Myth 192 - The myth of top brand and reputation

Lehman Bros has more than 150 years of track record. A highly rated investment banks staffed by some of the best brains money can buy. And they were all paid damn well, many, not ten or twenty, were driving Ferraris and owning several multi million dollar castles in the US and in retreats across the globe. Working in Lehman Bros is like having it made. And their products were A rated and sold across the world. The more they were sold, the more credibility they earned and the stronger is the brand name. No one expects Lehman Bros to collapse. No one expects its products to be flawed. The only organization here that can match the reputation of Lehman Bros is Singapore Inc. Though it does not have the long track record, it is staffed by the best men and women, proven to be the best, thorough, hardworking, transparent, incorruptible etc etc. In other words, the brand and reputation alone will bring confidence that it will not fail. Whatever it does, its services and products are unquestionable. Today, not only Lehman Bros has fallen, Merrill Lynch, Goldman Sach, Morgan Stanley, Barclay, UBS, Citibank and a lot more big names with big reputations have fallen to the wayside. In terms of reputation, brand, expertise and capitalization, none of our local institutions is in their league. Some big local institutions are also going to be dragged down, despite their big reputations. Can we live and trust on brand names and reputations alone? When the people change, the ideas change, the values and products change, the brand, the mission change and the reputation must also change. When good people have left, when bad ideas and values replaced the good of the past, the goods and services will not be the same again. Sometimes the changes are incremental and small and are difficult to detect. But change is taking place. You want proof, call Lehman. One can choose to continue to believe that nothing has changed. Refused or cannot see the changes. Everything is fine. One can also be frighten, be very frighten, when one is perceptive enough to see the rot within. To each his own belief. But surely there will be many Lehmans to come along.

You want to be rich?

You want to have big house, big pay, world class transportation? Sure, who will say no to such offers? Saying yes is a natural response. But be careful, be very careful. Read the fine prints. This was exactly what happened to the retirees who converted their FDs to minibonds. You want higher interest? How can anyone resist such an offer. But they did not hear the whole story. There is a price for everything. There are consequences. You want growth, pay your price. More foreign workers to compete for facilities and fresh air. They need all the living space as much as we do. Growth also means higher cost for everything and many more. Don't just simply accept a statement at face value.

Time to change beneficiary in CPF

In the past it is normal to name our spouses as the beneficiaries to our CPF savings. With all the new changes to how we can withdraw our CPF savings and how we cannot withdraw them, naming our spouses as the beneficiary is becoming irrelevant. Quite a number of CPF holders will die together with their spouses, if the projection is correct, in their late eighties. What this means is that our spouses will not inherit our savings. Also, a huge sum of our savings will not be used even after we pass away. It is thus necessary to name our children or maybe grandchildren as our beneficiary. Our children may be too old by then.

The buck stops here! Blame the RM

All the fingers are pointing at the Relationship Managers for the fiasco of the minibond sales. They are the devils. Watch them, put them under the microscope, charge them, sue them. How convenient. And very familiar too. Does anyone want to ask who designed the minibonds, who did the clearance and approved these bonds for sale, who worked out the strategies to target the retirees? When the product is a problem, why blame the salesmen? These salesmen were released into the market to make their sales pitch and conclude deals. The more successful they were, the more they will be rewarded. Come on, this nonsense of going after the lowest rung in the pecking order must be stopped.

Is the stock market another casino

In many ways people may generalize the stock market as another casino where people place their bets and ended up win or lose. But the stock market is not meant to be that way. It has a different reason to exist. Investors buy stocks of good companies to grow with the company, earn dividends and benefit from the rising stock prices. Companies list in the stock market to raise funds for its own growth, business developments and expansion. And the stock market behaves according to some business rules and cycles. Well managed and profitable companies will see the values of their stocks going up and vice versa. Some investors will buy stocks to be kept as long term investments after careful research on the fundamentals and prospects of the companies. But when these principles are ignored or been made irrelevant, and when the prices of stocks no longer behave as they should but being manipulated with no respect to their fundamentals, something is seriously wrong. Yes, it is no longer a stock market but morphing into another kind of casinos. And this is exactly what is happening to our stock market. And this will lead to its demise in time to come. There is an urgent need to return the stock market to its fundamentals and to serve its original role as a market for the companies to raise funds. Failure to do this is criminal. The design of the stock market, the mechanism that determines its price movements, must be fair to all investors and the companies listing their stocks in the market. If the mechanism is unsound, unfair, then caveat emptor is not enough. Just like the minibonds, if the product is unsound, here to read if the mechanism is unsound, you cannot blame the investors or even the relationship managers. The problem is at the source. The designer of the product or the system must be held accountable when investors fell victims to unfair practices, exposed to undisclosed and unacceptable risks. As a financial centre, we need a sound stock market, not a casino. The stock market must function as a stock market.