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9/19/2011

How not to repeat investment mistakes

Fund managers with a lot of cash are eager to make a killing to show off their talents, plus earning big bonuses. The fact that they are paid a huge salary also makes doing nothing unacceptable. They must show that they can make a difference to justify their indecent pays. Sometimes, some investment professionals ran out of ideas and would even forget the mistakes of yesteryears. To want to prove their worth, cautions are thrown to the winds. Take risk, go for quick results, quick fixes, no matter how silly and hazardous the investment is, never mind, just hope for the best. After all, it is other people’s money. At worst, quit, take the severance bonuses and go for a rich and bountiful retirement. And if lucky, people will say how smart he is, money well spent, every cent of it.

If fund managers or finance professionals are not in a rush, there are many lessons that they could learn from, and avoid repeating disasters. Many who came before them have laid the walkways with their fiascos to warn the eager beavers not to do the same. Briefly, one of the things that one must not invest in is kindergartens. Never put big money in childish stuff. Big money must be invested in real solid businesses. Investing in brick and mortar is quite sound. Investing in blue chip banks too is a foolproof investment strategy. But never invest in companies that are losing money, including banks, no matter how great their reputations are or were.

Some fund managers are crazy about the Manchester United IPO. It looks like some jokers never learn anything at all, even mammoth failures that are too recent to be forgotten. In the first place, football clubs are nothing but another gambling outfit in a different name. If that is not bad enough, football clubs that are in debt of a few hundred millions must have raised a red flag. Those who are clamouring to invest in such clubs must either be genius or mad, like those who bought into Citibank and all the European banks. No fools would want to put their money in a gambling outfit that is losing money.

If anyone thinks that gambling is a good investment portfolio to have, there are plenty of casinos that are making millions annually, and even closing both eyes, putting money in money making casinos will be a million times saner than to put money in a football club deeply in debt.

And there are two casinos that are making great money at the doorstep. Why not put money into them if kindergarten is bad, if banks that are losing money are also bad? Why so adamant about a football club that is in debt of a few hundred millions? Why put money in a business that one has no clue about and has absolutely no control whatsoever? Why not MBS or Genting, when their businesses are more transparent and under close supervision and regulatory control?

It beats me. Maybe because Peter Lim attempted to buy a football club, and he being the man with the Midas touch, following him cannot be wrong. I will never ask any client to put money in a losing concern, and not a losing concern that is a football club. How could a losing money football club be a good bet when a losing money and reputable bank is high risk?

Are Singaporeans being made to bail out Manchester United? How and when will the club be able to earn that kind of money to pay back to the investors? If the club is capable of mismanaging to such a debt, could it do better? Who is responsible to ensure that Singapore investors are not pushed into another shit hole.

Unbelieveable! Who says it is difficult to find nitwits?

5 comments:

Anonymous said...

Think there is a constant need to increase the GDP growth number, and no need to worry about making mistakes - "Let the buyers beware" clause and they go in with their eyes "opened".

Just increase the GDP numbers, and that is it.

Anonymous said...

Who is there to control SGX? Is there a conflict of interest to bring in all kinds of questionable companies for listing to earn listing fees? Who is there to protect the innocent investors from being robbed?

Anonymous said...

u have a greedy sgx/bonkers to allow any kind of shit to be listed here. Doesn't matter that singaporeans lose money. Only impt that sgx makes money, Govt also happy cos gdp figures go up so the salary/bonus of impt pple also rocket to the sky

Chua Chin Leng aka redbean said...

More reason to ask for a referendum to sell Singapore.

Anonymous said...

Should be trader and not fund managers with a lot of cash. These two roles operates differently.