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Is MU right to sack Moysie?/ Long ball is betterest

In Financial competency, Financial planning, Footie on 23/04/2014 at 4:43 am

Yes say I: The choice facing the owners (Jewish and Zionists and mortgaged to their eyeballs) BTW) was stark

Would they really back Moyes for the long term by handing him a transfer kitty worth as much as £100m to invest in rebuilding the squad?

Or would they decide giving all that money to him was too big a risk?

Would anyone sensible trust Moysie with that kind of $ based on this season’s performance which was the mother of nightmares? BTW, I waz happy he was the Chosen One. What was or went wrong: everything http://www.bbc.com/sport/0/football/27109742

No, say the stats and SAF’s cardinal rule of footie mgt.

Ter Weel analysed managerial turnover across 18 seasons (1986-2004) of the Dutch premier division, the Eredivisie. As well as looking at what happened to teams who sacked their manager when the going got tough, he looked at those who had faced a similar slump in form but who stood by their boss to ride out the crisis.

He found that both groups faced a similar pattern of declines and improvements in form.

While Ter Weel’s research focused on Dutch football, he argues that this finding is not specific to the Netherlands. Major football leagues in Europe, including England, Germany, Italy and Spain also bore out the same conclusion – teams suffering an uncharacteristic slump in form will bounce back and return to their normal long-term position in the league, regardless of whether they replace their manager or not.

And his theory seems to work if you look at what happened to other clubs in the English Premier League last season. The same week in March which spurred Sunderland to change the personnel in charge, Aston Villa were sitting at 17th in the table, struggling against relegation.

In the same way that water seeks its own level, numbers and series of numbers will move towards the average, move towards the ordinary.”

David Sally, co-author of The Numbers Game

(http://www.bbc.com/news/magazine-23724517)

In finance, this is called reversion to the mean.

This what AlexF said on the opening night of Ferguson’s book tour, on an October evening at the Lowry theatre, and what he told his audience about the management profession. “It’s a terrible industry. When clubs sack a manager there is no evidence it works. But there is evidence, and it’s hard evidence, that sticking with your manager does work. This is an important issue and it is something I believe in, very strongly. Sacking a manager does not help.”

Well obviously MU isn’t listening. Some serious money (borrowed I may add) is at stake.

Related article: Long ball is betterest:

His data suggested that most goals were scored from fewer than three direct passes, and he therefore recommended the widely-despised “long-ball” game.

In other words, the ugliest type of football imaginable. Hoof the ball forward, hope you get a lucky break, and poke it into the net.

“Unfortunately it kind of brought statistics and football into disrepute,” says Chris Anderson, author of The Numbers Game, an analytical and historical look at the use of data in football.

Now, behind the biggest football teams in the world, lies a sophisticated system of data gathering, metrics and number-crunching. Success on the pitch – and on the balance sheet – is increasingly becoming about algorithms.

The richest 20 clubs in the world bring in combined revenues of 5.4bn euros ($7.4bn, £4.5bn), according to consultancy firm Deloitte. And increasingly, data is being seen as crucial to maximising that potential income by getting the most from football’s prized investments – the players.

http://www.bbc.com/news/business-26771259

Looking for value for $ when studying in US?

In Financial competency, Financial planning on 13/04/2014 at 5:48 am

Check out this link http://www.economist.com/node/21600212

It tells you which colleges offer US students the best, worse returns for the fees they pay. While not directly applicable for S’poreans, some sign-post is better than none. Check out Harvey Mudd, a liberal arts college of science, engineering, and mathematics. Seems to offer bang for the buck.

Whether or not it is worth paying depends on who you are, what you study and where. PayScale, a research firm, has done a big survey of graduates and used it to estimate the financial return on degrees from different American colleges and universities. Our interactive chart below shows the total cost of a degree after financial aid (the beginning of the coloured bar) and the return over 20 years (the end of the bar). The return is defined as the amount that a graduate earns, minus what someone who did not attend college would earn, and minus the cost of attending college. Thus, a wider bar is good. The chart can be sorted by cost, return (annualised and over 20 years) or alphabetically.

PAP govt and S’poreans no ak degrees in arts and humanities, US data shows why:

Unsurprisingly, engineering is a good bet wherever you study it. An engineering graduate from the University of California, Berkeley can expect to be nearly $1.1m better off after 20 years than someone who never went to college. Even the least lucrative engineering courses generated a 20-year return of almost $500,000.

Arts and humanities courses are much more varied. All doubtless nourish the soul, but not all fatten the wallet. An arts degree from a rigorous school such as Columbia or the University of California, San Diego pays off handsomely. But an arts graduate from Murray State University in Kentucky can expect to make $147,000 less over 20 years than a high school graduate, after paying for his education. Of the 153 arts degrees in the study, 46 generated a return on investment worse than plonking the money in 20-year treasury bills. Of those, 18 offered returns worse than zero.

- See more at: http://www.economist.com/news/united-states/21600131-too-many-degrees-are-waste-money-return-higher-education-would-be-much-better#sthash.cJdJZ7Xp.dpuf

Unsurprisingly, engineering is a good bet wherever you study it. An engineering graduate from the University of California, Berkeley can expect to be nearly $1.1m better off after 20 years than someone who never went to college. Even the least lucrative engineering courses generated a 20-year return of almost $500,000.

Arts and humanities courses are much more varied. All doubtless nourish the soul, but not all fatten the wallet. An arts degree from a rigorous school such as Columbia or the University of California, San Diego pays off handsomely. But an arts graduate from Murray State University in Kentucky can expect to make $147,000 less over 20 years than a high school graduate, after paying for his education. Of the 153 arts degrees in the study, 46 generated a return on investment worse than plonking the money in 20-year treasury bills. Of those, 18 offered returns worse than zero.

- See more at: http://www.economist.com/news/united-states/21600131-too-many-degrees-are-waste-money-return-higher-education-would-be-much-better#sthash.cJdJZ7Xp.dpuf

Unsurprisingly, engineering is a good bet wherever you study it. An engineering graduate from the University of California, Berkeley can expect to be nearly $1.1m better off after 20 years than someone who never went to college. Even the least lucrative engineering courses generated a 20-year return of almost $500,000.

Arts and humanities courses are much more varied. All doubtless nourish the soul, but not all fatten the wallet. An arts degree from a rigorous school such as Columbia or the University of California, San Diego pays off handsomely. But an arts graduate from Murray State University in Kentucky can expect to make $147,000 less over 20 years than a high school graduate, after paying for his education. Of the 153 arts degrees in the study, 46 generated a return on investment worse than plonking the money in 20-year treasury bills. Of those, 18 offered returns worse than zero.

- See more at: http://www.economist.com/news/united-states/21600131-too-many-degrees-are-waste-money-return-higher-education-would-be-much-better#sthash.cJdJZ7Xp.dpuf

Unsurprisingly, engineering is a good bet wherever you study it. An engineering graduate from the University of California, Berkeley can expect to be nearly $1.1m better off after 20 years than someone who never went to college. Even the least lucrative engineering courses generated a 20-year return of almost $500,000.

Arts and humanities courses are much more varied. All doubtless nourish the soul, but not all fatten the wallet. An arts degree from a rigorous school such as Columbia or the University of California, San Diego pays off handsomely. But an arts graduate from Murray State University in Kentucky can expect to make $147,000 less over 20 years than a high school graduate, after paying for his education. Of the 153 arts degrees in the study, 46 generated a return on investment worse than plonking the money in 20-year treasury bills. Of those, 18 offered returns worse than zero.
- See more at: http://www.economist.com/news/united-states/21600131-too-many-degrees-are-waste-money-return-higher-education-would-be-much-better#sthash.cJdJZ7Xp.dpuf

So taz why so many FTs teaching here in arts and social science?

 

Unsurprisingly, engineering is a good bet wherever you study it. An engineering graduate from the University of California, Berkeley can expect to be nearly $1.1m better off after 20 years than someone who never went to college. Even the least lucrative engineering courses generated a 20-year return of almost $500,000.

Arts and humanities courses are much more varied. All doubtless nourish the soul, but not all fatten the wallet. An arts degree from a rigorous school such as Columbia or the University of California, San Diego pays off handsomely. But an arts graduate from Murray State University in Kentucky can expect to make $147,000 less over 20 years than a high school graduate, after paying for his education. Of the 153 arts degrees in the study, 46 generated a return on investment worse than plonking the money in 20-year treasury bills. Of those, 18 offered returns worse than zero.

- See more at: http://www.economist.com/news/united-states/21600131-too-many-degrees-are-waste-money-return-higher-education-would-be-much-better#sthash.cJdJZ7Xp.dpuf

Unsurprisingly, engineering is a good bet wherever you study it. An engineering graduate from the University of California, Berkeley can expect to be nearly $1.1m better off after 20 years than someone who never went to college. Even the least lucrative engineering courses generated a 20-year return of almost $500,000.

Arts and humanities courses are much more varied. All doubtless nourish the soul, but not all fatten the wallet. An arts degree from a rigorous school such as Columbia or the University of California, San Diego pays off handsomely. But an arts graduate from Murray State University in Kentucky can expect to make $147,000 less over 20 years than a high school graduate, after paying for his education. Of the 153 arts degrees in the study, 46 generated a return on investment worse than plonking the money in 20-year treasury bills. Of those, 18 offered returns worse than zero.

- See more at: http://www.economist.com/news/united-states/21600131-too-many-degrees-are-waste-money-return-higher-education-would-be-much-better#sthash.cJdJZ7Xp.dpuf

Annualised return of 8.4% using CPF*

In ETFs, Financial competency, Financial planning on 01/04/2014 at 4:34 am

(*Terms and conditions apply)

Only problem is that most of it is via capital appreciation i.e. must sell to get the income.

Straits Times Index EFTs getting an annualised 8.4% over the past 10 years.

While our CPF ordinary account is getting a miserly 2.5% that is getting beat by inflation.

Although we can invest amounts above $20,000 in the CPF ordinary account into approved stocks and unit trust, this rule puts a damper on everyone’s CPF accounts, especially those who are starting to work, or those whose pay is low and those who are not investment inclined.

More important is the fact that just the average dividends given by the STI ETF alone will have beat the 2.5% given by the CPF.

The reply by our government that the interest rate is low because our currency is strong is pure hogwash. If you are using the CPF funds to invest all over the world and boasting that you are getting investment returns that is on par or beat that of Warren Buffett’s Berkshire Hathaway, that explanation is laughable.

So why not just put all the CPF funds into STI ETFs, get dividends higher than 2.5%, have a more than even chance of getting capital returns with dividend as high as the 8.4% achieve over the last 10 years?

This is one example of the nanny state trying to be too clever.

http://www.financialfreedomsg.com/2014/03/why-dont-we-get-84-on-our-cpf.html?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+FinancialFreedomSg+%28Financial+Freedom+SG%29&utm_content=FaceBook

 

Finnish education system aimed at creating unemployment?

In Casinos, Economy, Financial competency, Uncategorized on 26/03/2014 at 4:38 am

S’poreans who laud the Finnish education system may want to think again. Look at the unemployment figures in this chart. Look st the Finnish the S’porean figures. Finnish education better than ours leh? Our system not that bad leh? worse for rapid PAP haters, govt is promising change. LOL

Here’s another inconvenient fact for those who want us to be more Finnish. A S’porean studying there tells me that slot machines are everywhere: in convenience stores, shopping centres etc.

On gambling on per capita basis and because of our casinos, we juz behind the Ozzies. Restrictions for locals? What restrictions? Only restricted if cannot pay and pay. OK, OK, terms and conditions even then apply. Finland is a distant third.

http://www.economist.com/blogs/graphicdetail/2014/02/daily-chart-

Coming back to education, the fact that PISA ranks China (OK Shanghai as tops) in education, doesn’t deter wealthy Chinese parents from wanting a posh, private British education (think s/o JBJ). No they want potatoe speaking, half Chinese, half ang moh sons: they want a better education for their kids.

My serious point, is that education is a very complicated topics. And we shouldn’t trivalise a debate on education with throwing data willy nilly to support an ideological position, even if one LKY (the PAPpy haters tremble and cross their hearts at the mere mention of his name) does it. Remember his remarks about the kids in neighbourhood schools that gave the govt grief?

In fact, data has to be analysed, not used as sticking plaster to support or denounce any given position on any issue. There are no “right” facts, juz facts.

 

Focus on dividend growth, not yield

In Financial competency, Reits on 11/03/2014 at 4:25 am

Here’s some gd advice from the FT when buying dividend stocks:

However, experts warn investors should not be lured by high dividend payouts from individual companies, as this can entail risk. Instead, they note that dividend growth can result in much higher returns.

“Chasing a high dividend is a risky strategy; the yield might look attractive, but the risk is the dividend gets cut and the share price falls further,” said Adrian Lowcock, senior investment manager at Hargreaves Lansdown.

“The share price may have already fallen to reflect expectations the dividend will be cut – meaning the yield would then have risen,” he added. “We saw this in 2008/09 when the banks all had high yields but were not going to be paying dividends for many years.”

Investors should instead look for growing income, as these companies are likely to be financially more robust, growing their capital base.

So maybe time to think about SMRT http://atans1.wordpress.com/2014/03/04/smrt-only-now-meh/?

And here’s a gd BT article on evaluating Reits: http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid={651562920-19895-7719950079} High yields do not mean a Reit is an attractive buy, however. Yields are related to risk and growth potential, as investor Bobby Jayaraman pointed out in his 2012 book on Reit investing, Building Wealth Through Reits. The safer the Reit and the higher its growth potential, the lower its yields will be. This is because high demand from investors for these assets pushes up their price, thus lowering yields.

If you want to know more about the Reit structure http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid={651939829-19894-8559931515}

Got money to retire on after paying 30-yr HDB loan for 99-yr lease?

In Financial competency, Financial planning, Political governance on 06/03/2014 at 4:28 am

Further to this, I tot readers would be interested in the findings of a study commissioned by MoM and conducted by NUS academics. What do you think of the assumptions? Are they reasonable? Yes, I know they assume 30yrs (while 25 yrs is max period), but that make’s it more conservative when thinking of retirement funds.

About half of Singaporeans currently meet the minimum sum to qualify them for the above payout. But most young Singaporean wage earners today will be able to meet the minimum sum by the time they retire, provided they buy property within their means, the government has said.

An independent study on retirement was also commissioned by the Ministry of Manpower and conducted by National University of Singapore professors Chia Ngee Choon and Albert Tsui. It found that young workers today can replace their income upon retirement at rates similar to developed countries.

One major assumption is that a couple of the same income percentile marry, with the male at age 30 and female at age 28. They buy an HDB build-to-order (BTO) flat with a 30-year mortgage, with the 30th, 50th and 70th percentile members buying a three-room, four-room, and five-room BTO flat respectively. The couple do not upgrade to a larger home.

In the study, a male at the 50th percentile earns $2,500 a month at age 25 (or $3,300 at 70th percentile) and is assumed to reach his peak earnings close to age 55, at $3,860 (or $6,800 at 70th percentile). The 50th-percentile male can replace 70 per cent of his age-55 income after he retires at age 65, the study said (63 per cent for the 70th-percentile male). The numbers for females are slightly lower.

Upon retirement, the median male is thus assumed to get a monthly income of around $2,700, and the 70th percentile male, $4,300. This presumes the entire amount of their retirement savings in the CPF is converted into a life-long annuity, instead of up to the Minimum Sum, as is the current practice. Otherwise, income replacement rates fall drastically.

Thus, the study’s authors said that CPF members with savings above the minimum sum cannot withdraw the lump sum and spend extravagantly. If they want to be able to replace a higher proportion of their income, “they must invest their CPF savings above the minimum sum wisely so as to generate a stream of retirement income to supplement CPF Life payouts”.

http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid={157655219-19765-9502481817}

Here’s the perspective of a flat buyer http://sgyounginvestment.blogspot.sg/2014/02/how-much-money-does-couple-need-to-earn.html

The risk Reit buyers bear

In Financial competency, Property, Reits on 25/02/2014 at 4:09 am

CapitaMall Trust recently sold retail bond offering paying 3.08% annually.

Its units trade at a yield of 4.55% as yet yesterday’s close.

The percentage difference (48%) between the two numbers is the willingness that holders of the units are willing to accept (whether they realise it or not) for the higher (but not assured) payout. If Reits, reduce their payouts, the price falls to compensate for the reduced yield. Even if the payout remains constant, high yielding shares are only a good investment if a falling share price does not undo the yield return.

As there are many other Reits that have better yields, reit investors should be mindful of the risk they are assuming in chasing higher yields.

FYI, I’m still a holder of Reits.

Relared posts:

http://atans1.wordpress.com/2014/01/09/why-owning-reits-in-a-rising-interest-rate-environment-may-make-sense/

http://atans1.wordpress.com/2013/11/14/where-reits-can-go-wrong/

CapitaMall Trust launches retail bond offering paying 3.08% annually – See more at: http://sbr.com.sg/retail/news/capitamall-trust-launches-retail-bond-offering-paying-308-annually#sthash.pEWiNljc.dpuf

Buying, renting or the Korean way?

In Economy, Financial competency, Property on 18/02/2014 at 4:23 am

Recently, the FT carried a commentary (behind pay-wall) on why a leading UK architect was renting, not buying (UK has a home-purchasing culture which one LKY imported and made S’porean for reasons explained below).

Here are two gd responses to the article:

– “People are obliged to borrow to buy property because they need a roof over their heads when they retire and do not want to be at the mercy of a landlord, who will increase the rent annually and reserve the right to serve notice three months after signing the annual shorthold tenancy agreement.” (a reader)

–”As everyone knows, buying property used to be like standing in front of a fruit machine that was jammed on three cherries. Wealth came pouring out. And as everyone also knows, that machine has now stopped dispensing cash. You can’t buy a house that will change your life like my grandmother did, nor buy a flat that makes you rich, like I did when I was only 23. Most people can’t afford to buy anything at all.” (Lucy Kellaway, an FT columnist)”

She also reminds, “It has nothing to do with money, and everything to do with culture, emotion and family.” The very reason why the PAP govt wants S’poreans to own their homes, never mind that most of them are buying 99-yr leases.

At the end of the day as she points out, buying “is a wise move” when property prices go up, “renting is smarter” when prices go down. So long as S’pore is a one-party state with the PAP in charge, property prices may keep on rising*. With WP or SDP in charge, what do you think?

—–

In Korea, there is an unusual rental system, known as jeonse, does not involve monthly rental payments. Instead, tenants provide landlords with a deposit, typically between a quarter and half of the property’s value, to invest for the duration of the lease. Property owners keep the returns and then repay the lump sum at the end of the tenancy … Tenants’ deposits financed landlords’ properties, interest-free, while pushing renters to pool savings: over time, the deposit would become their own home-purchase fund. For decades, monthly rental was synonymous with poverty.

Yet interest rates and property prices have sunk since 2008. To earn a decent return on their investments, landlords have been raising jeonse prices.

(http://www.economist.com/news/finance-and-economics/21596566-landlords-are-having-ditch-century-old-rental-system-lumping-it)

Related article: This S’porean bot http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid={157655219-19866-5631219744}

Related posts

http://atans1.wordpress.com/2014/02/10/bring-back-super-mah/

http://atans1.wordpress.com/2014/01/16/why-banks-tested-for-50-plunge-in-property-prices-and-other-wonderful-tales/

http://atans1.wordpress.com/2014/02/11/property-khaw-must-be-doing-shumething-right/

———————————————

*But not in 2014:

DBS Bank chief executive Piyush Gupta expects home prices to fall by 10-15 per cent this year – more than the 10 per cent forecast by property consultants – but says that this decline would not make a material impact on the bank’s loan book. Speaking at DBS’s Q4 results briefing, he said it is likely that the prices of high-end homes will slide 15 per cent, and that for lower-end ones, by 10 per cent.

As for the higher interest rates expected with the shrinking of monetary stimulus policy by the US, he said he was not expecting it to have any effect on DBS. “The Singapore portfolio is really driven on income considerations . . . As I’ve said before, the pressure will likely start coming when unemployment rises – more than when property prices change.” Singapore’s unemployment rate is now at a low 1.8 per cent.

Mr Gupta said: “All our stress tests in the past have shown that we can easily withstand a 20 per cent reduction in Singapore property prices without material impact on our portfolio. We stress-test (for a) 20 (per cent fall in property prices), but don’t expect it to happen; our stress tests are always calibrated to go off the charts. My own sense is that there will be a correction of 10-15 per cent.”

He noted that the market was already stabilising and that the froth was running off, but that if this continued, the government would roll back some of the macro prudential measures. Sales of new mortgages have plunged 30-35 per cent at DBS, and by 40-50 per cent at OCBC Bank as a result of the stricter loan rules.

Mr Gupta likened the Singapore property market to that of New York and London, where prices held up even during the financial crisis between 2008 and 2012. While prices in the rest of the US fell by about a third, prices in New York slipped by only 10 per cent. It was a similar situation in London, another city where the demand is not dependent on the state of the domestic economy.

Mr Gupta said he expects regional money buying properties here to also put a floor under prices. With the slower sales, DBS’s $49.1 billion mortgage book is likely to grow by $2 billion to $2.5 billion this year, down from $3.5 billion last year and $5 billion the year before that, said Mr Gupta.

OCBC Bank chief operating officer Ching Wei Hong said of the new mortgage sales having declined across the board: “That’s expected, given all the cooling measures that have been imposed. We’ve built up a healthy inventory level. The inventory drives the growth of (the loan) book, going into 2014 and 2015. Beyond 2015 H2 and 2016, if conditions remain the same, we’ll see a bit of tapering in that period.”

(BT article last Saturday)

Cost benefit analysis: PAP govt underestimating the value of human life?

In Economy, Financial competency, Political economy, Political governance on 12/01/2014 at 6:27 am

I came across this in the latest copy of the Economist in the letters section:

Petty’s cash ledger

SIR – You credited William Petty with inventing economics in the 17th century, but did not do full justice to his cost-benefit calculations (Free exchange, December 21st). The good doctor estimated the value of a person to be somewhere between £60-90 and in “Political Arithmetick” he suggested these values could be used “to compute the loss we have sustained” from the plague and war. In 1667 he argued that given the value of an individual and the cost of transporting people away from the plague in London and caring for them, every pound spent would yield a return of £84 as the probability of survival increased. (He also suggested that an individual in England was worth £90, and in Ireland £70.)

In a lecture on anatomy in 1676 Petty argued that the state should intervene to assure better medicine, which could save 200,000 subjects a year and thus represented a sensible state expenditure. Today’s economic estimates are more refined and the data are more exact, but the arguments presented by Petty still resonate in public policy.

Rashi Fein
Professor emeritus of the economics of medicine
Harvard Medical School

This set me thinking that since the govt is forever touting the importance of costing out the benefits of any spending proposal (something I agree with), maybe it should tell us how much it values a S’porean in monetary terms? Esp since the PM has just said that that more social spending does not mean better results http://www.tremeritus.com/2014/01/11/like-a-war-zone/

As pigs are likely to fly first maybe the SDP RI brains trust (Paul A, Wee Nam, Ang -Drs three- etc) can  “force” the govt to do so by coming up with their own SDP valuation, and what they calculate is the PAP valuation.

As to the co driver doing something? They wearing white?

http://atans1.wordpress.com/2013/12/13/why-a-2015-ge-is-now-more-probable/

Why owning Reits in a rising interest rate environment may make sense

In Financial competency, Property, Reits on 09/01/2014 at 4:46 am

When ST talks down Reits, as it has been recently, because interest rates are rising, it’s time think again. Remember its big-balls up when Reits were at their (with hindsight) their peak in May last yr?

Here’s some stuff that appeared in reference with US Reits but is applicable here: While REIT investors did an about-face following the Fed’s tapering announcement, some industry experts say all the attention surrounding interest rates and REITs is unfounded. “Ever since May 22, there’s been this discussion about the role of interest rates in REIT returns – and it’s a very strange discussion,” said Brad Case, VP of Research with the National Association of Real Estate Investment Trusts (NAREIT) in a recent interview with CoStar News. “Because the truth is, when interest rates go up, it usually means the economy is strengthening. That’s good news for REITs and means that returns will be strong.” In support of this statement, Case pointed out that REITs have performed well in 12 out of 16 periods of interest rate increases since 1995.

But be prepared that they underperform other types of “shares”

While there is controversy regarding the degree to which interest rates affect REITs, Affleck pointed out that investors need to consider more than just how REITs perform when interest rates change. “The relevant measure is not whether REITs have done well during interest rate increases, but how they performed relative to the broader market,” Affleck said. “On that count, the data are definitive – REIT performance relative to the broad market is inversely related to interest rate movements.” Affleck added that REITs outperformed the broad market – gaining 27% compared to a 20% gain for the S&P 500 – when interest rates fell from 3.5% in March 2011 to 1.5% in April 2013.

Juz take the payouts and bank them. But remember that Reits, unlike shares, pay out most of the income they get.When things go wrong (higher borrowing costs, lower rents), payouts suffer. No buffer, unlike comnpanies dividends. In the worse case, can end up having to subscribe to rights issues because Reits don’t have reserves to draw on in hard times.

Related post: http://atans1.wordpress.com/2011/12/12/primer-on-yields-of-reits-biz-trusts/

2014: Advice for Oppo, activists and investors

In Financial competency on 01/01/2014 at 6:41 am

My X’mas, New Yr  pressie to readers: 2 quotes that will serve them well as investors in 2014. The second one will also serve the Oppo and kay pohs well.

… fairly conservative investor, strongly believing in the combination of traditional valuation methods and charts – always looking at the balance sheet first and then analyzing the charts over 20, 50, 100, and 200 days.

http://pinkerspost.com/post.php

“The only way that individual investors can be heard in a situation like this* is to collaborate and try to get attention. There are so many other interested parties trying to get their points across that it’s the only way they can have a voice, ” says Mark Taber, a British individual investor, who has led three successful campaigns against banks.

(But I doubt asking SIAS to get involved amounts to collaboration.)

And collaboration applies to the Opposition and kay pohs too, though sadly the WP is very clear that it’s the PAP’s co-driver not part of any coalition against the PAP govt. Though I am willing to give Low, Ah Lian and Muhamad Faisal bin Abdul Manap that they don’t have ministerial ambitions unlike PritamS. As to Auntie and Show Mao, one senses they think they are meant for better things than juz MPs.

As for attention, the kay pohs should think again of their attention-seeking attempts. I often feel that there is too much aping of Western PR techniques. I plan to go into detail later this yr, but here’s the essence: Western HR PR tactics are premised on the assumptions that:

– the public knows and cares about the causes of the PR effort. In S’pore this may not be the case. Take the case of migrant workers arrested for “rioting”: while the kay pohs focus on “due process” and poor working conditions; the posters on TRE focus on being anti-PAP even while supporting deportation for alleged rioters, and low wages for manual workers.

– changing opinion (esp among the chattering classes) can have an effect: govts do listen. In S’pore govt hasn’t ever listened, even when votes are at stake (OK, this is a bit of an exaggeration). NatCon double confirms this view of an unlistening govt.

BT inflation headline talks sucks, really sucks

In Economy, Financial competency, Holidays and Festivals, Media on 24/12/2013 at 6:28 am

I recently blogged that the PAP should approach mrbrown to help PAP MPs in particular Baey and Tharman. Looks like BT needs his help in getting the facts “right”.Let me explain.

I waz planning to take a break from nasty, vicious blogging as it’s the time of peace and gooddwill towards men.

Happily for my inner Grinch , I read this

Core inflation inches higher, forecasts up
Economists point to higher inflation for next year with pressure from wages, business costs, COEs
… Inflation rose to 2.6 per cent year-on-year in November, from 2 per cent the previous month, with private-sector economists forecasting higher inflation for next year. In a statement yesterday, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said core inflation – which strips out accommodation and private road transport costs – also picked up pace to 2.1 per cent in November, compared with 1.8 per cent in October.Based on the above, core inflation was up 16.7%. Taz’s “inching” in a month?

Trying to spin gold out of bull dust? Or is shumeone seriously drunk or mathematically challenged? BTW, inflation was up 30% in a month.

Santa, I want for Christmas “Headlines from a Mathematically Literate World”

Our World: Unemployment Rate Jumps from 7.6% to 7.8%
Mathematically Literate World: Unemployment Rate Probably a Little Under 8%; Maybe Rising, or Not, Can’t Really Tell

Our WorldFirm’s Meteoric Rise Explained by Daring Strategy, Bold Leadership
Mathematically Literate WorldFirm’s Meteoric Rise Explained by Good Luck, Selection Bias

Our WorldGas Prices Hit Record High (Unadjusted for Inflation)
Mathematically Literate WorldGas Prices Hit Record High (In a Vacuous, Meaningless Sense)

Read more

http://mathwithbaddrawings.com/2013/12/02/headlines-from-a-mathematically-literate-world/

And if interested on why core inflation was up 16.7% (can’t help think of “ponding”)

A higher headline inflation figure in November – marking the first time since March that inflation has risen beyond the 2 per cent level – was generally expected as it had been flagged by MAS and MTI previously.

The biggest driver was higher accommodation costs, which rose 3.3 per cent year on year from 1.9 per cent in October, when service and conservancy charges rebates to HDB households had kept housing-related costs down.

 

TRE readers are illiterate in economics and finance

In Economy, Financial competency, Property on 19/12/2013 at 4:51 am

Or at least many are. Let me explain.

TRE posted this piece of mine on Reits.

It provoked a long rant* from someone called Armchair Anarchist. His or her basic grumble against the govt was that interest rates should have been raised a few back to curb various ills including rising property prices. It received huge positive ratings. And there are no dissenting views, not one.

Last yr around this time, I met an old friend at a function. He was an ISD detainee (short while and it seems ’cause dad was Barisan partisan)) and a strike leader. He later got a MA in Econs and was in admin service (taz meritocracy at work in S’pore, TRE readers, at least 30 yrs ago) before becoming a wheeler-dealer.He was, and is a proud S’porean. No S’pore hater he.

We were discussing what Tharman would do in 2013 to control inflation and property prices given that he couldn’t use interest rates, and the policy of strengthening the currency slowly was not working to control inflation or property prices.

We knew that raising interest rates would only make things worse. Given that everyone (except TRE, TOC and TRS readers) think that S’pore is a safe haven, raising interest rates will result in more foreign money pouring in to take advantage of the better yield here. The currency will be pushed up and exports and services will become uncompetitive. Prices of  most properties (and other assets) will rise. FTs will be willing to accept lower wages, ’cause S$ worth a lot more in their home currencies.

The result: a recession, unemployment among locals, deflation and rising asset prices (except possibly for HDB flats and low end condos: S’porean PMEs default ’cause they lose jobs to FTs). He and I and others with access to credit would make a killing buy low-end condos and renting them out to FT PMEs.

Is this what TRE readers want for Christmas and Chinese New Year?

Are they that deft?

—-

*Armchair Anarchist:

S-REITs payouts lean towards the high side of the global REIT market (e.g. average dividend yield of around 6+% compared to less than 5% in Japan and Germany, 6% UK). If dividends are cut by 20-25%, the yield is still relatively attractive given the dearth of high yielding instruments in Singapore.

But I do find MAS’s warning rather strange. If they are indeed worried about such things as REITs and the health of the Singapore financial sector in face of a potential rise in interest rates, the MAS ought to have engineered such a rise in rates at least 2 years ago and taken the froth out of REITS, the property market and reduced the risk in Singaprean banks’s balance sheets. Why issue warning now that the Fed may begin to taper when the MAS ought to have acted long ago? The easy financing for real estate speculation and the rise in inflation are not new. These had been with us for a few years now and are clear warning signs that interest rates are too low and liquidity too plentiful in Singapore. Look at bank deposit rates and CPF ordinary account rates: we suffered from negative real interest rates when adjusted for the underlying inflation rate (CPI is too crude, PCE deflator is a better indicator). When real rates are negative, the ordinary savers suffered as the value of their savings are inflated away. But it is great for speculators and big companies because it provides a very cheap source of debt financing.

Seems to me, the MAS is probably basking in the reflected glory of superior GDP growth while sleeping on the job in terms of forecasting the real threat to the economy. Another bunch of over-paid, incompetent elites?

Rating: +25 (from 25 votes)

Armchair Anarchist:

I like expand a little bit more on MAS caution regarding rise in interest rates.

My view is MAS left it rather late in the day to caution and to act if necessary. Certain sectors will be hit, not least real estate which had several adrenalin shots that propel values ever higher. But, for our savings and long term investments, it is no bad thing if interest rates are going up. It is my conviction that not just exercising political repression, the govt also exercise financial repression. I said before our AAA-rating is absolutely great for GLCs and big companies but a total disaster for ordinary citizens who have to save and invest for retirement and the rainy day. The Govt incessant extraction of revenues from all sorts of economic activity (tax, COE, surcharges etc)result in persistent budget surplus because in their anti-welfare extremism, the govt do not spend much on social, health and infrastructure programmes. Therefore, our bond yields are artificially low because the govt do not really need to borrow. The govt actually pretend that our CPF rates are pegged to market but in effect the govt control the levers of the bond markets giving themselves a low financing rate. The effect is that we received bugger-all out of bank deposits, CPF and bonds. Singapore company dividends are lousy because whatever crap they pay is still higher than CPF and bond yields.

So let interest rates go up. At least it reverse the equation slightly in favour of the man in the street rather than have the Govt, the GLCs and the big companies indulged themselves in winner-takes-all.

Rating: +20 (from 20 votes)

Well timed warning for merry hols, going into 2014

In Financial competency on 03/12/2013 at 6:42 am

I have never seen the sell-side predict a recession. There are a number of reasons for that but key among them is the personal career risk of calling a recession and being wrong. Both the sell-side and the buy-side tend to do much better when the economy and markets are doing well so who wants to be a party-pooper.

(Perpetual but respected bear)

He and another have gd points on why a recession is coming. Pls read http://www.economist.com/blogs/buttonwood/2013/11/economics-and-markets-1 if thinking of cheonging market esp reits or when reading broker reports or ST stories about 2014 prospects.

For S’pore; remember first half of 2014 is the last possible time PAP govt can make us pay and pay and not suffer the consequences in next GE: http://atans1.wordpress.com/2013/11/30/2014-last-chance-for-govt-to-increase-prices/

And here’s a great quote from the Economist that applies to Tharman as he tries to keep inflation under control while keeping a lid on property and COE prices: THE role of central bankers is often compared to that of a sober adult who has to take away the punch bowl just as the party starts getting a little too rowdy. But what happens when the party as a whole is pretty glum apart from a small group of hooligans in the corner? Take away the booze then and you ruin the party for everybody else. Instead the answer is to pay particular care to who gets another drink.

The Economist was talking about the British situation where the economy is slowly recovering (faster than even the US) but residential property prices are flying again.

Costs savings in airlines: every little bit counts

In Airlines, Financial competency on 14/11/2013 at 7:21 pm

Singapore Airlines (SIA) has reported a 78% rise in net profit for its second quarter*.

This reminded of a story in the New York Times, some time back, that Delta Airlines by slicing an ounce off its on-board steaks saved US$250,000. It even calculated that removing a single strawberry from its First Class salads would save US$210,000.

Talking after looking after the pennies, and the dollars will look after themselves.

In investing, John Bogle, the founder of indexer Vanguard, keeps stressing the importance of buying funds that charge low fees. The expenses saved when compounded over time adds to performance. Besides most active fund mgrs underperform the market., so they mare a waste of money. Indexers charge very little in comparison with active managers.

Related posts:

http://atans1.wordpress.com/2010/01/01/the-perils-of-indexation-revised-and-updated/

http://atans1.wordpress.com/2010/02/16/even-the-rich-should-use-index-funds/

http://atans1.wordpress.com/2011/01/07/rebalancing-can-lock-in-profits-trim-losses/

 

——–

*Asia’s second biggest carrier was boosted by the sale of aircraft, spare engines as well as increased passenger traffic.

The firm posted a total net profit of $128.6m (£80.9m) for the quarter, up from $72.1m a year earlier.

But it warned it was facing tough competition and a strong Singapore dollar. (BBC report)

Indications that time to cheong mkt?

In Financial competency on 31/10/2013 at 4:33 am

So based on patterns in the past, in so far as companies’ earnings are not artificially propped up by low interest costs and barring any structural change in the economic environment, investors who enter the market at current levels have a good chance of earning satisfactory returns from the stock market over the next five years.

(ex BT reporter, now in fund mgt, wrote on 13 October 2013 in SunT)

She argues

Consider the price of the Singapore market, relative to the 10-year average of its earnings per share, as calculated by Thomson Datastream. This is measured by the so-called Graham and Dodd price-earnings (PE) ratio.

In the past 30 years, the highest the market price has gone up to was 33.5 times its 10-year average earnings. That was in August 1987 just before the October 1987 Black Monday crash. The lowest the market has plunged to was 10.3 times its 10-year average earnings. That was in February 2009, the darkest point of the recent global financial crisis.

In the past 30 years, when the Graham and Dodd PE fell below 16 times, the returns of the three portfolios five years later tended to be substantial.

They averaged 15.2 per cent a year for the entire market; 25.4 per cent a year for the low (price-to-book) PB portfolio; and 13 per cent a year for the high PB portfolio. The five-year period starting from the lowest point on our PE chart, i.e. February 2009, has not ended yet. But already, those who entered the market at that point are sitting on, or had made, outsized returns.

There was only one instance when buying into the market at the Graham and Dodd PE of 16 times or below did not pay off handsomely five years later. That was in July 1997, at the onset of the Asian financial crisis. Five years later, in August 2002, the market was still trading at similar levels as it struggled to climb its way out of the dot.com bust and the 2001 terrorist attacks in the United States.

The higher the Graham and Dodd PE, the lower the return five years later. Investors who entered the market at a PE of 26 times or higher had seen a miserable 1 per cent average return a year in the following five years for the market portfolio, 7 per cent for the low PB portfolio and minus 2 per cent for the high PB portfolio.

At that market entry level, chances of an investor suffering capital loss are also elevated. Based on monthly numbers in the past 30 years, the probability of loss five years later (at Graham and Dodd PE of 26 times and above) was 42 per cent for the market portfolio, 12 per cent for the low PB portfolio and a whopping 70 per cent for the high PB portfolio.

Finally, where is the Graham and Dodd PE for the Singapore market now? It’s at 14.1 times as at end September. This compares with the average of 20.8 times in the past 30 years.

In the past three decades, there were 25 different months when the Graham and Dodd PE traded between 14 and 16.5 times. For those 25 different months, the market portfolio returned an average 15.5 per cent a year over the next five years. The low PB portfolio averaged 24.8 per cent a year, and the high PB portfolio 14.3 per cent a year. The probability of capital loss for those periods was 1-in-25 for the market portfolio, and 3-in-25 for the low PB as well as the high PB portfolios.

http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid={412728214-19447-2216721772}

Remember what Warren Buffett said about expenses, “Investors should remember that excitement and expenses are their enemies.” He goes on, “And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful.”

Asiasons: 2 bull pts

In Financial competency, Malaysia, Private Equity on 24/10/2013 at 4:46 am

Firstly, controlling shareholders are gd financial engineers. I had bot into Integra 2000 for its planned massive dividend in 2007 which I believed that the market had not appreciated because it was conditional on deals getting thru. It then started flying cum dividend. I had expected to sell the shares at a slight loss from the cum di price when it went ex-dividend. Instead I made a profit. Later I learnt that these guys had bot into the shares cum dividend. They must have used the pending dividend to finance the purchases. Financial engineering at its best.

(FYI, BT on Tueday quoted an unname broker, “He believes Asiasons’ “true” value could settle in the region of 30 to 40 cents, while LionGold’s could lie between 40 and 50 cents as it has a higher book value.”. Don’t know what he means, but will explore.)

Secondly, these guys willing to spend dollars trying to look gd. Blumont and LionGold selling controlling shareholders have gone to ground. But still, like Asiasons, their share prices have flown.

It was a masterstroke of Asiason’s PR/ IR team that got ST to carry a story entitled “Were not a bunch of comboys” on Saturday 19th October, juza before relisting on Monday. In it we learn,

– about the sparsely furnished office of Asiasons Capital in China Square Central [Frugal, serious people]

“The share price volatility has absolutely no link or association with Asiasons’ operations,” said chairman Mohammed Azlan Hashim, a prominent corporate figure in Malaysia who sits on the boards of sovereign wealth fund Khazanah Nasional and IHH Healthcare. [Not a nobody]

– Asiasons has a fund management portfolio of about US$300 million (S$372 million) and counts Malaysia’s deep-pocketed state-owned funds such as Ekuinas and government pension scheme Kwap as clients.[Gd, solid connections]

– At current price levels, Mr Azlan admitted that the shares are hovering near the level they were at in 2007 when he and his two partners took control of Asiasons, then a human resources technology firm called Integra2000 and shifted its business focus to private equity investment … three also reiterated that none of them have sold “a single share” in Asiasons over the past six years.  [Long term greedy] That’s quite a contrast from what has been taking place at LionGold and Blumont, which have seen significant trades recently involving insiders, particularly disposals and forced selling involving directors.

– “This so-called web of cross shareholdings makes it appear as if we are in cahoots in this whole thing,” said Mr Lim. “We are our own men and no one else is influencing us.” Asiasons owns 9 per cent of LionGold and has a 27 per cent stake in ISR Capital which it plans to eventually divest.

Mr Azlan reiterated that there are no other connections to the other firms. “We have absolutely no relationship with these other firms, including Blumont. The only relationship there is Jared, a director, and his wife but that’s not related to Asiasons per se,” said Mr Azlan.

Clearwater Developments, which is linked to Mr Lim’s wife Dian Lee, owns a 7 per cent stake in Blumont. That investment, Mr Lim said, came about from an “innocent transaction” a few years back when Blumont, then called Adroit Innovations, was scouting around for some properties in Malaysia.

“She went ahead and made the decision herself and it was a small investment which involved shares. Now she and her partners are looking to sell their stake as it was purely an investment and not part of their business,” said Mr Lim. [Not connected with ...]

– The three founders also categorically denied another topic hot in the market rumour mill that Asiasons is connected to well-known Malaysian stock investor and businessman Soh Chee Wen. [Not connected with ...]

Watch out for the “bowl” consolidation, if thinking of buying. Let you know if I buy some after I buy some.

Why economic forecasters underperform fortune tellers

In Economy, Financial competency on 20/10/2013 at 5:23 am

(Taz all the more reason to stick to stocks that make can make sustainable (we hope) good payouts. Check Temasek’s Fab 5 out: they have consistently made gd payments but the prices reflects this i.e. better yields available elsewhere but at greater risk.)

[A]n advance estimate showing the city-state’s economy shrank 1.0 percent on quarter in the July-September period, better than expectations for a 3.6 percent contraction, but a significant deceleration from 16.9 percent growth in the previous three months.http://www.cnbc.com/id/101109030

Opps wrong again. And govt isn’t that gd either at forecasting. A few months ago: The Republic’s economy is expected to do better this year than previously expected, with the growth forecast raised to between 2.5 and 3.5 per cent, Prime Minister Lee Hsien Loong said yesterday.

The previous official forecast was between 1 and 3 per cent. [Today]

In both cases, in percentage terms, the changes are significant: a fortune teller would lose his credibility with such forecasts. All finance ministers, their advisers, economists, central bankers and analysts always get their forecasts wrong: nothing uniquely S’porean.

In addition to the general reasons I gave here, here are two more reasons for them being sotong in the post 2008 environment.:-

– The experts are lost because the conventional model of how the financial system interacts with the real economy has evolved too little since the huge and largely unexpected financial crisis. Now as then, there is too much debt in the world for either monetary or fiscal policy to have the effect that the textbooks say.

The stimulative efforts of governments and central banks help the highly leveraged financial system stay afloat, but only a small portion of the funds actually reach the real economy. In such an unconventional financial world, the conventional wisdom is likely to stay wrong. Expect more of the unexpected.

http://blogs.reuters.com/breakingviews/2013/08/05/markets-central-bankers-face-strange-new-world/

– Economics is an inexact science, with exceptions to almost every pattern of behaviour that economists take for granted. For example, economists predict that higher prices for a good will reduce demand for it. But students of economics will no doubt remember an early encounter with “Giffen goods”, which violate the usual pattern. When tortillas become more expensive, a poor Mexican worker may eat more of them, because she now has to cut back on more expensive food like meat.

Such “violations” occur elsewhere as well. Customers often value a good more when its price goes up. One reason may be its signalling value. An expensive handcrafted mechanical watch may tell time no more accurately than a cheap quartz model; but, because few people can afford one, buying it signals that the owner is rich. Similarly, investors flock to stocks that have appreciated, because they have “momentum”.

The point is that economic behavior is complex and can vary among individuals, over time, between goods, and across cultures. Physicists do not need to know the behavior of every molecule to predict how a gas will behave under pressure. Economists cannot be so sanguine. Under some conditions, individual behavioral aberrations cancel one another out, making crowds more predictable than individuals. But, under other conditions, individuals influence one another in such a way that the crowd becomes a herd, led by a few.

Unfortunately, many of these methods [to get clear-cut evidence of causality. If high national debt is associated with slow economic growth, is it because excessive debt impedes growth, or because slow growth causes countries to accumulate more debt? cannot be applied to the most important questions facing economic policymakers.] So the evidence does not really tell us whether a heavily indebted country should pay down its debt or borrow and invest more.Moreover, what seem like obvious, commonsense policy solutions all too often have unintended consequences, because a policy’s targets are not passive objects, as in physics, but active agents who react in unpredictable ways. For example, price controls, rather than lowering prices, often cause scarcity and the emergence of a black market in which controlled commodities cost significantly more.

http://www.theguardian.com/business/2013/aug/08/raghuram-rajan-economic-paranoia-uncertainty

 

Penny stocks’ fiasco show greed cannot be untaught

In Financial competency on 10/10/2013 at 4:48 am

I refer to the bloodbath on SGX described by TRE here. Writer lost serious money from the sound of it. And now venting his anger at anyone but himself?

Let’s get serious about a very serious topic, Can financial competency programmes work help prevent such disasters?

When the the central bank came out with these two rules, I appauded,

[F]inancial institutions are required to disclose to borrowers the total amount and time needed to fully pay off their debts if they pay only the minimum payment each month.

Financial institutions are also to disclose to borrowers the amount of debt that would accumulate by the end of six months if they fail to pay in the next six months.

MAS said this will help borrowers make more informed credit decisions while taking into account the total cost of borrowing.

http://www.channelnewsasia.com/news/singapore/mas-tightens-credit-card/809774.html

But tot it a sad reflection that in this day and age of electronic spreadsheets, smartphones apps, and cheapish financial calculators, young working people can’t do the maths of compound interest, or understand its effects.

How much is it, this year, my man?”… “Well, it’s been a doubling so many years, you see,” the tailor replied, a little gruffly, “and I think I’d like the money now. It’s two thousand pound, it is!”

“Oh, that’s nothing!” the Professor carelessly remarked … “But wouldn’t you like to wait just another year, and make it four thousand? Just think how rich you’d be!”  …  ”But it; dew sound a powerful sight o’ money! Well, I think I’ll wait–”

“Of course you will!” said the Professor. “There’s good sense in you” …“Will you ever have to pay him that four thousand pounds?” Sylvie asked as the door closed on the departing creditor.

“Never, my child!” the Professor replied emphatically. “He’ll go on doubling it, till he dies. You see it’s always worth while waiting another year, to get twice as much money!

The novel was published in 1889 and in 1987 or 1988, Ralph Wanger (a then leading investment fund manager, now retired) told author John Train that the sum would have grown to £1 followed by 33 zeros. The magic of compounding on funds not drawn on. No wonder Lim Swee Say has a special monthly CPF statement so that he can see every mntnh.

(http://atans1.wordpress.com/2011/12/02/cpf-and-alices-adventures-in-wonderland/)

But don’t blame the education system or the govt for not teaching kids financial literacy: teaching financial competency doesn’t work according to the experts.

Financial Literacy Outside the Classroom An academic research paper showed that “financial education is laudable, but not particularly helpful,” Richard H. Thaler, a professor of economics and behavioral science at the Booth School of Business at the University of Chicago, writes in an essay in The New York Times.

Returning to the latest fiasco on SGX. Retail investors and remisers have been warned, time and time again, to be careful when retail investors are playing speculatives. They never learn even though remisers have to attend training courses where they are tot basic risk management techiques, or so I’ve been told. Love of money is the root of all ignorance, to misquote pastor Khong’s and Kong Hee’s bible.

Temasek’s Fab 5 S’pore blue chips

In Financial competency, Temasek on 03/10/2013 at 5:11 am

Regolar readers will know this blog’s hostile to ST esp in its personal investment coverage.And usually is critical of Temasek.

Here’s an exception: If you owned one or more of these blue chips, you would be really ungrateful not to vote for PM

http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid={435478142-19236-1456515192}

Data from SGX My Gateway and Bloomberg showed aircraft engineering firm SIA Engineering Company topping the list, with a total return of 164 per cent over the five years to Sept 13, the cut-off date for this exercise. This includes price increases and cash dividends paid out, and works out to a compounded 21 per cent a year.

Telecommunications firm StarHub, engineering firm Singapore Technologies Engineering and rig builders Keppel Corporation and Sembcorp Marine round up the rest of the top five.

One key thread of these firms is that they are all part-owned by Temasek, which probably adds to the confidence of investors.

They are all also known for being solid with their dividend payments … Of course the share prices reflect that fact i.e. that there are better yields in the market albeit with greater risk.

Disclosure: got Keppel for yonks, and odd lot of SIAEC.

S’pore bonds are a lousy investment

In Financial competency, Media on 01/10/2013 at 5:06 am

SINGAPORE bonds were the second-worst performer in Asia in the first seven months of this year, the Asian Development Bank (ADB) has said.

Losses were largest in Indonesia, down 17.8 per cent, followed by Singapore, where bonds were down 7.8 per cent in the January-to-July period, said the latest report by ADB’s Asia Bond Monitor.

Market returns on Asian bonds have fallen sharply so far this year with the iBoxx Pan-Asian Index falling 3.5 per cent in US dollars in unhedged terms, it said yesterday.

Only bonds in the Philippines and China recorded gains – 7.5 per cent and 3.1 per cent respectively.

Reported in BT 27 September 2013, but not in ST or Today. Why? ST and Today only report the “right” news? Note that ST regularly talks of the benefits of investing in S$ bonds, and bonds generally.

BTW, here’s shumething SunT didn’t tell us about the Finnish education system: Angry Birds creator Rovio has brought Angry Birds Playground, a schools initiative devised with the University of Helsinki in Finland, into the kindergarten classroom of children, aimed at six-year-olds.

With the initiative already in use in Finland, Rovio has now entered into an agreement with schools in China.

“With small children, the Finnish approach to education is very much play-orientated,” says Sanna Lukander, vice president of book publishing at Rovio Entertainment.

“These characters and their world seemed to inspire children. You can’t not think about how you might motivate children to do more than play.”

No worries abt one-yr wait to see renal specialist

In Financial competency, Humour on 27/09/2013 at 5:00 am

I refer to http://mysingaporenews.blogspot.sg/2013/09/medical-appointments-in-world-class.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+MySingaporeNews+%28My+Singapore+News%29 and to http://www.tremeritus.com/2013/09/23/one-year-wait-to-see-specialist-at-sgh/

They are all very angry people because Ms Tay’s hubby has to wait for a year before he can see a kidney specialist.

I know someone who recently was told that he had to go to see a kidney specialist. He was then told by the girl responsible for making an appt that the waiting period was one yr if not longer. He juz shrugged his shoulders.

He was pretty relaxed abt waiting because

– He knew that there is a priority procedure for “siong’ cases. He had benefited from the priority list several yrs ago when a routine check had the doctor concerned about his eyes. He got an appt to see a specialist within weeks. I have had a similar experience.

– He also knew that the polyclinic doctors were monitoring the situation, via tests every time he renewed his medication. The doctor had told him that the dosage of one pill could be increased if necessary.

– The doctor had given him a copy of the results of his test. He was thinking of consulting a private-sector GP that he trusted to ask him what the results meant: is he in clear and imminent danger of dying, as Ms Tay seems to fear for her hubby? He could have also asked one of our mutual doctor friends, but felt piah seh.

– According to my friend, a doctor once told told him that polyclinic doctors knowing the length of the queue do put marginal cases on the waiting list juz to be kia-su: anticipative medicine that should be commended.

– If nec, he would consult a private sector specialist and then return to polyclinic with the results. The worse case would be if he got warded immediately as a private patient because things were that bad.

Be very clear, neither of us are defending the staus quo: one yr’s wait is not right, if one cannot afford to go “private’*. Especially, as there is the Toto element in the system. It is sometimes (very rarely to be fair) possible that if the polyclinic calls to make an appointment, it will be told that someone has juz cancelled and that there is a slot available say in two months. The polyclinic may grab the spot for the patient, and tell the patient that “die, die” got to go.  Conscientious staff do this even though there are consequences for the staff if the patient is daft not to take the lucky opportunity. I have heard that it does happen: daft patients who refuse to take the slot because got “other appointment” like going to beautician, or got golf game.

The system should be changed so that all such cancellations are offered to the next person in the queue. Only fair. Of course, this assumes that the IT system can cope with such changes. It may not be possible with legacy systems.

But, we are saying that she (and presumably hubby) are being too KS, and emotional. They also do not seem to trust the doctors, or the system. We don’t assume that the doctors or the system are out to fix us.

As to the comments of Redbean that a first world system shouldn’t have anyone waiting for one yr, juz google up the topic of waiting lists in the UK’s NHS system, one of the world’s finest. The issue is simple. In healthcare ,the demand is endless, resources are finite. There are two ways to handle the problem, rationing by

– wealth, the American way.

– queuing, the NHS way.

I wish Redbean, and all those TRE readers commenting on Ms Tay’s letter read what Jeremy Lim has to say http://theindependent.sg/what-singapore-did-right-and-wrong-in-health-care/, before they comment adversely on the healthcare system here. He also wrote shumething similar in ST https://www.evernote.com/shard/s1/sh/bfb5535d-4859-47f1-beb9-99270276e45f/4133391be0a8092e6d1ac8cdc39ef20b.

Read both articles. Jeremy Lim has his heart in the right place (unlike a certain sneering minister who was a doctor), but knows the practical problems of providing “affordable” healthcare.

Let’s be informed on the topic before opening our mouths. Don’t talk cock on this v. v. impt issue. Don’t use it to express cliched anti-govt or PAP cliches. Even the WP doesn’t.

*We are assuming Ms Tay’s hubbie has financial concerns but can afford to visit a private GP to ask what the test results mean. We are also assuming that they can know a gd GP, by reputation, at least. I hope they are not like a very rich neighbour who uses the public healthcare system but who is always complaining that she never sees the same specialist or GP again: always new one she complains.

It is acceptable if one is cheap-skate, or searching for “value’ person. My friend was an arbitrageur when he worked in the stockbroking industry. He believes that there are always free lunches but one mustn’t be choosy or picky. But he warns to be careful to avoid getting food poisoning. One bad case of food poisoning can wipe out the savings made, unless one goes to a polyclinic for treatment.

Telling gd info from bad, the secret police way

In Financial competency on 04/09/2013 at 5:18 am

(Or “How Ravi & PM can improve their decision-making or sharing skills” Actually, everyone, who has to evaluate info i.e all of us, can benefit from the methodology.)

P Ravi had a “hard” time*, a few months back, from two ministers and the spokesman from the Info ministry ever since he reposted some stuff on masks (See this) which even I tot he shouldn’t have done.

PM had serious problems in the 2011GE and the by-election this year: the PAP grassroot leaders gave him and the PAP the wrong info on grassroot sentiment. After the 2011 GE, he had to defend said leaders after PAP MPs criticised them. To ensure that the feedback, the selected NatCon participants reflected S’poreans’ concerns, he had a survey to double-confirm what he was hearing from the selected NatCon participants.

Maybe, if Ravi and the PM had used the following evaluation method that the Malayan Special Branch successfully used when fighting the communists, they could have better evaluated their sources’ information.

Source reliability Information accuracy
A – Completely reliable 1 – Confirmed
B – Usually reliable 2 – Probably true
C – Fairly reliable 3 – Possibly true
D – Not usually reliable 4 – Doubtfully true
E – Unreliable 5 – Improbable
F – Reliability cannot be judged 6 – Accuracy cannot be judged

(Was based on “Admiralty System”. From  Malaya’s Secret Police 1945-60: The Role of the Special Branch in the Malayan Emergency)

It splits the analysis into two: the reliability of the source (based on source’s historical reliability) and the accuracy of the info (based on known facts).

In the case of Ravi, even though he would have given his source an “A” rating, the fact that before his reposting the following was reported:

The Health Ministry has urged Singaporeans to be patient, as it works with suppliers to speed up deliveries to shops.
Adrian Lo, director of Singapore Test Services, said: “The frustration is definitely there as a citizen. But I know the challenges of distribution so we just have to be patient and then hope the government intervenes and do something to spread out the availability of the masks.”
Dr Ng Eng Hen, chair of the Haze Inter-Ministerial Committee, added the government will supply retail outlets with more masks and that NTUC FairPrice will get the stocks next week.
The FairPrice chain of stores said close to two million masks will be re-stocked from Monday across all its 115 outlets.
Dr Ng said: “NTUC FairPrice will cap the price of these masks, but also limit the number that each person can buy. Because when people buy more, they create more demand and artificial shortages, so they will cap the price and limit the numbers that each person can buy.”
More than 1.5 million N95 masks are also on their way to being delivered to retail pharmacies.

http://www.channelnewsasia.com/news/singapore/n95-masks-run-out-at/719948.html

should have alerted him that info he was going to repost was at best a “4″ in terms of accuracy. The rating would have been A4. I mean a minister, no less, said that masks were going to be distributed. A minister would not be playing the DRUMS on such an issue of national concern, which was easily verifiable, or shown to be false, as the case may be.. Trustworthy source, but accuracy problematic. BTW, Ravi now concedes that the said masks were distributed.

As for the PM, instead of relying on grassroots leaders’ assurances of a victory in Punggol East, he should have tot back to their assurances of easy victories in 2011, and given the grassroots leaders a C or D rating, and 3 for accuracy. This score would have told him that it would be prudent to campaign harder because it was C3 or D3 at best: neither here or there. It might even be a C4 orD4.

*Now this is a hard time: BETWEEN August 20th and 23rd Beijing police arrested several microbloggers** on a charge normally reserved for rabble-rousers on the streets: that of “creating a disturbance”. They were nabbed, police claim, for spreading false rumours. Earlier in the month two influential microblogging activists were also arrested in east-central China. Each had accused officials of wrongdoing. An online crackdown is under way on those who do not follow the Communist Party’s line … On August 23rd Beijing police detained one Big V, Charles Xue, and later accused him of holding group sex parties with prostitutes.

http://www.economist.com/news/china/21584385-authorities-move-against-some-chinas-most-vocal-microbloggers-big-vs-and-bottom-lines

**Seems some of those arrested were PR people microblogging a product placement.

No such thing in China as “juz sharing” and “seeking govt clarification”. If it smells like rumour-mongering, bring on the handcuffs, is shumething the Chinese can teach Yaacob.

Remember ST’s “promotion” of Reits in May & June?

In Financial competency, Reits on 03/09/2013 at 5:09 am

ST wrote last Saturday about S-Reits as follows, In short, this means that you would have got a better deal if you had bought in 2010 and 2011, compared to now.

However, buying now would still be better than if you had bought in May this year: At that time, the average yield of the sector was as low as 4.3 per cent, Bloomberg data shows.

http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid={493433871-18886-1315537690}

Regular readers will know that in late May (here), two weeks in a row in June (here and here), I grumbled about ST’s “promotion” of Reits, saying it wasn’t the time to load-up on Reits.

As to whether to load up on Reits, I’m thinking about it. Let you know after I buy some, Or if I decide not to.

Related post: http://atans1.wordpress.com/2013/07/08/why-im-not-selling-my-reits-yet/

If you are blur about why the yields of different types of reits are different, read this http://atans1.wordpress.com/?s=Reits+%2B+primer. BT is not ST.

DBS Vickers likes Cache Logistics Trust, Suntec Reit and CapitaRetail China Trust, saying that “most of the negatives are already priced in” for these counters.

It also likes hotel owner CDL Hospitality Trusts, though technically, the vehicle is a stapled security rather than a pure Reit (ST report)

Tharman has a point, but Lawrence Wong missed the plot

In Economy, Financial competency on 27/08/2013 at 4:50 am

Speaking at the Network ASEAN forum on Friday morning, Singapore’s Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said there was never a realistic prospect of a smooth and easy exit from quantitative easing (QE).

But the QE tapering will not be bad for the ASEAN economies as it is not in anyone’s interest for very low global interest rates to continue indefinitely.

It also signals an economic recovery in the US — a major market for ASEAN. [Channel News Asia last week].

Investors who have suffered from the flight from regional markets and currencies should look on the bright side. What he said is one gd point to remain calm.

Another reason why tapering is gd: The Federal Reserve is forcing Asia to kick its addiction to hot money. The prospect of higher U.S. interest rates had made the region’s dwindling trade surpluses look an increasingly dangerous habit. Though markets may be turbulent, pricier local money or cheaper currencies will improve the trade balance for most Asian countries. http://blogs.reuters.com/breakingviews/2013/08/22/fed-liquidity-curbs-will-act-as-asias-detox-plan/

But QE tapering is gd news only if investors are not leveraged to their eyeballs and counting, bringing me to the issue of Lawrence Wong (a board director at the central bank, where Tharman is the chairman) talked cock on “over-leveraged” borrowers.

Most heavy borrowers in Singapore have above average income levels, which means they are less likely to default on their loans.

Acting Culture, Community and Youth Minister Lawrence Wong said this [on 11 August] in response to questions in Parliament on household debts from Nominated MP Laurence Lien and Non-Constituency MP Yee Jenn Jong.

He went on to say: On borrowers who are “over-leveraged”, or those with debt service burdens exceeding 60 per cent of their income, Mr Wong said most of them have incomes higher than the median household income of S$6,000.

He added that nearly 90 per cent of these borrowers are servicing private property loans, and more than 80 per cent are servicing only one loan.

The reasons to be concerned about these people is not that they earn a lot and can service a loan while leading the gd life, or that they only got one loan. The issues are:

– What happens if they lose their high playing jobs. Will they find another high paying job before the bank manager starts calling? And if they can’t?

– Do they have the cash to cope with a rise in interest rates, whether they have a job that pays them a high a lot or not?

That they have incomes higher than the median household income of S$6,000 is irrelevant, or only one loan is irrelevant to the issue of whether the level of over-leverage poses a danger to the system. Going by the numbers available, over-leverae borrowers do not seem to pose a danger to the system. But the minister’s explanation does worry me: it could indicate the complacency of the central bank and the govt. Hopefully, I’m wrong about their complacency.

Why regional mkts are tanking & why it’s a risky moment

In Financial competency on 22/08/2013 at 4:50 am

Thailand and S’pore have lost all its 2013 gains. Indonesia in now into bear territory, and M’sia is now being targeted. Why

But first the good news.The sell-off isn’t Asean specific. It is affecting all emerging mkts. Explanation below.

There is also a technical reason for the markets’ moodiness: August is when most ang moh traders and fund mgrs go to on hols. This means lesser volume, and hence more volatility. And for those jnr staff left on duty, the standing order is “Avoid risk. Sell when you think others will sell or are selling”.

Now for the financial hard truths.

On the bit why regional (and other emerging) mkts are tanking, it’s the fault of US Fed. Explanation:

When a central bank buys certain kinds of assets they leave the banks or funds who sold them the assets short of the particular kind of asset the central bank bought. So a fund that intends to keep a certain share of its portfolio in safe-ish long-term debt will sell Treasuries to the Fed in exchange for newly printed cash, but will then find itself in need of portfolio rebalancing to get back to its preferred distribution of risk, maturity, and so on. The fund then takes its cash and buys something similar to the assets it sold: highly rated mortgage-backed securities or corporates, for instance, or the safe debt of foreign governments. But the funds selling those assets will also need to rebalance, and they may adjust their portfolios by purchasing safer emerging-market debt or equities. As the money works its way through the system it raises asset prices around the economy. And because some of the rebalancing involves purchases of foreign assets, they weaken the domestic currency and can reduce borrowing costs and raise equity prices abroad.

That was the effect of Fed’s policy of “printing money” or QE programme.

Now fast-forward a couple of years. Financial markets had been moving money around based on expectations that central banks would end up buying a very large chunk of assets. But beginning in the spring Federal Reserve officials made statements hinting that they would in fact end up buying a somewhat smaller chunk of assets. As financial markets began to react to the change in outlook, the previous stimulative effects of QE started to unwind. As funds realised they would not need to replace as many Treasuries as they thought, Treasury prices fell (and yields rose) and so did prices for Treasury substitutes. That knock-on effect made its way around the world. Prices of emerging-market assets also sank, as did emerging-market currencies.

As to why it’s a risk moment:

To simplify things: QE was pro-cyclical for emerging markets but counter-cyclical for advanced economies and was probably beneficial on net. Now the end of QE may prove pro-cyclical in emerging markets (exacerbating ongoing slowdowns) but is also pro-cyclical or at best neutral in advanced economies (since tightening is occurring amid a continued demand shortfall). And so the end of QE may well be quite negative on net.

It would be extremely premature to warn of disaster. Rich-world central banks may react to market stumbles by pushing back the start of tapering, and emerging economies may avoid overzealous rate increases in the face of sinking currencies. But the world has reached a risky moment. Though advanced economies are a long way from full recovery and emerging economies are slowing, central banks are almost uniformly moving toward a tightening bias. If policymakers aren’t careful, things could end badly.

 http://www.economist.com/blogs/freeexchange/2013/08/global-economy

If you must invest, look for stocks that pay decent dividends that are sustainable. As for reits, I remain cautious, though the recent price falls do look tempting.

Temasek’s Chinese banks pay great dividends but there’s a catch

In Banks, Financial competency, Temasek on 20/08/2013 at 5:01 am

ICBC pays 6.1%, while CCB and BoC pay 6%. If it had AgBank, it would get 6.4%.

Contrast this with the dividend yield it gets from

– DBS: 4.4% (UOB’s yield is 2.9% and OCBC’s is 3.2%)

– Bank Danamon: 2.4%

– StanChart: 3.5% (BTW,  earlier this month the bank said  that it was no longer targeting double digit revenue growth this year. Year-on-year revenue growth in the first six months was less than 5% for the first time in 10 yrs.)

But Chinese bank yields are so gd largely because Chinese banks are not popular with ang mohs: one-tenth share price falls this yr helped produce these yields. http://atans1.wordpress.com/2013/07/02/time-to-worry-about-temaseks-strategy-on-chinese-banks/

And there are gd reasons to be fearful. One is concern that there could be more bad debts building up in the system as the economy slows/

Another: ChinaScope Financial, a research firm, has analysed how increased competition and declining net interest margins will affect banks operating in China. The boffins conclude that the smallest local outfits, known as city commercial banks, and the middling private-sector banks will be hit hardest, but that returns on equity at the big five state banks will also be squeezed (see chart). They think the industry will need $50 billion-100 billion in extra capital over the next two years to keep its capital ratios stable.

The bigger worry for China’s state banks is the signal sent by the PBOC’s move. The central bank has affirmed its commitment to reform. If those reforms include the liberalisation of deposit rates, then something far more serious than a minor profit squeeze will befall China’s banks. Guaranteed profitability would end; banks would have to compete for customers; and risk management would suddenly matter. In short, Chinese bankers would have to start working for a living.

http://www.economist.com/news/finance-and-economics/21582290-chinas-central-bank-has-liberalised-lending-rates-does-it-matter-small-step

And two of China’s four “bad’ banks (they bot portfolios of dud loans from Chinese banks, the last time the Chinese cleaned up their banks in the late 1990s and early noughtie), are planning to raise capital via IPOs. They have impressive returns. But maybe China is preparing for the day it has to recapitalise the banks again. In such a case, the UK and US experience is that the other shareholders get diluted, and can lose serious money. Think UBS and RBS.

Even if there is no recapitalisation, there are likely to be rights issues, something that ang moh fund mgrs don’t like.

But to be fair, this big chart shows a possible reason why Temask is optimistic. Despite loan growth, bad loans are falling. But the economy was growing rapidly. And sceptics point out that the numbers may be flakey. In the 1990s, the real bad loan position was 20%, not the lowish figures reported at the time. Investors forget this ’cause banks were 100% govt owned.

Related (sort of) link: http://wikileaks.org/cable/2009/06/09SINGAPORE588.html

Graphics from FT.

Take advantage of these CPF facilities

In Financial competency, Financial planning on 30/07/2013 at 10:49 am

There are two facilities that S’poreans can take advantage off. The first is for oldies, the other for everyone

Using yr CPF a/c as yr savings, fixed deposit account

(Note that a version of u/m first appeared in 2011)

If you are in a position to withdraw money at age 55 from your CPF accounts, given the pathetic S$ interest rates offered by the banks, you may want to use your CPF Ordinary Account as a savings account or even as a fixed deposit account that pays higher than S$ bank or finance company fixed deposit rates.

But make sure you know how often a year you can withdraw your money if you want to use your OA as a savings account, or more accurately as a “betterest” way of managing your cash. The laziest way to find out is to call up the CPF help line.

You also have to be aware of the following: http://www.asiaone.com/News/AsiaOne+News/Singapore/Story/A1Story20110715-289391.html.

THE scheme is stated in the Central Provident Fund (CPF) website.

But Mr Jerry Low, 58, was not aware of it.

So the retired bank trader got a surprise when the CPF Board transferred $10,000 into his Medisave Account (MA) without his permission, after he applied to withdraw $37,000 from his Ordinary Account (OA) in June this year.

Mr Low had chosen to not withdraw all his money from his OA when he turned 55.

He opted for a partial withdrawal, leaving some money in his OA as the CPF interest rate of 2.5 per cent was higher than what the banks were offering.

He could do this as his Medisave Account and Retirement Account (RA) had the required amount.

Since 2008, Mr Low had used his Medisave to pay for some medical expenses, whittling away his Medisave Required Amount (MRA), which was $14,000 as of Jan 1, 2008.

However, the required amount was raised to $27,500 as of Jan 1 this year [2011].

Said Mr Low: “I was shocked to find that $10,000 from my OA had been moved to my MA without my approval.

“I did not even know that the money was moved, let alone the amount moved.”

As to the danger of the government not allowing you to withdraw your money by changing the rules yet again, assess the risk of the government taking this action in the light of it only getting 60% of the popular vote in the May 2011 GE, and it’s determination to win back Aljunied. Besides, the government actions, so far, on CPF issues, are never retrospective.

As to the CPF being or going bankrupt, remember that Tan Jee Say (25% of voters voted for him at the 2011 presidential election and he was once a senior civil servant specialising in economic matters) doesn’t worry about the solvency of the CPF system. To him, the S$60bn he proposed spending on his plans was “small change”. So the CPF amount due to members, as of August 2011, S$204 billion, cannot be an issue, despite what the SDP (his ex-party) and his supporters at TR and Singapore Election Watch say. Reminder: they say that the CPF is bankrupt because of the losses at Temasek and GIC. Hence the introduction of the Minimum Sum and CPF Life Plans schemes.

Did you know that until a few years ago, once you reached 55, the staff there hassled people to withdraw their surplus funds? It happened to a friend in 2004. He told them he as a Nantah graduate and retired central bank employee, trusted the S’pore government.

Now, the staff encourage people to keep funds they don’t need in their OAs.

BTW, when I first posted this, someone wrote in saying

If you leave money in OA after 55, very high chance you will not get out 100% later.

1. Good chance you will use Medisave for medical expenses after 55, necessitating topping up of MA from OA before you can take out.

2. Medisave Required Amount increases EVERY year on 1st Jan, in line with medical inflation during the previous 12 months. This has resulted about 5%-7% annual increase in MRA for the past few years.

So even if you don’t touch your Medisave after 55, you will need to top up the ever-increasing Medisave Required Amount before you’re allowed to withdraw your OA.

Unless your OA amount is large enough such that the yearly interests are sufficient to cover the yearly increase in MRA. But then, this will effectively reduce the 2.5%. Which defeats the purpose for why you left money in OA in the first place.

He has a gd point. My response is that Medisave account will be used and anyway it attracts 4% interest a yr.

Related post: http://atans1.wordpress.com/2011/12/03/best-cpf-life-plan/

Reading BT/ST financial stories for free

Readers may have noticed that I link to ST and BT financial stories (behind paywalls) via CPF.

Check out this link regularly http://www.cpf.gov.sg/imsavvy/infohub.asp if you want read, for free, to ST and BT financial stories.

The maths of salaries when mortgage rates rise 50%

In Financial competency, Property on 28/07/2013 at 10:22 am

Up to 9,000 Singapore private property owners could be forced to sell their homes if interest rates rise in the city-state, according to an analyst report published today.

On the back of news that up to 10 percent of Singapore households may have already over-leveraged their private property purchases beyond the new 60 percent limit that was recently imposed by the Monetary Authority of Singapore (MAS), wealth management firm Religare Enterprises has cautioned its clients to avoid investing in Singapore property developers.

http://www.propertyguru.com.sg/property-management-news/2013/7/36279/analyst-9-000-troubled-units-could-be-on-market.

If debt servicing absorbs a third of your income when the rate is x% and the rate rises 50% to 1.5x%, it will absorb a half of your income. You will need a 17% pay rise just to maintain your non-debt spending and a 50% pay rise to return your debt servicing ratio to its previous level.

Think you will get this type of rise?

Taz why MAS is afraid, very afraid*.

(BTW, the MAS concern is a tight slap to the nation-building, constructive ST because on 3 July 2013, ST spun a rose tinted tale on a worrying statistic)

SINGAPORE households are among the most indebted in Asia relative to what they earn, according to a Standard Chartered report this week

Households had borrowings worth 151 per cent of their annual income last year, second in the region only to Malaysia, with debt at 182 per cent of income.

This is mainly because consumers here take on large dollops of property debt, amounting to 111 per cent of household income – the highest level in the region, Stanchart said.

On the bright side, households have a robust buffer of financial assets from high savings, so their debt levels are relatively low compared to these assets, the bank added.

“We are not concerned about household solvency in Singapore,” it said.

Thanks to low interest rates, the repayments that Singapore households make on loans are also among the lowest in the region as a share of income.

However, Stanchart warned that as rates rise, debt servicing may become more difficult for home owners who are over-leveraged, although current debt burdens are still manageable.

http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid={617222427-18073-5858065485} BT, gave a more sober reading of the same report http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid={617243129-18067-663266181})

Coming back to reality from STLand, StanChart is not the only one arguing that financial assets buffer S’poreans against over-leverage. While, rising household debt is a concern, it should also be viewed in context with the asset side of the balance sheet. If needed, they [borrowers] could draw down on deposits,” said Michael Wan, economist at Credit Suisse. http://www.cnbc.com/id/100882025

I suspect they are wrong for two reasons.

S’poreans may have financial assets, but some may have very tiny discretionary income to rely on for emergencies such as increasing mortgage payments. ST reported MAS as saying, One couple with a total monthly income of $6,000 were granted a new home loan of $400,000 on top of their existing debt, as they had a savings deposit of $90,000. But their total monthly loan repayments came to more than 90 per cent of their income. http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid={568402008-18352-5608736872}

That $90,000 will be smashed peanuts if the equity in their property turns negative or juz drops, and the bank asks them to top-up. And what happens if, in addition, they have to pay higher rates of interest on their debts? As I wrote above, if debt servicing absorbs a third of your income when the rate is x% and the rate rises 50% to 1.5x%, it will absorb a half of your income. You will need a 17% pay rise just to maintain your non-debt spending and a 50% pay rise to return your debt servicing ratio to its previous level.

Then too, financial assets unless they are bank deposits can depreciate too as interest rates rise (example bonds, or structured products predicated on low interest rates). And if the deposits are in foreign currencies, these currencies may lose value against the S$.

The only financial assets that matter then are S$ deposits, which brings us to Moody’s comments on the local banking scene. While Moody’s is concerned. I wouldn’t pay much attention to Moody’s concerns over the banking sector. Credit agencies are now overcompensating for being super bullish over US sub-prime and bank ratings. Netizens, especially TRE posters should think ST, when they “rate” credit agencies’ BS remarks.

S’pore’ banks are among the safest in the world. In fact too safe, for investors, I”ve argued http://atans1.wordpress.com/2011/06/30/ocbc-look-after-yr-shareholders-not-yr-creditors-or-regulators/. FTR, I have Haw Par shares which owns shares in UOB http://atans1.wordpress.com/2011/09/05/haw-par-rediscovered-yet-again/

To end, let me repeat, “If debt servicing absorbs a third of your income when the rate is x% and the rate rises 50% to 1.5x%, it will absorb a half of your income. You will need a 17% pay rise just to maintain your non-debt spending and a 50% pay rise to return your debt servicing ratio to its previous level.”

Can get this kind of rise, or not?

Norway’s SWF: transparency & performance not exclusive

In Corporate governance, Financial competency, GIC, Temasek on 15/07/2013 at 5:09 am

From FT

Transparent, yet doing well.So large it owns an average 1.25% of every listed company in the world, or 2.5% of every European listed company.

Temasek, GIC and govt can learn from Norway? Pigs will fly first, I suspect.

Update two hrs after publication:

Unlike Temasek, it ain’t big on Chinese banks

Temasek owns big chunks in three out of four China’s major banks

– 2% of Bank of China

– 8% of China Construction Bank

8% of Industrial & Commercial Bank of China,

Temasek has accumulated more than [US]$17 billion of holdings in Beijing-based ICBC, China Construction Bank Corp. (939) and Bank of China Ltd. over the past two years, according to data compiled by Bloomberg. Global firms including Goldman Sachs and Bank of America Corp. have divested holdings as new capital rules known as Basel III make it more expensive to hold minority stakes in banks. (Bloomberg few days ago)

http://atans1.wordpress.com/2013/07/02/time-to-worry-about-temaseks-strategy-on-chinese-banks/

BTW

Temasek has stakes in three out of the four biggest Chinese banks. It therefore has stakes in the world’s largest, fifth and 9th largest banks. It doesn’t have a stake in Agriculutural Bank, the 10th largest.

Why I’m not selling my Reits yet

In Financial competency, Property, Reits on 08/07/2013 at 5:14 am

I’ve been long Reits since 2008.

Despite the recent turbulence, I’m still not a seller because the global economy (and S’pore’s) faces four potential outcomes: a return to healthy growth (in which case Reit incomes should rise); a low-growth, low-inflation period in the doldrums (in which case the income appeal of Reits should help); a return of rapid inflation (as a real asset, property should offer some protection and Reits offer property and leverage); or a deflationary slump. Only in the last case would property suffer. Three-out-of-four sounds good odd for any racing man. And the last in S’pore is impossible to imagine. Easier to imagine a S’pore where the PAP doesn’t form the govt.

As to whether I’m a buyer http://atans1.wordpress.com/2013/05/21/s-reits-why-stay-away/. Look at dividend yielding stocks.

BTW, since http://atans1.wordpress.com/2013/05/28/bad-timing-st-article-on-reits/, I’ve been told the Reits index is down about 14%.

BTW2: Still looking at Comfort Delgro. http://atans1.wordpress.com/2013/06/17/when-raising-fares-sbs-smrt-govt-dont-have-this-problem/ explains why it looks interesting.

Why SIAS should sit down and shut up

In Corporate governance, Financial competency on 28/06/2013 at 7:04 am

So long as shares go up, investors don’t care about corporate governance

The Trade: In Shareholder Say-on-Pay Votes, More Whispers Than Shouts The Dodd-Frank Act required shareholder approval of executive pay packages, but investors don’t seem to care about pay if their stocks are up, says Jesse Eisinger of ProPublica.

DEALBOOK

Another Monday, another rocky day

In Financial competency on 24/06/2013 at 5:51 am

BIS’s weekend statement will spook mkts. It tells central banks to head for the exit and stop trying to spur a global economic recovery. They should focus on fighting inflation.

CENTRAL banks are unable to repair banks’ broken balance sheets, to put public finances back on a sustainable footing, to raise potential output through structural reform. What they can do is to buy time for those painful actions to be taken. But that time, provided through unprecedented programmes of monetary stimulus since the financial crisis of 2008, has been misspent. Neither the public nor the private sector has done enough to reduce debt and to press ahead with urgent reforms. Yet only a forceful programme of repair and reform will allow economies to return to strong and sustainable growth.

That is the message from the Bank for International Settlements (BIS), the closest that central bankers have to a clearing-house for their views. Based in Basel, the BIS can point to prescience before the financial crisis, when William White, then its chief economist, worried that excessive credit growth was generating bubbles that could burst in a messy fashion.

http://www.economist.com/blogs/freeexchange/2013/06/sermon-basel

And SunT yesterday had an article “pushing” US junk bonds. SIGH

Time to panic? Everything, including sky, is falling

In Financial competency on 21/06/2013 at 6:15 am

Gd summary and explaination of day’s events

http://www.bbc.co.uk/news/business-22984168

A cash crunch in China, the Fed, and Abenomics

http://www.bbc.co.uk/news/business-22985493

When QEIII slows

In Financial competency on 18/06/2013 at 5:45 am

“Defensive” stocks (those that do not move with the business cycle, like food) are the most vulnerable.

When investors began to expect there would be a reduction in the Federal Reserve’s quantitative easing bond-buying programme towards the end of this year, from monthly purchases of $85bn a month to perhaps $65bn. the perception that the rate of money creation might fall by around a quarter has seen bond yields rise by more than a third and the US 10-year yield is now firmly lodged above 2% (circa 2.2% the last time I looked).

By historical standards 2% is still very low. But the yield shift from circa 1.5% to circa 2.2% is dramatic.

The best analogy is with an earthquake deep under the sea, which causes powerful waves in all the world’s oceans or, in this case, in all the world’s markets.

(BBC analyst)

ST’s bearish on reits! Time to buy?

In Financial competency, Property, Reits on 10/06/2013 at 5:08 am

Fee-fi-fo-fum; I smell the blood of reporters and analysts that were bullish on reits. Be they alive or be they dead, I’ll grind their bones to make my bread.

ST has finally given up promoting reits (something I’ve been bitching about recently here and here), reporting: MAYBANK Kim Eng Research has gone against the long-prevailing view and downgraded Singapore’s red-hot real estate investment trust (Reit) sector amid a period of increasing price volatility.

Reits have come under heavy selling pressure the past fortnight amid fears the golden days of low interest rates may be ending.

The FTSE ST Reit Index, which tracks the sector, dropped 1.68 per cent yesterday and is down 8.2 per cent since May 22, when the United States Federal Reserve’s chairman raised the possibility of ending its money-printing.

http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid={309678777-17695-45587420}

Gee, less than a month and two bullish stories, ST is now reporting bearish news on reits. Even when I waz an equities salesman, I didn’t change my views so fast. ST Money Desk practicing to be salespersons.

But before rushing into reits, think. The prices of reits were helped by institutional equity investors* buying them for the yield. Now those who chased yields in the equity markets may switch into cyclicals and defensives, if they think the yield party is over. If so buying into reits may face a stampede out of reits, and then relative underperformance.

*Remember, bond investors don’t buy reits. They stick to bonds, moving to junkier bonds for yield. When cautious, they sell the junk and buy US govt bonds.

Quadruple confirm: Public servants don’t do cost-benefit analysis

In Financial competency, Humour, Public Administration on 04/06/2013 at 5:12 am

Former NUS law professor, Tey Tsun Hang, was sentenced to a 5 months’ jail term and ordered to pay a penalty of $514.80 by the court yesterday. He was convicted of corruptly obtaining gifts and sex from former student Darinne Ko.

Last week, the former chief of the Singapore Civil Defence Force (SCDF), Peter Lim Sin Pang, was convicted by a District Court for corruption. He was on trial for abusing his position to obtain sexual favours from Ms Pang Chor Mui in return for favorable consideration of her company’s tender bid for business.

Also last week, the Ministry of Home Affairs said disciplinary proceedings against the former chief of the Central Narcotics Bureau Ng Boon Gay would remain suspended until a final outcome in the criminal proceedings. Mr Ng was acquitted of corruption charges in February. Mr Ng was accused of obtaining sexual favours from IT sales manager Ms Cecilia Sue in return for furthering the business interests of her two employers. The MHA spokesperson also said that the prosecution was studying  the written grounds of decision and assessing whether to file a Petition of Appeal.

Even though Gay was acquired, all three public servants paid a high price for being a bit (very cheap actually) cheap when it came to sex. In return for a few freebie trysts, they ended up spending very serious money on lawyers , and damaging their reputations and earning capabilities. I mean who will want to employ two soiled police scholars and an academic who proclaimed his academic integrity* when he was charged?

Then there was ex-Speaker of Parliament, “Mangoes for Laura” Palmer. True he wasn’t charged and never paid lawyers’ fees, but the guy was castrated in public: within a few hours he fell from “tua kee” to zero you-know-what.

Obviously, they didn’t do cost-benefit analysis. If they had been, they could have realised that the costs of being cheap on sex was higher than if they had paid for it. They would have realised that paying for sex was less risky for their careers and reputations. Based on legal fees of $500,000 a case (and I’m being conservative given the size of the legal teams), even if each man charged had sex 100 times (and the reports indicate that the frequency wasn’t that high), the cost would be $5,000 a session. And these were with aunties! Not slim, tall Vogue model-types.

If these senior public servants, didn’t use cost-benefit analysis on such an impt, personal matter, what are the chances that public servants use cost-benefit analysis when analysising or making decisions for us the masses? Yup, highly unlikely.

Anyway, these four cases illustrate the ancient Chinese saying of, “Kill a cock to frighten the monkeys”. Here four cocks were “killed’ to remind public servants that free sex is not a benefit of service. Never mind, public servants can afford to pay for sex, juz like they can afford to buy $5m to S10m apartments from a TLC, even when the TLC expresses concerns that it can sell some of these apartments. And if the MDA chairman and CEO may have problems with their personal cost-benefit analysis (what with QE possibly being reversed, with knock-on effects for S’pore property, and KepLand’s remarks on selling its apts), can ministers and the public trust that the MDA has done its cost-benefit analysis on its new media regulations? It could be telling that the Manpower minister replaced MDA’s CEO at a Talking Points programme on the issue of new media regulation? BTW, where was the water engineer**, Yaacob?

Note (Last three lines added two hrs after first publication, after reading FT etc)

——

*I tot he was going to deny that he ever had sex with his student. It has been part of Western academic tradition since the times of the Greeks that sex with students was taboo. There was a lewd Roman joke that Socrates never had sex with Plato despite both being gay because Plato was Socrates’ pupil. The Romans didn’t do gay sex.

**See the * at end in link on what I mean by “water engineer”.

Time for ST to stop promoting Reits

In Financial competency, Property, Reits on 03/06/2013 at 5:53 pm

Opps ST nearly did it again. On Saturday, an ST headline screamed: “Buying opportunity after Reits rout”. http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid={498059457-17610-6138972043}. Market overall was off 24.6 points (0.74%), while the reits’ index was off a marginal 1.1 point.

Could have been worse. The last time ST promoted reits, ““It was no different in Singapore, where the benchmark Straits Times Index sank 61.2 points or 1.8 per cent to 3,393.17, its worst one-day plunge in percentage terms since its 2.2 per cent reverse on May 7 last year” (“Markets tumble amid US, China fears”: ST headline. Didn’t have the balls to tell us, reits here were off about 5%”http://atans1.wordpress.com/2013/05/28/bad-timing-st-article-on-reits/

On a more serious note, ST shld not be promoting reits. True the yields are better than most plays, but reits are leveraged plays. Now is not the time to be bullish on reits.: http://atans1.wordpress.com/2013/05/21/s-reits-why-stay-away/

I’m still long but I got in in 2008 and 2010. I’ve been riding the run and collecting the payouts to pay for my expenses.

 

Bad timing! ST article on Reits/ Will mkts continue rising?

In Financial competency, Humour, Property, Reits on 28/05/2013 at 5:29 am

On 22 May ST screamed “Reits look like good bets to yield-hungry investors”

The opening para read “SINGAPORE real estate investment trusts (Reits) are among the hottest assets in town to own”.

http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid={332593593-17481-7717667817}

On 23 May, Japan’s stock market fell by about 7%. “It was no different in Singapore, where the benchmark Straits Times Index sank 61.2 points or 1.8 per cent to 3,393.17, its worst one-day plunge in percentage terms since its 2.2 per cent reverse on May 7 last year” (“Markets tumble amid US, China fears”: ST headline. Didn’t have the balls to tell us, reits here were off about 5%*. They have since recovered slightly.

Fee-fi-fo-fum; I smell the blood of reporters and analysts. Be they alive or be they dead, I’ll grind their bones to make my bread.

For what’s it’s worth, I repeat my take first expressed here http://atans1.wordpress.com/2013/05/21/s-reits-why-stay-away/. But I’m not selling, yet, juz collecting the distributions, and watching to sell.

Update after first publishing: Juz read in FT that while the Topix index is down 10%, reits there down 1%. Seems investors want to own real assets, given that Japan wants to raise inflation.

Update, Update: However, there are three good reasons why stock markets, a few blips aside, will continue to grow for some time: central banks are scared; there is lots of money waiting to be invested; and returns on all other assets are low … Strapped to these three rockets, the market can still soar. Of course, Spain could yet go bust or China grind to a halt. There could be a natural disaster, an act of terrorism or war. History tells us a bust is waiting down the track, but while the world economy recovers and governments and central banks maintain their pledge to keep printing money, we should expect prices to rise.
Phillip Inman from Guardian

 

Stk mkts were hitting new highs, so what?

In Financial competency on 27/05/2013 at 6:14 am

Markets are off their recent highs.

There are gd reasons to be concerned abt the ability of equity markets to continue going up. But their hitting new highs should not be one of them. This explains why.http://fatasmihov.blogspot.sg/2013/05/lets-get-real-about-stock-market.html

Gd summaries of waz driving mkts and the risks http://www.bbc.co.uk/news/business-22620262 andhttp://www.bbc.co.uk/news/business-21696467

Time to get real on retail Reits, and S-Reits generally?

In Financial competency, Property, Reits on 16/05/2013 at 3:35 pm

Ong Kian Lin, an analyst with Maybank Kim Eng, wrote in a note dated March 22 that the recent S-Reit rally was not due to strong fundamentals but fuelled by inflated asset values from quantitative easing by the US Federal Reserve and ample liquidity.

He noted how retail and office property prices have gone up but rentals have been slow to catch up.

A Colliers International report reflected this divergence. As at the end of the first quarter of 2013, retail property rents in its areas of study have fallen from the previous quarter while capital values went up.

While maintaining a positive outlook for the retail and retail Reit sector, Savills’ Mr Cheong noted signs of trouble in that retail sales figures are trailing growth in areas such as tourist arrivals, population and inflation.

Retail sales fell 2.7 per cent in February. Tourist arrivals last year was 9.1 per cent higher than the year before. The consumer price index rose 3.5 per cent in February from a year ago. Total population growth was 2.5 per cent between 2011 and 2012.

The demand seen in the market right now is due to sentiment still being buoyant, Mr Cheong feels.

“At the moment it’s still rising, but it’s a binary issue. You cannot go and push to the tipping point, you push to the tipping point, everybody will bolt for the door like a fire in a cinema or retail mall. If everyone bolts for the door, everything will be vacated.”

NUS’ Prof Sing said retailers have increasing choices of malls. And the risk is that with greater choice, consumers may drift away from traditionally popular malls, leading to a downward spiral.

“When this happens, tenants will also start to move out. This cycle will continue, because you (as a manager) cannot pull in the crowd, I (as a retailer) cannot afford to pay such a high rent, I have to move out from the mall. So you put in another tenant that is not as good, so fewer people will come.”

Prof Sing and Knight Frank’s Mr Png said they are watching the Jurong East area, with several commercial and retail developments due for completion.

Retailers also have to cope with tighter foreign manpower policies.

“Much as the government would like to talk about productivity you find that retailers, the services business, is still very labour intensive,” Mr Png said.

http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid={4798875-17374-4688516258}

Err the issue of inability to raise income could also apply across the board to office and industrial reits too, given the economic slow down. Price rises can only depend on yields going down. FTR, I own various Reits.

Life insc buyers deprived of huge savings!

In Financial competency, Financial planning on 15/05/2013 at 5:02 am

The following report from Monday’s ST deserves the widest possible publicity because it shows how buyers of life insurance here have been deprived of the opportunity to buy less expensive life insurance: they could have saved as much as $20,000 when buying a $1m life plan.

FUNDSUPERMART’S move to sell insurance products on its online platform at a 50 per cent rebate off the lifetime commission sparked some unhappiness among industry players who saw it as a price war tactic.

Four days after launching it on April 30, Fundsupermart took down the offer, and has stopped selling insurance products since.

On its insurance webpage, which has been removed, Fund- supermart said it was introducing the distribution of protection products as a value-added service to its customers.

“More importantly, clients who are on the search for transparency on the commissions they pay for purchasing insurance can find this here,” it added.

There were also two examples stating that the 50 per cent commission rebate translates into savings of $2,000 for a $1 million term plan. For the same sum assured, the savings for a whole life plan could be more than $20,000.

The calculations were aggregated across three insurance providers, based on the profile of a 40-year-old, non-smoking male.

The Straits Times understands that Fundsupermart initially intended to continue with this model but later revised it to a one-month promotion, before pulling the plug completely.

A check with Tokio Marine, NTUC Income and Manulife, whose products Fundsupermart was distributing, found that individual financial advisory firms are free to employ different business models.

http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid={4798875-17383-3900371789}

According to the report, financial advisers (what insurance sales persons call themselves,nowadays, for various reasons) bitched to Fundsupermart: The Association of Financial Advisers (Singapore) said in an e-mail statement that when the advertisement was published on Fundsupermart’s website, the association expressed its members’ concern to Fundsupermart, “noting that the tone and language used in its postings could be detrimental to the reputation and professionalism of other financial advisers”. [Err wondering what reputation and professionalism? What can be lower than the reputation and professionalism of life insc sales persons? Used car dealers? Juz kidding leh.

The industry body, representing nearly half of the financial advisory firms here, added: “We are glad that it has taken our views into consideration and has decided to withdraw the advertisement.

Hopefully some human rights or other kay poh activists will kick up a fuss, though I’m not holding my breath: They focus on things like ISA, capital punishment, FT workers rights and other things fashionable with ang moh social activists, not with the concerns of median S’porean wager earners.

So here’s hoping Tan Kin Lian of Fisca will organise a protest or write to the press to highlight the loss of this scheme; or for Uncle Leong to get Mrs Chiam to ask in parliament that the the competition authorities investigate whether there was undue pressure to remove the offer. Note that the agents’ trade union emphasised that “All financial advisers are free to offer their competitive deals to their customers. We believe that in such an environment, consumers will ultimately benefit in terms of both quality of advice and pricing.” Ya right, so how come no one offers to give such big rebates, and why the bitch to Fundsupermart when it cut its commission rates?

Doesn’t smell right, does it?

Meanwhile, three cheers to ST for highlighting this issue.

Revisited: Shld consumer financial products be regulated like drugs?

In Financial competency on 08/05/2013 at 5:53 am

Recently, shumeone by the name of Steve Wu (Wu Chee Wah of Foxtrot in SAFTI in 1974?) has been ranting about the 1990s DBS/POSB* deal on TRE. This reminded me that in 2008, 2009 (remember minibonds and DBS HN5?) he was one of those calling for Tan Kin Lian and other experts to certify that financial products are safe for consumers. TKL and GMS too called for this, so he was in good, even if not intellectually sound, company. (Sorry  GMS, couldn’t resist that jibe. Buy you a MacCafe coffee when you next in town.)

Pharmaceutical firms must convince the health authorities that their product is safe and valuable before it can be marketed. Likewise consumer financial products must face a process similar to that for new medicines is what they argued.

This in turn reminded me that last yr I read a piece arguing why this analogy is wrong. Drugs can be tested empirically via tests in the laboratory and field studies in the physical world. Financial products CANNOT be tested beforehand because the only laboratory is the market, and how does one conduct field studies in such a situation?

It’s tempting to see the harm financial products can cause and liken it to medication which, if not thoroughly tested, can also serious illness or death … New drugs can be tested in trials and in a lab. There is no equivalent for financial products. The only laboratory is the market. To effectively balance efficiency and safety, a good regulatory system should observe financial products closely in the wild and only then determine which pose a threat.

http://www.economist.com/blogs/freeexchange/2012/04/financial-innovation

Actually, the piece gives other reasons, that I think are rather weak.

There are no short cuts to buying any financial product. Actually there are two short cuts: don’t trust what an insurance agent, or bank staffer says is one . And go ask Tan Kin Lian or Uncle Leong. Pay their fees if necessary.

——

*I hope he realises that

– Temask got paid in DBS shares;

– foreign brokers were complaining that non-Temasek were being diluted because the price at which the shares were issued gave Temasek a double dip (cheap shares for over priced asset);

– he innocently misreps the deal by focusing on NTA valuations. POSB’s profitability and deposit base were shrinking because the govt had removed POSB’s unique selling point: interest on. POSB a/c exempt from income tax (all interest from banks got exempted from incometax). Our three local banks are trading around 1.3x trailing book value while the leading M’sian and Indon banks would consider, anything less than 2x book value sissy stuff: they are growing more rapidly in terms of assets, profits etc; and

– DBS didn’t think much of its acquisition. For many yrs after the acquisition, it was running down or at best ignoring the brand. Only when true blue S’porean banker, Peter Seah, became DBS chairman did it start taking advantage of S’poreans’ love of the POSB brand.http://atans1.wordpress.com/2010/06/18/dbs-why-is-it-reviving-posb/

Cramers tips for younger US investors

In Financial competency on 06/05/2013 at 7:17 am

They include pharma; social media, the cloud, mobile, and the web; and gold

http://www.cnbc.com/id/100674767?__source=ft&par=ft

Great Recession and Not-So-Great Recovery: “Cat in the tree” analogy

In Financial competency on 23/04/2013 at 5:19 am

The Nobel Prize winner George Akerlof of the University of California – had a vivid analogy for the state of uncertainty the economics profession now faces.

“It’s as if a cat has climbed this huge tree – the cat of course is this huge crisis. My view is ‘oh my God the cat’s going to fall and I don’t know what to do’.”

Another one of the organisers, David Romer also of the University of California, picked up the analogy: “The cat’s been up the tree for five years. It’s time to get the cat down from the tree and make sure it doesn’t go back up.”

The trouble for the economics profession is, according to the last of the conference hosts and another Nobel Prize winner, Joseph Stiglitz: “There is no good economic theory that explains why the cat is still up the tree”.

http://www.bbc.co.uk/news/business-22223249

Splitting the CEO and Chairman roles: It’s complicated …

In Corporate governance, Financial competency on 21/04/2013 at 6:20 am

if the firm is having performance problems; it’s not so helpful if everything is running smoothly. Our study showed that CEO-chairman separation tends to reverse a company’s performance: Low-performing firms benefit from a separation event, while high-performing firms suffer.

It also matters how the firm chooses to separate its top jobs. For the company to see this reversal of fortune, it has to go through what we call a “demotion” separation, whereby the CEO remains the same, but a new, independent chairman is appointed to oversee him or her.

http://www.businessweek.com/articles/2012-11-01/splitting-the-ceo-and-chairman-roles-it-s-complicated

Rowe Price: Father of “growth” investing

In Financial competency on 16/04/2013 at 5:34 am

http://www.investopedia.com/articles/financial-theory/09/thomas-rowe-price.asp?utm_source=coattail-buffett&utm_medium=Email&utm_campaign=WBW-04/11/2013

MSM, less triumphalism when puffing up GIC, Temasek

In Financial competency, GIC, Media, Temasek on 09/04/2013 at 6:16 am

Pls remember what someone who manages more $ than GIC, Temasek says abt performance

Clearly the ability of the investor to adapt to the market’s “four seasons” should be proof enough that there was something more than luck involved? And if those four seasons span a number of bull/ bear cycles or even several decades, then a confirmation or coronation should take place shortly thereafter! First a market maven, then a wizard, and finally a King. Oh, to be a King.

 But let me admit something. There is not a Bond King or a Stock King or an Investor Sovereign alive that can claim title to a throne. All of us, even the old guys like Buffett, Soros, Fuss, yeah – me too, have cut our teeth during perhaps a most advantageous period of time, the most attractive epoch, that an investor could experience. Since the early 1970s when the dollar was released from gold and credit began its incredible, liquefying, total return journey to the present day, an investor that took marginal risk, levered it wisely and was conveniently sheltered from periodic bouts of deleveraging or asset withdrawals could, and in some cases, was rewarded with the crown of “greatness.” Perhaps, however, it was the epoch that made the man as opposed to the man that made the epoch.
PIMCO’s Bill Gross

Spotting mkt turning pts

In Financial competency on 21/03/2013 at 10:26 am
“The idea that a bell rings to signal when investors should get into or out of the stock market is simply not credible. After nearly 50 years in this business, I do not know of anybody who has done it successfully and consistently.” — John Bogle founder of Vanguard which “is the world’s largest mutual fund company, with about $2 trillion invested in the U.S. in more than 170 index, active, and exchange-traded funds.”

Investment banking horror stories

In Financial competency on 05/03/2013 at 4:42 am

In the end, an adviser would say the client, no matter how foolish, is in charge. And that was the problem. The Bakers, who had built a $600 million business from scratch, appear to think that their advisers should have saved them from themselves and that they could negotiate a better deal than Goldman Sachs. That was a mistake.

http://dealbook.nytimes.com/2013/01/29/lessons-for-entrepreneurs-in-rubble-of-a-collapsed-deal/

The charges against … should put Wall Street on notice that the government will try to police markets that require trust among the participants in the absence of transparent price information. The defense of caveat emptor, or let the buyer beware, will not necessarily protect against criminal charges for fraud.

http://dealbook.nytimes.com/2013/01/30/a-warning-to-wall-street-about-misleading-clients/

Update

So why not, for example, put a ceiling on salaries and let clients reward good service, just as they do in restaurants? That could allow banker pay to shrink to a more realistic level.

The U.S. restaurant business even provides a model of sorts. The Fair Labor Standards Act lets an employer pay waiters below minimum wage as long as they earn a certain amount a month in tips. If the combined total remains below the minimum wage, the restaurant has to make up the difference.

http://dealbook.nytimes.com/2013/03/01/tip-bankers-like-waiters/?nl=business&emc=edit_dlbkpm_20130301

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