Recently, quite a few people in Singapore want to be a landlord. Some HDB flat owners buy a condominium unit and rent it out. They are probably thinking “It is a wonderful to be a landlord. Every month I just collect rent from my tenants and shake my legs at home. In a few years time, I can quit my day job and retire. Life is wonderful, Ha ha ha.”
While I agree being a landlord is one way to earn passive income, being a landlord is more than that. A closer look reveals more expenses of being a landlord.
Say for example a landlord owns 5 properties and each property give him a monthly rent of $4,000. That will be total monthly income of $20,000. It sounds good till we look at the expenses involved in owning 5 rental units. The monthly installments for 5 units for example can hit $15,000 if we assumed each unit bank loan is $700,000 and 3% (conservative) interest rate. The monthly property tax can reach $1,000. The monthly maintenance fee for 5 units may hit $1,200 (each unit monthly maintenance fee is $250). This does not include expenses like home insurance, minor repair (eg: spoilt washing machine, water heater etc), income tax, commission by agents, vacancy cost etc…
After deducting the expenses, the $20,000 monthly rental income is left with $2,000. This sounds miserable after all the hard work of searching and buying 5 properties. It made you flinch after you know that there are one-time fees like stamp duty, lawyer fees, agent sales commission and furniture payable for the 5 units upon purchase. It is certainly not fun at all.
At work, we receive a pay for our work. In the case of the landlord, he is working hard to pay the government (in property and income tax), bank (in monthly instalment), maintenance company ( in maintenance fees).
Rich Dad Poor Dad’s book mentioned “it is not how much money you made ( in salary or rental income), it is how much and how long you can keep the money you made.” This statement sums it up.
Wednesday, December 19, 2012
Tuesday, December 11, 2012
An opinion of life
Life as we know is short. In the twinkle of an eye, time flies. Christmas is coming again.
My view about life is a book that I am interested to finish reading. No matter what happens, whether the ending is good or bad, I am determined to read this book till the end.
Life is similar to be a movie or TV series, in which I am the director and the main actor, influencing many events in the show.
Life is like a blank piece of paper in which we are each given pens or pencils to draw and colour it. We are the owner or master of the painting and how the painting will turn out will depends on how well we draw the painting.
In summary, this is life from my point of view.
My view about life is a book that I am interested to finish reading. No matter what happens, whether the ending is good or bad, I am determined to read this book till the end.
Life is similar to be a movie or TV series, in which I am the director and the main actor, influencing many events in the show.
Life is like a blank piece of paper in which we are each given pens or pencils to draw and colour it. We are the owner or master of the painting and how the painting will turn out will depends on how well we draw the painting.
In summary, this is life from my point of view.
Monday, December 10, 2012
Singaporeans are gracious
I travelled often on the MRT trains and buses. The last I heard about Singaporeans’ behavior on the train and buses are that they are ungracious and unkind.
My experience on the public transport convinced me otherwise. I often see Singaporeans giving up seats to elderly folks or pregnant ladies. Although, some of them could be foreigners, I still believe that generally Singaporeans are kind and gracious.
This belief is so strong that I wanted to set up a website and post photos of these marvelous people who give up their seats for the needy. Let us see how it goes.
My experience on the public transport convinced me otherwise. I often see Singaporeans giving up seats to elderly folks or pregnant ladies. Although, some of them could be foreigners, I still believe that generally Singaporeans are kind and gracious.
This belief is so strong that I wanted to set up a website and post photos of these marvelous people who give up their seats for the needy. Let us see how it goes.
Reading other blog
Today, I m comforted and reassured to know blogger in similar situations as me, otherwise I begin to feel that I am an alien from outer space. There are plenty of lessons to learn from others.
In this Blog, titled “5 Million dollars in 10 years time”, he or she has set a goal of achieving $5 Million in 10 years time. His or her financial journey in life is recorded in his or her blog. One particular blog I read was about the job situation in Singapore in December 2008. It was horrible according to the writer. He or she knew about his colleague who was retrenched together with his wife. I wondered how the retrenched couple is doing now.
It would be wonderful to gather all the bloggers with similar blogs in one corner and let them mingle around. One day I can send invites to all this great bloggers and share our thoughts, opinion and viewpoints.
The last recession was in year 2008. The next recession if it comes, may be worst. I certainly hope this time is different. Although my belief is that the more things change, the more they remained the same.
In this Blog, titled “5 Million dollars in 10 years time”, he or she has set a goal of achieving $5 Million in 10 years time. His or her financial journey in life is recorded in his or her blog. One particular blog I read was about the job situation in Singapore in December 2008. It was horrible according to the writer. He or she knew about his colleague who was retrenched together with his wife. I wondered how the retrenched couple is doing now.
It would be wonderful to gather all the bloggers with similar blogs in one corner and let them mingle around. One day I can send invites to all this great bloggers and share our thoughts, opinion and viewpoints.
The last recession was in year 2008. The next recession if it comes, may be worst. I certainly hope this time is different. Although my belief is that the more things change, the more they remained the same.
Tuesday, December 4, 2012
Manufacturing sector contraction
In the TV news, we heard manufacturing sector in Singapore has contracted. What does this mean for most Singaporeans who are in the sales, operations, service sector and not manufacturing industry?
It means that the demand for Singapore goods is coming down. When the demand for goods reduced, we can be sure that the transportation industry will contract as well. Retail shops may find that they are unable to clear their stock. Shoppers may find “Sale” at every location. If this persists for a long enough time, “Sale” will become “closing down Sale”.
The manufacturing sector contraction may signal a general slowdown in the economy in next year. If the slowdown persists for a year, sooner or later companies may have no choice but to retrench workers.
It means that the demand for Singapore goods is coming down. When the demand for goods reduced, we can be sure that the transportation industry will contract as well. Retail shops may find that they are unable to clear their stock. Shoppers may find “Sale” at every location. If this persists for a long enough time, “Sale” will become “closing down Sale”.
The manufacturing sector contraction may signal a general slowdown in the economy in next year. If the slowdown persists for a year, sooner or later companies may have no choice but to retrench workers.
Thursday, November 29, 2012
The paper chase
Many Singaporeans chase after a degree. The government encourages us to upgrade our education and skills if we lost our job. Many Singaporeans heed the call and have taken this step. However, the fact remains that it is not a given that their paycheck will rise if a degree is gotten.
For example, management of people in sales, customer service will not bother if the person has got a degree or diploma or ITE certificate. All the company care is how much sales is done, how satisfied are the customers, how many customers are served today. For those in administration, operations, a new degree may mean additional responsibilities or new posting.
Thus, it will be wise that working Singaporean do not equate a newly gotten degree with a pay rise.
For example, management of people in sales, customer service will not bother if the person has got a degree or diploma or ITE certificate. All the company care is how much sales is done, how satisfied are the customers, how many customers are served today. For those in administration, operations, a new degree may mean additional responsibilities or new posting.
Thus, it will be wise that working Singaporean do not equate a newly gotten degree with a pay rise.
Wednesday, November 28, 2012
Expansion of retail business
Today, I read the newspaper about a young company called “Twelve Cupcakes”. It is expanding rapidly. Within a year, the number of outlets rose from 4 to 8. It is encouraging to know that young entrepreneurs are doing well.
My concern is with this type of rapid expansion, the operating cash flow of the business may be negative as the business has to pay for rental deposit (3-6 months for a retail business), machinery purchase, staff training, etc…. in this situation, company need fresh funds from the business owners or bank loans. If the business owners are not careful, they may expand too fast and then run into countless problems later on. Issues like food quality is not maintained, staff are not well-trained, etc are problems associated with rapid expansion.
MacDonalds and Kentucky Fried Chicken took 30-40 years to achieve the result they had today. Twelve Cupcakes management would be wise to learn the lesson of MacDonalds.
My concern is with this type of rapid expansion, the operating cash flow of the business may be negative as the business has to pay for rental deposit (3-6 months for a retail business), machinery purchase, staff training, etc…. in this situation, company need fresh funds from the business owners or bank loans. If the business owners are not careful, they may expand too fast and then run into countless problems later on. Issues like food quality is not maintained, staff are not well-trained, etc are problems associated with rapid expansion.
MacDonalds and Kentucky Fried Chicken took 30-40 years to achieve the result they had today. Twelve Cupcakes management would be wise to learn the lesson of MacDonalds.
Tuesday, November 27, 2012
Same place different times
In 1997, Clark Quay in Singapore was jammed packed with people. It was a place to be seen and to see the night scene. Many couples and small group of friends can be seen sitting down by the river every few steps. It was a good time for business owners of Clark Quay. They must be laughing all the way to the bank.
In year 2003, things changed. Another visit there on a Saturday night, showed that the same Clark Quay walkway, has few people and shops are empty of clubbers and drinkers. In fact the place was almost deserted.
In year 2003, Dhoby Ghaut Northeast line MRT was not crowded on a Saturday afternoon.
In year 2011, the same Dhoby Ghaut Northeast line MRT was packed with people during peak hour that some passengers could not take the train. The interchange at Dhoby Ghaut was also very crowded with people switching trains. It was hard not to bump into another passenger.
What a difference a few years can do. Will things go back to the time when Dhoby Ghaut interchange is deserted?
In year 2003, things changed. Another visit there on a Saturday night, showed that the same Clark Quay walkway, has few people and shops are empty of clubbers and drinkers. In fact the place was almost deserted.
In year 2003, Dhoby Ghaut Northeast line MRT was not crowded on a Saturday afternoon.
In year 2011, the same Dhoby Ghaut Northeast line MRT was packed with people during peak hour that some passengers could not take the train. The interchange at Dhoby Ghaut was also very crowded with people switching trains. It was hard not to bump into another passenger.
What a difference a few years can do. Will things go back to the time when Dhoby Ghaut interchange is deserted?
Outlook from property agents
A recent chat with two separate property agents showed that they were optimistic and confident that the government will do anything to support the economy. I hear words like this from them:
a) “How can the USA government default?”
b) “The low interest rate is a secure and stable environment.”
c) “The Singapore government will not allow interest rate to go up too much because the economy will dive.”
From the annual reports of listed companies, we often hear:
a) “The operating environment is volatile and the US and Europe crisis continues to linger”
b) “Profit margins will be squeezed further because of lower demand.”
My question is what if the management of listed companies is right?
We need to prepare our portfolio to be prepared for all situations. My current opinion is to follow the advice of the management of listed companies and be prepared for all types of situation.
Just when no one believes that it will happen, things often happen out of the blue.
a) “How can the USA government default?”
b) “The low interest rate is a secure and stable environment.”
c) “The Singapore government will not allow interest rate to go up too much because the economy will dive.”
From the annual reports of listed companies, we often hear:
a) “The operating environment is volatile and the US and Europe crisis continues to linger”
b) “Profit margins will be squeezed further because of lower demand.”
My question is what if the management of listed companies is right?
We need to prepare our portfolio to be prepared for all situations. My current opinion is to follow the advice of the management of listed companies and be prepared for all types of situation.
Just when no one believes that it will happen, things often happen out of the blue.
Tuesday, November 13, 2012
Now and near future
Yesterday, I visited Katong Mall and it was filled with people eating and shopping. I noticed that many foreign workers are employed at many eateries.
Looking at the current good times, it is very hard to believe that next year will be a tough year as forecast by expert like Jim Rogers. Since the economy is mainly made up of consumption, a reduction in consumers demand will hit the economy hard. Then weak businesses like restaurants will close and foreign workers will be sent home. The extent of this will depends on how deep the recession is.
I can only hope we will take it well as it comes.
Looking at the current good times, it is very hard to believe that next year will be a tough year as forecast by expert like Jim Rogers. Since the economy is mainly made up of consumption, a reduction in consumers demand will hit the economy hard. Then weak businesses like restaurants will close and foreign workers will be sent home. The extent of this will depends on how deep the recession is.
I can only hope we will take it well as it comes.
Tuesday, October 30, 2012
A person’s life
For most people, their life looks like this:
First 20 years – ignorant, blur, unsure of what they want to do in their life.
Next 20 years – impatient, egoistic, proud.
Next 20 years – tired, frustrated, lost hope, given up their goals or dreams.
Last 20 years – loss of sight, hearing, movement, health, etc…
The happiest and action-oriented people will be guided by their friends, mentor or parents in the first 20 years. They will follow sound advice and work out their plans in the next 20 years by trial or error. The next 20 years they will begin to enjoy the fruits of their labor and the last 20 years will be just relax and enjoy their life.
Two of my friends are reaching the 3rd 20 years period. They are tired, frustrated, and may have given up their goals and dreams.
How many 20 year periods a person can have? Even though we have 4 of them, the first 20 years, we are in a state of blurriness. The last 20 years, we may suffer loss of hearing, movement etc…in actual fact, we only have 40 years of productive life in which we can pursue the things important to us. Thus, treasure and value these 40 years because, it will never come back again.
First 20 years – ignorant, blur, unsure of what they want to do in their life.
Next 20 years – impatient, egoistic, proud.
Next 20 years – tired, frustrated, lost hope, given up their goals or dreams.
Last 20 years – loss of sight, hearing, movement, health, etc…
The happiest and action-oriented people will be guided by their friends, mentor or parents in the first 20 years. They will follow sound advice and work out their plans in the next 20 years by trial or error. The next 20 years they will begin to enjoy the fruits of their labor and the last 20 years will be just relax and enjoy their life.
Two of my friends are reaching the 3rd 20 years period. They are tired, frustrated, and may have given up their goals and dreams.
How many 20 year periods a person can have? Even though we have 4 of them, the first 20 years, we are in a state of blurriness. The last 20 years, we may suffer loss of hearing, movement etc…in actual fact, we only have 40 years of productive life in which we can pursue the things important to us. Thus, treasure and value these 40 years because, it will never come back again.
Wednesday, October 17, 2012
A tale of two condominium
Sunglade – located 3-5 minutes walk to Serangoon MRT, interchange for northeast line and circle line and bus interchange. 3-5 minutes walk to NEX shopping mall and HDB shops, market, coffeeshop and many amenities. Price - $1.2 Million for 1,200 square feet unit, $1,000 PSF. 10 year old unit, ready to occupy anytime.
Bliss@Kovan – located next 5-8 minutes walk to Kovan MRT, northeast line. 5-8 minutes walk to Heartland Mall and HDB shops, market, coffeeshops and many amenities. Price - $1.4 Million for 1,200 square feet, $1,200 PSF. New condominium under construction. Ready to occupy in year 2015, 3 years time.
Given a choice of two different units, which will you buy?
In this market, people go for Bliss@kovan because it is new. They forget the fact that Bliss@kovan is located further from amenities than Sunglade. If the buyers want a new unit, they can simply buy Sunglade and renovate it with $30,000-$50,000. This saves them at least $100,000.
Is it really worth it to buy a brand-new sparkling unit at a poorer location by paying $200,000 more?
Bliss@Kovan – located next 5-8 minutes walk to Kovan MRT, northeast line. 5-8 minutes walk to Heartland Mall and HDB shops, market, coffeeshops and many amenities. Price - $1.4 Million for 1,200 square feet, $1,200 PSF. New condominium under construction. Ready to occupy in year 2015, 3 years time.
Given a choice of two different units, which will you buy?
In this market, people go for Bliss@kovan because it is new. They forget the fact that Bliss@kovan is located further from amenities than Sunglade. If the buyers want a new unit, they can simply buy Sunglade and renovate it with $30,000-$50,000. This saves them at least $100,000.
Is it really worth it to buy a brand-new sparkling unit at a poorer location by paying $200,000 more?
Wednesday, October 10, 2012
A big gap in price
Newton once commented that he can understand the laws of physics but never understand the insanity of mankind. I too did not understand the sellers and buyers who price their houses recently.
For example, see the table of recently transacted condominium ( source: URA website) below:
Project name address house type price transacted area sq feet unit price $psf date of option exercised
TREVISTA LORONG 3 TOA PAYOH Condominium 1,485,000 1,098 1,353 Sep-12
TREVISTA LORONG 3 TOA PAYOH Condominium 1,400,000 1,141 1,227 Sep-12
SUNGLADE SERANGOON AVENUE 2 Condominium 1,130,000 1,087 1,039 Aug-12
BISHAN 8 BISHAN STREET 21 Condominium 1,320,000 1,163 1,135 Aug-12
The condominium above share similar traits like 5-10 minute walk to MRT station, about 10-15 minute train ride to town area, near shopping mall, wet market, shops, coffeeshops, in mature estate, near schools and other amenities, size and transaction period.
However, there is a big difference in price of condominiums in Toa Payoh and Bishan and Serangoon. The transacted prices show that buyers are willing to pay $300,000 more for a unit in Trevista against a unit in Sunglade. This is where I find ridiculous because the main difference in two of them is that Trevista is a new condominium versus Sunglade which is nearly 10 year old. If the buyers want to renovate Sunglade, it surely will not cost more than $100,000. Furthermore, there is no shopping mall near Trevista like Sunglade has. Another point to note is the buyers are willing to pay $160,000 more for a smaller unit in Trevista against Bishan 8 larger unit.
Perhaps, the buyers in Toa Payoh have deeper pockets. Perhaps the buyers knew that there is gold buried inside the condominium. Many other reasons exist. A key question buyers need to ask themselves is this: is this a good buy compared to similar units around the area?
The market is never efficient. There is always someone doing something foolish. In this case, the buyers of Sunglade and Bishan 8 seemed to be more prudent than the buyers of Trevista.
For example, see the table of recently transacted condominium ( source: URA website) below:
Project name address house type price transacted area sq feet unit price $psf date of option exercised
TREVISTA LORONG 3 TOA PAYOH Condominium 1,485,000 1,098 1,353 Sep-12
TREVISTA LORONG 3 TOA PAYOH Condominium 1,400,000 1,141 1,227 Sep-12
SUNGLADE SERANGOON AVENUE 2 Condominium 1,130,000 1,087 1,039 Aug-12
BISHAN 8 BISHAN STREET 21 Condominium 1,320,000 1,163 1,135 Aug-12
The condominium above share similar traits like 5-10 minute walk to MRT station, about 10-15 minute train ride to town area, near shopping mall, wet market, shops, coffeeshops, in mature estate, near schools and other amenities, size and transaction period.
However, there is a big difference in price of condominiums in Toa Payoh and Bishan and Serangoon. The transacted prices show that buyers are willing to pay $300,000 more for a unit in Trevista against a unit in Sunglade. This is where I find ridiculous because the main difference in two of them is that Trevista is a new condominium versus Sunglade which is nearly 10 year old. If the buyers want to renovate Sunglade, it surely will not cost more than $100,000. Furthermore, there is no shopping mall near Trevista like Sunglade has. Another point to note is the buyers are willing to pay $160,000 more for a smaller unit in Trevista against Bishan 8 larger unit.
Perhaps, the buyers in Toa Payoh have deeper pockets. Perhaps the buyers knew that there is gold buried inside the condominium. Many other reasons exist. A key question buyers need to ask themselves is this: is this a good buy compared to similar units around the area?
The market is never efficient. There is always someone doing something foolish. In this case, the buyers of Sunglade and Bishan 8 seemed to be more prudent than the buyers of Trevista.
Wednesday, October 3, 2012
SGX
Today, I took a look at SGX. With a share price of $6.90 and cash per share of 60 cents, it is definitely not attractive compared to my last buy at share price of $1.65 and a cash per share of $1. Furthermore, with a price to earning ratio of 25, it looks expensive compared to the market PE ratio of 10.
Well, looks like when you got a good buy, it pays to stick with the investment through the ups and downs of the economy. This applies to people around us and our interest. I will develop more patience and hold on to my great investment and let time do the rest of the work.
Well, looks like when you got a good buy, it pays to stick with the investment through the ups and downs of the economy. This applies to people around us and our interest. I will develop more patience and hold on to my great investment and let time do the rest of the work.
Monday, October 1, 2012
Conversation with the PM?
A few nights ago, we see the Prime Minister having a national conversation with fellow Singaporeans on housing, foreign workers issues. Although I find the program a good start, I was puzzled that there was no vigorous debate on those issues. Someone in the audience will raise an issue he is concerned and the prime minister will reply to his concern. There will be no further reply from others after the prime minister conclusion. It is as if thing are rehearsed. Another thing I find strange is all 3 ministers agree with the prime minister opinion. It is hard to find two persons to agree in all issues. Let alone 3 persons to agree all the time.
Why do we need this program if the chat or debate is not candid?
Why do we need this program if the chat or debate is not candid?
Tuesday, September 11, 2012
Overheard chats
A casual stroll in Toa Payoh HDB Hub and I can confirm that property is the next craze now. I heard people chatting about property. I saw people looking at developer’s latest project brochure.
A HDB flat was nearly transacted at a million dollar. It was a maisonette in Bishan. Things may be getting to unsustainable level.
A HDB flat was nearly transacted at a million dollar. It was a maisonette in Bishan. Things may be getting to unsustainable level.
Wednesday, September 5, 2012
Apple store update
I walked past the Apple store today and noticed during lunchtime it was almost empty of customers. Salespersons are busy chatting on the phone or with colleagues. As this was the school holiday period, I expected a small crowd of students inside the store. It was a different story 2 years ago, when the store was filled with students at about this time.
On the stock screen, I noted that Apple PE is 15 and the share price is at a 52 week high of US$674. About 5 years ago, this was a stock I wanted to buy at US$80. I did not buy because the PE ratio was high at 30. I did not expect it to climb all the way to $600. At this price its market cap is US$632 Billion. Unless, it has a few new great product, Apple may reached its peak now and will dive soon.
On the stock screen, I noted that Apple PE is 15 and the share price is at a 52 week high of US$674. About 5 years ago, this was a stock I wanted to buy at US$80. I did not buy because the PE ratio was high at 30. I did not expect it to climb all the way to $600. At this price its market cap is US$632 Billion. Unless, it has a few new great product, Apple may reached its peak now and will dive soon.
Could the 4 bubbles burst?
I noted that there is a bubble everywhere the retail investors turn to on 26th October 2011. The 4 bubbles are the property market, stock market, bond market and commodity market.
1) Bond market- USA interest rate is at a 30-year low and bond prices are high. A month ago, fund managers in Singapore are promoting bond funds to retail investors because of the high yield versus bank low interest rates.
2) Property market- Parc Centros at Punggol was sold between $800 - $1,000 PSF based on this report in straits times - http://www.valuebuddies.com/thread-2359-post-32237.html#pid32237 . This is considered high price for a condominium in Punggol, an area far from town.
3) Stock market- STI index is at a high 3,000 points with low volume trading compared to the booming years 2006-2007.
4) Commodity market – Australia Resources Minister Martin Ferguson last month declared that the resources boom is over. Major resource company like BHP Billiton shelved its multi-billion-dollar expansion of the copper and uranium mine.
Can the 4 bubbles be bursting soon? Time will tell us soon. If so, prepare for the ultimate roller coaster ride by fastening your seat belt.
1) Bond market- USA interest rate is at a 30-year low and bond prices are high. A month ago, fund managers in Singapore are promoting bond funds to retail investors because of the high yield versus bank low interest rates.
2) Property market- Parc Centros at Punggol was sold between $800 - $1,000 PSF based on this report in straits times - http://www.valuebuddies.com/thread-2359-post-32237.html#pid32237 . This is considered high price for a condominium in Punggol, an area far from town.
3) Stock market- STI index is at a high 3,000 points with low volume trading compared to the booming years 2006-2007.
4) Commodity market – Australia Resources Minister Martin Ferguson last month declared that the resources boom is over. Major resource company like BHP Billiton shelved its multi-billion-dollar expansion of the copper and uranium mine.
Can the 4 bubbles be bursting soon? Time will tell us soon. If so, prepare for the ultimate roller coaster ride by fastening your seat belt.
Tuesday, September 4, 2012
Is Reits good?
A few years ago, reits were the “in” thing to invest for yield. Some of the reits were giving 10% in annual dividend payout. They also promised to pay 90% of the profit generated yearly. Everything is fine when interest rate is at a 30 year low, i.e. 1%.
What will happen if interest rate spike suddenly? As their loan repayment go up, the profit will be much less. The reduced profit will reduce their dividend payout and share price will fall. I wonder if reits holders are aware of the risk they took.
What will happen if interest rate spike suddenly? As their loan repayment go up, the profit will be much less. The reduced profit will reduce their dividend payout and share price will fall. I wonder if reits holders are aware of the risk they took.
Tuesday, August 28, 2012
Companies with huge debt
I happen to chance upon these 3 companies. This is something they have in common. In the past 5-8 years, they grow very fast and became big company. But something is not right. Their cash balance to long term debt is like 1:5. For example, Ezra has a cash balance of $100 Million and a long term debt of $600 Million. KS Energy has cash balance of $40 Million and a long term debt of $200 Million. Wilmar has $1 Billion in cash and $3 Billion in long term debt. This is what we called a weak balance sheet.
For example, how can a teacher or engineer be financially healthy if he has a debt of $600,000 and a cash balance of $100,000? If interest rate spike, he may have difficulty to service the loan repayment. Something is not right in these companies. Could the tide be turning soon?
For example, how can a teacher or engineer be financially healthy if he has a debt of $600,000 and a cash balance of $100,000? If interest rate spike, he may have difficulty to service the loan repayment. Something is not right in these companies. Could the tide be turning soon?
Thank god I cut loss
In year 2005, I bought 1stsoftware (it is no longer listed today) based on a CEO purchase of 1 Million shares at 10 cents. When its share price fell to 6-7 cents, I bought a few hundred lots. I was thinking to myself how can insider be wrong.
In year 2006, its share price fell even further to 4-5 cents, and the cash balance dropped to a few million dollars. I was very concerned and worried because my holding in 1stsoftware represented a huge chunk of my net worth. I paid a visit to the company in Suntec city and spoke to the CFO.
He presented to me a future plan of the company. As I did not understand much of it, I cut his presentations short. I asked him about the cash balance of the company and questioned if it was sufficient to tide the troubled company over. He seemed unenthusiastic, look down and declined to answer. That convinced me to sell the stock.
But the confirmation to sell was this. When the CFO sends me to the door and we parted, I saw him talking to receptionist and then chatting about the events in the newspapers. When this happened, I knew this company is a goner.
I rushed home and sold all my stocks in 1stsoftware at a loss of 3-4 cents. Thank god, I sold, if not my losses will be 100% and not 50%.
The stock was delisted from SGX a few years later. It never reached 2nd, let alone 1st.
In year 2006, its share price fell even further to 4-5 cents, and the cash balance dropped to a few million dollars. I was very concerned and worried because my holding in 1stsoftware represented a huge chunk of my net worth. I paid a visit to the company in Suntec city and spoke to the CFO.
He presented to me a future plan of the company. As I did not understand much of it, I cut his presentations short. I asked him about the cash balance of the company and questioned if it was sufficient to tide the troubled company over. He seemed unenthusiastic, look down and declined to answer. That convinced me to sell the stock.
But the confirmation to sell was this. When the CFO sends me to the door and we parted, I saw him talking to receptionist and then chatting about the events in the newspapers. When this happened, I knew this company is a goner.
I rushed home and sold all my stocks in 1stsoftware at a loss of 3-4 cents. Thank god, I sold, if not my losses will be 100% and not 50%.
The stock was delisted from SGX a few years later. It never reached 2nd, let alone 1st.
Sunday, August 26, 2012
Insiders sell and urge retail investors to buy
I find this story still valid today. Please look at the latest Sunday times for “Me and my money series”, in one of the section, it was mentioned that an expert on Asian debt capital market is bearish on the market.
“Mark and I have joint bank accounts. He trusts me completely to manage the money.
As we are bearish on the markets, half of what we have is in cash. The rest includes the 25 per cent that we have set aside for property investments, as we are looking to invest in Irish and European commercial real estate, the 15 per cent in equities and the 10 per cent in commodities, bonds and other products.
Mark is a veteran fixed income banker while I have a background in investment banking and equities, so we make a well-hedged team.”
Yet a month ago, I attended a Fundsupermart seminar in which 4 fund managers from East Spring, Lion Capital, Legg Mason and UOB asset management company unanimously urge retail investors to buy high yield bond funds.
Perhaps, they are acting on their boss instructions. Perhaps they have a different opinion than the veteran fixed income banker. Perhaps, they ask the retail investors to buy and they sell.
Which is which? Inside their heart, they knew. And we know.
“Mark and I have joint bank accounts. He trusts me completely to manage the money.
As we are bearish on the markets, half of what we have is in cash. The rest includes the 25 per cent that we have set aside for property investments, as we are looking to invest in Irish and European commercial real estate, the 15 per cent in equities and the 10 per cent in commodities, bonds and other products.
Mark is a veteran fixed income banker while I have a background in investment banking and equities, so we make a well-hedged team.”
Yet a month ago, I attended a Fundsupermart seminar in which 4 fund managers from East Spring, Lion Capital, Legg Mason and UOB asset management company unanimously urge retail investors to buy high yield bond funds.
Perhaps, they are acting on their boss instructions. Perhaps they have a different opinion than the veteran fixed income banker. Perhaps, they ask the retail investors to buy and they sell.
Which is which? Inside their heart, they knew. And we know.
Tuesday, August 21, 2012
Wing Tai Chairman on property outlook 2013-14
This is an insider view of the property outlook in year 2013-14. The message below is the news report which I copied:
Located at Tampines Road near Kovan MRT station, Wing Tai said this latest project which sits on land acquired in the 1960s would help capture any potential uptick in the property market.
But the property developer believes the market is set for a correction ahead.
Chairman of Wing Tai Holdings, Cheng Wai Keung, said: "A number of you have been asking why have we not been tendering for URA projects and we have not been active in the market for quite some time.
"I would still maintain that the correction will be coming and the way I look at it, is that if there is a cycle, if you take away that 2008 temporary drop, you smooth out the curve, it is actually the eighth or ninth year of the rise in this cycle.
Did you note that the property developer believe that market is set for a correction ahead? Let us prepare ourselves for the flood or drought now.
Located at Tampines Road near Kovan MRT station, Wing Tai said this latest project which sits on land acquired in the 1960s would help capture any potential uptick in the property market.
But the property developer believes the market is set for a correction ahead.
Chairman of Wing Tai Holdings, Cheng Wai Keung, said: "A number of you have been asking why have we not been tendering for URA projects and we have not been active in the market for quite some time.
"I would still maintain that the correction will be coming and the way I look at it, is that if there is a cycle, if you take away that 2008 temporary drop, you smooth out the curve, it is actually the eighth or ninth year of the rise in this cycle.
Did you note that the property developer believe that market is set for a correction ahead? Let us prepare ourselves for the flood or drought now.
Wednesday, August 8, 2012
The building of an organization
This is taken from Peter Lynch’s book “One Up on Wall Street”. In his book, Peter mentioned that the lavishness of a company building is inversely proportionate to the willingness of the management to reward shareholders. There is truth in this saying and credit goes to Peter.
In the NKF saga, it was mentioned that gold plating was done in some part of the toilet. Then the scandal followed. Management was called up before court to explain how the funds were used for charity.
In City Harvest church, the church office is in Suntec Tower. As this is the central office area, rental is high. The new church in Jurong also was made of Titanium and has water fountain. This is lavish spending by management on funds for charity.
Today, I rejected a banker suggestion to invest in bonds. His argument was that bond yields are at 4.8% versus bank deposit rates at 0.05% per year. Investing in bonds grows my money faster. As interest rate is at 30 year low and bond prices are at 30 year high, I m worried that I buy high sell low.
My instinct was justified when I check the company that sells this bond. It is called Eastspring and their office is in high rental area, Marina Bay. In a few years, I will know if this theory is proven right again.
In the NKF saga, it was mentioned that gold plating was done in some part of the toilet. Then the scandal followed. Management was called up before court to explain how the funds were used for charity.
In City Harvest church, the church office is in Suntec Tower. As this is the central office area, rental is high. The new church in Jurong also was made of Titanium and has water fountain. This is lavish spending by management on funds for charity.
Today, I rejected a banker suggestion to invest in bonds. His argument was that bond yields are at 4.8% versus bank deposit rates at 0.05% per year. Investing in bonds grows my money faster. As interest rate is at 30 year low and bond prices are at 30 year high, I m worried that I buy high sell low.
My instinct was justified when I check the company that sells this bond. It is called Eastspring and their office is in high rental area, Marina Bay. In a few years, I will know if this theory is proven right again.
Tuesday, August 7, 2012
Child abuse
There are many forms of child abuse. The ruthless and unreasonable physical punishment includes beating the child, rubbing chilli on the child’s eyes, calling the child a dog or locking the child in a dark room alone.
The subtle form of child abuse is not preparing meals for the child or ignoring (bo-chap) the child.
I came across an elderly lady taking care of a 2-3 year-old kid (maybe her grandchild). She was looking in a distant and her thoughts seemed to be far away. Her grandchild was playing a few metres away from her by himself. She seemed unappreciative of her grandchild and did not engage him. I guess if he fell down, she would not have known till he cry out.
That was a sad story.
The subtle form of child abuse is not preparing meals for the child or ignoring (bo-chap) the child.
I came across an elderly lady taking care of a 2-3 year-old kid (maybe her grandchild). She was looking in a distant and her thoughts seemed to be far away. Her grandchild was playing a few metres away from her by himself. She seemed unappreciative of her grandchild and did not engage him. I guess if he fell down, she would not have known till he cry out.
That was a sad story.
Watching the Olympic Games
The Olympic table tennis games remind me of human weakness. For example, one player won 2 sets, and then lost 1set. Later he wins 1 set and loses again.
Nations made up of human beings rise to greatness, then slip into complacency. Then it fell down and then rises again. This is written in history where nations rise and fall and then rise again.
It is a gentle reminder for us not to slip into complacency and to be at our best most of the time.
Nations made up of human beings rise to greatness, then slip into complacency. Then it fell down and then rises again. This is written in history where nations rise and fall and then rise again.
It is a gentle reminder for us not to slip into complacency and to be at our best most of the time.
Wednesday, August 1, 2012
Return on equity (ROE)
A great company has a high return on equity. Returns can be in the form of rent, dividends, profits, royalty etc…generated by the business. Equity is the sum of money the company has put in to build this business.
As the return in rent, dividends, profits etc is somehow similar across many businesses, properties or stocks, a good way to achieve a high ROE is by putting in a low equity. This may only be achieved by buying good assets during an economic downturn.
As the return in rent, dividends, profits etc is somehow similar across many businesses, properties or stocks, a good way to achieve a high ROE is by putting in a low equity. This may only be achieved by buying good assets during an economic downturn.
Tuesday, July 31, 2012
Opinion from retail investors 2012
I just heard this from retail investors.
1) They mentioned that property prices will not fall.
2) They mentioned that if STI index go up to 3,000 points and above, they will sell.
I find this opinion property prices will not fall contrary to opinions from senior management of listed property company. Their opinion is that property prices may be at a peak now. Even if STI index reach 3,000 points, the stocks retail investors hold on may still lose money because STI index reflects mainly the large caps companies rather than the small caps retail investors buy.
1) They mentioned that property prices will not fall.
2) They mentioned that if STI index go up to 3,000 points and above, they will sell.
I find this opinion property prices will not fall contrary to opinions from senior management of listed property company. Their opinion is that property prices may be at a peak now. Even if STI index reach 3,000 points, the stocks retail investors hold on may still lose money because STI index reflects mainly the large caps companies rather than the small caps retail investors buy.
Wednesday, July 25, 2012
Opportunity and you
The average investor will come across 3-4 opportunities a year. Whether he recognize them and grab hold of his opportunities presented depend on his mindset, knowledge and experience.
My friend, now 37 years old has seen many opportunities come and go. Though he has studied in Australian University, he now works as a security guard. This is a true and sad story of a Singaporean with a diploma and earning only $1,300 per month.
He did not appreciate the privilege to study in oversea university and instead choose to gamble in casino. He lost his school fees and allowance and has to borrow from friends.
When he came back from Australia, he works in shipping line, printing company, food and Beverage Company like MOS burger, Delifrance, Food Junction and SMRT. He never stays long in each company and never acquired enough knowledge and experience and skills in each company and industry. If he had persisted and work hard in a single company, he may be a manager of an outlet and earning $2,500 per month.
To conclude, a man must prepare himself daily to take advantage of opportunity presented. If he does not, he only has himself to blame.
My friend, now 37 years old has seen many opportunities come and go. Though he has studied in Australian University, he now works as a security guard. This is a true and sad story of a Singaporean with a diploma and earning only $1,300 per month.
He did not appreciate the privilege to study in oversea university and instead choose to gamble in casino. He lost his school fees and allowance and has to borrow from friends.
When he came back from Australia, he works in shipping line, printing company, food and Beverage Company like MOS burger, Delifrance, Food Junction and SMRT. He never stays long in each company and never acquired enough knowledge and experience and skills in each company and industry. If he had persisted and work hard in a single company, he may be a manager of an outlet and earning $2,500 per month.
To conclude, a man must prepare himself daily to take advantage of opportunity presented. If he does not, he only has himself to blame.
Wednesday, July 4, 2012
Car park update
As I travelled in my work, I noted that car parks in Bishan remained 30-40% occupied during office hours like 3-4pm, weekday. Frankly speaking, I find it puzzling on the rationale of Singaporean who keeps their cars in the car park for little usage. It is costing them large amount of money daily in road tax, HDB car parks fee, maintenance fee, car insurance etc……
Perhaps it will take a deep downturn for the people to bite the bullet. Maybe I am wrong. Could the below new finding be true?
A new study found that households with investable assets of US$1 million (S$1.24 million) or more jumped 14 per cent more to 188,000 last year. That means 17.1 per cent of households - more than one in six - are millionaires. At least based on the people around me, I don’t really find it happening.
Based on my memory, car population increased from 350,000 to 500,000 in the last 12 years. Has the number of roads increased by 50% to allow more cars to travel? I don’t think so. Therefore we are seeing traffic congestion and slowdown even during off-peak travel hours.
I wonder if a massive retrenchment were to happen in Singapore, will their cars be the next to go.
Perhaps it will take a deep downturn for the people to bite the bullet. Maybe I am wrong. Could the below new finding be true?
A new study found that households with investable assets of US$1 million (S$1.24 million) or more jumped 14 per cent more to 188,000 last year. That means 17.1 per cent of households - more than one in six - are millionaires. At least based on the people around me, I don’t really find it happening.
Based on my memory, car population increased from 350,000 to 500,000 in the last 12 years. Has the number of roads increased by 50% to allow more cars to travel? I don’t think so. Therefore we are seeing traffic congestion and slowdown even during off-peak travel hours.
I wonder if a massive retrenchment were to happen in Singapore, will their cars be the next to go.
Tuesday, June 26, 2012
Unpredictable times ahead
The water appears calm but a storm is approaching.
Comments and warnings by many experienced businessmen and investors are disheartening:
George Soros, 81, previously bet against the British pound in the early 90s and made $1 billion off its collapse says in January 2012:
“I am not here to cheer you up. The situation is about as serious and difficult as I’ve experienced in my career,” Soros tells Newsweek. “We are facing an extremely difficult time, comparable in many ways to the 1930s, the Great Depression. We are facing now a general retrenchment in the developed world, which threatens to put us in a decade of more stagnation, or worse. The best-case scenario is a deflationary environment. The worst-case scenario is a collapse of the financial system.”
Robert Kiyosaki, author of Rich Dad Poor Dad series warns in year 2011:
“Economic collapse is coming. I encourage Americans to stock up on food, guns and precious metals. “
The acclaimed, and highly accurate trends forecaster Gerald Celente is warning America again that a complete economic collapse is closer than ever before.
It is better to be prepared than to be caught unprepared. I hope I m prepared. How about you?
Comments and warnings by many experienced businessmen and investors are disheartening:
George Soros, 81, previously bet against the British pound in the early 90s and made $1 billion off its collapse says in January 2012:
“I am not here to cheer you up. The situation is about as serious and difficult as I’ve experienced in my career,” Soros tells Newsweek. “We are facing an extremely difficult time, comparable in many ways to the 1930s, the Great Depression. We are facing now a general retrenchment in the developed world, which threatens to put us in a decade of more stagnation, or worse. The best-case scenario is a deflationary environment. The worst-case scenario is a collapse of the financial system.”
Robert Kiyosaki, author of Rich Dad Poor Dad series warns in year 2011:
“Economic collapse is coming. I encourage Americans to stock up on food, guns and precious metals. “
The acclaimed, and highly accurate trends forecaster Gerald Celente is warning America again that a complete economic collapse is closer than ever before.
It is better to be prepared than to be caught unprepared. I hope I m prepared. How about you?
NKF, Renci and City Harvest Church saga
About 6 years ago, the NKF scandal broke out and the public find out that money raised for charity was used to provide a luxurious lifestyle for the board members in NKF. This was followed by the scandal in Renci Hospital and involved a high-ranking monk. Now, we heard a similar story from City Harvest Church. I believe the leaders in all organization started out with good purpose and intentions. When the pool of money grew, so did their personal ambitions. Inside their heart, a struggle for personal gain and public good ensued. Their personal gain won and a cover-up and show for the general public was staged.
In the NKF scandal, a lady by the name of Matika was infamous. It was understood that within two years, her salary increased 5 fold to more than $100,000 per year because of her good performance. She was not the first one to use sex for money and neither will she be the last one. The recent spate of scandals involving many government agencies chief is proof.
As the experts say, the names changed but the story remained the same. You may also remember a story told in schools, a wolf in sheep clothing. The recent spate of scandals in government agencies reminded me of a blog I wrote earlier “ Does lady bankers skirts have to be so short?”
I hope we learn an important lesson here. History repeats itself. The more things change, the more they remain the same.
In the NKF scandal, a lady by the name of Matika was infamous. It was understood that within two years, her salary increased 5 fold to more than $100,000 per year because of her good performance. She was not the first one to use sex for money and neither will she be the last one. The recent spate of scandals involving many government agencies chief is proof.
As the experts say, the names changed but the story remained the same. You may also remember a story told in schools, a wolf in sheep clothing. The recent spate of scandals in government agencies reminded me of a blog I wrote earlier “ Does lady bankers skirts have to be so short?”
I hope we learn an important lesson here. History repeats itself. The more things change, the more they remain the same.
Tuesday, June 12, 2012
Is the COE system working?
Would you ever believe that price of a car in land A is equal to the price of a home in land B. Is this for real?
According to Bloomberg Businessweek news, the cost to own and drive a car in Singapore is now $150,000, about the same as the median price of a U.S. Metropolitan home. The question then becomes are the home in USA undervalued or cars in Singapore overvalued? Judging from the car showroom poor sales, I suspect Singapore cars is overvalued.
Clearly the COE system which is intended to ease traffic congestion to Singaporeans is not working. The fact remains there is slow moving traffic in many areas during peak travelling hours. In addition, there are insufficient car parks lots in many areas. In Macpherson, the problem is so bad that cars are parked illegally at the double yellow line at night. This is despite a new car park was built recently. The COE system I suspect has to go.
Value investors can sell their cars and then buy a home in USA. When the price of cars fall by half, investors can sell their homes and buy 2 cars.
According to Bloomberg Businessweek news, the cost to own and drive a car in Singapore is now $150,000, about the same as the median price of a U.S. Metropolitan home. The question then becomes are the home in USA undervalued or cars in Singapore overvalued? Judging from the car showroom poor sales, I suspect Singapore cars is overvalued.
Clearly the COE system which is intended to ease traffic congestion to Singaporeans is not working. The fact remains there is slow moving traffic in many areas during peak travelling hours. In addition, there are insufficient car parks lots in many areas. In Macpherson, the problem is so bad that cars are parked illegally at the double yellow line at night. This is despite a new car park was built recently. The COE system I suspect has to go.
Value investors can sell their cars and then buy a home in USA. When the price of cars fall by half, investors can sell their homes and buy 2 cars.
Wednesday, May 9, 2012
Outlook on Asian currency
A trip on the MRT train turned out to be fruitful.
I saw in the train advertisement Aberdeen is still promoting its Asian Bond Funds. This fund is special because it will appreciate if Asian currencies rise in value further. It further confirmed my earlier views that S$ will probably rise to 1:1 against US$ but will depreciate rapidly to 1:1.6 once US Federal Reserve hike rate sharply. Retail investors will be burn again.
As retail investors usually get the timing wrong, this product will likely end up like the DBS mini bonds.
Let us see how the story unfolds.
I saw in the train advertisement Aberdeen is still promoting its Asian Bond Funds. This fund is special because it will appreciate if Asian currencies rise in value further. It further confirmed my earlier views that S$ will probably rise to 1:1 against US$ but will depreciate rapidly to 1:1.6 once US Federal Reserve hike rate sharply. Retail investors will be burn again.
As retail investors usually get the timing wrong, this product will likely end up like the DBS mini bonds.
Let us see how the story unfolds.
Tuesday, April 24, 2012
COE and stock market
COE prices and stock market prices both measure the bubble in the real economy.
Recently, COE prices for 1.6 L cars hit a new high at $90,000. Stock market volume yesterday hit a high of 5 billion and only $900 Million in value. (Usually, they are of similar figures like e.g. 5 billion in volume and $4.5 Billion in value). This implies that market is about to turn south soon in the COE market and stock market.
A recent time both COE prices and stock market prices both hit a low is in year 2009 February. COE prices for small car are about $5,000. Stock market high a new low too. At that time, stock market index was only 1,500 compared to today 2,900.
We shall check further if this theory is right.
Recently, COE prices for 1.6 L cars hit a new high at $90,000. Stock market volume yesterday hit a high of 5 billion and only $900 Million in value. (Usually, they are of similar figures like e.g. 5 billion in volume and $4.5 Billion in value). This implies that market is about to turn south soon in the COE market and stock market.
A recent time both COE prices and stock market prices both hit a low is in year 2009 February. COE prices for small car are about $5,000. Stock market high a new low too. At that time, stock market index was only 1,500 compared to today 2,900.
We shall check further if this theory is right.
Tuesday, April 17, 2012
A trip and analogy
A trip and analogy
A trip with my mother to the bank recently really proved a theory- An experience on a trip will tell you what your partners really are in character.
During this trip, my mother who is unsure of the route (unsure of her purpose in life), walk faster (loves to win) than me and is about 30-50m ahead of me (her ego is big). She does not ask me which way (does not take instructions) and I have to shout to her to tell her that it is another way, before she turned away. By walking alone in front me, she is focused on herself and neglect the group with her. During the trip, she offers her help to carry baby, and I rejected because it is very tiring for a 71-year old lady.
Upon reflections, I realized that my mum is unsure of her purpose in life and she does not take instruction from anyone. She must win and hate to lose. Her ego is so big that she focused on herself and forgot about her group with her. She does things herself and neglect the team. She loves to help others. I learnt that I m considerate because I spared a thought for my mum and reject her help not because she is unable to help but it is very tiring to carry a 10 kg baby over a long distance.
A trip with my mother to the bank recently really proved a theory- An experience on a trip will tell you what your partners really are in character.
During this trip, my mother who is unsure of the route (unsure of her purpose in life), walk faster (loves to win) than me and is about 30-50m ahead of me (her ego is big). She does not ask me which way (does not take instructions) and I have to shout to her to tell her that it is another way, before she turned away. By walking alone in front me, she is focused on herself and neglect the group with her. During the trip, she offers her help to carry baby, and I rejected because it is very tiring for a 71-year old lady.
Upon reflections, I realized that my mum is unsure of her purpose in life and she does not take instruction from anyone. She must win and hate to lose. Her ego is so big that she focused on herself and forgot about her group with her. She does things herself and neglect the team. She loves to help others. I learnt that I m considerate because I spared a thought for my mum and reject her help not because she is unable to help but it is very tiring to carry a 10 kg baby over a long distance.
A clearer vision
The picture of what is coming in the next 2 years is getting clearer.
In the next 6 months, three key issues will force the central banks in Europe and USA to print more money to stimulate the economy.
1) Baby boomer generation folks in Europe and USA begin to withdraw their funds from their retirement accounts. However, as they spend prudently, the economy is not boosted.
2) Record youth unemployment rate which result in more social unrest.
3) To weaken their currency and strengthen their exports
This stokes inflation and worsen the economy. Large companies face collapse and funds will leave USA and Europe for safe heaven in Asia. US$ to S$ weaken to 1:1
To arrest inflation and USA and Europe hike interest rate. This stemmed the outflow of funds to Asia. US$ to S$ rise 1: 1.6. Asia increase rate but not as high as USA.
The rise in interest rate in US and Asia, caused massive deleveraging. Companies and government downsized to cope with the reduction in demand. Many Jobs were restructured and lost. Many homes, cars, investments were force sold as consumers could not afford to pay the monthly installments. 5 years passed and things got better. Stock and property market rebounded.
The strongest of the US banks and Europe banks survived the financial crisis and thousands of weakest banks closed.
In the next 6 months, three key issues will force the central banks in Europe and USA to print more money to stimulate the economy.
1) Baby boomer generation folks in Europe and USA begin to withdraw their funds from their retirement accounts. However, as they spend prudently, the economy is not boosted.
2) Record youth unemployment rate which result in more social unrest.
3) To weaken their currency and strengthen their exports
This stokes inflation and worsen the economy. Large companies face collapse and funds will leave USA and Europe for safe heaven in Asia. US$ to S$ weaken to 1:1
To arrest inflation and USA and Europe hike interest rate. This stemmed the outflow of funds to Asia. US$ to S$ rise 1: 1.6. Asia increase rate but not as high as USA.
The rise in interest rate in US and Asia, caused massive deleveraging. Companies and government downsized to cope with the reduction in demand. Many Jobs were restructured and lost. Many homes, cars, investments were force sold as consumers could not afford to pay the monthly installments. 5 years passed and things got better. Stock and property market rebounded.
The strongest of the US banks and Europe banks survived the financial crisis and thousands of weakest banks closed.
Tuesday, March 6, 2012
A stark contrast of outlook
At this point in time, senior management of established companies like Boustead, Lee Metal, Hoe Leong are being cautious in the outlook for the next 2 years. In stark contrast, people are very optimistic about their future. Their optimism has spilled over to the housing and car market. So much so that the HDB flat cash over valuation has even hit $50,000. This $50,000 is the cash forked out by buyers, which does not include agent fees, lawyer fees. Car COE (certificate of Entitlement) has reached $57,000. This piece of paper to buy a car has probably exceeded the cost of manufacturing the car.
Only one party is right. I choose to stick with the senior management of established companies because of their experience and knowledge of their business. Every decade has excesses which will eventually be cleaned up. This decade is no exception.
Will the buyers of HDB flats, condominiums and cars suffer buyer’s remorse in later years? Time will tell us.
Only one party is right. I choose to stick with the senior management of established companies because of their experience and knowledge of their business. Every decade has excesses which will eventually be cleaned up. This decade is no exception.
Will the buyers of HDB flats, condominiums and cars suffer buyer’s remorse in later years? Time will tell us.
Thursday, March 1, 2012
An example of deleveraging
I would like to use my neighbor example to illustrate an example of deleveraging.
My neighbor used to own only a Mercedes. When his children started working, each of them owns a luxury car. I saw a BMW, Sports car, a Toyota Camry, a sports utility vehicle, a 7-seater 2-litre car etc. After the financial crisis in year 2008, many luxury cars disappeared in the blink of an eye and are replaced by a 2nd hand vehicle. A year later, even the house was sold.
This is an example of deleveraging.
I suspect the past 6 years of excesses in cars, houses, will go through this process of deleveraging.
My neighbor used to own only a Mercedes. When his children started working, each of them owns a luxury car. I saw a BMW, Sports car, a Toyota Camry, a sports utility vehicle, a 7-seater 2-litre car etc. After the financial crisis in year 2008, many luxury cars disappeared in the blink of an eye and are replaced by a 2nd hand vehicle. A year later, even the house was sold.
This is an example of deleveraging.
I suspect the past 6 years of excesses in cars, houses, will go through this process of deleveraging.
A suggestion to help our people
My sixth sense flashed an idea to help the people here. Every block of flat has about 100 families. Each block can elect 5 village chief or assistants or ( block chief) to assist needy families with unemployment issue, family conflicts, financial difficulties, marriage problems or addiction issues. If these volunteers are busy to help, the needy families can seek help from adjacent block chiefs.
Our flat void decks has plenty of spaces for us to build business centers to help small business to grow into future Google, Apple, Microsoft.
We have plenty of elderly and teenagers who can help to paint motivational slogans, beautiful paintings or anything that interest them on our void deck walls.
Our flat void decks has plenty of spaces for us to build business centers to help small business to grow into future Google, Apple, Microsoft.
We have plenty of elderly and teenagers who can help to paint motivational slogans, beautiful paintings or anything that interest them on our void deck walls.
The collapse of Europe
What does the collapse of Euro means to the rest of the world?
A cascading effect that will flood the USA, Asia and the rest of the world with bad news, interest rate hike, company restructuring, retrenchment followed by a collapse of the car resale market, stock market, housing market and bond market. Usually, the stock market will react followed by real economy like car resale market, bond market and housing market. This is similar to a household deleveraging. What are the items to be sold first? First in line is stock, bonds, cars, boats and lastly houses.
I hope that the process will be quick and painless for many people though I doubt so. God bless us.
A cascading effect that will flood the USA, Asia and the rest of the world with bad news, interest rate hike, company restructuring, retrenchment followed by a collapse of the car resale market, stock market, housing market and bond market. Usually, the stock market will react followed by real economy like car resale market, bond market and housing market. This is similar to a household deleveraging. What are the items to be sold first? First in line is stock, bonds, cars, boats and lastly houses.
I hope that the process will be quick and painless for many people though I doubt so. God bless us.
Wednesday, February 29, 2012
An example of deleveraging
I would like to use my neighbor example to illustrate an example of deleveraging.
My neighbor used to own only a Mercedes. When his children started working, each of them owns a luxury car. I saw a BMW, Sports car, a Toyota Camry, a sports utility vehicle, a 7-seater 2-litre car etc. After the financial crisis in year 2008, many luxury cars disappeared in the blink of an eye and are replaced by a 2nd hand vehicle.
A year later, even the house was sold.
This is an example of deleveraging.
I suspect the past 6 years of excesses in cars, houses, will go through this process of deleveraging.
My neighbor used to own only a Mercedes. When his children started working, each of them owns a luxury car. I saw a BMW, Sports car, a Toyota Camry, a sports utility vehicle, a 7-seater 2-litre car etc. After the financial crisis in year 2008, many luxury cars disappeared in the blink of an eye and are replaced by a 2nd hand vehicle.
A year later, even the house was sold.
This is an example of deleveraging.
I suspect the past 6 years of excesses in cars, houses, will go through this process of deleveraging.
Tuesday, February 21, 2012
A vision
All of a sudden, I have a clear picture of what is coming in the next 2 years.
1) In the coming months, the crisis in USA and Europe will worsen and this will send a financial shockwave to the rest of the world. S$ will strengthen against US$ to 1 :1. This is the right time to change S$ to US$.
2) To arrest the outflow of funds from USA to asia, USA is forced to raise interest rate drastically. This stemmed the outflow of funds to asia. US$ to S$ rise 1: 1.6. time to change back to S$
3) The rise in interest rate in US and Asia, caused massive deleveraging. Companies and government downsized to cope with the reduction in demand. Jobs were restructured and lost. Many homes, cars, investments were sold as consumers could not afford to pay the installments. Time to buy stocks or properties.
4) In the blink of an eye, a few years passed and things got better. Stock and property market rebounded.
1) In the coming months, the crisis in USA and Europe will worsen and this will send a financial shockwave to the rest of the world. S$ will strengthen against US$ to 1 :1. This is the right time to change S$ to US$.
2) To arrest the outflow of funds from USA to asia, USA is forced to raise interest rate drastically. This stemmed the outflow of funds to asia. US$ to S$ rise 1: 1.6. time to change back to S$
3) The rise in interest rate in US and Asia, caused massive deleveraging. Companies and government downsized to cope with the reduction in demand. Jobs were restructured and lost. Many homes, cars, investments were sold as consumers could not afford to pay the installments. Time to buy stocks or properties.
4) In the blink of an eye, a few years passed and things got better. Stock and property market rebounded.
Tuesday, January 31, 2012
Flavour of the month
The “in” thing to invest now is 1) bonds 2) gold 3) US distressed real estate. Many seminars have sprung up touting gold, bond and USA distressed real estate as safe or alternative investments. These alternative investments seemed to me like the DBS bank “Minibonds” which was highly touted to conservative investors 6 years ago. I find it strange that people prefer to buy something new like gold after losing money in stocks. Perhaps it is a case of the grass is greener on the other side.
These are exactly the investments I m wary investing right now when it is touted highly to the retail investors. Maybe the bubble will go on for a year or two before bursting. But I prefer to buy something of value. Patience is the key here. Let us monitor the situation and await our opportunities.
These are exactly the investments I m wary investing right now when it is touted highly to the retail investors. Maybe the bubble will go on for a year or two before bursting. But I prefer to buy something of value. Patience is the key here. Let us monitor the situation and await our opportunities.
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