$760 million evaporating into thin air

A report by Gabriel Chen today in the ST says that GIC may stand to lose $760m in the gushing oil disaster in the Gulf of Mexico. GIC was noted to have 200.4m shares of BP worth around US$1.68 billion. With the fast crashing price of BP shares, and if the shares have yet been sold down, GIC could lose up to $760 m, and all, if BP go bust under a series of expensive lawsuits coming from the US. We cannot blame GIC for the loss of this investment. Neither can we blame them for many of the losses as the causes were not due to lack of due diligence. They were proper investment decisions made after thorough research before plonking down the money. The exceptions were those decisions made over a few days when white gods descended from heaven to ask for tithes. Act of god or fate, or just plain unlucky can happen to many investors. Sometimes the bad luck comes in a string. Everything touched turns into waste paper. The contrary can also happen when everything touched turns to gold, giving the monkey a chance to claim credits. We can only hope that this is not the beginning of a string of bad luck and bad investments. If it is, nothing can help and no experts and super talents can do anything about it. At times one must believe in fatalism. The worst case can mean a wipe out of the bulk of our foreign investments, if god willing. Better go and pray for more blessing and abundance.


Anonymous said...

Dear Redbean:

Good Morning to You and All.

Me just like to say that without the mishap, BP was a rock solid stock for all investors.

Unfortunate accidents do occur from time to time and me will even tells those related to victims killed by lightnings not to blame their gods or anyone for the fates of their loved ones.

Investors in BP cannot and should not be blamed for any incompetency, carelessness, neglect and lack of prudence.


Anonymous said...

Jinx: don't blame me hor...i never touch

Matilah_Singapura said...

There is nothing morally wrong with losing money in any investment.

The moral hazard here is this:

1. the govt corp loses money.

2. unlike privately held investment enterprises, no personal 'loss' is incurred.

3. the govt stays in business -- a private company might go broke after such a huge loss

4. the govt can aquire new funds simply by taxing the citizens -- a private company cannot -- it has to form 'new capital' the old fashined way: i.e. produce, sell and save

So any reporting of this loss is mere smoke -- there are no consequences for the people involved in making the decision. As for the citizens: they're the ones being fucked over.

Anonymous said...

Singaporeans deserve to be screwed by the Government they voted for.

Just bear with it and pay and pay, if you are one of those who did not do the right thing at the elections.

Chua Chin Leng aka redbean said...

Yes patriot. I also said so. This kind of things cannot blame anyone.

Only bad decisions, hasty decisions need accountability. And some bad decisions are so obvious and that need no explanations.

Wally Buffet said...

Walau, with this kind of money, we can have a reclamation project that will extend Changi Point into the South China Sea to house the hordes of foreign trash landing nearby at the airport.

This is really bizarre. I can imagine that there must be banks of computers churning out predictions at GIC and analysed by by imported foreign talents yet recruited at great costs. Yet, it appears that we did not act to sell the shareholding despite all the technical and fundamental indicators pointing to a precipitous fall in it's share price. If we like the stock so much, we can always buy it back for a pittance and save ourselves a pile.


Chua Chin Leng aka redbean said...

You forgot to tally up the rest like UBS etc etc.

Wally Buffet said...

I did not forget.

I forgave.

But this BP thingy is unforgivable.

We should learn from our mistakes and stay alert.

Anonymous said...

The mistake made here, is to plonk too much money into a business that is already known to carry much higher risk than others. This is reflected in the higher volatility of stock prices of petroleum related industry. SPC (delisted) fluctuate wildly and unexpectedly, and so are most mining companies.

Ever wonder why Warren Buffett never invest much in such companies?

Chua Chin Leng aka redbean said...

With western economies turning turtle one by one, investing big time now is like big time gambling. Just place your bets and hope for the best. But like all gamblings, most gamblers will lose big time.