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.

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