Saturday, January 24, 2009

If you are feeling poor…

Yesterday somebody lamented in the office that he is really poor. Markets are bad, bonuses are low and prices are not coming down.

An interesting conversation ensued:

Me: You sure you are poor??

Colleague: Of course!!

Me: If I were to give you half a million dollars, would you give me your arm?

Colleague: No lah!

Me: Okok, what about a million dollars for your eyes? Good deal right?

Colleague: 2 millions I also won’t give!

Me: You are very rich what! Give you 2 million also don’t want!!


Recently I just had my medical check up and I was given a clean bill of health. It made me thankful that I do not have to worry about my well being and potential hefty medical bills. If you have read about Chew Chor Meng, I am sure he is willing to give up all his fortune in exchange for good health.

Counting my blessings

With the financial crisis unfolding with no end in sight, Singapore is bracing for -5% growth. Seriously, life for me has not changed much other than feeling poorer. I still have my regular gym exercise and weekly restaurant indulgence. In fact, I just went for my spa today and will be signing up for a new package when it expires in March.

Although I do not exactly love my job and bosses, I still command a decent income and stable job which will allow me to afford my $800 monthly Masters tuition fees comfortably.

My parents are still alive and in good health.

My car is still in good shape and the major cost incurred so far is changing the 3 year old battery. It still sprints like a jaguar every time I floor the accelerator.

I do not have a legal suit to bother me.

My bills are all paid on time and I am not in debt.

I have no relationship problems to bother me and can sleep like a log daily.

I have clean water conveniently from the tap.

I bath with heated water and sleep in air con room.

Is life really that bad?

Yes, everyone is expecting the recession to be really bad, but do stop feeling down and complain about life. Have life really changed for you? Or are you just bothered by the numbers in your bank and CDP account?

No point blaming yourself for incurring losses. We know the market will recover in time to come. Rather, take some time off and look at things that you have forgotten during your pursuit of wealth.

Money really is just numbers in one’s account. I wouldn’t spend much more if STI is 4,000 now or 1000 tomorrow.

The only noticeable difference is between “feeling rich” and “feeling poor”.

But remember, life is not merely about numbers. Try to look beyond that and magnify your optimism.

So do not feel that it is the end of the world. Life can still be great if you choose it to be!

Wishing my readers a happy Chinese new year!

Saturday, January 17, 2009

Back to school!

I have finally enrolled in a Masters in Applied Finance this year! The letter of offer was signed and school fees paid yesterday.

This marks the beginning of an end of my current career and the commencement of a new path.

The choice of schools and master degree courses started last November and was narrowed to a reputable local institution. I have to consider between costs, academic tenure, possible sacrifices, standing of education institution, my future career path, Singapore’s future, current work commitments and my ability to cope with studies.

Initially I wanted to study in Australia, however the minimum period was 1.5 years and it will cost me at least $60,000 to complete it. After factoring the opportunity costs, it will add up to at least $160,000. Hence I decide to pursue my Masters on a part time basis. It will take at least 2.5 years to complete the course and I will be starting in February.

I could have studied in an extension field of subject from my first degree. However, as finance was my passion for the past 5 years, it seems a natural progression for me to study in this field. In fact, given a chance to start all over, I would have given up my scholarship and read Finance in the University.

Well, it is better late than never for both studies and investment.

I will have to keep studying a secret from my boss and colleagues as I do not want to be condemned as a traitor to my specialization and be seen as just the next sucker being lured by the allure of money.

The good thing to study during a financial crisis is that there is really few interested to study it! Class size will be small and tuition fees are unlikely to go north. I heard my first module has less than 20 students. I can always have the first opportunity to discuss with my lecturers on the latest development of the financial crisis. I like that!

Meanwhile, I need to condition myself to be content with less and cope with more.

There will be less leisure time for tv, sports, gym, dates and even blogging. I need to save more money and hence will have to cut down on restaurant outings, gadget indulgence and spa.

I will also have to plan my schedule more carefully, so that my work will not be noticeably affected by my studies. I cannot apply leave to travel overseas for extended period of time as I need to conserve leave for examinations preparation.

It takes a huge amount of energy to overcome the inertia to submit the application.

There will be more stress from grappling with work, financial commitments, bear market and studying.

I am sure I can overcome it. Afterall I am just aspiring to complete the Masters in Applied Finance, and not be the Masters of Universe!

To the new year, cheers!

Wednesday, January 14, 2009

SPH Q1 results

SPH reported a 35% drop in 1Q net profits this week. Its share price started to price in the news 1 week prior to its results release and have been a downward trend ever since.

Is there any cause for concern for investors to cut loss? Will there be a dividend cut? I would like to share my take on SPH’s fundamentals and outlook.

Basically, SPH unexpected loss came from its investment portfolio. It has a marked to market (MTM) loss of $34M. Though I might be wrong, I do not believe the paper loss on its funds will directly result in a reduced dividend payout. For instance, my cash flow (salary) per month is $4000. After accounting for MTM losses in my investment portfolio, I am losing $8000 per month.However, I still have $4000 to pay myself, parents, bills and other expenses. I do not need to fork out $4000 to pay my investment loss.

Similarly, SPH do not have to realise its investment loss, unless they are borrowed funds. Records show that it has a $1B investment portfolio.

Paper loss (MTM) and free cash flow are not to be read under the same light. This explains the increased of cash at bank from $30M to $43M and fixed deposits from $180M to $397M, QoQ. There is an increase of $60M in cash and cash equivalents, YOY. (Part of it should come from the $150M loan capital.)

The Q1 result was a reflection of September to November 2008 financial results, when Lehman brothers collapsed and AIG was nationalized. Investment gains were at the ebb in this period. SPH Q2 results will likely to fare much better.

Historically, SPH pays its dividends from its recurring profits, (which is up 1% or $127.8M) and not from its investment portfolio.

That said, SPH 35% decline profits for Q1 has resulted its share’s price to drop 35% from $4.40 (conservative fair value) to $2.85. I estimate SPH to declare a minimum of 20 cents dividends in 2009 (6 cents in 1H 09, 14 cents in FY 09). The yield is a healthy 7%.

I will not be selling my stake in SPH as it would yield me more than 4.5% at my purchase price. Market would definitely recover eventually. Hence, I will continue adopting my passive stance on my portfolio.

I expect more bad news streaming in. Just read online that Ezra’s 1Q 09 profits have fallen over 90% to US$ 9M. Superbowl has warned of 2008 full year loss.

More bloodshed ahead.

Friday, January 9, 2009

DBS Rights decision

I have sold 500 DBS rights for a good price of $3.92. It has reduced my average price of DBS to $17.47. My next entry price to purchase DBS is around $7. It is acknowledged by many that the market will go down lower till the first half results are out. In my opinion, market may only bottom towards the beginning of 2010. So I see more benefits in being patient, since I already have a good stream of dividend income and will be accumulating more cash to pick up future bargains.

Major economies are heading towards recession and Singapore will only recover when the rest of the world recovers FIRST. Hence, although I run the risk of missing the market bottom, I would prefer to invest when I believe the markets have truly bottomed. Then, I will be more inclined to buy and hold instead of selling away my newly bought stocks to earn a few percent.

Sunday, January 4, 2009

Good article by Dr. Lee

My house is shabby, but it is comfortable

By Lee Wei Ling

In 2007, in an end-of-year message to the staff of the National Neuroscience Institute, I wrote: 'Whilst boom time in the public sector is never as booming as in the private sector, let us not forget that boom time is eventually followed by slump time. Slump time in the public sector is always less painful compared to the private sector.'

Slump time has arrived with a bang.

While I worry about the poorer Singaporeans who will be hit hard, perhaps this recession has come at an opportune time for many of us. It will give us an incentive to reconsider our priorities in life.

Decades of the good life have made us soft. The wealthy especially, but also the middle class in Singapore, have had it so good for so long, what they once considered luxuries, they now think of as necessities.

A mobile phone, for instance, is now a statement about who you are, not just a piece of equipment for communication. Hence many people buy the latest model though their existing mobile phones are still in perfect working order.

A Mercedes-Benz is no longer adequate as a status symbol. For millionaires who wish to show the world they have taste, a Ferrari or a Porsche is deemed more appropriate.

The same attitude influences the choice of attire and accessories. I still find it hard to believe that there are people carrying handbags that cost more than thrice the monthly income of a bus driver, and many more times that of the foreign worker labouring in the hot sun, risking his life to construct luxury condominiums he will never have a chance to live in.

The media encourages and amplifies this ostentatious consumption. Perhaps it is good to encourage people to spend more because this will prevent the recession from getting worse. I am not an economist, but wasn't that the root cause of the current crisis - Americans spending more than they could afford to?

I am not a particularly spiritual person. I don't believe in the supernatural and I don't think I have a soul that will survive my death. But as I view the crass materialism around me, I am reminded of what my mother once told me: 'Suffering and deprivation is good for the soul.'

My family is not poor, but we have been brought up to be frugal. My parents and I live in the same house that my paternal grandparents and their children moved into after World War II in 1945. It is a big house by today's standards, but it is simple - in fact, almost to the point of being shabby.

Those who see it for the first time are astonished that Minister Mentor Lee Kuan Yew's home is so humble. But it is a comfortable house, a home we have got used to. Though it does look shabby compared to the new mansions on our street, we are not bothered by the comparison.

Most of the world and much of Singapore will lament the economic downturn. We have been told to tighten our belts. There will undoubtedly be suffering, which we must try our best to ameliorate.

But I personally think the hard times will hold a timely lesson for many Singaporeans, especially those born after 1970 who have never lived through difficult times.

No matter how poor you are in Singapore, the authorities and social groups do try to ensure you have shelter and food. Nobody starves in Singapore.

Many of those who are currently living in mansions and enjoying a luxurious lifestyle will probably still be able to do so, even if they might have to downgrade from wines costing $20,000 a bottle to $10,000 a bottle. They would hardly notice the difference.

Being wealthy is not a sin. It cannot be in a capitalist market economy. Enjoying the fruits of one's own labour is one's prerogative and I have no right to chastise those who choose to live luxuriously.

But if one is blinded by materialism, there would be no end to wanting and hankering. After the Ferrari, what next? An Aston Martin? After the Hermes Birkin handbag, what can one upgrade to?

Neither an Aston Martin nor an Hermes Birkin can make us truly happy or contented. They are like dust, a fog obscuring the true meaning of life, and can be blown away in the twinkling of an eye.

When the end approaches and we look back on our lives, will we regret the latest mobile phone or luxury car that we did not acquire? Or would we prefer to die at peace with ourselves, knowing that we have lived lives filled with love, friendship and goodwill, that we have helped some of our fellow voyagers along the way and that we have tried our best to leave this world a slightly better place than how we found it?

We know which is the correct choice - and it is within our power to make that choice.

In this new year, burdened as it is with the problems of the year that has just ended, let us again try to choose wisely.

To a considerable degree, our happiness is within our own control, and we should not follow the herd blindly.

The writer is director of the National Neuroscience Institute.

Send your comments to

SBC says: Dr. Lee has demonstrated very clearly in her essay that money doesn’t buy happiness, at least for her. Wealth is measured by who you have, not what you have.

Living simple and not stumble to the allure of material goods is tough, especially when everyone around you has that LV handbag, drives the continental badge car, lives in posh condominiums. Then, do you buy your next branded item because you want it or because you have to keep up in order to avoid feeling like a loser?

To equate money making with pursuit of happiness is myopic, yet isn’t everyone around you doing the same thing? There is little way to get out of the equation, unless you are born rich.

Then perhaps the next happy question is: How to get richer?