Coming to terms of being a loser

This FT smashed his $1.5m limited edition Ferrari to prove how good he was in road racing, so it was reported. Though he killed three innocent people in the process, he hit the newsstand as a young and handsome, successful and rich foreign talent. And they even ogled at the wealth he left behind, a luxury BMW, multi million dollar condos. Who cares where the money comes from? It was reported that he was a very clever investor and made his own fortune. Though there were suggestions of mafia links and money laundering, these were not important in a city state that worshipped success in terms of money in the bank account. More of such successful talents would be welcomed to shore up the property prices and the COEs.

At the other end of the spectrum, there was this retiree lamenting and complaining about a hefty $83 bill he was served with at the Alexandra Hospital’s A&E department. He was also unhappy that the parking fee came to a whopping $6. How could the hospital charge $6 for parking.

The widening gap of the rich and famous living it up and the losers trying to make every dollar counts, no longer making cents count as cents were practically worthless, is raising its ugly head. Throw a few coins on the road no one will bother to pick them up. Throw it into a beggar’s hat and he would frown.

For the loser retirees, they have yet to come to terms with living in a first world city state among the rich and famous when a tip to a doorman could be $50 and to a nice waitress could be more than enough to pay for the hefty hospital bill with plenty of change left. If the retirees are living on their pensions, sorry lah, unless the pension is millions of dollars which some privileged yodas are getting.

A $100k COE is simply peanuts. A few million bucks for a private property is small change. Where did the money come from? The money seems to be floating everywhere, as abundant as hell money. The moral of the story, as told by the elite, live within your means and stop kpkb.

Wealth creator versus wealth manager

Ngiam Tong Dow has spoken of the need to have more wealth creators instead of wealth managers. One is creating wealth and the other is just managing the wealth. He made a false assumption that wealth managers are there to manage the wealth, ie to ensure that the wealth will be there or at least not depreciating. This assumption has proven to be drastically and painfully wrong if we look at the bigger picture especially those coming out from the US.

Many wealth managers are basically gamblers. They are just placing chips everywhere and hoping that there will be more winners than losers. If only their books were to be opened, many owners do not know the truth until the hole is too big to fill.

In reality, many wealth managers are actually wealth destroyers. Yes wealth destroyers. The first thing they do is to demand to be paid a ransom. And whether they deliver or not is not guaranteed. Most will try their best to do a good job. And when the chips are down, when the losses piled up, they take bigger bets and bigger bets, hoping that lady luck will smile on them for once. If not, just too bad. It is other people’s money on the table. They do not guarantee any winnings. The only thing that is guaranteed is the ransom that they will be paid.

Wealth creators, wealth managers and…wealth destroyers. The first is real. The latter two are interchangeable.

The temptation of Hougangkia

For more than 20 years, Hougang was like a step child, abandoned by the establishment and left to fend for themselves. They soldiered on under the leadership of Low Thia Kiang. They literally bit the bullet and accepted their fate, that for some reasons, they would be at the end of the queue for any goodies or handouts. They stood their ground. They were resolute and committed to what they believed in. Today, the pride of Hougangkia and their resoluteness are being tested.

A handsome man came along with a pushcart of abalone porridge or the best free porridge one could find. And he is yelling, this is only the appetizer. Yield to his master and he will rebuild Hougang and improve the lives of all Hougangkia. He is so confident that he could do a lot of good to the band of drifters. No one has yet to ask him where is the money coming from. Everyone, including the young man, takes it for granted that the money will be there to turn Hougang into a Disneyland.

Will the knees of Hougangkia turn soft to the temptation? Will the step child turn into the favoured child of the favourite concubine? That is what Hougang will become if the young man is elected as their representative in Parliament. Hougang will be the new favourite child and bestowed with all the sweets and candies in the candy shop. And Hougang will be represented in Parliament and their voice will be heard.

The last nail going in

We used to have a healthy and vibrant stock market and a finance industry supporting several thousands of professionals and supporting staff. The market used to be plodding along happily in its own steam with steady growth and an envious reputation of a successfully run system. This was despite the fact that it was a very small market with relatively small number of stocks and small number of investors.

There were some unique features in the system that allowed the stock market to function the way it was, punching above its weight like they used to say. The market thrived on volumes and demands over supplies. Where were the volumes and demands coming from in a small city state? There were two unique features that made this possible, remisiers and contra trade. The former took on the role of ‘ah long’, taking high risk, to extend credit facilities to their clients which no banks would want to do or allowed to do, too risky and without collateral. But it worked most of the time, based on trust and knowledge of the client’s ability to pay for losses. This allowed the clients to trade many times more than they were able to without being limited by upfront collaterals or cash deposits. It worked. The market was alive.

Contra trading also facilitates liquidity in the market. Clients could take positions and settle the differences when they squared off their positions. It used to be more than 14 days, and that gave the clients more room to manouvre. The longer the exposure, the greater would be the risk, but also more chances of market changing positions. In a way contra trading played the same part as remisiers in allowing clients to take bigger and more positions than they were able to if trading is restricted to money upfront. For a small pool of investors in a small city state, contra trading allowed the trading volume to appear tens or hundreds time larger.

Between the credit lending role of remisiers and contra trading, the market was able to trade with much more volumes than it could otherwise do. Doing away with remisiers and contra trading would be like knocking in the last nail to send the stock market into the incinerator.

No, apparently the smart alecs don’t think so. They believed that there is no need for remisiers and trading could be done online by computers. The shallowness of such stupidity has proven itself, and online trading is still standing on the high pedestal as a white elephant, too high cost to operate and for too little return. And there were all the other factors that made online trading ineffective and unworkable as a business model. It is history. It is also a reminder of where the market will head if people with little knowledge of how the market works make the decision. And there will be people who know but kept quiet, follow orders as long as they are paid, and do the master’s will.

The next attempt is to do away with contra trading. It is too risky, reduce the duration of exposure. Traders still have 5 trading days to square their positions. And there is no collateral, too risky. There were bad cases of bad debts. This too must be taken care of. Margin trading could be a solution. Better to do away with the remisiers altogether.

In all businesses, there were risks involved and bad debts could be incurred. So far, all the bad debts were manageable and were part and parcel of the business. The bad debts were not in the proportions of hundreds of millions, billions or tens of billions like the losses of well managed funds and banks. If bad debt is such a serious concern, all the big funds and banks should be closed down or not be allowed to take those risks. How come their colossal losses were acceptable as part and parcel of risk takings and taken in their strides as clever investment strategies but losses of small investors were unbearable? How come the few millions of losses by a few individuals in an industry of a few hundred thousand players were seen as so fearsome to live with?

There were rumours that contra trading would be replaced by CFD or contract for difference. What’s the difference between CFD and contra trading? CFD is claimed to be much better than contra trading. It allows the traders to hold their position longer, several weeks even if they wanted to. Shit, contra trading used to be like that but the length of holding to long positions were curtailed, deemed as too risky. In CFD, holding long and longer position is a plus point. CFD also can short positions. Now, why were short positions not allowed in contra trading? Isn’t this as good as saying having free sex is bad but going to prostitute is okay, both offering the same thing but the latter got to pay more?

What’s the difference between CFD and contra trading? Isn’t it contra trading in another name, another form? Oh it is not called contra trading. It is called Contract For Difference. Brilliant eh? The industry is being prepared to switch from free sex to having sex with prostitutes as a better option.

When this happens, the contra players would vanish. The remisiers too would vanish. And they expect the market to continue to thrive, bustling with billions of trades done by the computers. And the funds would still be churning the market without any suckers to pay for their expenses and profits. The funds would be happily chucking along in a stock market with practically no investors and no money to make, just to make the stock market look good for the city state.

Just wait for the smart alecs to knock this last nail in and everyone in the industry can go away. The fictitious trading volumes will still be there, an envy of all the outdated stock markets who can never dream of such volumes. But their phones in the brokerages will be ringing. The brokerages here will be as quiet as a cemetery, if any is still left standing.

Hougang is like part of a bigger scheme of things

Hougang is like part of a bigger scheme of things


Under normal circumstances this could still be the honeymoon period for the elected ruling party to ferment whatever it wants to do. The next GE is another four years away. This is the period for more increases in everything and whatever unpleasant policies, now is the time to throw them to the people. There will be some pain and unhappiness, but the people will get used to it, get over it over time. Then comes the last chapter, the pre election phase when the wounds are healed and little goodies would do the trick to prepare the electorate for more good years.

The Hougang by election must have come at an inopportune time. With this in the air, with the people getting political again and being agitated by all kinds of issues, and introducing or implementing tough policies would give the opposition a good platform to shout them down. Not doing so would have to delay it further down the road and may be too close to the next GE.

Whichever way, the temper of the people would not be given a chance to take a break. The temperature will rise again as in all elections. And expectedly, the opposition would rub the salt in wherever there is an open wound, or would open up old wounds. And it is defending time. The full backs and the goal keepers would not be able to rest or sleep soundly. Where are the goal keepers?

The other important development coming out from Hougang is the closing ranks of all the opposition parties. This is one of the rare instances that the oppositions are coming together to fight a common enemy. It would be interesting to see who would be speaking in the WP rallies. It would also be an opportunity for the opposition parties to rally together, to seek common grounds and build a closer rapport and understanding before the next GE. Hougang could pave the way for a better understanding among the opposition parties, and more give and take later on, and who knows, a united front that they have yet to forge after so many years.

Hougang could also be a testing time for people forced to reveal themselves to do damage to the WP’s cause. Many believe that there are plenty of moles in hiding in the opposition parties. It is a time to see the real stuff, the real enemies within, the desperadoes. But they are unlikely to cause a dent on the WP’s armour.

The PAP will, for the first time, be facing the opposition parties as a single bloc, speaking in unison. No more divide and rule, pulling strings here and there for the opposition parties to dance and bicker at each other. Maybe it is too premature to talk about this. It would be an interesting battle with more actors playing more important roles on both sides. All the big guns from both camps would be firing at the same time. A Tchaikovsky’s 1812 Overture in the air.