Another case of car vs tree

Another young man, another crash. Thankfully, this car did not break up into 2 pieces, and the driver escaped death, but not serious injuries. So, is the Mitsubishi Lancer built better (sturdier to withstand crash impact) than the Subaru WRX?

In the U.S., the National Transportation Safety Board (NTSB) may investigate and study the safety of the car models and probe into whether there were any design or production defects. Here, I don't think there are any such agencies.

It would fall on The Traffic Police to conduct its studies on how the accident occurred and the State Coroner would determine the cause of death and possibly pass a verdict of misadventure.

The authorities would just rely on the car manufacturers' crash impact studies and presume that all their car models are crashworthy and provide certain levels of safety. Is that adequate?

Should more be done, especially if lives may be saved, and dreams of families preserved?

Subaru WRX Tragic Crash

Another road accident resulting in the tragic loss of lives of 2 young men.

In the industry, many insurers decline to cover Subaru WRX cars. The few who do will likely consider raising their premiums for such models.

The insurer for the late Mr Kerk will not only have to pay for the total loss of the car, but also compensate the late Mr Ng's dependants for the loss of his income, and his pain and suffering during the 1.5 hours from the time of accident till he finally succumbed to his multiple injuries.

There will also be legal fees for the insurer as well as the estate of the late Mr Ng.

All these will pend the results of investigation by the Traffic Police and the verdict by the State Coroner in due course. A post-mortem toxicological test would undoubtedly have been done to establish whether the late Mr Kerk was under the influence of any intoxicating drugs or alcohol.

If you wait for the robins, spring will be over

My friend, Stanley, pointed me to the above article, written by the Oracle of Omaha.

Below is an extract from http://www.streetauthority.com/warren_buffett.asp

Below are a few other characteristics that Buffett looks for when evaluating an investment opportunity:

Easy-to-Understand Businesses
One of Warren Buffet's principles is not unlike Peter Lynch's -- stick with what you understand and choose investments with which you are comfortable.

High Return on Equity (ROE)
Buffett emphasizes return on equity (ROE), a key measure of a company's profitability. He prefers to invest in companies where he can confidently forecast future ROEs at least 10 years out.

Consistently Strong Free Cash Flow
Buffett also seeks companies with significant free cash flow. Always mindful of the risks associated with investing, he ensures that his companies have plenty of money left over to invest in their growth after they have paid the bills.

Limited Debt
In the 1990s, Buffett bought insurers Geico and General Re because he liked how the companies limited and managed their debt.Buffett also likes the "float" that insurance companies offer. Policyholders pay premiums up front, but claims are paid out later -- providing insurance companies with a steady stream of low-cost cash to play with.

Quality Management
Among the most noteworthy aspects of Buffett's stock-picking expertise is that he looks for quality companies with quality management teams. When Buffett buys a business, he buys its management as well. Buffett looks for people who are as passionate about their business as he is about investing.

Lehman minibonds debacle

The rating agencies played a crucial role in these credit crises. They were the ones who gave these minibonds A+ ratings. The rating was equivalent or even better(safer) than, say, DBS Bank's credit rating, or the recent OCBC Preference Shares which was rated A-.

But, who can really blame the rating agencies for giving these high ratings, which was obviously so inaccurate (on hindsight)? The issuer was Lehman Brothers Holdings, ranked no. 37 worldwide on the Forbes' Fortune 500 in 2008, before the shit hit the fan. Its recent years' business performance had certainly looked very reassuring:

Year. Rank. Revenues(USD). Profits(USD)
2006, 62, $32 bil, $3.3 bil
2007, 47, $47 bil, $4.0 bil
2008, 37, $59 bil, $4.2 bil

Now, we know how it (and other such U.S. financial institutions) achieved these seemingly sterling results with 47% (2006) to 26% (2007) increase in revenues. The percentage increase in profits were much lower; the profits likely distributed in obscenely huge bonuses to the senior execs.

The question now arises: just how did they manage to "cover up" the equally obscene huge liabilities from their external auditors, which eventually led to bankruptcy, from a $4.2 billion profit position? Were there widespread "cooking of books" by all these failed corporate giants?

Scandals after financial scandals from the 1980s to the 21st century, is this the American way, that the U.S. politicians are so proud to uphold? Is this the right and moral way in their "pursuit of happyness"? Billions of $ were wiped out from the savings of ordinary U.S. citizens, whilst their corporate "geniuses" made their millions and retired in luxury when the bubble burst.

Barack Obama: Fire those execs

I am not an American taxpayer, but I was nevertheless filled with anger when I read of such insensitivity and callousness. I have no business criticising the U.S. system, but it looks to me that the core of the financial meltdown has a lot to do with the lack of a moral value system in Wall Street, if not corporate America.

My only American brother-in-law and sister are living in Eugene, Oregon, and I have no doubt how they'd feel about such excesses.

AIG Execs head to resort with the US$85 billion bailout

I was greatly relieved when the US Congress finally approved the US$700 billion bailout plan but after reading the above article, I would rather that the U.S. (including the global financial markets) bite the bullet in order to stop the deep rot from spreading to our part of the world. Let all the mismanaged American companies with their unbridled and unchecked greed close down, so that all can re-start with a new slate, instead of being dragged down by old baggage and all the wastefulness!

MAS can't force banks to compensate

"In this new and changing environment, Singaporeans need to become more self-reliant in their financial affairs. They must acquire the knowledge and skills to manage their day-to-day finances, make prudent investments and plan for their longer-term needs."
- Deputy Prime Minister and Chairman of the Monetary Authority of Singapore, Mr. Lee Hsien Loong in a parliamentary address on 16 October 2003.

So it is Caveat Emptor or Buyers Beware - read the fine prints and ask questions so that you understand the investment products before you put your hard-earned $ in them; don't be rushed into a quick decision, especially when clouded by tempting offers of freebies.

You may have to bear fees, expenses and/or investment losses if you change your mind about purchasing the product, or decide to sell it prematurely.

Key Questions To Ask The Financial Adviser's Representative:
1. Why is this product suitable for me?
2. What type of product is this? Is it a life insurance policy, unit trust or structured deposit? Is it primarily for savings, investments or insurance protection?
3. What benefits does this product offer? Which benefits are guaranteed and which are not?
4. What instruments does the product invest in? How risky are these underlying instruments?
5. Is this product suitable for individuals with low, medium or high risk tolerance levels? What is my risk profile?
6. How long must I stay invested? What are the penalties, restrictions and procedures if I decide to liquidate some or all of my investments earlier?
7. What are the various fees and charges? Does the product provider have the discretion to change the fees and charges at any time or is there a cap?
8. If I were to purchase the recommended product, how can I monitor the performance of my investment? What reports and updates will I receive? How often will I receive these reports and updates?
9. What if I find that the investment product is not suitable after I have purchased it? Can I return the product and get my money back? If so, how soon must I inform the Financial Adviser of my decision to return the product?

As the old saying goes, "A fool and his money is soon parted". Take responsibility for your own money and decision instead of crying foul to regulators when the investment decision turns bad. Don't buy any investment product that you don't understand.