What every tech journalist should know about share valuation

Whenever a tech company’s result announcement results in a share price drop, tech journalists around the world pontificate about what it means. Fans of a particular company rally to defend it and seem to take it very personally that the stock market doesn’t seem to understand how good the company’s products really are.

A little basic finance knowledge would be of use here to get an inclining of why the market often reacts in the way it does. I present here a bit of Finance 101 and the Dividend Discount Model. Don’t be afraid – it’s quite simple involves just one formula:

P = \frac{D_1}{r-g}

This model considers a company, specifically a share of a company, as a black-box that spits out money in the form of a dividend. How much would you be willing to pay for such a black-box? The formula gives us the answer to that question, P.

The first factor is the size of the dividend D_1. A larger dividend gives us a larger P.

We also need to take time into account. A dollar now is worth more that a dollar received in one year’s time. In simple terms, you can think of this is as inflation. Slight more accurately it is opportunity cost – a dollar put in the bank will accrue interest over that one year. The formula expresses this as r.

The final factor g is the growth rate of the company, specifically the growth rate of the dividend. If your black-box will spit out larger amounts in the future, it is worth more. This is a negative in the denominator, so higher g will give us higher P. Of course, we don’t know in advance what the black-box will spit out – or the company will pay out in dividends – so we estimate it based on the track record and whatever other information we have to predict the future growth rate.

This growth rate is the key value for understanding drops in stock prices after ‘poor’ earnings announcements. If the market suspects – or receives direct evidence indicating – that a stock’s future growth isn’t as big as previously thought, then the price will drop.

Of course, then nuance comes into play. Maybe this quarter was an exceptional one due to special conditions, maybe the company has a big announcement around the corner. Different investors will have a different view of what g for a company is.

Many other factors come into play – not all of the company’s earnings are paid out as dividends and so on and so on. The Dividend Discount Model is far from the final word in share pricing, but identifies some important factors that serious investors will be considering in valuing a company.

So, next time your favourite tech company’s price drops, don’t take it personally. It is just a bunch of investors reevaluating their estimate of a company’s g value.

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My visit to an Egyptian barber

Game of Thrones has reached Egypt. An early episode from season one was screening on the television screen in the corner of a Dahab hairdresser where I had come to have my shaggy traveller’s beard trimmed.

Familiar faces from the mythical Seven Kingdoms of Westeros filled the screen. “Salam alaykum, Lord Varys” intoned a character. The Arabic translation would’ve been the simple part of bringing the show to the Middle East. I wondered what they have done with the frequent explicit sex scenes. Simply cutting them wouldn’t work as many of the scenes have dialog advancing the plot – “sexposition” as it has been dubbed.

The show seems to be well liked in Egypt and my barber was watching the television while he worked on trimming my beard. This wouldn’t have bothered me so much if it wasn’t for the way he took a straight razor to shave my neck while his eyes were fixed on the screen.

There were no major incidents though and my neck was left smoothly shaved. The straight razor had been preceded by an electric shaver which brought my shaggy two-months of beard to a manageable stubble. He splashed some aftershave on my skin and I thought the procedure was over.

Things were just getting started as he applied baby powder to my forehead, cheeks and ears.  Was I about to make a television appearance? No – despite the fine appearance of my freshly trimmed beard, my face was still too hairy for local standards. My barber took a long piece of what seemed like dental floss and twisted it against my skin removing the fine fluff that had been happily growing undisturbed since my childhood. As thin as the hairs were, their removal was quite uncomfortable. I winced while squirming in my seat, tears squeezing through my scrunched-closed eyelids.

“Brave boy!” encouraged my barber, jovially patting me on the shoulder, “Almost over!” The finale was the dextrous application of the barber floss to remove a few stray nostril hairs. Yikes! Looking 20 years younger – according to my barber – and a mere 20 Egyptian pounds poorer, I emerged from the hairdresser with a trimmed beard as fine as any in the Seven Kingdoms of Westeros.

Jesus didn’t take a daypack

I recently completed the four-day Jesus Trail walk from Nazareth to Capernaum on the Sea of Galilee. The motto given to the hike is “Jesus didn’t take the bus”. As I looked at the recommended packing list, I figured that Jesus didn’t take a daypack either.

I’ve always been a fan of travelling light. Via a pointer from Tim Ferriss, I came across Rolf Pott’s No Bag Challenge. The idea of stuffing my pockets and heading off certainly held appeal. My current pack is under 12kg (including hiking shoes and my MacBook Air) but the idea of ditching it for a few days was certainly appealing.

Hat in pocket, water bottle and scarf hanging from belt

Hat in pocket, water bottle and scarf hanging from belt

Here was my final packing list for my trek:

  • Lowa waterproof hiking shoes
  • Hiking socks
  • North Face travel pants
  • Krama scarf from Cambodia (trusty travel companion for over a decade)
  • Hat
  • Sunglasses
  • Two pairs of underwear (wear one, one in back pocket)
  • Thigh pocket:
    • Hand sanitiser
    • Tissues
    • Sunscreen
    • Lip balm
    • Toothbrush
  • Thigh pocket:
    • Hiking the Jesus Trail guide book
    • Map
    • iPhone (camera, GPS, map, compass, torch, podcast device)
    • Plastic bag (rain protection for all the above)
  • Zip pocket
    • iPhone mini charging cable
    • Money
    • Passport&visa photocopy
    • Notebook & pencil
  • Belt and bungie-cord hook
    • I used this to hang a 1.5 litre water bottle to my waist

No bags and the pants had sufficient pockets so that they didn’t feel overfull.

So what did I miss out on?

The limited underwear supplies meant that I had to wash one pair every evening – not a huge hassle. I did wash the shirt once and it did manage to dry for the morning. This was due to appropriate fabrics and a warm climate.

Despite the optimistic weather forecast, I did find myself caught in the rain. A plastic poncho might have been a good addition.

I wish I had brought a small tube of toothpaste. Despite the advice of “borrowing toothpaste is a great way to meet people!” – it turned out to be more hassle than it was worth.

The 1.5 litre water bottle was sufficient, but I did have to carefully hit every water spot along the hike. Attaching it by bungee hook to my belt worked well. I’d like to productise a dedicated device for this purpose.

Overall, bag-less travel was a liberating experience. As well as being light, it was lovely avoiding the sweaty spine one gets from a backpack. While I was glad to return to my full backpack and have a fresh change of clothes I’ll certainly grab the next opportunity to ditch the backpack

Hiking the Jesus Trail (in a secular fashion)

Aside

Jason of Nazareth

Jason of Nazareth

I had spent a few days in Nazareth in the north of Israel seeing the sights. As well as the usual batch of churches, Nazareth has a lovely, labyrinthine old city with spice and coffee makers, cafes and restaurants. I took a wonderful walking tour through the city and got pleasantly lost in its old market.

Whilst in Nazareth, I heard mention of The Jesus Trail. Established in 2007, this 4-day walk links some historical sites that Jesus visited along paths that he may have walked. The religious side didn’t interest me as much as a hike through some scenic and historic countryside.

I liberated a copy of the Hiking the Jesus Trail guidebook from my guesthouse and after a hearty breakfast I set off. The trail started in front of the Church of the Annunciation in the centre of Nazareth. This example of slightly gaudy 1960s architecture is built on the site where the Angel Gabriel appeared to the Virgin Mary to tell her that she was pregnant with Jesus. Two other churches in Nazareth also claim to be site where Gabriel appeared – maybe Mary was sceptical after the first visit and Gabriel had to pop back to drive the message home

Arab of Nazareth

My first friend-on-the-trail

The trail wound up through the old city which I had gotten to know well. Ascending the stairwell above the souq, I started to get a view back over the city. While admiring it, I met a friendly old Arab coming down the stairs. He gave me a warm welcome to the city, wished me luck on my walk and gave me a candy to set me on my way.

Zipporis Resovoir

Nazareth is one of the few Arab-majority towns in Israel. The majority are Christian, with around 30% Muslims. A suburb on the outskirts is Jewish. It all seems a pleasant example of how we can just all get along if we put our minds to it.

Nazareth is no longer the village of Jesus’ time. The first few kilometres of the trail took me through the suburbs of Nazareth and some new developments on the outskirts of town. I eventually hit the countryside and around lunchtime I reached Zippori National Park. Zippori was once a town of the Roman Empire and some well preserved ruins remain. One highlight was the ancient underground reservoir that was hand carved out of the rock. Now dry, it is a 250m long tunnel with I walked with the help of my iPhone torch.

I found lunch – well instant noodles – at the park’s headquarters and continued on my way. My goal for the day was to reach Cana. This is the site where Jesus turned water into wine (Jesus was way cool). The local tourism industry was doing good business selling local wine, so if Jesus returned, I think they’d be upset by the reintroduction of a cut-price competitor. I checked the local guesthouse, found they had a free bed (the guesthouse was empty) and so stayed for the night.

Franciscan Wedding Church in Cana

Franciscan Wedding Church in Cana

I visited the two churches in the evening along with the busloads of day-trippers. Israel attracts many Christians who are overwhelmed by their visit and feeling of closeness to Jesus. During my travels, I encountered one tour group at a Christian church. Their tour guide would give an explanation of the site (in, I think, Portuguese) then the group would burst into song.  I encountered them several times and they would repeat the same ritual. I wasn’t aware of the existence of “Spiritual Singing Tours of Israel”, but this seems to be a “thing”.

For dinner I found a local restaurant that cooked up a delicious kofte for me. It is currently olive harvest season in the middle east and so I also got to sample some freshly pressed olive oil from this season’s harvest. Soaked up with some bread, it is most delicious.

Kfar Kana - Pizza

Kfar Kana – Pizza

The following morning I woke early. My body clock has been synced by the early Muslim Fajr call to prayer which is around 04:30 each day. I took a local “pizza” which was arabic flat bread dough topped with a sesame and olive paste and freshly cooked in an oven. Washed down with strong arabic coffee, I was ready to start my second day of hiking.

Yarok Az Organic Goat

Yarok Az Organic Goat

The trail took me out of town and along a forested ridge line with views over the plain. By mid-morning I reached the village of Ilaniya and the Yarok Az Organic Goat Farm.  “I come seeking water and WiFi,” I announced upon arrival. These I received, as well as a cup of herbal tea – the herbs being picked straight from the garden. As well as herbs and vegetables, the farm had a collection of goats and two beautiful horses. I was invited to stay for the evening as an alternative to the Kibbutz Lavi Hotel that was further along my trail. I committed to continue my hike for the day and backtrack by bus to the farm for the night.

I continued on the hike. Part of the hike followed the remains of a former Roman road – the rectangular stones of the top layer, worn away but still clearly visible. The road was a major thoroughfare and may well have been walked by Jesus at the time. The road dissolved into farmland and let me towards Kibbutz Lavi and my lunch stop.

Kibbutz Lavi was established in 1949 and has developed into a small town with a 4-star hotel. Far from my image of a kibbutz of mud-built houses on a dusty plain. I had a choice of the meat restaurant or the dairy restaurant (well separated). I chose the, cheaper, dairy option and enjoyed a gigantic salad topped with cheese and a delicious loaf of fruit-and-nut bread.

Oncoming storm on the outskirts of Lavi

Oncoming storm on the outskirts of Lavi

As I walked to the outskirts of Lavi, I could see an approaching thunderstorm with impressive lightning strikes. With the first drops of rain, I took shelter at a collection of storage containers converted to accommodation. I was welcomed there by some young Israelis and offered tea and chocolate. They introduced themselves as being part of the New Guardian volunteer program. This turned out to be a pro-Zionist movement to defend Israel against Palestinian arsonists. From the stories I heard while travelling in the West Bank of Palestine, the Palestinians have their own reasons to defend agricultural land against Israeli vandalism. Still, the lads were very friendly and hospitable. In the afternoon they gathered for lessons and during a break in the rain, I continued my journey.

View from the Horns of Hattin to Arbel and the Sea of Galilee

View from the Horns of Hattin to Arbel and the Sea of Galilee

My goal for the day was to summit the Horns of Hattin. This is a former volcano and the site of a decisive battle in the second crusades. In 1187 the crusader army marched east towards the Sea of Galilee not stopping for water at Tur’an (which I passed earlier in the day). This gave Saladin’s army the advantage and his victory led to end of the second crusade.

The Horns of Hattin afforded me a spectacular view of the countryside showing my route to date and my path for the coming days towards the cliffs of Arbel and down to the Sea of Galilee. The top of the hill was exposed and with the storm approaching, very windy. I had been mislead by an optimistic weather forecast and didn’t have a rain jacket with me. Although my clothes were synthetic fibre, only my shoes were waterproof.  I set a quick pace down from the hill and walked down to a bus stop on the highway where I could get a connection back to the Yarok Az farm.

Yarok Az kitten

Yarok Az kitten

The daughter of the owners was having a birthday party with a dozen 9-year old girls all preparing their own pizzas for cooking in a gas oven. I was invited to join and created a kosher pizza topped with onion and local olives.

Yarok Az goat milking

Yarok Az goat milking

The next morning, I took a walk around the farm, accompanied by an adorable and super-friendly kitten. As the farm woke, I helped feed the chickens, goats and horses. Feeding the goats provides them with distraction while they get milked. I also tried my hand at milking, which was an interesting experience. The goat nipples are the size of a fat banana and of course warm to the touch. I was instructed to be firm and when squeezing, the milk would come out at a ‘surprising’ angle. For breakfast, I took porridge with some yoghurt made from the goat’s milk.

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Olive tree rain shelter on the Horns of Hattin

I set off mid-morning and returned by bus to the Horns of Hattin. My bad luck with the weather the previous day continued. As I approached the hill, it started to rain. I put my papers and iPhone into a plastic bag and resigned myself to getting a bit wet. At the top of the hill, the rain intensified and I took shelter under an olive tree (WWJD?). During a gap in the rain I pressed on, descending the far side of hill only to be caught again by another shower.  I took shelter again, this time under a eucalyptus tree. At the start of the 20th century, Israel imported the eucalyptus from Australia – despite their arsonistic tendencies.

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Krama tarpaulin

The eucalyptus didn’t provide as effective rain protection as the olive tree, so I built myself a rain tarpaulin with my trusty krama, and listened to a podcast waiting for the rain to pass.

I continued once the rain cleared. The clouds providing the advantage of protection from the blazing midday sun. I visited the Nebi Shu’eib mosque on the way down the mountain. This is a temple of the Druze, a famously secretive offshoot of Islam. According to their beliefs, we reincarnate. So if you weren’t born Druze in this lifetime, they won’t try and convert you – they’ll just wish you better luck for your next reincarnation.

Further downhill, I passed through the ruined mosque of the former town of Khirbat Hittin. This Muslim town was evacuated during the war of 1948 with the original inhabitants finding themselves unable to return.

Sunrise over the Sea of Galilee

Sunrise over the Sea of Galilee

The trail wound down the valley of the Arbel stream ending with a steep ascent to the town of Arbel perched near the cliff. I checked myself into the guesthouse there and enjoyed a fine meal of Peter’s Fish – tilapia caught in the Sea of Galilee. Delicious!

I arose early the next morning for the fourth and final day of my hike. I covered the remaining kilometre to the Arbel National Park and enjoyed the early morning view from the cliff-top across the Sea of Galilee. The next stage of the journey was the most adventurous with a steep descent down the cliff. The path was well marked with metal hand/foot-holds for the most treacherous sections. The path then traversed around the side of the cliff to split in the mountain.

View from the Cliffs of Arbel

View from the Cliffs of Arbel

The final leg of the hike descended through small towns and farmland and finally, at Peter’s Primacy Church, I set foot into the Sea of Galilee. There was no walking on water, but my feet were grateful to cool off after over 70km of walking. I finished off the day with a visit to the (alleged) house of Peter and Synagogue of Capernaum where Jesus (allegedly) taught.

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The Sea of Galilee

The return trip by road to Nazareth was challenging. Saturday is Shabbat in Israel and is taken very seriously with no trains and only limited bus services (Shomer Shabbos!). I ended up hitchhiking most of the way back with a public bus taking me home to Nazareth.

The trip wasn’t a spiritual journey. Many of the ‘sites of Jesus’ are very speculative, but roman Roads are quite plausibly routes that Jesus might have taken. I very much enjoyed the slow pace of travel and the time to read and appreciate the rich history of the region. Hiking alone gave me time to think and appreciate the nature.

Philosopher David Hume and Testimony

I’m doing the wonderful online course (MOOC) Introduction to Philosophy at coursera. Part of the assessment is an (optional) short essay. I’ve chosen to answer:

Was David Hume right to think that one should never believe that a miracle has taken place on the basis of testimony?

I answer this question in my essay included below. For the sake of the course, my target audience will be familiar with the philosophical arguments of David Hume and his opposer, Thomas Reid. I do restate their arguments below, so it should stil be possible to follow along.

Feedback welcome!

 

Topic: Was Hume right to think that one should never believe that a miracle has taken place on the basis of testimony?

 

David Hume argued that we should not accept that a miracle has take place on the basis of testimony. I believe this is a fair and vaild argument and a good basis for reasoning. I support this belief based on Hume’s arguments and also contemporary understanding of epistimology and psychology. Further, I will refute some of Hume’s contemporary critics, in particular Reid, and his argument for credulity.

 

David Hume made an argument for a philosophy of “Evidentialism”. He advocated that “a wise man…proportions his belief to the evidence”. “Testimony” is a claim made by another person. Hume arged that we should weigh our belief in the testimony based on how likely it is that the testifier is right. A miracle – by definition – is something that is unusual and unlikely to have occured.

When faced with the extraordinary testimony, we have to decide: did the miracle occur as claimed, or the testimony is wrong. “What is more likely?” Hume invites us to ask. Testimony is alone is only weak evidence in favour of a miracle. On the other hand, we know from experience, that testimony can be false. From there we can conclude that it is more likely the miracle did not occur.

This argument of David Hume can be further supported by an appeal the scienetific prinicple of “Occam’s Razor”: given competing hypotheses, the one that makes the fewest assumptions should be selected. Accepting that a miracle occured would require us to question, or revise, much of what we know about the world. In contrast it is easy to imagine that a witness is presenting false testimony.

In the case of miracles, we can also turn to ideas of cosmologist, Carl Sagan. He is quoted saying, “Extraordinary claims require extraordinary evidence”. We might believe someone claiming to have seen a cow while they were on their way to work. However, if they claim to have seen a flying cow, we should insist on more evidence than just their testimony.

Hume presents his logic in binary terms: a miracle is unlikely, therefore he discards the possibility. I would argue for a more nuanced approach. I agree that testimony alone is insufficient for us to accept the occurence of a miracle. Under such circumstances, we could reckon that there is, say, a 1% chance that the miracle occurred. Perhaps the witness is known to us, and from past experience, we know them to be honest. In this case we may increase our assesment to a 20% chance.

A contemporary of Hume, Thomas Reid argued against Hume’s scepticism of testimony. Reid believes that, in the same way we are hard-wired to believe our senses, we are also hard-wired to trust others. Imagine that our beliefs were only formed by evidence and experience rather than testimony. Ried argues that children, without experience would believe very litle of what they are told. Yet, children tend to be naturally credulous.

Hume counters this by pointing out that being sceptical of testimony isn’t necessarily something we do, but something we should do.

I would further Humes argument by pointing out that children also weigh the testimony they hear. They will be more sceptical of what they learn from stranger than from their parents. Further, it behoves every individual to question any teachings they uncritically accepted as a child. Our beliefs should not be fixed and we should continually revise them as we learn more of the world. As John Maynard Keynes once quipped, “When my information changes, I alter my conclusions. What do you do, sir?”

Reid also makes an appeal to inherent honesty. In the same way that we are naturally creduluous, we are naturally honest. Hume counterargues with examples of dishonesty (people lie out of self interest) and out of ignorance (we may repeat heresay for the sake of a good story).

I would add that people can be lie without realising. In modern times, we have proof that eyewitness accounts are often unreliable.

In conclusion, Hume provides a convincing argument that we should not simply accept testimony of miracles. Contemporary evidence strengthens Hume’s argument and weaken counterarguments against it. 

Thoughts on The Hobbit: An Unexpected Journey

Overall, I really enjoyed The Hobbit. I can, however, sympathise with many of its critics. For the Lord of the Rings films, Jackson (et al.) had to exclude parts of the story to fit it all into 3×3+ hour portions. For the adaptation of The Hobbit, a lot more material was brought in to stretch it to a second trilogy.

Cynically, one could assume that this was done for commercial reasons. From what I know of Peter Jackson though, I imagine the decision was made to make the most of what may be our last chance to see films set in the world of Middle Earth.

Aside from The Hobbit, the only other Tolkien book that could have provided suitable and sufficient material for additional footage, would have been The Simarilion. However, it seems that these rights are still held by the Tolkien family and they aren’t great fans of the movie franchise.

So, Jackson took The Hobbit and stretched it. Much of the extra material comes from the appendices of Lord of the Rings, so can reasonably considered “canon”.

In most cases, I think this works very well. Radgast the Wizard was a nice inclusion. He was mentioned in The Hobbit and was fleshed in the appendices. There were really only small embellishments to his part.

I have mixed feeling about the action sequences. While they continued the tone and feel of the Lord of the Rings movie trilogy, they were a far stretch from what we read in the book.
I have heard one explanation for how to reconcile these mismatches. A critic suggested that we remember that the in-world book “There and Back Again” (the fictional version of the real book, The Hobbit), was by Bilbo Baggins. The book, both in-world and real, was targeted at children. As a result, much of the action would have been toned down appropriately. In this context, The Hobbit movies can be considered as showing the story as it ‘really happened’.

This makes some of the differences between the book and the movie far more palatable. The extended Jackson-esque action sequences can be better understood from this point of view. No, they weren’t in the book, but perhaps the book self-censored them.

So while I won’t criticise the action sequences as deviations from the novel, they do reveal the biggest problem I had with the film. Many of The Hobbit characters are modified in ways that are off-putting. In the book, the dwarves were bumbling fools. In the film, they are portrayed as awesome warriors.

Ironically, this is the opposite of a grating change that Jackson included in the Lord of the Rings. Gimli of those books is a great dwarven fighter. The Two Towers movie turned him into comic relief and weakened his character unnecessarily.

The character change that I found most jarring, was Gandalf’s beefed-up role as deus ex machina. In a number of scenes he arrives just in time to save the day. For me, this ruined the climax of the one of the best scenes in the book, that with the trolls. The book has Bilbo show his value to the troop with his bravery and quick thinking. He uses his wits to distract the trolls long enough for sunrise to petrify them into statues. The movie robs Bilbo of this victory by having Gandalf turn up with unnecessary flair to a contrived solution of cracking a boulder to let the sunlight in. Further, this gives more foreshadowing of Gandalf’s power than was necessary.

The Hobbit could have been squeezed into a single, Jackson-length film. The original plan was for two films, which probably would have been the right number. We won’t know until 2014 as to whether the choice for three films was the correct one, but so far it looks like Jackson’s gamble may pay off in movie quality, not to mention financially.

Indonesian recipes

In Bukit Lawang, North Sumatra, I did a cooking course with some fellow travelers. The course was run by Nella and Sri of Rainforest Guesthouse. Here are the recipes and results.

Nella and the ingredients
Nella and the ingredients

Gado gado
Gado gado

Vegetables

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Potatoes, diced
Baby corn, chopped
Carrot, diced
Green beans, chopped
. Boil for 10 minutes

Cabbage
Sanc (? Bok choi?)
. Add
Cucumber, chopped
. Add last and lightly blanche

2 eggs
. Hard boil then quarter

Sauce
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Garlic
Turmeric seeds
Ginger
Kencan (related to ginger)
2 fresh chillis
. Fry, then drain

Peanuts
. Deep fry

Fish stock
. Combine with other ingredients
. Grind

Coconut milk
. Boil
Add:
Sauce
Water
Palm sugar
Crushed lemon grass
Lime leaves
. Bring to boil
Add:
Soya sauce

Tofu
Tofu
. Deep fry, then drain
. Chop

Present as:
Vegetables
Tofu
Eggs, halved
Lettuce
Cucumber
Tomatoes, chopped
Sauce

Randang chicken

Randang chicken

Sauce
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Dry chili
Fresh chili
Garlic
Thai onion
Coriander seeds
Turmeric
Ginger
Water
. Blend
. Fry in oil for 1 minute
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Chicken
. Chop and add to fry
. Cook 5 minutes

Galangan
Lemon grass
. Roughly crush
. Add to pan
. Cook 5 minutes

Potato, chopped
. Add to pan
. Cook 2 minutes

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Star anise
Cardamom
Palm sugar
Lime leaves
. Add to pan

Coconut
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Coconut, desiccated
. Dry fry until brown (10 minutes)
. Grind to paste

. Add Coconut to pan of Sauce

Cinnamon stick
Tamarind
Palm sugar
Soya sauce, dash
Salt
. Add to pan

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Chilli
Garlic
Water
. Blend

Tomato, chop
. Add to blend
. Fry

Sugar
. Add to blend

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Small fish (anchovies), deep fried
. Add to blend

Peanuts, deep fried
. Add to blend

Shallots, chopped
. Add to blend (for color)