Investment Losses

Any of us who have delved into investments would likely have made losses at some point in time. I have certainly made substantial losses in my personal investments, running into 5 digits (small change to some, but not inconsequential to yours truly).

Having made losses, we ought then to take heart and learn from the mistakes but very often, we go into a denial mode, unwilling to admit that we had made huge errors of judgment, but instead, justify to ourselves that, just because we had made some very good investments in the past and present, that means, hey, we are totally immune from making any stupid mistakes now and in the future, and well, the present loss is just a paper loss.

Well, the auditors (not even those creative types) would certainly call a spade a spade. Were it not so, the world's biggest banks and institutions could have basked in their past glories, instead of "going on their knees" to beg for government bailouts.

$50 billion is surely not a small sum. It is enough to build 10 integrated resorts, or 10 MRT lines - Singapore's first MRT line (the East-West line) costs just $5 billion. The CIA World FactBook estimates Singapore's GDP at $193 billion in 2008. So, $50 billion is roughly equivalent to the total value of all final goods and services produced by the entire nation over a period of 3 months. And that's a lot of blood, sweat and tears.

Many Americans are familiar with jokes advising them not to trust their politicians and lawyers. I just googled and readily found this one:

A quote attributed to one of America's founders, John Adams (the 2nd President of USA), in the play 1776: "I have come to the conclusion that one useless man is called a disgrace, two men are called a law firm, and three or more become a Congress."

And that was 200 years ago when Americans were supposedly more God-fearing, honest and upright.

Well, now the world should learn never to trust American bankers and their genius accountants, who readily cook their books and manage to hide super-huge losses right under the supposedly sharp noses of shrewd, hard-nosed and discerning sovereign investors, as well as "independent" auditors not worth the fat fees they charge, not to mention the "independent financial advisers" engaged to conduct due diligence prior to pumping huge dollars into these "troubled assets" (trust the Americans, or rather George Walker Bush & team, to come up with such cock-and-bull euphemisms).

As one mayoress of a small Norwegian town which lost millions of their town council funds investing in CDOs and structured deposits, ruefully said, "Never trust a man in Armani suits coming to sell you super-duper too-good-to-be-true investment products", or something to that effect (from the 'House of Cards' TV show produced by CNBC; catch the preview at http://www.cnbc.com/id/15840232?video=1024219334). Because of these losses, the town have had to close down a few schools and old folks' homes, and retrench a few firemen.

As Ron Weasley in those Harry Potter books would say, "Bloody Hell!" to the Americans and their unbridled greed!

Flawed Genes & Heart Diseases

Modern computing technology and the combined resources of more than 18 countries worldwide has made it possible to map all the human genes, and analyze and sequence the human DNA.

The successful mapping of the human genome will lead to a quantum leap in medical science and treatment.

It will also lead to changes in the way life insurance business is done.

The above article makes it possible to "predict" those at higher risks of getting heart diseases. This may lead to "anti-selection" as those who are aware of their greater risks will want to get themselves insured. Conversely, life insurance companies may wish to exclude such risks via medical screening exams.

All these will happen when the costs of screening are made affordable, again with advances in technology.

New 7-year IOU by Singapore Gov't

The main buyers of SGS (Singapore Gov't Securities or bonds, or IOUs, in fact) are traditionally banks and life insurance companies, who need to invest their client's savings and policy premiums in very safe instruments, in order to maintain a minimum capital adequacy ratio, set by the MAS, whilst earning a modest interest rate in order to pay operating expenses, guaranteed interests and policy cash values.

This new issue comes with a coupon (interest) rate of 2.875% p.a., thus setting the maximum return for bank deposits or short-term non-participating endowment policies, like the recent one sold by a local insurer, which offered a fixed return of 2.0% p.a. for a 2-year plan.

Some are more equal?

When you are rich, your lawyers and doctors certainly act fast.

Without doubt, all the arrangements must have already been made to harvest (for lack of a better word indeed!) the organs of a doomed man.

So, did the rich manage to jump ahead of all others in the long queue for organs, or was he judged the best suited in terms of age, and compatibility?

Given a theoretically longer life expectancy, a younger person is supposed to benefit more from such a transplant and should be given priority.

From Todayonline, "According to past reports, Mr Tang — who had undergone a triple-bypass operation in October 2007 — was not eligible for a cadaveric kidney because of his many ailments, such as heart problems, asthma, sleep apnoea, depression, anxiety and panic attacks."

With a plethora of health problems, one might wonder whether this new organ is going to benefit much. It may buy him a better quality of life, but let's hope that some more deserving person out there had not been "robbed" of a new lease of life.

Foreign Exchange trading risks

"SEMBCORP MARINE (SCMN.SI) - Sembcorp Marine said on Wednesday it had agreed with BNP Paribas to settle a $50.7 million dispute stemming from botched foreign currency trades at its Singapore unit last year. Sembcorp said in a statement it would take a charge of about $30 million in the fourth quarter following the settlement. "


How many times have we read about huge foreign exchange trade losses incurred by companies who need to hedge against foreign exchange fluctuations, given that many receive revenues denominated in USD against costs which are often in SGD?

So, when even these big boys incur huge losses, with all the so-called expertise and resources at their disposal, what makes us, the small retail investors, think that we can do better than them and reap huge financial rewards and gain financial freedom, as claimed by so many advertisements by self-professed gurus (some with dubious doctorates bought from unaccredited universities)?

If it's so easy, why don't these gurus offer their expertise and simple winning formulas to the big companies and earn big time, and at the same time benefit our stock markets, so that for once, we read about huge foreign exchange gains instead of losses?

My advice therefore to all my friend and clients is to stay away from foreign exchange trading.

AIG sells private bank

The asset sale continues relentlessly even as AIG's government loans ballooned from the initial US$85 billion to US150 billion. Its assets were estimated at US$1 trillion before the credit crises and financial meltdowns and scandals hit the global financial markets, crippling and sending many once-venerated institutions to near collapse and bankruptcy. Its liabilities were estimated at US$1.4 trillion (i.e., approx $400 billion more than its assets), hence its near bankruptcy, as it faced difficulties to raise funds in the midst of the credit crunch.

Farrer Park Mediplex to open in 2010

Medical tourism certainly has a huge growth potential here, even as the U.S. and President-elect Obama begins to grapple with high healthcare costs and double-digit increase in health insurance premiums. I am still holding on to my Parkway shares, so I hope that this bodes well for its share price in the uncertain times ahead.