DBS begins axing staff

Yes, it's not new news now.

DBS is axing 6% of their staff strength (about 900 employees) across their Singapore and Hong Kong operations (news article here).

Usually the end of the bear market is indicated by banks laying off staff. DBS is the first, and probably won't be the last.

STI has rallied, but no I don't imply that the end of the bear is here. The worst seems to be over though.

Discount price, anyone?

The adversity today is opportunity for you to create your wealth for tomorrow

Bull and bear markets are cyclical.

After the reign of the bull, the bear usurps his throne. After that, the bull pokes the bear's hairy butt off the pedestal with his horns again. The cycle continues.

I admit that I would be more cautious the next time I see paw tracks on the market. That could be another 10 years from today. I won't let so much money get lost again by taking defense when everything seems too good to be true. This is about overcoming the demon called greed.

Then again, I am now not going to deceive or be deceived that I don't already smell bull dung. Our good friend, Mr Moo, is already somewhere around the corner, plotting his return -- can't you smell him? This is about overcoming the demon called fear.

If you're not already on your way back in to the market, I hope that you are at least plotting it! If you don't want to invest a whole lump sum, there is always dollar cost averaging (another good article can be found here).

Know that opportunity loss is still loss, no matter how you choose to view it.

It may be better to postpone your plans

It is finally publicized today on the papers that the Integrated Resort (IR) at Marina Bay cannot be completed on time. I personally think it is a good idea for them.

On one hand, there are datelines to meet, on the other hand, I'd rather the dateline is not met than to have a shoddy completion. You don't want the floors to give way after you strike a winning-7 on your jackpot machine (I'm more concerned of the safety of the people. For the record, I am against gambling).

A few days ago, I was having a conversation with a client. He intended to purchase a flat in less than a year. Half a year ago, he invested his CPF money with an insurance agent (no, not me) expecting to grow his money to an amount that can help him pay the downpayment for his flat in a year's expectation.

He definitely didn't expect the market to take a turn down. As of today, he probably lost 40-50% of his investments. A few days ago, he asks me if he should terminate the policy.

I asked him if he does that, how does that help him with his goal in buying a house in less than a year. He suggested to me to help him set up a portfolio that can help reach that goal.

I had to tell him that's not gonna work.

A better idea is for him to keep his current investment, because even if he draws it out now, it doesn't help at all. I think he should calculate how much he really needs for the house, and try to work backwards how much he needs to put today, and how long it takes. He should work on the time frame and the contribution he needs to set aside to reach that amount, and decide if he will do that. He should consider to push his house purchase further away instead of rush in, only to end up in bigger debt, and tight cash flow.

While not everything should be delayed, some things that can be delayed, then it'd better be. Like the analogy of not having the floor in the IR to give way, you don't want your finances to give way just because you chose not to secure the foundations before inviting your guests (your family!) to come in.

I made this mistake myself years ago. I can vouch that postponement is usually the better option.

ETFs - something worth looking out for

Ever heard of ETF? It stands for Exchange Traded Fund (I won't be defining what it is here. Instead, you can read about it here).

I thought ETFs are extremely interesting because you trade them like a stock, but they aren't as exposed to risk because they are diversified. In comparison to unit trusts, ETFs are much easier to maintain and monitor, and the charges are extremely low.

While I would think that ETFs are best suited for DIY investors who will never employ the help of financial advisors, I also think that it is good to put a reasonable amount of your investments in it. Unless you completely don't want to monitor the markets, ETFs are cost-effective, and effective.

However, in our local market, the ETF market is not as established as the States. You won't get much variety for now, and chances are if you want to diversify on broader sectors and countries, you still need a larger portfolio of unit trusts. But do stay tuned, because it is very likely that when the investors market here are more receptive to ETFs, there will be more variety of this product. Unit trusts may not completely become the thing of the past, but it sure will see a great downsizing. I know I would do that to my own portfolio when the time comes.

For more about ETFs, I thought this article is a very good read.

For the current available ETFs in our Singapore market, you can take a look here.

The Great Sale

I don't know why it hasn't dawned on you yet. There is a great sale going on in the financial markets. Here's why:

1. STI is at least 50% lower than it usually was.
2. Unit trust funds are also at a price which brings envious investors who missed the boat, to hop right in again.
3. Financial institutions are bending their backs to come up with attractive financial products that they normally wouldn't bother when they are enjoying good times (eg: single premium endowments with bonus returns)

So long as the majority fails to realize that this is a sale, the price will remain low, and financial institutions will continue to do cartwheels. But one day they will realize it, and it's those bargain hunters who will have laughed to the bank way before.

If you're always waiting for Sheng Shiong and Harvey Norman to come up with a sale, what are you waiting for regarding this one?

Attempting to raise investors confidence

What encourages me is to see governments step in. The objective is to assure investors and to raise confidence in the market.

http://news.yahoo.com/s/afp/20081020/ts_afp/financebankingworld
Have you begun returning to the market yet?

Yep. "Dead cat bounce"

See? http://sg.news.yahoo.com/afp/20081016/tts-finance-banking-world-c1b2fc3.html

I believe there will be a day whereby it all will come crashing down foever, but fortunately, this is not that day. However, the fundamentals have changed and the world leaders are looking for a complete overhaul of the financial system. Has it happened before? Yes. So it's nothing new.

Something constructive: Diversify. It's true that if the world financial system is destroyed, everything related to it will be killed in its path. That means your banking system, maybe even government financial systems will also go under. If that happens, it doesn't matter where you put it, so let's not bother about that scenario, 'cause we'd all probably just say, "Ah well", and go plow the fields.

However, if you prefer not to self-prophecy a doomsday scenario (that is likely not to happen yet) and take care of today, separate your investments about. There are Lifestyle Funds, there are single premium endowment plans. Returns won't be double digit, but at least you can be quite certain you have returns that is quite worth the wait.

Why not?

Is this a "dead cat bounce"?

My laptop died on me yesterday. Got it fixed today.

The following article isn't fresh from the oven, but it does speak well that can help us manage our expectations regarding the market rebound.

http://www.marketwatch.com/news/story/dont-break-out-bubbly-just/story.aspx?guid={E913C56F-C1ED-4636-A62D-3F30B00D91AE}

I really don't think the bad times are over yet. But there are still alternatives.

Yahoo! News: Dow roars back from worst week ever

Something quite nice to read about finally. http://news.yahoo.com/s/ap/20081014/ap_on_bi_st_ma_re/wall_street

However, exercise caution. As quoted in the article,

"My screen is completely green, and I love that," said John Lynch, chief market analyst for Evergreen Investments in Charlotte, N.C. "But I'm not doing any backflips yet. We still have many challenges up ahead."

and

"I would say this is closer to the bottom. I can't say this is the bottom," said Bill Schultz, chief investment officer at McQueen, Ball & Associates in Bethlehem, Pa. "I think it's more relief, the rally today."

and

"I think we had enough negatives last week that if the government steps in we could have a pretty nice run," said Denis Amato, chief investment officer at Ancora Advisors. "Is it off to the races? No, I don't think so. We have a lot of stuff to work through."

Yep, I think so too.

Congratulations to those who profited from this rally. It sure is helpful when you have spare cash to risk riding this possibility. For many, it seems that it had paid off. Good for you.

Investors do the darndest thing

The market has bounced back again.
Asia: http://sg.news.yahoo.com/ap/20081013/tbs-as-world-markets-e285837.html
Wall Street: http://news.yahoo.com/s/ap/20081013/ap_on_bi_st_ma_re/wall_street

It's almost funny that when the market plunged, everyone is crying the loudest. When the market rebounds, no one seems to notice. I barely heard a whimper.

I'm talking about investors.

Like crashing and booming markets, these are cycles that repeat over and over. Every market crisis has the wise making money because the majority freaked out and pulled out when they were not supposed to, sending prices falling at the "unprecedented" lows (that's when people like Warren Buffet come in and get richer). Every time, the majority makes the same mistakes, and the wise reaps same profit the same way.

Don't get me wrong, I know how it is to lose money. I have lost money in investments before, and believe me, I started thinking irrationally and made more and more bad moves each time I did anything about it. Yet, I did know how the markets work, but I still made that mistake.

It's called emotions. Emotions are what make us human. Emotions help us appreciate joy, love and everything else that is nice. But it also has a dark side. If not managed properly, you really end up doing the stupidest things.

Don't blame yourself. You're only human. Just get better each time you mess up. It's just like this.

A breath of air

The Feds have cut interest rates. That's gonna help for a while. Hopefully the market can rebound and restore some confidence.

http://news.yahoo.com/s/ap/20081008/ap_on_bi_ge/fed_interest_rates


If you think Singapore is going to face a rough patch, count your blessings as you read about Iceland.

http://www.cbsnews.com/stories/2008/10/07/world/main4508148.shtml

Yahoo! News: Bailout passes Senate, House foes soften

The bill is approved by Senate. http://news.yahoo.com/s/ap/financial_meltdown

Still, be on your toes... It's not the final order yet. Stay tuned.

Be invested, but trod wisely.

Lessons learnt so far

The month of September has been a big upset for the financial market here in Singapore. Besides the US mortgage crisis, we also experienced, yet again, another AIA problem. Both investments and insurance areas in our local financial markets have been thrown to a challenge.

While September just ended, and October is unlikely to be a turning point, there are still valuable lessons that we can learn from this:

1. Diversify - everyone made losses on their investment portfolios. Those that had some money market or cash funds suffered lesser than others. In terms of insurance, the public has learnt that big brand, size and history of the company no longer guarantees stability. Diversify even your methods. Been investing lump sum? Have another account that invests on a regularly timed basis. See here.
2. We cannot time the market, but learn better how to tell the signs - I believe I have learnt a lot better in how to anticipate market peaks. When peaks come, it's probably high time to cash out or transfer to safer instruments. When everyone on the streets say, "It's a good time to buy." it's probably a good indicator to run for cover.
3. Cash liquidity - Fortunately, I've yet to have met anyone who is screaming in misery because he or she has lost all life savings in the stock market. Never ever invest your emergency fund. Emergency fund should be around 3 to 6 months of your income, for events whereby you quit, get retrenched, or fired, you still have this buffer space to make necessary adjustments.
4. Never lose sight of your goals - You have invested for a purpose. There is a point to reach. Markets will always rise and fall. Don't let today's setback make you make irrational moves and delay, or if not, derail your track to your financial goals.
5. Take ownership of your investment and insurance portfolios - Your insurance agent is the guy who sold you the insurance plans, but don't ever mistake him to be the guy solely responsible for your policies. Always know what you bought, and why you were recommended that product.
6. Surrendering your insurance plan is not punishing your agent - Sadly, many people I know surrender their insurance plans because they began to hate their agent. They don't realize that the ones hurt is themselves, not the agent.
7. Have more choices to make - Either you do your own research in the investment and insurance products in the market, or work with a professional who can recommend the various products. If you work with a tied agent or banker, that's just about all you will be sold -- THEIR products.

The People are FED UP!!!

The people has had it. No, they will not let the Bill pass, and the Congress is behind them.

That's it. The Bill to rescue dying financial institutions with US$700 billion (read: the taxpayers' money) has been rejected.

I'm expecting to see the market plummet (not that it hasn't already, Dow is down 700 over points!) further and further until a new proposal is put in place, we should see another rally. If the proposal fizzles, another fall. Another proposal, another rally. Is anyone able to predict what is going to happen?

The last few days, I've met with fund managers, managed accounts managers, read articles from economists, columns from newspapers, etc. Many said that the Bill "sure push through one!" "Even Warren Buffet has bought Goldman Sachs."

Hmmm... So is Warren Buffet wrong? Probably not, in the long term. But certainly he gave me the impression that he was confident that the Bill will come through. He made very clear that he supported the Bill, and I don't fault him on that, but I think he too was surprised that Congress did not let it come to pass.

At this point in time, I think very few people are left to say, "The Dow has dropped so many points! It's cheap! Let's buy!" Because we REALLY know that it is likely to drop even further. While this is not about timing the market, this is common sense...

So, how do you think you should be doing your investments today? Stay in the sidelines for an indefinite period of time and let the Inflation Monster slowly chomp your money away? Rake up a huge amount of money like Warren Buffet and put your bets on things that have been proven to be impossible to predict anymore? Or enter the market slowly but steadily - tiny but sure investments, minimizing inflation losses, expecting to reap greater profits when the market recovers?

A solution in this mad-cap investment climate

Believe it or not, opportunity is still waiting in this crazy investment climate. Most investors have fled for cover, but did you find out why they did so?

Possible reason 1: "Because I don't know what to do now."
Possible reason 2: "Because I don't know what to do now."
Possible reason 3: "Because I don't know what to do now."

Yeah, you get the point.

What if you know what to do? You probably will not take the uninformed approach and bury your head in the sand. Go read this latest article entry in my website, together with useful links which can be found at the bottom of the article. http://www.cedrictan.net/index.php?module=article&article=9249

This strategy won't make you money right away, though. It'd still take a while.