I recall a story. British Prime Minister Winston Churchill was asked, "Sir, why is the stock market falling every day?"
His answer, "There are more sellers than buyers".
This is what is happening now to the global stock markets. Everybody (except Warren Buffett) is so negative. Nobody is buying. They expect the stock markets to fall.
The hedge funds have to liquidate their position due to withdrawals by the investors. They sell their holdings at any price. Some may be selling short. The wave after wave of selling will continue, until the value become $0. (Just joking. It will not reach this extreme point).
This is our wonderful global financial system, that has now totally collapsed.
Monday, October 27, 2008
Unconditional help from volunteers
Many people thanked me for spending time and effort to help the investors of the structured products.
I wish to acknowledge the unconditional help given by many volunteers who came forward to assist me. I shall not mention their names, but tell you what they have been doing:
> volunteers who provide guidance and deal with specific issues of investors
> volunteers who help at Speaker's Corner
> contact persons for the various groups (by distributor or product)
> strategy team who understakes various types of tasks
> volunteers who monitor the internet for news and contribute updates for me
> volunteers who translate my article into Chinese.
These volunteers came forward without being asked. Some are investors, others are not. They do what they consider to be useful. This is called UNCONDITIONAL HELP.
I wish to acknowledge the unconditional help given by many volunteers who came forward to assist me. I shall not mention their names, but tell you what they have been doing:
> volunteers who provide guidance and deal with specific issues of investors
> volunteers who help at Speaker's Corner
> contact persons for the various groups (by distributor or product)
> strategy team who understakes various types of tasks
> volunteers who monitor the internet for news and contribute updates for me
> volunteers who translate my article into Chinese.
These volunteers came forward without being asked. Some are investors, others are not. They do what they consider to be useful. This is called UNCONDITIONAL HELP.
NUS dean also exposed to loss
http://www.todayonline.com/articles/283518.asp
Today Weekend, October 25, 2008, By Lin Yanqin
HE HAD built his career on his expertise and knowledge in the field of finance, but like thousands of others, he too fell victim to the collapse of Lehman-backed structured products after the American investment bank folded.
Professor Bernard Yeung, the new dean of NUS Business School, recalled the moment when he received the bad news from his broker.
“She said ‘Bernard, you’re exposed to Lehman Brothers’. I won’t tell you how much I lost, I basically feel like I’m working for free right now,” said Prof Yeung.
The Lehman fiasco prompted Prof Yeung to pull together the business school’s academics to share their knowledge and expertise on the issue.
“We said, ‘This is our social responsibility’... So we asked the faculty to write about this crisis, to help society understand what has happened,” said the 55-year-old Hong Kong-born Canadian, who met the media on Friday.
This culminated in a 13-part series in The Straits Times, as well as various articles in Today (picture) and The Business Times.
Such, Prof Yeung says, is how he envisions Singapore’s oldest business school spreading its knowledge beyond the ivory tower — drawing from its “peaks of excellence” to make a social impact.
Not only does he want to create a culture of intellectual curiosity and integrity in the school, Prof Yeung wants the knowledge created to be shared through teaching, journals and books, as well as the mass media.
Apart from the articles in the newspapers, the school also organised a panel discussion with industry leaders, faculty and alumni to educate its students about the impact of the ongoing financial crisis.
A special module on the crisis will be taught next month for the whole university, with lectures on topics like moral hazards, governance and government policy.
Prof Yeung, who came to NUS after nine years at New York University’s Stern School of Business, said NUS would play to its strengths and “focus on the basics”.
“The whole industry needs to train people back to the basics. We need to understand risk management better, we need to understand finance even better, and we need to think about this concept of responsibility,” he said.
“There’s a lot of self-reflection going on in the industry.”
Prof Yeung also spoke about the importance of rankings. These measures matter because they reflect what a school is about. Hence it is important to create a culture of learning and impart this to students — a hallmark of well-ranked schools. “If they deliver, we’ll always be the best,” he said.
His appointment at NUS — a three-year renewable term — allows him to be immersed in what he sees as the “Asian Renaissance,” with Asia becoming central to the world’s economy.
“It’s very exciting to be here,” said Prof Yeung, who intends to retire here.
Today Weekend, October 25, 2008, By Lin Yanqin
HE HAD built his career on his expertise and knowledge in the field of finance, but like thousands of others, he too fell victim to the collapse of Lehman-backed structured products after the American investment bank folded.
Professor Bernard Yeung, the new dean of NUS Business School, recalled the moment when he received the bad news from his broker.
“She said ‘Bernard, you’re exposed to Lehman Brothers’. I won’t tell you how much I lost, I basically feel like I’m working for free right now,” said Prof Yeung.
The Lehman fiasco prompted Prof Yeung to pull together the business school’s academics to share their knowledge and expertise on the issue.
“We said, ‘This is our social responsibility’... So we asked the faculty to write about this crisis, to help society understand what has happened,” said the 55-year-old Hong Kong-born Canadian, who met the media on Friday.
This culminated in a 13-part series in The Straits Times, as well as various articles in Today (picture) and The Business Times.
Such, Prof Yeung says, is how he envisions Singapore’s oldest business school spreading its knowledge beyond the ivory tower — drawing from its “peaks of excellence” to make a social impact.
Not only does he want to create a culture of intellectual curiosity and integrity in the school, Prof Yeung wants the knowledge created to be shared through teaching, journals and books, as well as the mass media.
Apart from the articles in the newspapers, the school also organised a panel discussion with industry leaders, faculty and alumni to educate its students about the impact of the ongoing financial crisis.
A special module on the crisis will be taught next month for the whole university, with lectures on topics like moral hazards, governance and government policy.
Prof Yeung, who came to NUS after nine years at New York University’s Stern School of Business, said NUS would play to its strengths and “focus on the basics”.
“The whole industry needs to train people back to the basics. We need to understand risk management better, we need to understand finance even better, and we need to think about this concept of responsibility,” he said.
“There’s a lot of self-reflection going on in the industry.”
Prof Yeung also spoke about the importance of rankings. These measures matter because they reflect what a school is about. Hence it is important to create a culture of learning and impart this to students — a hallmark of well-ranked schools. “If they deliver, we’ll always be the best,” he said.
His appointment at NUS — a three-year renewable term — allows him to be immersed in what he sees as the “Asian Renaissance,” with Asia becoming central to the world’s economy.
“It’s very exciting to be here,” said Prof Yeung, who intends to retire here.
Enforce the law
Sent by e-mail to me:
Minister Lim Hng Kiang (Deputy Chairman of MAS) said that it is not up to MAS to judge the merit of the investment product, yet MAS endorses the standard of clarity in the prospectus of the investment products.
He said that two legal laws, i.e. Financial Advisors Act and The Securities and Futures Act, are already in place, yet MAS, being the regulator empowered to enforce these laws, chooses not to exercise its power.
Full posting:
http://theonlinecitizen.com/2008/10/a-sleeping-authority/#comments
Minister Lim Hng Kiang (Deputy Chairman of MAS) said that it is not up to MAS to judge the merit of the investment product, yet MAS endorses the standard of clarity in the prospectus of the investment products.
He said that two legal laws, i.e. Financial Advisors Act and The Securities and Futures Act, are already in place, yet MAS, being the regulator empowered to enforce these laws, chooses not to exercise its power.
Full posting:
http://theonlinecitizen.com/2008/10/a-sleeping-authority/#comments
Well regarded persons oversee the financial institutions
The well regarded persons appointed to oversee the complaint handling of the financial institutions are:
Gerard Ee – DBS Bank
Law Song Keng – ABN Amro, Hong Leong Finance, Maybank
Hwang Soo Jin – CIMB GK Securities, DMG & Partners Securities, Kim Eng Securities, OCBC Securities, Phillips Securities, UOB Kay Hian, AMEX Bank.
Standard Chartered - try Hwang Soo Jin or write to MAS.
If you wish to contact these three people, you can write to their name, c/o Monetary Authority of Singapore.
10 Shenton Way MAS Building
Singapore 079117
Tel : (65)-6225-5577
Fax : (65)-6229-9229
Website : http://www.mas.gov.sg
Gerard Ee – DBS Bank
Law Song Keng – ABN Amro, Hong Leong Finance, Maybank
Hwang Soo Jin – CIMB GK Securities, DMG & Partners Securities, Kim Eng Securities, OCBC Securities, Phillips Securities, UOB Kay Hian, AMEX Bank.
Standard Chartered - try Hwang Soo Jin or write to MAS.
If you wish to contact these three people, you can write to their name, c/o Monetary Authority of Singapore.
10 Shenton Way MAS Building
Singapore 079117
Tel : (65)-6225-5577
Fax : (65)-6229-9229
Website : http://www.mas.gov.sg
Town Council invest in Minibond
Mr Tan,
Even Town Council use the resident sink fund to invest in Minibond , sorry can't tell you the name of the TC.
Invest around 300k, ....... many more MCST too have invest in it, So just simply write off public fund, it is legal?
Hope more people can surface more related info, to add on the pressure.
Eric
Even Town Council use the resident sink fund to invest in Minibond , sorry can't tell you the name of the TC.
Invest around 300k, ....... many more MCST too have invest in it, So just simply write off public fund, it is legal?
Hope more people can surface more related info, to add on the pressure.
Eric
Jump on bandwagon
Someone sent an e-mail to me, arguing that some of the investors are knowledgeable and wanted to jump on the bandwagon to claim for compensation.
I asked him to call me by telephone. He did, and we had a chat. I realise that he was not aware about the details of the structured product. He was arguing from a "thereotical" angle.
I explained that there is no way for any knowledgeable person to invest in the structured product, if he has been properly informed about the risk. The return of 5% is not worth the risk.
He still did not accept my point.
I hope that other people who claimed that the investors were "greedy" should meet and talk to them, before forming this opinion.
I asked him to call me by telephone. He did, and we had a chat. I realise that he was not aware about the details of the structured product. He was arguing from a "thereotical" angle.
I explained that there is no way for any knowledgeable person to invest in the structured product, if he has been properly informed about the risk. The return of 5% is not worth the risk.
He still did not accept my point.
I hope that other people who claimed that the investors were "greedy" should meet and talk to them, before forming this opinion.
Malaysia act against land banking
Hi Tan,
On the subject about land banking, how come the relevant authorities here not taking action whereas our neighbouring country is taking action.
http://www.malaysianbar.org.my/legal/general_news/companies_commission_raids_three_companies_over_illegal_land_investments.html
I believe that Malaysia is not exposed to Lehman Brothers Minibonds but doing something as a watch dog!
JLN
On the subject about land banking, how come the relevant authorities here not taking action whereas our neighbouring country is taking action.
http://www.malaysianbar.org.my/legal/general_news/companies_commission_raids_three_companies_over_illegal_land_investments.html
I believe that Malaysia is not exposed to Lehman Brothers Minibonds but doing something as a watch dog!
JLN
Can investors understand CDO?
Dear Mr. Tan,
Financial Times interviewd Dr. Tony Tan in Feb 2008. Dr. Tan said,
"We believe that one of the reasons why we have, for example, weathered these CDO difficulties well is because we have always put risk management as a very high priority. We studied CDOs on many occasions in the past several years. We could not understand who was bearing the risk there. We looked at this many times and we decided several years ago, as a policy, that we will not invest in CDOs, so we have no direct exposure to CDOs at all. Of course, we also invest in funds and they invest in CDOs, so indirectly we do have some exposure, but as far as direct exposure is concerned I think our risk management framework works quite well."
If GIC admits it does not understand CDO risks, how can MAS MD said, "There will also be a group he described as 'knowledgeable and experienced. This group should have understood the risks of investing in these products and take responsibility for their actions."
Financial Times interviewd Dr. Tony Tan in Feb 2008. Dr. Tan said,
"We believe that one of the reasons why we have, for example, weathered these CDO difficulties well is because we have always put risk management as a very high priority. We studied CDOs on many occasions in the past several years. We could not understand who was bearing the risk there. We looked at this many times and we decided several years ago, as a policy, that we will not invest in CDOs, so we have no direct exposure to CDOs at all. Of course, we also invest in funds and they invest in CDOs, so indirectly we do have some exposure, but as far as direct exposure is concerned I think our risk management framework works quite well."
If GIC admits it does not understand CDO risks, how can MAS MD said, "There will also be a group he described as 'knowledgeable and experienced. This group should have understood the risks of investing in these products and take responsibility for their actions."
Biggest loss in the the structured products
I met a couple at Speakers' Corner on 25 October. They invested a total of $1,775,000 in Jubilee Notes 3, Minibonds 3, Pinnacles 3 and 6. The investments were made in their personal name and in their company's name during February to June 2007.
They asked me to look into their faces. Were they greedy people? Were they people willing to take risk?
I felt so sorry to learn about their devastating loss. I told them that I will try my best ot help them to recover some of their loss.
They asked me to look into their faces. Were they greedy people? Were they people willing to take risk?
I felt so sorry to learn about their devastating loss. I told them that I will try my best ot help them to recover some of their loss.
CLSA Asks 500 Staff to Take Pay Cuts of Up to 25%
Oct. 27 (Bloomberg) -- CLSA Asia-Pacific Markets, the regional brokerage unit of Credit Agricole SA, asked 500 senior bankers and executives to accept pay cuts of as much as 25 percent next year to avoid getting rid of jobs.
The voluntary salary reduction program that was proposed for one-third of the staff last week would reduce basic pay by 15 percent to 25 percent starting in January, according to Chief Executive Officer Jonathan Slone. The participating employees would be paid the salary they forgo and may also receive a bonus payment when profit meets certain targets, he said.
``We think it's the right way to keep our team intact, maintain client service and allow us to expand our offering during a difficult time,'' Slone said in an interview. ``We face challenges like this crisis as a team and when conditions turn, we all share in the benefits as well.''
COMMENT BY TAN KIN LIAN:
This is an excellent way to deal with the recession. It is different from the American approach of retrenching employees.
The voluntary salary reduction program that was proposed for one-third of the staff last week would reduce basic pay by 15 percent to 25 percent starting in January, according to Chief Executive Officer Jonathan Slone. The participating employees would be paid the salary they forgo and may also receive a bonus payment when profit meets certain targets, he said.
``We think it's the right way to keep our team intact, maintain client service and allow us to expand our offering during a difficult time,'' Slone said in an interview. ``We face challenges like this crisis as a team and when conditions turn, we all share in the benefits as well.''
COMMENT BY TAN KIN LIAN:
This is an excellent way to deal with the recession. It is different from the American approach of retrenching employees.
Collapse of the global financial system
The global financial system has collapsed. This has been acknowledged by the leaders of Asia and Europe at their meeting in Beijing. In their statement after the meeting, they pledged to rebuild the global financial system. President Sarkosky of France is providing the leadership.
The pillars of the collapsed system are:
> free market
> minimal regulation
> excessive leverage
> financial engineering
> non-regulated derivatives and swaps
> excessive reliance on private capital
> unsound banking system
> excessive rewards for corporate leaders
What will the new global financial system be based on? The leaders did not provide sufficient details. We must be ready to think of a new paradigm.
The pillars of the collapsed system are:
> free market
> minimal regulation
> excessive leverage
> financial engineering
> non-regulated derivatives and swaps
> excessive reliance on private capital
> unsound banking system
> excessive rewards for corporate leaders
What will the new global financial system be based on? The leaders did not provide sufficient details. We must be ready to think of a new paradigm.
Lehman Brother bond
My friend invested $100,000 in the mini-bond, introduced to him by his stockbroker. He thought that he was investing in the Lehman Brother bond (which was A-rated at that time).
He said, "If I have actually bought the Lehman Brother bond, I would have lost my entire investment anyway. It is not fair for me to lodge a complaint about the mini-bond. It is just my bad luck".
I salute him for his honorable decision.
He said, "If I have actually bought the Lehman Brother bond, I would have lost my entire investment anyway. It is not fair for me to lodge a complaint about the mini-bond. It is just my bad luck".
I salute him for his honorable decision.
A fair compensation
Dear Mr. Tan,
Why should the investors in the mini-bonds and other notes expect to get full compensation for the investments? Surely, they know that there must be some risk, when they expect to get interest rate of 5%, when FD is only 1% or less.
Do you know that the people who invested in stocks are suffering losses of 50% or more. Can we ask for compensation? Even A-rated bonds can fail. Can the investor than ask for compensation from the distributor?
Surly all kind of investments have risk. Why should the mini-bond holders expect full compensation? Why are you supporting this unreasonable claim?
REPLY
I believe that these structured products should not be sold in the first place. If the distributor had properly described the product, it is likely that nobody would have bought them.
In my personal view, the loss should be shared equally between the distributor and the investor (i.e. noteholder). It will not be fair for the investor to shoulder the loss entirely. It is also not fair for the distributor to make a full compensation. I hope that both parties will make a compromise and agree to share the loss equally. Many investors have told me that they will accept such an offer.
Why should the investors in the mini-bonds and other notes expect to get full compensation for the investments? Surely, they know that there must be some risk, when they expect to get interest rate of 5%, when FD is only 1% or less.
Do you know that the people who invested in stocks are suffering losses of 50% or more. Can we ask for compensation? Even A-rated bonds can fail. Can the investor than ask for compensation from the distributor?
Surly all kind of investments have risk. Why should the mini-bond holders expect full compensation? Why are you supporting this unreasonable claim?
REPLY
I believe that these structured products should not be sold in the first place. If the distributor had properly described the product, it is likely that nobody would have bought them.
In my personal view, the loss should be shared equally between the distributor and the investor (i.e. noteholder). It will not be fair for the investor to shoulder the loss entirely. It is also not fair for the distributor to make a full compensation. I hope that both parties will make a compromise and agree to share the loss equally. Many investors have told me that they will accept such an offer.
Prospectus needed
Will the co-ordinator of Pinnacle Notes, and the co-ordinators of investors that bought minibonds etc from UOB Kay Hian and Phillips, please contact Adrian Tan at atans1@hotmail.com?
Volunteers are willing to analyse the prospectuses, pricing supplements, promotional materials and advertisements of Pinnacle notes, and minibonds etc that Phillips Secs and UOB Kay Hian clients bought. Copies of these materials are needed.
Volunteers are willing to analyse the prospectuses, pricing supplements, promotional materials and advertisements of Pinnacle notes, and minibonds etc that Phillips Secs and UOB Kay Hian clients bought. Copies of these materials are needed.
Subscribe to:
Posts (Atom)