Another myth in the making?

Ho Ching's proposal to invite the public to co invest with Temasek has been receiving quite a lot of approval and favourable comments. At face value it looks like another great proposal for investors to grow their nest eggs. But before people plonk in their hard earned savings, they better think very carefully as investment is a high risk enterprise. The higher the returns, the greater the risks. Not very long ago, there was this great scheme called COWEC. It is a company welfare scheme where employees and companies joinly contributed to the fund to invest in stocks with the belief that stock investment was a sure win game in the long run. It was supposed to guarantee a higher rate of return than the CPF. It is now history. The same crazy belief also reemerged in the early 1990s when all the clever analysts and investment experts were churning out reports on how great investing in stocks and shares were against all other instruments. In the long run, investing in stocks will generate the highest returns compare to other forms of investments. This faith led to the release of CPF funds for stocks and shares and a kind of frenzy when every CPF contributor had a stock investment account. Again it became history when many of them lost their nest eggs, contributing to the miserable state of our CPF savings. Would co investment with Temasek lead to the same fate? Can investment guarantee a safe and high return? The fact that the CPF Life scheme has an escape clause in case the fund becomes insolvent speaks for itself.

Chok Tong's 10 challenges

Chok Tong has thrown 10 challenges to the new political leadership as we celebrate 44 years of dynamic progress and economic growth. What I feel is that Chok Tong is unduly worried. There is no cause for concern if one reads the comments in cyberspace, the home ground of dissent, dissatisfaction and cynicism. The criticism of the govt were all very superficial and lacks dept. Many were just simply kpkb, with no substance. How could one call it a genuine complaint or hardship when one needs to pay 20c more for a service or $10 more for goods? Fortunately these are met by the real and genuine responses from contented Singaporeans who are very grateful for what the govt has done. We have progressed in leaps and bounds. And many Singaporeans can be proud to tell the world how expensive are their houses/flats and cars. Their homes will appreciate in value every few years, maybe doubling in value every 5 to 10 years. With this kind of progress, even living in the same 1000 sq ft unit, no Singaporeans would mind. All they want to know is that their homes are getting more expensive and another sucker will be queuing up to buy from them. Then they themselves can upgrade to another 1000 sq ft unit and pay double the price for it. Another sign of progress, to be able to pay for ever more expensive housing or the same size or smaller. For those who have made enough, they could downgrade into a 1 rm rental flat and live happily ever after.

Are Singaporeans really that crazy?

We used to pay $30k for a 1,300 sq ft HDB flat. Today, people are queuing up to pay half a million or more for a 1000 sq ft little pigeon hole in the air. And everyone is so happy about it. Don't they know that it will take them a whole life to pay to be cooped up in that little space when a big sprawling house could be had in other places for much less? What is so great about a little space dressed up like a hotel room, a place to sleep, a place to pee and eat, and a TV to watch. And that is about all for $500k to a million. And the best part, everyone is expecting to make a handsome profit when they sell that little space to the next sucker. What kind of quality of living are we getting into? Work like shit for life to pay for a little place to sleep and shit and getting so excited over it? Do Singaporean ever ask whether life could be better, less stressful, less work, more leisure and fun and space to run around? Or this is what good quality living is all about?

Bravo, Great Eastern

If we want to know what is being responsible and trustworthy, look no further. The name is Great Eastern. As a follow up to the Lehman minibonds and Pinnacle notes debacle, Great Eastern has voluntary taken the step to payback every cent its clients paid for a similar product. This is quite embarrassing to the other renowned and reputable organisations that were involved in the fiasco and refused to compensate fully or compensating a pittance. The whole episode and the pathetic handling of the cases with consumers having to fight tooth and nail to claim back their losses said that there is an urgent need for a truly independent body to protect consumer interest. Unfortunately, with the overlapping of roles and interests, and personalities involved, such an organisation is practically impossible to find, not that it cannot be formed, but there is no political interest to have one. The web of being connected is amazing in this little dot. The minibond saga is like all the organisations are banded together on one side and the consumers, the little people, on one little miserable corner with a gungho maverick in the form of Tan Kin Lian as their defender. it is an ugly sight like in the Miserables.

New chief at SGX/Building castle on shifting sands

Magnus Bocker has been recruited from New York, the finest financial centre of the new world. He was the President of Nasdaq OMX. I am not going to belabour the foreign talent or lack of local talent debate. I am looking at this appointment and what direction is the SGX heading? Having a foreign head with a wealth of experience in M & A of stock exchanges, like Chip Goodyears experience in commodities, can we expect that SGX will be heading in this direction, more mergers with other exchanges? The concept is brilliant, as brilliant as the acquisition of huge international banks. The disastrous failure of the latter was due primarily to bad timing as well as buying rotten apples without knowing it. We do not know what we are in for. In the case of growing SGX into an international financial centre in the league of NY, London or Tokyo, my fear is that we are taking too big a bite that we could not swallow. The way the current stock market is running is a case in point. Without a critical mass, a big and sustainable local fund, and relying on an over representation of foreign funds, we are completely at the mercy of these funds. When they are in, we all laugh to the banks. When they decide to pull out, we will be caught high and dry. There is no escape, and many local investors, no matter how big, will be hanged by the cleaners. Their investments can be totally wiped out. This has been our experience. Are we blind to it and still think that this is the way to go? Think big but not too big. Or should we take a step back and ask ourselves whether we should know our strength and weaknesses and play at a level that we can manage and control with lesser risk? Look at our football league. This is what we are and where we will be. Don't deceive ourselves to think otherwise unless we are prepared to throw our money away. The international funds are rich and have plenty of money, but they are very mobile and not only that they will move their funds at will to where the opportunities are, they will exploit the weaknesses of the local market and investors and clean everyone out if they can. Do not play with danger that we cannot control. The minibond saga, the failed investments in foreign banks and in anything foreign, the Scam chips, Malaysian chips, are painful lessons that we must learn from. We are not smarter than them. If we go this way, the biggest disaster that will come our way will be the collapse of the stock market.