How did U.S accumulate so much debts?

$3.88 billion per day since September 28, 2007 as of this post.

Look at the debt clock.

Would you stay in a murder house?

A real murder not a virtual murder.

Supposedly.................

There's a murder or multiple murders in an apartment few years back or even a decade ago. The apartment is then put up for sale.

I won't even if it's not haunted. It may be haunted since there's a possibility of the dead with grievances still residing in that house.

(It may or may not be haunted). Nobody knows for sure except for the residents.

But here's the catch.......

The property prices will soar in future, say 3 years later, you will make good profits from the sale of your apartment if you buy it now.

The downside - Murder apartment and possibility of being haunted.
The upside - Handsome profits from the sale of the apartment.

I won't stay there.

That's out of my comfort zone no matter how much profits I will e getting in the near future. I do like horror movies but I don't like to be part of the movie.

For half of it's market value? 50% OFF.

I won't stay either.

Will you buy the apartment and stay there?

Lost another broker

I picked up a letter from my mailbox this evening.

It was from CIMB, my brokerage, I have no intention to open this letter since I have received a lot of letters from them saying the same thing - They have assigned a new trading representative to me. I am guessing since they do not send me letters other than for this reason.

I started with GK GOH in the beginning. That was donkey years ago..............................

My brokers kept leaving, I am not sure if they left for other companies or they had left the industry, I know the market is pretty hard on their business. Not only the current market. Ever since the launch of online trading, a lot of brokers were left broke.

DIY trading is so much competitive in commissions.

I never trade through my brokers ever since I started online unlike those early days of trading which I do not trust the online system.

And I guess those who really survived have upgraded themselves to the role of financial advisers/analysts.

Anyway....I finally opened the letter (before I throw it away), I am not surprised ....... a change of trading representative. This is the 7th time I have received this from CIMB.

"Change is the only constant?"

I guess I have to upgrade myself as well. It's a dreadful rat race which I am grateful that I am still in it (employed) and trying to get out of it (financial freedom).

Tan Kin Lian is the man

I like Mr Tan's blog and I believed there are many out there sharing the same sentiments. He stood out to organized a petition, help the dejected investors and speak for them when they needed a voice.

Well, he mentioned in his blog that he doesn't want to be called a hero, but I think he deserves all the praise we could give him.

In every turmoil, there will always be someone like him, there is still hope even when you are cornered and it's true in this case.

An astute investor is a good businessman

After going through so many books on investing, they all say the same thing, I wonder if the authors copied the content from another author or it is just the common truth that’s why they spoke the same thing.

The best person to learn from is Buffett.

But labeling him the most successful investor in the world is quite an understatement, he is in my opinion an outstanding businessman. Without an acute business sense, it’s impossible to pick winning stocks by scrutinizing financial figures.

How to tell if a business will be profitable in years to come, say 5 to 10 years?

How to tell if a business has a competitive advantage over its competitors?

Financial ratios have no answer for that. Financial analysis is not that useful.

Business analysis is a better tool, business valuation is a better tool, competition analysis is a better tool, and marketing analysis is a better tool......

Forget about examining economic cycles and look for business cycles instead. Since, there is no way any business could have left untouched by economic downturn; I personally think that it’s more valuable to examine the business cycles. The duration of each cycles, how long it took for the business to reach its peak in the cycle, how much has profits increased when it’s at the peak, how does this compare to the last peak so on and so forth.

You need a business mind to pick up good business. Financial intelligence or high qualifications wouldn’t be very helpful here.

Looking at each product cycles, how has the R&D been performing since the last big sale, how does the new product compete with its competitors; there are so many things to this. Competition analysis is more important than financial analysis.

I prefer simple ways for analysis, financial ratios are not my cup of tea, I have to learn since I am moving into fundamentals and keeping distance from technical.

OK. Its weekend now, the weather’s bad when I wrote this, I going off for a quick bite and will be back after my trip from the national library.

See you.

Why are my groceries getting lighter?

You need your spouse and your kids to help you carry your $10 worth of groceries.

That was 10 years ago....

Your boy in pre-school could carry your $10 worth of groceries.

That is the present.

In every market, there is an invisible hand helping you carry your groceries without sweat and the name is inflation.

In the next 10 years....your cat tells you it could carry your groceries for half a pack of Whiskas.

Life savings gone and they are helpless

I felt sad when I saw this picture on the front page of the papers today.

The old folks whose lost their money to the sub-prime were coerce into buying the Lehman bonds. These are people who are not financial literate and will rely on the expertise of their advisers for investment matters. The typical target group for advisers.

And these adviser are not keen in giving prudent advice, they care for nothing but their commissions. They are only interested in building their own wealth and hitting targets.

Irony. The advisers get richer while clients become poorer.

Mr Tan Kin Lian has taken the initiative to organise a petition for the investors, and if you are an investor and have yet done so, please visit here: http://www.petitiononline.com/ISTFI1/petition.html

Their retirement funds and life savings are gone. The old folks have nothing left for their golden nest.

I have never trusted any financial advisers. Never in my life.

I have only listened a recommendation of an adviser only once in my life, I was recommended a payout fund from Allianz, I lost money.

I can't blame them since the market is out of their control.But I will feel better if I am the one choosing the wrong funds. I will take responsibility for that.

The more of such news, I read the more I see the importance of financial literacy.

FT interviews George Soros Part 1 to 3

Part 1


Part 2


Part 3

Poll: Do you have enough money to survive the recession?

I ran a poll recently on the topic Do you have enough money to survive the recession?

The results are quite even. A total of 100 people have voted as of this post.

This weekend is a Monday

Image source: Focus in mind

Bad news, you know what I meant, the crisis and Singapore's heading for recession and possible unemployment in December. G7 coordinated efforts to calm the finanical markets. We will only know how well the markets respond when the market reopen on Monday.

I have already seen the glum in some of the people I know.

A former colleague called me this morning, "I have 2 hamsters to give away, do you want them?". Hmm...this bad huh. I don't keep pets, I have no time for them and I have no tolerance for pet poos. 

I can sing the blues now, not on a Monday but the weekend blues. I am lucky to have my salary increment recently but I am not optimistic about my bonuses, pragmatically, my company shouldn't pay bonuses at all.

I am looking at my own competitiveness now to increase my niche when the market recovers, I need to restructure myself, rejuvenate myself and refresh myself. Continuous upgrading is the key, like what the old text says "Change is the only constant".

The slowdown could be a blessing; it's time for further education.

Do I sound pessimistic here? I hope not.

Jim Rogers: Let them go bankrupt

Jim Rogers views on the bailout:

The current rescue plans, which will force governments to issue more debt, print money and flood the markets with liquidity, will flare up inflation after the crisis is over and will create worse problems, Jim Rogers CEO of Rogers Holdings, told CNBC.

"We're setting the stage for when we come out of this of a massive inflation holocaust," he said.

And the plans are unlikely to fend off a severe economic downturn, as the crisis starts affecting all walks of life.

"We had the worst excesses we had in credit markets in world history. We're going to have to take some pain," Rogers said.

"Many people bought four or five houses with no money down and no job.....You think we'll just say well, that's too bad, we'll start over and nobody loses their job? Be realistic."

"What about all the people in countries that minded their manners, saved their money, didn't get overextended and now all of a sudden they're being asked to bail out a bunch of guys on Wall Street who were incompetent at best and some of them crooks?"

"I thought it outrageous that anybody has to step in a bail out a bunch of 29 year olds driving Maseratis," he said.

There are not many safe havens in the volatile markets, he said.

"I have an enormous amount of cash and I've been using it to buy more Japanese Yen, more Swiss Francs, more agricultural products....There's a liquidation phase going on, where everything is being liquidated. They're selling everything in sight."

"In a period like this the way you make money coming out of it is to own the things were the fundamentals have not been impaired," Rogers added.

"I've been buying agricultural commodities. I bought some a couple of days ago. It's down today. It did not matter, I bought them. I covered shorts yesterday," Rogers said on CNBC.

Rogers told CNBC's Maria Bartiromo that the financial markets are in a liquidation phase. "Commodities are only thing that I can see that will not be impaired.

"The way to solve this problem is to let people go bankrupt," Rogers said.

"Then you will hit bottom and then you start over. The people who are sound will take over the assets from the people who aren't sound and we will start over. This is the way the world has worked for a few thousand years."

Gold is green

Proven. Proven. Proven. Gold is the evergreen investment.

For centuries, gold has always been the favourite among investors, kings, queens, emperors and pharaohs. Who doesn’t like gold? I know I do, I mean physical gold not gold certificates.

I prefer physical gold at least it’s tangible unlike certificates. I wanted a Canadian maple leaf bullion coin but gold prices have been svery bullish. I was totally put off by the prices.

But the bad thing about gold is that it doesn’t pay dividends or interest.

I am new to gold investment and I have lots of homework to do before becoming a serious investor in gold.

Financial crisis is like a public demonstration PART 2

The last part of Financial crisis is like a public demonstration, read Part 1 here. Let’s see some of the points I have raised in Part 1.

By the time, I post this Singapore is already in a recession in technical sense. 

The transition of emotions:

• Stage 1 - Enthusiasm
  
• Stage 2 - Excitement 
  
• Stage 3 - Frustrations
  
• Stage 4 - Hysterical
  

Stage 1 Enthusiasm – Market sentiments are usually a speculation of market reactions to rumours and news. Like it or not, even people with no vested interest in any counters join the pack because of the herd mentality. Which shares to sell? How’s the market performing?  In a financial crisis like this, it’s not hard to find people following the market news even if they usually don’t. Some individuals are ready to sell even at a loss even before another bad news trigger their decision to sell. They have read enough bad news especially when the media is giving coverage on the falling market everyday.

Stage 2 Excitement – As the sentiments gets worse, more sellers jump in to sell off their shares. The large crowds and the intense emotion attracted more dejected and worried shareholders. A negative excitement out of desperation.

Stage 3 Frustration – More bad news. Portfolio losses. The individual cannot understand how he could have incur so much of loses within a short span especially the investor whose investments are tie to sub-prime companies. The disappointment in financial products and financial markets guarantee the coming of mass selling and closure of investment portfolios. The ineffectiveness of capital injection will drive the market crazy.

Stage 4 Bloodbath in the market. Frantic selling at its height, worrying that the crisis may become unstoppable, investors start selling off their investments, they don’t care if they are losing money when they realised their portfolio, even though holding on could only mean paper loses and not actual loss - the hysterical sellers. They will sell at any price as long as there are buyers. Exit has no strategies; at this point it is totally useless to them, non-existent. 

Gone baby gone.

In Technical Analysis, this is called the Total Despair (what an unpleasant name but it sums up the sentiments in the market), confidence lost, gone case, “I am selling and I don't care if I am making loses”. You can't blame them, not everyone is financially literate, not everyone knows about paper lost, nobody cares if this is only temporary; they have to put food on the table.

The market cycle repeats itself again and again from bloom to doom vice versa caused by nothing but sentiments.

I will share this article with you

Written by Dennis Ng of Leverage Holdings.

The 5 Laws of Money (Gold). 

The book entitled “The Richest Man in Babylon” in my opinion, is really one of the “classics” in Personal Finance. 

It’s first published in year 1926, 81 years ago! However, what the book shares are “Financial Principles” which are as useful and practical today, as they were, when first published in year 1926. 

I’ve personally benefited from the book tremendously and applying the principles therein and have experienced improvement in my own finances. 

Cheers! 

Dennis Ng, http://www.HousingLoanSG.com 

The principles shared might seem simple. However, be really honest with yourself and check if you had “violated” some of the principles shared so far. Of course, the principles are not beneficial to those who think they already are very knowledgeable and have nothing to learn from others. 

They can bluff the whole world however, their own financial results will show whether they themselves are “financially literate” and really “know” what they proclaimed to know. 

A friend of mine said:”knowing and not doing it, is not yet knowing”. What he means is that you only know it if you’re applying what you learned. Knowledge is only POTENTIAL power. Knowledge is ONLY power when APPLIED. 

Below are written by me in Simple English, interpreting “The 5 laws of Money (Gold)” as shared in the book “The Richest Man in Babylon”: 

The 5 Laws of Money: 

1. Money comes gladly and in increasing quantity to any person who save at least 10% of his/her earnings (first step to Financial Freedom). 

There are only 3 Cashflow Scenarios: 

a. You spend more than you earn: This person has negative cashflows and likely to end up owing other people money (eg. credit cards, friends, relatives, loan sharks). 

b. You spend all that you earn: whether this person is earning S$2,00 a month or S$200,000 a month, he/she is still "Just over broke". 

c. You spend less than you earn (eg. save 10% of your eanings). as time goes by, this person will automatically get richer and richer. 

Which cashflow scenario do you want to CHOOSE for yourself? 

2. Money can work for you, if you become the “wise owner” of money and make money work for you. (note: you’re the Master, money is the slave, while many people are guilty of being slaves to money). 

We should Love people, use money. The sad thing is there are people who Love money and use people instead. 

3. Money will be safe and grow if you invest it wisely or if you invest under the advice of people who are wise in money. ie. investment knowledge is key to making money grow. You can either acquire Investment Knowledge yourself or you can invest money under the advice of people who have investment knowledge. 

4. Money will slip away from the man who invests it in businesses or investments with which he is not familiar or not “approved” by people who are wise in money. ie. Ask the opinion of those who are wise in money, they might be able to offer you information or advice that can prevent you from losing money. 

5. Money flees the man who falls into scams created by tricksters and conmen, who promise “impossible earnings”. One common weakness of human beings is "greed". Greed can make a person who is usually alert and smart "stupid". Greed can blind a man and is the main reason why financial scams continue to exist whether in ancient times or in the modern day.

Singapore in a recession, technically

The recession creep is here, this sneaky fellow smuggling into Singapore to cause havocs.

The first ime in 6 years since 2002. 6 years only? Good times never last. It takes only 6 years to go from bloom to doom. 

Singapore is the first Asian country to fall into a recession since the crisis started. Japan is teetering on one, and New Zealand slid into a recession in the second quarter for the first time in more than a decade.

We have to be the first remember? First in everything including recession, there is no way we are going to let anyone beat us to it. And we got it now. We are the first in the race.

Financial crisis is like a public demonstration PART 1

I see some similarities between the two. The sentiments are equally worrying. The herd mentality is contagious.  

Some demonstrations are peaceful while some turned into violent.

The recent financial crisis (I hate this word) is the worst since the Great Depression. I wasn’t born yet so I don't know how bad it is. During an interview recently, Warren Buffett said that he has never seen anything like this in his entire life, I bet there are a lot of people even the most seasoned investors have never in their life experience anything like this.

The transition of emotions in public demonstration are similar to what we have seen in the stock market. I won’t name all of them but the more noticeable ones.

In a public demonstration:

• Stage 1 - Enthusiasm
  
• Stage 2 - Excitement 
  
• Stage 3 - Frustrations
  
• Stage 4 - Hysterical
  

Stage 1 Enthusiasm - News of an organized demonstration spread like fire. Enthusiasts or the dissents will join the demonstration (Some emotions already exist or arise in the individuals before they join protest groups; while others are formed or reinforced in collective action itself), starting from a handful of protestors at the beginning to a larger group. More people join in and a predictable flow of behaviour will follow. The group gets bigger. 

Stage 2 Excitement -As the group gets bigger without interference, voices became louder (oh...unity is strength), the large crowds and the intense emotion attracted eccentrics as well as mourners and the numbers grow. Grievances became a norm; the group is ready for a march anytime. 

As the group grows, commotion becomes louder and it will take a deaf man to ignore them.

Stage 3 Frustration or angst - whichever you like. Demonstration usually take a few hours or maybe a day or longer, look at the Taiwan's demonstration to oust the President out of his office, it took days and hundred thousands of protestors. As time goes by, the protestors suffer from fatigue, hunger and thirst and bad weather will have a dampening effect on the psychology of the protestors. The frustration escalates especially when the objective of the demonstration isn't achieved. 

Stage 4, this is the nightmare, not desirable but unavoidable, the group turns hysterical. There several reasons to this behaviour: Fatigue and provocation from anti -riot police or instigation from fellow protestors.  And the worst case scenario: Authorities ignored the agenda of the protest sending the wrong message to protestors.

The crowd starts to vent their anger, perhaps a little violent will cause the authority to rethink their decisions?  The demonstration turns violent, turns into a riot ......

a bloodbath

PART 2