tune in to the ‘Pulse’
At this stage, we are ready to tune in to the ‘pulse’ of the book. This is performed by turning the pages, dipping in here and there, reading a paragraph or two, and sometimes several pages in sequence. Our main aim is to look for the signs of the main arguments put forward by the author. Remember to read the last final two or three pages of the book, for its conclusion. Authors often sum up new and important matters in this section.

Conclusion:
After performing Systematic Skimming, we are able to understand the main contents and purpose of the book. With this, we are ready to perform the Second Stage of Inspectional Reading – Superficial Reading!