The badness of short selling

Short selling came to attention recently and the US even banned it for a short while. SGX did banned short selling which I find amusing for the reasons and the nature of it. SGX is only against naked short selling. But the big boys or anyone can short the whole market till kingdom comes if he has the ability to borrow scrips to cover his short position. Why is short selling bad? It goes against the principle of investing in stocks. Investors put money into stocks for its potential to grow. The better the company is managed, the better chances that it will make more profits to reward its shareholders, thus leading to higher share prices. With short selling, the fundamentals of share investment have changed. It becomes gambling. The funds are saying that they can make money by buying or shorting the market, regardless of fundamentals. It is no longer whether the company is good or bad. Good company can still be shorted and its price forced down by short sellers to make their profits. How so? Over the years, many small investors have lost their money in the stock markets for many reasons, a shrinking economy, too many stocks, too many derivatives, too little money and of course short selling. We have reached a stage when there are just not enough small investors in the market for fair play. And the shortists, mostly big funds and house traders, have unlimited resources to short out the buyers. The one who who is able to keep on buying or selling wins. This is the game in the market today. Even very sound companies are not seeing their prices moving up. They all fell victims to this new gambling strategy. When there are few small investors buying, the big boys just short and force them to sell at a loss. Investors beware. Only when the big boys start to buy up the market will the stocks run up. But there are no one buying the market except the small investors. And they are either stuck for the very long haul or have to cut losses and get out. This is the new game play.

Greed is fine.

Greed is fine. It's stupidity that hurts This is the title of an article by Steven Pearlstein in the Sunday Times this morning. I find the article of particular relevance to what can happen to us in the mirror of Wall Street. Read the article by substituting the words 'Wall Street' with the word 'paradise' and the similarity is remarkable. ...The big problem with 'paradise' isn't that it's greedy....the masters of finance start our with reasonably good products and good intentions, only to get swept away by their success. They become arrogant, take too many risks and begin to believe their own marketing spiels. Then, when the cycle turns against them and the risks turn sour, they try to cover everything up and begin lying to their customers, to regulators and to each other.Trust erodes, and the whole thing collapses. In the populist 'greed' fantasy, it is ordinary people who are the losers while the 'paradise' big wigs walk off with all the loot. Where is greed in paradise? You find there everywhere. The landlords just keep raising their rentals. The market can afford it. It is free market at works. Who pays? The property prices are at high heavens. Not the cost was running to heaven. It is the add ons called profits. How much profits depends on how the market is willing to pay. And who pays? If a HDB flat is built on a $50k construction cost, plus $50k land cost plus $50k technical cost, should it be sold at $500k or $600k? Why not $300K? Why should someone pay $500k to die in a world class hospital when he could die free at home? Why should a few medical checks or trials and a few visits by a consultant be $20k when the cost of equipment used and medicine, plus staff attendance may be less than a couple of thousands? Is it that being world class, everything must be paid world class prices? Don't forget that 90% of the people are not world class and many are just trying to make ends meet.

What a great idea

Recruit men from Nepal! Our police force and immigration officers are overworked. Many are leaving the services. There is a shortage of manpower. Why not recruit the men from Nepal to solve this shortage and make these services more efficient, and of course, at much cheaper cost. This is being suggested by Ravi Govindan in a letter in the ST today. And we can replace or reinforce those officers in Certis Cisco and Aetos as well. For such a great idea to deserve a big corner in our main media it must have be something worthy of consideration. And there is no shortage of supply to oursource these services to foreign mercenaries. If Nepal cannot provide the numbers we need, we can go for Bangladeshis, Indians and Chinese. Then we can free our highly educated local Singaporeans to take up better paying jobs. And if this proves successful, we can even recruit them for our armies and scrap National Services. The Singaporeans will be jumping for joy to leave the guarding of the country to foreigners and no more reservist duties to bother them. The hotels are doing very well engaging private agencies to run their security system. If hotels can do that, then there is no reason why a bigger hotel like Singapore cannot. Let's go for it.

A time to change

There is a tinge of sadness with the passing of JBJ. And there will be a little ceremony in memory of him at the Hong Lim Park this evening. Among political observers, there is a big load of mixed feelings when they look closely at JBJ and the path that he travelled, battered and trampled, in the pursuit of a cause and to lead the people forward in a different way. These are noble and honourable goals which every able Singaporeans should aspire to. JBJ could have chosen a different path, in the pursuit of material wealth, and he could be very successful as a practising lawyer. Instead he ended up in the pathetic state he was in, as a politician on the losing side. How could our political system that is supposed to throw up leaders to lead the people be so cruel, vicious and unkind to political aspirants? They are not criminals or people who want to destroy the country. They stand up to provide an alternative to the people, to offer a different way forward. The people are fortunate to have these men offering them more alternative ways. The country can be richer and benefit from more political aspirants making themselves available to serve the people. Politics need not be a zero sum game, need not be an arena for gladiators to fight and kill or maim one another. It is the highest office of the land and the rules of the game must be that of noblemen and gentlemen. And participants, winners or losers, should remain honourable, highly regarded and well respected by the people, and least of all, remain as worthy opponents and colleagues, if not even friends. There were too many bad blood being spilled in the political arena over the years through a culture of robust demolition of political opponents. The aim is to maim and destroy at all cost. The losers must not be left standing. Such a vicious culture has no place in a developed society that we aspire to be. There are great models of political culture and conduct in the West for us to imitate and adopt. In America and Europe, you do not see the extent of helplessness in defeat in the losers of an election. Life goes on and winners and losers continue to enjoy their social and economic lives without any acrimony. It is time to change, to redefine the rules of engagement in politics, to be more gracious in speech and in actions, to embrace political opponents as worthy adversaries and also as peers who can join you with a mug of beer when the jostling is over. The sadness that is being felt now, this evening at Hong Lim Park, should be a turning point in our political culture. Let this be the last sad story in our political history and be a new beginning, that politics is an engaging ambition for good people to step forward to serve the country in grace and humility. Let the winners and losers all be happy people, giving due regard and respect for each other. And on the passing of an elder statesman, be an occasion to relive the good memories of the past and comradeship. We deserve a better political system and culture for the good of everyone.

The first wrong turn

When thrift was punished. Can you believe it? This was the first wrong turn when propriety gave way to greed. When my generation was children in schools, we were encouraged to save by buying stamps, one stamp a day or a week, or even a month. Then we pasted the stamps into a book and when the book was full, brought it to the post office for entry into our savings account. We were encouraged to save, 5c or 10c at a time. Then some wise guys decided that small savers were a waste of time. Big banks didn't need savers that brought in 10c or 20c. No, not even a few hundred dollars. The big banks had no time for small people. So they made the small people pay a fee to keep their money in the banks which were meant for big and rich people. In other words, small people should not waste the time of big banks and bring their small money elsewhere. I lost my $200 in a deposit account which I forgot totally. too many accounts. Actually it was a leftover of an investment account. The bank just kept deducting the monthly $2 fee until it was empty. And they did not see it as their responsibility to rob me of my money. Happily they took my money away. This was the first sign of rot in a society when thrift was punished. If I am not mistaken, a local bank is rewinding the clock and is encouraging the children to open savings accounts again. I hope they do not charge them administrative fee if the amounts in the savings accounts are too small. Good riddance to greed and greedy men.