Wednesday, October 26, 2016

Is the Australia I once knew gone for good?


When I first started writing about the Australian property bubble in 2003 I knew it was big. But even I didn’t think it would reach its current absurd proportions. The bubble has now engulfed not just our economy but our politics, our media, our social structure and entire strategic outlook. Not one of these is defensible in terms of the national interest but together they converge on Australian disintegration:
  • The economy is now a hollowed out wasteland of finance, speculation and consumption. Other than dirt, we do nothing else.
  • Politics is now warped completely around the bubble with elections won and lost on house prices alone. Policy is forgotten.
  • The duopoly of Australian media is focused entirely on maximising for sale listings for Domain and It has become a bald-faced real estate propaganda machine.
  • Multi-culturalism is being increasingly strained as immigration is sustained at economically destructive levels purely to support house prices.
  • ANZUS is now fundamentally undermined by the “citizenship exports” sector that drives house prices and construction and brings with it a “hard-edged” Chinese soft power push.
The Australia that I grew up in was based upon the principle of the “fair go” balanced against a vibrant and mixed competitive market economy, of policy made in the national interest, of successful multi-culturalism within a liberal Anglosheric context, and of unshakable faith in the US as our strategic partner in the world.  Now, thanks to the bubble:
  • The “fair go” is dead.
  • The US alliance is dying.
  • Multi-culturalism is under assault.
  • Liberalism and the market economy have been subsumed by specufesting.

Tuesday, October 25, 2016

Regret Minimization Framework by Jeff Bezos


Here’s the story as told by Brian Christian and Tom Griffiths, in their excellent book, Algorithms to Live By: The Computer Science of Human Decisions:
Regret can also be highly motivating. Before he decided to start, Jeff Bezos had a secure and well-paid position at the investment company D. E. Shaw & Co. in New York. Starting an online bookstore in Seattle was going to be a big leap — something that his boss (that’s D. E. Shaw) advised him to think about carefully. Says Bezos:
“The framework I found, which made the decision incredibly easy, was what I called — which only a nerd would call — a “regret minimization framework.” So I wanted to project myself forward to age 80 and say, “Okay, now I’m looking back on my life. I want to have minimized the number of regrets I have.” I knew that when I was 80 I was not going to regret having tried this. I was not going to regret trying to participate in this thing called the Internet that I thought was going to be a really big deal. I knew that if I failed I wouldn’t regret that, but I knew the one thing I might regret is not ever having tried. I knew that that would haunt me every day, and so, when I thought about it that way it was an incredibly easy decision.”

Sunday, October 2, 2016

Keep Calm and Carry on investing - Howard Marks

  • 90s were the best. and it doesn't get better. if it doesn't get better, then it gets worse.

Saturday, October 1, 2016

Today 5.5% yields are pretty good - Howard Marks

Not Bubble Prices now - Howard Marks

Good times or up cycle in the seventh inning, you could be in the eight or ninth but you don't know - Howard Marks

Today 5.5% yields are pretty good. - Howard Marks

Annualized gains of 5.5 percent “strikes me as the most reasonable expectation,” Marks said Wednesday at the Bloomberg Markets Most Influential Summit in New York. “It’s a big problem because most endowments need 8 percent, charities need 8 percent, and pension funds need about 7.5 percent.”
Marks said high-yield bonds are expected to return about 5.5 percent, stocks 5 percent to 6 percent, Treasuries 2 percent and high-grade corporate bonds 3 percent. Alternative assets such as private equity and real estate would yield higher profits, the billionaire investor said. In a balanced portfolio, that mix would work out to about 5.5 percent.

Friday, September 30, 2016

Future expected returns on pension funds

when you buy a bond, you get interest, when you short a bond, you owe interest. when you short a bond, if it does nothing for a year, you are not breakeven, you are down by the coupon. - Howard Marks

since 1986, a blend of equities 9.8%, high yield bonds 8.4%, mortgages 6.6%, treasuries 6.2% yield 7.5% which is what pension funds historically hope to make.

I think that currently you would do well with 5.5% - Howard Marks

7% sounds about right for GIC CPF - sauce

Thursday, September 29, 2016

Will Singapore CPF model go down the same path?

granted singapore's cpf model is primarily based on individual savings so there is lesser chance of osmosis of your own savings efforts towards providing for the others who did not save as much.

even so, there is a tyranny of the one size fits all model for CPF resulting in inactive investors leaving their CPF under 2.5% p.a. which in today's world will not retain your prosperity in the global context any further. a comparison of the greying population under the european system (minus the state pension that puts the younger generation under the yoke that provides for the older generations that had spent and spent) with the new rising asian generations rapidly reaching majority middle class, sees the prosperity of the former unretained.

Voting in a populist government will certainly make life easier for a whole generation of Singaporeans to live off the reserves built up previously. But how long and how soon before it becomes yet another enslaving of future generations?


As the working population ages, more money gets put away, which in turn also helps drive yields lower. Pension funds among countries in the Organization for Economic Cooperation and Development, for example, have reached a record $25 trillion. 
"There are a lot of very negative feedback loops," Credit Suisse Chief Executive Officer Tidjane Thiam told the audience at the Bloomberg Markets Most Influential Summit in London this week. "There's been a glut of savings that impact real interest rates. You can't make any money on the assets, and the liabilities explode. People born in 1968 and the following 15 years will have an enormous pension deficit because they've made nothing on their assets."

Jim Leaviss, who helps oversee about $374 billion at M&G Investments in London, argues that the world demographic picture suggests bond yields should be much, much higher than they are. In the past, projecting population changes gave you a good guide to what economic growth would do, how labor-market supply would affect wage demand and inflation, and how demographics would affect production versus consumption of goods and services. 
Those economic indicators in turn told you where bond yields would likely settle. Using that model, Leaviss says the 30-year U.K. gilt yield, for example, should be closer to 12 percent than the 1.4 percent the government currently pays to borrow for three decades, with U.S. Treasuries similarly mispriced:

Wednesday, September 28, 2016

Standardized parts bringing down production cost of crude oil

deflation into oil consumers countries.
support of growth
turning oil producers and explorers more resilient.


Nergaard Berg estimates that standardization of sub-sea forgings alone—the massive steel spools used in deepwater drilling—has resulted in a 30 percent reduction in project lead times. Christie, of GE Oil & Gas, also reckons that standardization can lower drilling expenses by an average of 30 percent.

Saturday, September 24, 2016

Singapore funds invested in India are performing well

when singapore markets are faltering and losing their luster amongst regional markets, it is important for singaporean investors to be more well-rounded.


Singapore-based hedge funds outperformed Asian rivals during the first seven months of the year thanks to a greater focus on India and global markets, according to data provider Eurekahedge Pte.
Funds headquartered in Singapore returned 2 percent through July, while Hong Kong-based funds declined an average 2.3 percent, Eurekahedge said in a report Tuesday. Funds based in Australia rose 1.9 percent, while Japan-based funds declined 2.5 percent, the report said.

Friday, September 23, 2016

adjustments to BOJ ETF buying


Bank of Japan has radically shifted how it will purchase exchange-traded funds (ETFs) in Japan's stock market.
the BOJ said after its policy-setting meeting on Wednesday that now 3 trillion yen of its purchases would still be divided among ETFs based on the three indexes, roughly proportionate to the ETF's total market value.
But the central bank added that the remaining 2.7 trillion yen would be aimed only at funds tracking the Topix index. It said the 300 billion yen allocated to ETFs tied to "supporting firms proactively investing in physical and human capital" would be unchanged.
In a note on Wednesday, analysts at Nomura estimated the change meant around 70 percent of funds would be allocated to the Topix index, 28 percent to the Nikkei and 2 percent to the JPX Nikkei 400, compared with an estimated 42 percent, 53 percent and 4 percent respectively, previously.
That was a likely driver of the Topix index's outperformance on Wednesday, when it closed up around 2.7 percent, compared with the Nikkei's 1.9 percent gain. Japan's markets were closed Thursday for the autumnal equinox holiday.
Nomura expected the biggest gainers from the change would likely be among the low-liquidity small-capitalization stocks included in the Topix.

Tuesday, September 20, 2016

Crazy housing prices still, down under


Successful bidder, Robert, and his family celebrate after the auction.
Turning off even the most willing first home buyers was the $1.510 million sale of the 40-year-old unrenovated one-bedroom apartment at 6/166 Queen Street, Woollahra, in Sydney's eastern suburbs on Saturday morning.
The 70 sq m apartment broke the suburb record at $21,571 a square metre and its auction attracted the who's who of the eastern suburbs.

Sunday, September 18, 2016

Commoditization of fixed income

  • The first piece is the commoditization of fixed income.
  • The next piece of the puzzle is the false perception of a high-yielding U.S. Treasury market.
  • The final piece is the question of how much control central banks really have over the situation.


Only time will tell if central banks are able to find creative solutions to normalizing interest rates without a disastrous side effect like a bond panic or a yield curve inversion. In the meantime, investors have been allocating away from equities and into bonds all year, with bond funds adding $189 billion in assets year-to-date. 
Within bond strategies there is a flood out of alternative credit and more nontraditional areas of the market into the lowest-yielding — even negative-yielding — high-quality areas. The bond pile-up is alarming for several reasons, and one needs to examine all the pieces of the puzzle to see the bigger picture. 
The first piece is the commoditization of fixed income. Warren Buffett’s quote comes to mind here: “The problem with commodities is that you are betting on what someone else would pay for them in six months. The commodity itself isn’t going to do anything for you. ...” Today negative-yielding bonds more closely resemble commodities.
Bonds have long served as the anchor in a conservative portfolio: a safe haven asset with an income component designed to produce a consistent return stream. As the amount of negative-yielding debt exceeds $10 trillion globally, bonds increasingly cease to trade based on fundamentals, such as yield, in favor of what someone else will be willing to pay for them in the future. For a prime example, look no further than 4 percent Swiss government bonds maturing in 2049. Today these bonds trade above par at more than $130, giving them a negative yield. With premiums of this magnitude, bonds are effectively commodities, and investors are using the greater fool theory as an investing strategy.
The next piece of the puzzle is the false perception of a high-yielding U.S. Treasury market. Compared with the negative nominal yields in Japan and parts of Europe, the yield on U.S. ten-year Treasuries appears attractive, trading at about 1.6 percent. Treasuries also look attractive compared with government bonds from other developed markets such as Canada, with 1.1 percent, or the U.K. gilt’s 0.7 percent or the 1.5 percent in South Korea. On a real basis, however, these yields are significantly negative as well. Adjusting for inflation, they range from –1 to –0.1 percent. Furthermore, at a real yield of –0.7 percent, the ten-year Treasury isn’t even the best house in what appears to be a very dangerous neighborhood for investors. From an endowment whose return target includes inflation to individuals planning on spending their retirement savings, this circumstance has significant implications for many investors.
The final piece is the question of how much control central banks really have over the situation. In our view at J.P. Morgan Asset Management, it is tenuous at best. Whereas central banks have shown they are extremely capable of driving rates lower, they have yet to show their ability to drive market rates up. Should we see more hikes from the Fed, what is to prevent a further flattening of the yield curve? Last year’s hike has already led to significant flattening. The difference in yields between ten- and two-year Treasuries is a mere 80 basis points. To put this situation in perspective, this figure was close to 300 basis points in early 2010 and, since the beginning of 2009, has averaged almost 200 basis points, which makes the current spread two standard deviations below the recent average.
So the Fed’s — and other central banks’ — choices are either to continue to push rates lower, a strategy that is proving to do nothing for economic growth and actually hurts financials, or to push rates higher with little impact on market rates and the added risk of creating panic in the bond markets.
Perhaps this is one reason why we’ve seen the Fed managing in accordance with market sentiment: interpreting essentially the same constructive stream of economic data differently, depending on where markets are at the time of a meeting. The bottom line is that in the wake of unprecedented quantitative easing, central banks have painted themselves into a corner and lost their ability to alter market rates.
So where does this leave us? One way or another, market forces will eventually prevail and return the income component to bonds. In the meantime, investors should consider diversifying into strategies with a much broader toolbox across traditional, alternative and private markets. This recommendation is because a long-only, best-ideas approach focused exclusively on public fixed-income sectors looks very limited on the upside and is acquiring a meaningful downside as the incongruence between economic data and central bank policy grows. A more constructive approach would be to allocate to strategies, not sectors: strategies that target a specific risk-return profile and take a relative-value approach across traditional, alternative and private markets from both a long and short standpoint, as well as lend liquidity in exchange for yield. This approach may be investors’ best bet at continuing to find attractive, risk-controlled returns while waiting for market normalization.

Thursday, September 15, 2016

Banks paying you monthly interest on your mortgage while you stay in it

well, I'll be....

AALBORG, Denmark— Hans Peter Christensen got some unusual news when he opened his most recent mortgage statement. His quarterly interest payment was negative 249 Danish kroner.
Instead of paying interest on the loan he got a decade ago to buy a house in this northern Denmark city, his bank paid him the equivalent of $38 in interest for the quarter. As of Dec. 31, his mortgage rate, excluding fees, stood at negative 0.0562%.
  • Purchase price of their home in Aalborg, Denmark: 1.7 million Danish kroner ($261,000)
  • Mortgage rate: -0.0562%
  • Quarterly interest payment: -249 Danish kroner (-$38)
  • Realkrdit Denmark, one of the nation’s largest home lenders, provided 758 borrowers with negative interest rates last year.
It has been nearly four years since Denmark entered the world of negative monetary policy, and borrowers and lenders alike are still trying to make sense of the upside-down world it has brought.
“My parents said I should frame it, to prove to coming generations that this ever happened,” said Mr. Christensen, a 35-year-old financial consultant, about his bank statement.
Denmark isn’t the only place where central bankers are experimenting with negative rates. The European Central Bank and the Bank of Japan, grappling with stagnant economies, are using subzero rates to stimulate growth. Switzerland and Sweden, like Denmark, are trying negative rates to keep their currencies in line with the struggling euro.

Wednesday, September 14, 2016

Owning a fraction of house - the new economy

Fractionalization of real estate has already occurred in australia. To me, I feel it is a monstrosity.
This is not helping younger people to own property.
But rather aiding the ability of the older/richer people's increasing share/ownership of the real estate and artificially inflating the price of property and preventing it from dropping despite the much anticipated rate hike (if it happens and it will be gradual anyway).

For the longest time, there have been two ways of “living” somewhere:
  • Renting, in which case you own 0% of your residence
  • Owning, in which case you own 100% (typically using a bank mortgage as a 30-year crutch to owning all 100%)
But why not own 91% of your house? 95%? 87%? Home ownership rates have been falling, partially because millennials can’t afford to buy homes — and when/if they can, they might find 300% of their net worth concentrated in a single asset class (i.e., the exact opposite of diversification) — their house.
There’s no such thing as a free lunch, and in this case Point’s lunch comes in the form of capital appreciation (more on the historical magnitude of this in a bit). If the house appreciates in value, Point shares in that upside. If the house depreciates in value, Point gets paid back after the bank, but before the homeowner, in the event of a sale. If the property depreciates enough, Point may lose some of its money, without the homeowner being in default; on the flip side, if the house greatly appreciates in value, Point will make far more than a traditional “coupon” from a mortgage. This type of equity-like exposure creates alignment between the homeowner and investor. There’s a terrific article on this subject in this Wharton article, “Don’t Reform Housing Finance — Reinvent It“.
On the opposite side, imagine you’re a big investor looking for capital protection and appreciation. There are few asset classes that have outperformed super-prime real estate in the last 60 years. Consider that the median home in Palo Alto sold for less than $20,000 in 1956, versus $2.5 million today — an appreciation rate of 12,500%. Compare that to an approximate 5000% return for the S&P 500 over the same period (much higher with dividend reinvestment, but you’d need to pay taxes on said dividends, making this calculation challenging).
Of course, for an investor to invest passively not in a single house but in a broad basket of homes would have been challenging, if not impossible. The investor would need to deal with finding and serving tenants, paying annual real estate taxes, and fixing toilets (maintenance) … across many, many properties.
Using technology, Point brings diversification to residential homeowners (diversify out) and investors (diversify in). It’s not like a home equity line of credit (HELOC) or a mortgage with monthly payments; it’s an aligned investment — that is, equity. It’s rethinking the fundamentals of residential real estate ownership — making single-family residential real estate a liquid, tradeable asset class.

Saturday, September 10, 2016

Hong Kong is bullish

bullish still. with the yuan devaluation vs HKD peg.


China has opened up a new channel for insurers to invest in Hong Kong equities.
Insurance funds are now allowed to buy the city’s shares through an exchange trading link with Shanghai, the China Insurance Regulatory Commission said in a statement on its website, without saying when the funds could start using the link. The increased access will help the companies boost investment returns, it said.
The move comes less than a month after officials dropped the overall quota for mainland investors to buy stocks in Hong Kong and approved the opening of a second link via Shenzhen, while retaining daily limits. Insurers are allowed to invest up to 15 percent of their assets in overseas markets including Hong Kong, which they can currently do through a different program.
“It’s unexpected and positive for the Hong Kong market, though there are regulatory caps on how much money they can actually allocate," said Hao Hong, chief China strategist at Bocom International Holdings Co. in Hong Kong.
Chinese investors have already been showing more appetite for Hong Kong stocks. Net buying of equities in the city through the Shanghai link has swelled to average 4.7 billion yuan ($705 million) a day this week, exchange data show. Hong Kong’s Hang Seng Index has rallied 9.2 percent this year, compared with a 13 percent drop for the Shanghai Composite Index.

Friday, September 9, 2016

Wednesday, September 7, 2016

China relaxes foreign financial investment quota rules

Foreign investors in the country's Renminbi Qualified Foreign Institutional Investor(RQFIIprogram will be granted quota limits based on their aggregate assetssaid adocument of the People's Bank of China and State Administration of Foreign Exchange.

Wednesday, August 31, 2016

Price dictates sentiment and vice versa

Price dictates sentiment and vice versa, reflexivity at play.

Fundamentals change all the time and the only ones who are in the know are insiders who can calculate the various metrics and even They know that their calculations could change any time.

besides, their opinions are reflected in their buying/selling in the markets.

Not saying fundamentals aren't important, just that they matter more significantly only in the longest timeframe:forever.
 But above all, technicians respect the power of sentiment more than their fundamentalist counterparts. And sentiment, after all, is how valuations actually come to be – the P in the PE Ratio or the PEG Ratio or the P/B calculation. In the real equation, the only one that counts, the P is what pays, not the E, not the EG and certainly not the B. Buffett would tell you the B (book value) is what pays over time (the market going from a voting machine to a weighing machine). But Buffett can afford to ride it out, having permanent capital under management and an ocean of insurance premiums sloshing in over the transom every hour of the day. Most market players do not.

Sunday, August 21, 2016

Bonds carry the same absolute risk as equities, just different volatility

both can go to zero.

equities, when no one wants to buy yours.

bonds, when the company cannot return you your capital anymore.

just the speed and paths are different.

now, what about treasuries? ;)

Free wifi and mobile phone charging points at bus stop in singapore

much love.


Working closely with various Government agencies, they have now implemented their ideas in a bus-stop along Jurong East Central behind JCube.
This experiential bus stop incorporates several features:
  • Vertical greenery and solar panels
  • Free wifi coverage (available from Sep) and mobile phone charging points
  • Interactive smart boards to access information like bus timings, weather and the street directory
  • Books to browse and read, as well as e-books to download
  • Art panels depicting the evolving landscape of Jurong
  • Bicycle parking

Singapore stocks prices are cheap, but

cheap can get cheaper, so we need convincing of us.

The Thai economy was certainly a bit more Boleh in Q2. 2Q16 GDP expanded 3.5% yoy, the strongest since 1Q13 led by increased public sector spending as well as steady contribution frm the hospitality sector to offset the drag from exports and sluggish private consumption. Fingers crossed the Land of Smiles can continue to recover.
Despite sluggish global growth, the region’s macro picture is looking “less bad” according to 2 other countries who reported Q2 GDP growth during the week. Taiwan’s 2Q16 GDP rose 0.7% yoy vs. 1Q16’s -0.3% yoy. It was the first growth since the Q2 2015, and the fastest expansion since Q1 2015 on “less bad” exports.
Over in the Philippines, the economy is on fire. 2Q16 GDP expanded 7.0% yoy, the fastest expansion since the Q3 2013, as a stronger domestic demand (consumption and investment) offset a slowdown in exports.
What about the poor July trade performances of Indonesia, Singapore & China or the stagnant Japanese economy? Total trade fell 15% yoy in Indonesia while Spore’s total trade shrank 11% yoy in July, the worst in 6 mhs for both countries. While this is a reflection of the still sluggish global demand, the shorter working month due to the Hari Raya festivities could be the main reason for the sharp plunge in July trade while China’s data was partly affected by supply disruptions (the severe flooding in July).
What about Japan? On an annualized basis, the economy grew just 0.2% in Q2 as companies cut back on capital spending and exports fell. Spending by businesses was weak & household spending was also lacklustre. But we must also remember that earthquakes in April caused extensive damage and disruptions to production in western Japan, while exporters kena by stronger yen with more expensive Made-In-Japan goods. More pressure on PM Abe & the BoJ to spend and spend to lift domestic demand.
The disappointing Q2 GDP growth in Japan, so-so July US and Asian macro data fuel expectations that there will be more global fiscal stimulus from governments & monetary easing by central banks. Expectations of cheaper liquidity “add oil” to global equities (except in Spore where sadly there’s still minimal interest in our local stocks). In Asia, the interest this week is very much focus on the upcoming trading link between HK & Shenzhen that will give outsiders the chance to trade shares, not of stodgy SOEs (listed in Shanghai), but the smaller start-ups & leading Chinese tech companies.
The only thing we can say for SGX-listed stocks is that many are cheap cheap, and despite the rally, valuations for Spore REITs are not over-stretched. According to a recent report from CIMB Research. S-REITs are trading at mean of 6.3% dividend yield and 1x P/BV. Furthermore, S-REITs are still trading at a 450bp spread vs. the 10-year bond yield, 75bp higher than the average 370bp. Compared to the other key REIT markets, S-REITs is also one of the cheapest. And, Industrials replace the office as their most preferred sub-sector. So Spore REITs still Boleh.
Not so boleh was the US$ during the week. Expectations that the US central bank may hold off raising interest rate in September pushed the US dollar lower this week although it managed to recover some ground on Friday. The dollar index (DXY) ended the week 1.3% weaker (-0.5% last week) and the US 10Y Treasury note ended the week at 1.58% (1.51% the previous Friday). Gold, which usually benefits from a soft dollar and falling bond yields, ended Friday at US$1,341 an ounce, highest in 3 weeks.
Weaker US$ and (misplaced?) hopes that major oil producers can agree to an output freeze next month continued to underpin oil prices for the third consecutive week. Brent crude crossed US$50 for the first time in 5 weeks, to end Friday at US$50.88/bbl.
And speaking of oil, the Norwegian govt reported this week that it had to tap into its massive oil fund (US$890bn, the largest sovereign wealth fund) for spending for the first time in two decades. Given the current trends of low oil prices and low (& lower?) expected rates of returns, there is a big debate in Norway about how much risks this mega fund should take to grow or protect the fund if the govt were to continue dipping into reserves to fund spending. Here in Spore the same question is being asked at GIC/Temasek. It’s a indeed a very stressful time for SWFs, pension funds & long-term investors.
This question & more will certainly be asked at the key event for Week 34 of 2016, a gathering of central bankers, finance ministers, etc. at Jackson Hole, Wyoming, USA for the Kansas City Fed’s annual symposium (Thur/Fri). The theme this yr is ‘Designing Resilient Monetary Policy Frameworks for the Future’, or in simple Singlish, “What can central banks do ah if global growth and inflation stay low low for long long?” Fed Chair Yellen will cakap on Friday & we’ll wait to see if she will “show hands” (unlikely) on what the Fed may or may not do in its next policy meeting. 
There is no major central bank monetary policy decision this week but there is plenty of Developed Mkt data to test investor confidence. Among the key macro releases: Prelim Aug PMI readings from US, Eurozone & Japan, US Durable Gds Orders, revised Q2 GDP readings from UK & US.
Here in Asia, Taiwan will report July export orders (Mon) and industrial output (Tue). Spore will report July factory output data on Friday & PM Lee is off to Semarang, Indonesia for a 3-day meeting and makan with Pak Jokowi on Wednesday.

comments on Surrendering My AIA Prime Life Policy

comments on
the NTUC policy has no cash value. 
"For AIA, I’m paying $73.17 monthly for $50k coverage with some riders on it. In comparison, my NTUC Income policy has $200k TPD/CI coverage at $68.90" 
inaccurate calculation. at $73.17 monthly for 20 years, if you assumed the insurance costs was free, the yoy annual rate is about -0.67% 
"Yah ! for the past 20 teays,, you are just getting half of the return if you just invest in STI ETF ,, IRR just around 3.5 % ,,, with your own control ,, money shall double than that in enxt 20 years !!" chua's comment is particularly insightful.
kevin's policy IS from 1997. 
"We all know that the benefit illustration 20+yrs ago is flawed and XIRR based on my surrender value is about 2.6%. However, bearing in mind that I was 13 then and my parents are not financially savvy – they just hope to give me some form of savings when I grow up, I can live with it. If XIRR can increase to 3% when I reach the 30th policy year, coupled with the insurance coverage, – I will be contented." 
always a good habit. I do so for mine too. 
"At the halfway mark in 2008 when I started working, I began collecting these annual letters as much as I could, and I can see that the projected surrender value was revised downwards." 
freaking ****!
the plague of one size fits all.
freaking employee fund manager mentality! just protect his own rice bowl! 
"72% in fixed income20% in equities3% in real estate3% in other assets2% in loans" 
looks about right but that 2012 to 2016 is just wrong.
see above comment. 
"Year 1997 : $21,385Year 2008 : $17,544Year 2010 : $15,718Year 2012 : $16,448Year 2016 : $16,449" 
good timing now though if it is 72% fixed income! 
"I was told have to wait to next year, because the value at that point in time can fluctuate according to the underlying fund returns. Oh well."

comments on assi - Whole life insurance, universal life insurance and investing

comments on
that kenneth chua comment in 2014 is a very perceptive and insider comment.
I made extensive and intensive studies on my own whole life policies so I know that was a very good important comment. and most people won't understand it.

universal life insurance as it is marketed in Singapore, in this environment, is poison.
and ak, his question is not what you think it is.
"I don't think Universal Life Insurance is well known in Singapore and to me, it is just a more flexible form of Whole Life Insurance. "

kenneth chua's comments in 2014:

Kenneth Chua said...
Hi AK,

I chanced upon your blog this year and is impressed by your insights into the various financial topics. (Errh on oats as lunch occasionally yes, but not everyday..its quite filling :)

What works in the past for traditional whole life and endowment policies are not achievable now in the low interest rate environment. Your policy and mine are of different series of the same product (Prime Life). Thus, surrender value differs by about 15K. Life coverage is high with corresponding low premiums in the past. It was a struggle especially in early years paying the premiums for multiple policies. Hence, at age 65, it will be nice to surrender one or two policies at highest surrender value. However, it will be good too to keep these policies for your descendants as a gift.(Properties are a more preferable choice obviously..hehe..).

Current whole life policies offered don't even meet the inflation rate. The worst advice received is to purchase ILPs in order to increase the returns with wrong objective of insurance coverage vs investment returns. Thus, I don't encourage anyone to purchase whole life policies nowsaday.

20 Aug '2016

AK71 said...
From my FB account:


Hi AK,

A friend recently suggested getting Universal Life Insurance policy, taking a loan to pay part of the premium & service the interest only of the loan. The benefits highlighted is akin to getting high value Term Insurance coverage but with added benefit of cash value growth (i.e. form of wealth accumulation). Would you have a conversation with yourself on the value/risk of Universal Life policy and the circumstance that it might be suited for?

Thank you in advance 🙂

I don't think Universal Life Insurance is well known in Singapore and to me, it is just a more flexible form of Whole Life Insurance.

"You have the liberty to reduce or increase your death benefit and also to pay your premiums at any time and in any amount (subject to certain limits) after your first premium payment has been made." INVESTOPEDIA

It is still more costly than term life insurance as it includes elements of savings and investment. So, if you believe in not mixing up insurance and investment, this is not going to fly. 😉

Fixed or floating mortgage rates


I choose a floating rate home loan pegged to the 1 month SIBOR (+ 1%) because I believe that I have the resources to pay down my home loan rapidly if interest rates should spike.
 For example, when interest rate on my home loan spiked to 5.1% many years ago, I chose to pay down the loan for my previous home.
 5.1%? Yes, I know this might look unbelievable to younger readers but ask the older folks and they should remember and, for some, it might have even been higher.

comment on Scolded by wife for thinking about financial freedom

thinking further, the assi reader is not scolded for thinking about financial freedom but for not having the aspirations and looking to escape.

my personal opinion is both sides (only investing/career matters) are equally extreme.
though to be equally focused on both is an art in itself.
nothing wrong to have aspirations on both fronts.
but the more important thing I would ask myself is: are my reasons behind investing more aspirational or more of an escape?
and very often, for a lot of people, they find it to be the latter.
if we find that to be the case that we are looking to escape, then we need to question our mentality.
i find it important to find the courage not to back away from challenges.

Saturday, August 20, 2016

tax relief is free money comment at assi

at 20%, tax relief is free money. free money NOW.

as long as cash flow is good.

upcoming comment at

Thus, slowing down or stopping OA to SA transfer might be a good idea if tax benefit from MS Top Up to SA is something that is important to you.

Japanese government to force companies to pay higher wages

this higher minimum wage move is a dangerous policy. yet they are running out of alternatives.

ever easing monetary policy to give companies money to spend on investment and infrastructure has backfired onto reversing yen devaluation, almost back to 2011 values.
meanwhile, companies have stayed put.

and they have now to juggle both the effects of high debt, strong yen and cushioning both the JGBs and Nikkei stock markets.

their targeting has been off course for a while.

giving money to companies helmed by older people (who had ever only thrift on their minds with their elder ages and experiences in post war Japan) only inspires more caution.

giving money(rising yen!!!) to people/companies who are good at asset allocation means people like Masayoshi Son buys foreign assets, like Sprint and ARM, not reflating the economy.

They need to give money to the rising younger Japanese innovators with conditions.
They might hit something.

Higher minimum wage might still work. But foreign orders and companies in primary industries might move on. (already moved to Taiwan at one point with the taiwanese firms absorbing smartphone components manufacturing orders from Japanese firms culminating in Foxconn buying Sharp. until Xiaomi came along and brought orders to Sharp up until the recent yen strength from 2015)


But rather than employing it to try to contain salary and price pressures -- as U.S. leaders did in the 1970s -- the IMF wants Japan to use moral suasion, tax breaks and, as a last resort, penalties to prod companies into granting bigger pay gains and thus promote higher inflation.
“We need policies to support wage increases in Japan,” Luc Everaert, IMF mission chief for the country, told reporters on Aug. 2 after completion of the agency’s annual consultation with the world’s third-largest economy.
The IMF’s backing of such an unorthodox approach is an acknowledgment of how entrenched Japan’s “deflationary mindset” has become and how resistant it’s been to a more traditional mix of policies.
It’s also the lending agency’s answer to exhortations by some economists that Japan launch so-called helicopter money -- direct central bank financing of the government’s budget deficit -- a strategy Everaert said has “very large risks.”

Foxconn bought Sharp - Taiwanese takes smartphone orders from Japan and now their company(ies?)

nice move. good synergy and currency play.

Terry Gou is one sharp dude.


Foxconn and Sharp Corp (6753.T) on Saturday formally signed a long-awaited deal that would see the Taiwan firm take control of the Japanese display maker, as executives sought to dispel lingering doubts over whether Sharp can turn around its ebbing fortunes.
At a packed news conference following the signing of the $3.5 billion deal, Foxconn CEO Terry Gou ducked questions about how - and when - Sharp would become profitable again, but expressed confidence in the Japanese company's ability to bounce back with its highly regarded technology.
Gou pointed to Sharp's proprietary know-how to mass-produce the advanced IGZO (indium gallium zinc oxide) display technology as a standout, calling it superior to the popular OLED (organic light-emitting diode) technology. IGZO technology is used in products such as Apple Inc's (AAPL.O) iPad.

"Everybody is saying OLED," Gou said at the event held at Foxconn and Sharp's jointly owned liquid crystal display factory in Sakai, western Japan. "If I was an engineer, I would choose IGZO," he said, noting that they were more energy-efficient than OLEDs.

Friday, August 19, 2016

Mongolia hikes interest to 15%

The central bank of Mongolia raised its key interest rate to 15 percent to protect the currency, reversing a cut in borrowing costs to 10.5 percent in May.
The Mongolian tugrik initially rose after the announcement. By 4:26 p.m. in Ulaanbaatar it was falling again, and traded at 2,268 per dollar. The currency is headed for its 24th straight daily decline.

Rotation into cyclical shifts market into high gear, but first?

Rotation into cyclical?

not without a fat dip first, I reckon.



This may be about to change.  Below is the price ratio of the PowerShares S&P 500 High Beta Portfolio (SPHB) relative to the Powershares S&P 500 Low Volatility Portfolio (SPLV).  A rising ratio means high beta (riskier) stocks are on average outperforming low volatility (less risky) stocks. The top shows the relative strength of that ratio, and beneath the middle pane is the performance of the two Exchange Traded Funds since a significant “bull” market began in October 2011.  High beta, which should have led the last few years, ended up underperforming low volatility by a whopping 3,380 basis points.

Masayoshi at it again, first Sprint, now T-Mobile


SoftBank Group Corp.’s Masayoshi Son has a 300-year plan, so if combining Sprint Corp. and T-Mobile US Inc. takes a few years longer than he hoped, that’s OK.
Son, who became one of the world’s wealthiest men by turning Tokyo-based SoftBank into a telecommunications and technology powerhouse, still would like to merge the U.S. wireless providers, according to people familiar with his thinking. SoftBank owns more than 80 percent of Sprint after acquiring the majority stake in 2013, part of Son’s famed plan to build a business empire that can endure through the centuries.
Son considered buying T-Mobile in 2014, before abandoning the effort when officials at the U.S. Federal Communications Commission and Justice Department signaled they were against a theoretical merger. There’s a key figure who will determine if Son makes another run at T-Mobile: the yet-to-be named new head of the FCC. If Son feels that person is more amenable to a combination to take on market leaders AT&T Inc. and Verizon Communications Inc., he will probably try again, said the people, who asked to not be identified because the matter is private.

Chinese retail investors buying up US stocks, really?


One year ago, U.S. markets tanked because China surprised everyone with amini-devaluation of their currency and a clear indication it will further liberalize foreign exchange markets.
This lead to massive private sector capital outflows and the People’s Bank of China (PBOC) had to sell foreign exchange reserves to keep the exchange rate stable.
Much later we learned that China’s central bank had not only sold U.S. government bonds but also $126 billion in U.S. stocks over the period from July 2015 to the end of March 2016, contributing to short-term corrections in the fall of 2015 and the spring of 2016.
So why is the S&P 500 trading at an all-time high around 2200, despite the Chinese official selling, Brexit, and a possible meltdown in the Chinese economy?For two main reasons. First, while the Chinese central bank is selling U.S. stocks, Chinese people are buying them.
If a Chinese citizen wants to buy U.S. stocks, they have to first exchange yuan for U.S. dollars in the marketplace, either illegally or legally. If enough people sell yuan and buy dollars, this puts downward pressure on the yuan and the price falls.
Enter the PBOC: To keep the price stable, it steps in on the other side of the market and sells dollars into the market, buying yuan and therefore stabilizing the price. Of course, the two parties seldom interact directly, but rather through Chinese and international banks.
Real estate is by and far the biggest investment vehicle for Chinese, but they also like U.S. stocks, especially after their stock market crashed in 2015.
According to a Financial Times survey, Mr. Guo, who works as a manager in manufacturing in Nanjing, has invested two-thirds of his assets in U.S. equities. The percentage of respondents holding foreign securities increased from 27.3 percent to 35.1 percent over the course of one year.
“U.S. stocks are easier to understand when you spend enough time studying them. In China, the longer you are in the market the less certain you feel,” Mr. Zeng, a Chongqing-based factory owner who owns $600,000 worth of U.S. stocks told the FT.
The demand for overseas assets including stocks is so great, the first Chinese wealth manager has set up a trust firm on the British channel island of Jersey.
Other, less wealthy individuals, who can stay under the $50,000 cap on foreign exchange transfers use apps offered by companies like Jimubox to invest in stocks abroad without even visiting the bank.
“Chinese investors are actively seeking alternatives from the volatility of the local equity markets and have significant concerns about the valuation of the renminbi,” Jimubox Chief Executive Dong Jun told the Wall Street Journal. The IIF estimates citizens and companies will invest up to $237 billion in different kind of equity investments abroad for the whole of 2016.
Speaking of Chinese companies, they spent $134 billion on outbound mergers and acquisitions deals, some of them on listed companies like China’s Anbang Insurance Group buying Strategic Hotels and Resorts Inc. for $6.5 billion. 
Even the  134-year-old Chicago Stock Exchange was recently sold to a group of Chinese investors.
Central Banks
But there is yet another buyer of U.S. equities, helping them to reach record highs while many other institutional investors and domestic individual investors are selling: the central banks of the world.
For example, the Swiss National Bank (SNB) held $119.7 billion in listed U.S. equities at the end of the first quarter of 2016. It is allocating 20 percent of its foreign exchange reserves to stocks and it’s a fan of tech companies like Apple ($1.2 billion) and Google ($1.2 billion).
According to an analysis by investment bank Barclay’s, central banks may have been a big factor behind a $60 billion net investment in long future contracts in U.S. equities.
“You are essentially in the world where public sector signals dominate,” says Viktor Shvets, global strategist at Macquarie Securities. He thinks the aggressive involvement of central banks and the government in investment decisions could end investment theory as we know it.
“The public sector doesn’t have cycles like the private sectors. Investment theory evolved around cycles. If you are dominated by the public sector, then investment is no longer possible,” he says. 

Thursday, August 18, 2016

Insurtech is one of the leading innovation frontiers of fintech


Enter one of FinLeap’s existing portfolio companies, Clark, which operates in the insurance space with an app to help you stay on top of your various insurance products. Today the Berlin/Frankfurt startup is announcing it’s closed €13.2 million in Series A funding, made up of both equity and media-for-equity financing.FinLeap is investing “several million Euros” once again, while additional investors include yabeo Capital, Kulczyk Investments, HitFox, TA Ventures, Tenderloin Ventures, along with various unnamed business angels.Media investment, which I understand will mostly be in the form of TV advertising but will also include some online and print, comes from SevenVentures (the venture arm of the ProSiebenSat.1 Group), Axel Springer, and media investor GMPVC. The split between equity financing and media-for-equity financing is roughly 75 per cent to 25 per cent.(Noteworthy is that FinLeap, which itself raised €21 million in new funding this June, is backed by institutional investors from the insurance industry, including Hannover Re, the third largest worldwide reinsurer.)Calling itself an “insurance­ robo-­advisor,” Clark’s iOS and Android apps let you manage and purchase various insurance products. Specifically, it uses algorithms to analyze your current insurance situation and automatically propose opportunities to improve your coverage or the deal you are currently on. The startup’s insurance experts are also on-hand via the app to help with more bespoke insurance questions.
Since the start of the year, Clark claims to have increased the volume of its managed insurance premiums five-fold, to 30 million Euros. The startup employs close to 20 people, most of whom are software developers.Competitors include KnipGetsafe and Financefox, but Clark reckons it differs in the way it uses robo-advisors (ie a more automated approach) to assess each user’s insurance situation and to send chat-messages to alert you to insurance opportunities.“In addition, all clients have access to an in-app insurance cockpit,” the German startup says. “This works similar to fitness apps like runtastic or Nike running, i.e. the client can easily understand his ‘insurance fitness.'”

Tencent overtakes Alibaba, both probably still undervalued


Brent Lewin | Bloomberg | Getty Images
Tencent, the owner of popular social messaging app WeChat, on Thursday overtook e-commerce giant Alibaba to become China's most valuable technology company after posting a strong set of earnings.
Data compiled by spreadbettor IG showed Tencent's market capitalization was at 1910.3 billion Hong Kong dollars ($246.35 billion) as of 10:40 a.m. HK/SIN, compared with Alibaba's market capitalization of $242.04 billion. 
The Chinese gaming and social network company announced its second quarter and first half 2016 earnings on Wednesday, reporting strong growth in mobile gaming and advertising.
Total revenue for the second quarter came in at 35.69 billion yuan ($5.38 billion), registering a 52 percent on-year increase. Operating profit was at 14.33 billion yuan, which was 43 percent higher from the same period a year earlier.
The bulk of revenue for the quarter came from online gaming, which grew by 32 percent on-year to 17.124 billion yuan, driven particularly by smartphone games. 

Monthly active user accounts on Tencent's social WeChat/Weixin platform were 806 million, registering a 34 percent on-year increase. 
In June, Tencent deepened its presence in the mobile gaming space by leading a consortium to acquire a majority equity stake in Finnish gamemaker Supercell, which produced popular titles such as Clash of Clans and Clash Royale. 
Hong Kong-listed shares of Tencent climbed 5.08 percent in morning trade on Thursday.
Representatives from Tencent and Alibaba did not immediately respond to CNBC's request for comments.