We all know about the terrible earthquake which, along with the tsunami, caused a tragedy in Japan. Thousands of lives are lost, many more will be. Acres of land are destroyed, property and assets vanished in an instant. Many reports have explained the catastrophic damages and the economic cost of this tragedy, while still unknown, is likely to rise above $30b and many firms, especially insurance firms, will suffer impossibly high financial costs and face possible bankruptcy.
What I have been musing does not lie on the financial or life side. Many articles have been written on it. I was intrigued by what I noticed DID NOT occur. Over the past years, several disasters have occurred in Asia. It started with the boxing day tsunami which struct Aceh, followed by the Sichuan earthquake. Both raking in thousands of lives.
How the Japanese disaster differed from the former 2 was the way the citizens reacted to it. In both China and Indonesia, looting, selfish deeds, crimes were rampant with high level of chaos. Not only did these not help with the rescue operations, these 'self-preserving' citizens hindered the work of those with the will to help.
In Japan, the scene seems to be very much different. We DO NOT hear about crimes and amidst the unimaginable chaos and vulnerability of people, we do not see much crimes occurring. While some may argue that this is selective media coverage, I choose to believe this is the result of generations of quality education and upbringing. In a disaster, victims help those who are worse off than themselves. Instead of rounding up as much aid and supplies as possible (which was what we saw in Indonesia and China), we are not witnessing Japanese selflessly giving up their own aid to help those who need it more. The level of culture is too deep.
China has prided herself to have overtaken Japan as Asis's largest economy and the world's 2nd largest superpower. India is growing at a pace unfathomable by the Japanese economic board but let's look at what Japan has that China, India and possibly almost every other country out there do not have: a quality citizen base. Say what you like about the Japanese, hate all you want the former generation of soldiers, the facts in front of us are clear as sky. These people are cultured. Maybe one day, we would stop quantitatively assessing countries and ranking them as such, take a look at the quality of the people and nation. Maybe when that day comes, we can then truly answer the following question.
Is my country a republic, or an economic centre: in other words, am I living in a home or a house.
Monday, March 14, 2011
Wednesday, February 23, 2011
Car Prices
Do you know where your money goes to when you buy a car? I went about dabbling with some numbers and started to figure out where all that money goes to when someone purchases a car in Singapore and I tried to reconcile the huge disparity between the money you pay and the OMV (Open market value) of the car you buy.
For instance, a BMW Z4 230i would cost you around $230,000 in Singapore if you were to purchase it now but its OMV (value of the car) is $55,000. Notice the 400% increase from OMV to OTR (on the road) price?
Now, let me set some assumptions. We are now working with a (not-so-common-car) the BMW Z4, 2.5L engine.
the OMV is 55,000, to grant some allowances, lets put it as 60,000.
the ARF (fees you pay to register the vehicle) is believe it or not, 110% of OMV: 66,000 (yes and you thought COE was expensive...)
Then of course, we need a Cat E COE which is around 50,000
We also have our import duty, 20% of OMV: 12,000
And GST which will include all the costs of imports: 5040
Shipping and other misc costs: 2,500
Road Tax (which after i have went to derive, works out to be: [746+1.16(EngineCap-1600)]=1790
Insurance: 3,000
Total: S$200,330
This is not much difference from the price PI offers you...
__________________
If we were to look at a more common vehicle with a lower engine cap (1600)
Say, the Honda Civic 1.6
OMV: 24,000
ARF: 26,400
Duty: 4,800
GST: 2016
Shipping: 2,500
Road Tax (Diff formula this time round): 742
COE Cat A: 40,000
Insurance: 2,000
Total: 102,300
Again, not much difference from the PI cost.
For instance, a BMW Z4 230i would cost you around $230,000 in Singapore if you were to purchase it now but its OMV (value of the car) is $55,000. Notice the 400% increase from OMV to OTR (on the road) price?
Now, let me set some assumptions. We are now working with a (not-so-common-car) the BMW Z4, 2.5L engine.
the OMV is 55,000, to grant some allowances, lets put it as 60,000.
the ARF (fees you pay to register the vehicle) is believe it or not, 110% of OMV: 66,000 (yes and you thought COE was expensive...)
Then of course, we need a Cat E COE which is around 50,000
We also have our import duty, 20% of OMV: 12,000
And GST which will include all the costs of imports: 5040
Shipping and other misc costs: 2,500
Road Tax (which after i have went to derive, works out to be: [746+1.16(EngineCap-1600)]=1790
Insurance: 3,000
Total: S$200,330
This is not much difference from the price PI offers you...
__________________
If we were to look at a more common vehicle with a lower engine cap (1600)
Say, the Honda Civic 1.6
OMV: 24,000
ARF: 26,400
Duty: 4,800
GST: 2016
Shipping: 2,500
Road Tax (Diff formula this time round): 742
COE Cat A: 40,000
Insurance: 2,000
Total: 102,300
Again, not much difference from the PI cost.
Friday, February 18, 2011
Responsibilities of a single party
In various contexts, we, as individuals will be faced eight vastly different responsibilities. For instance a family run business has a different objective from a listed one, a single parent has different responsibilities from parents of regular family and a single state governance has different responsibilities from a multiple-party governance system.
In a multiple-party system, the battle for votes is integral for the survival of the governing party. If a group of passionate patriots want to serve, they have to first garner support before they can enact policies. However, some governments do not have to battle as hard for their votes and position. A good example is how China's communist party faces less opposition than say the democrats do. For such parties, it is essential that they begin to divert attention away from votes and enact real changes to people who require such changes. Parties like these should spend more effort focusing on increasing the economic strength of the powerless and less economic well-off. Thee parties have to aim to benefit not only the cream but the lower levels. It should be in their blood to give support to those who have lesser power to themselves. Sometimes, we cannot work in a perfectly efficient and economical way. It is easy to help the rich and powerful. Small benefits are often amplified when handed over to these elites. In contrast, a lot of effort may have to be put in to help those of he lower rungs of society and these efforts may not even promise results. Rationalism tells us to not waste such efforts. This is when a government has to be less "rational" and more empathetic. The function of a government is after all not solely for the economic liabilities of a state.
In a multiple-party system, the battle for votes is integral for the survival of the governing party. If a group of passionate patriots want to serve, they have to first garner support before they can enact policies. However, some governments do not have to battle as hard for their votes and position. A good example is how China's communist party faces less opposition than say the democrats do. For such parties, it is essential that they begin to divert attention away from votes and enact real changes to people who require such changes. Parties like these should spend more effort focusing on increasing the economic strength of the powerless and less economic well-off. Thee parties have to aim to benefit not only the cream but the lower levels. It should be in their blood to give support to those who have lesser power to themselves. Sometimes, we cannot work in a perfectly efficient and economical way. It is easy to help the rich and powerful. Small benefits are often amplified when handed over to these elites. In contrast, a lot of effort may have to be put in to help those of he lower rungs of society and these efforts may not even promise results. Rationalism tells us to not waste such efforts. This is when a government has to be less "rational" and more empathetic. The function of a government is after all not solely for the economic liabilities of a state.
Thursday, January 27, 2011
Was reading Hard Truths to keep singapore growing and i began to ponder. No, I'm not just interested in the content (which is obviously very interesting and refreshing), im not interested in the medium of content.
The book is not about MM Lee coming out to tell us some truths which we ought to know. It is a symbol of us, as Singaporeans, being ready to accept some of these truths.
Singapore is a young country, Singaporeans are usually politically apathetic and the general argument is that the bulk of Singaporeans will not understand the broader issues. People complain about the 1 party leadership and the strict manner of leading. People question certain human rights issues and debate over our legitimacy as a democracy. And most pertinent to me right now, people reject the concept of a conscript armed forces.
I am no PAP supporter nor a fanatic patriot, but I am a supporter of wisdom. The choices we have to make sometimes is "hard". And sometimes, people really do not understand what they are asking for. Youths who complain that MM Lee was a strict leader has actually never really experienced this so called strict leadership. Those who complain about the 1 party leadership often complain for the sake of doing so. Of course there are those who vote wisely and vote for the opposition for wise reasons and I respect these people for doing their homework before voting. But I know just too many people who complain about the government (or as Singaporeans like to call garrmen) merely because we have been ruled by PAP for so long.
I do not like the idea of serving 2 years of NS but at the policy level, somethings have to be done. Everyone knows the problems of war--destructions, economic standstill etc. But we hardly realise the pain of peace--complacency and lack of appreciation of the state of affairs. And complacency broods sentiments and complains.
Back to my original point; are we really ready to accept these truths? Apparently MM Lee thinks so (or at least he probably hopes) Truths can come painful, so painful people like to reject it. Truths can displace myths, and some of these myths may be what the common Singapore citizen do not want displaced. I'm not sure if I can judge if we are ready for truth but 1 thing is for sure. We have no choice but to be ready for it.
The book is not about MM Lee coming out to tell us some truths which we ought to know. It is a symbol of us, as Singaporeans, being ready to accept some of these truths.
Singapore is a young country, Singaporeans are usually politically apathetic and the general argument is that the bulk of Singaporeans will not understand the broader issues. People complain about the 1 party leadership and the strict manner of leading. People question certain human rights issues and debate over our legitimacy as a democracy. And most pertinent to me right now, people reject the concept of a conscript armed forces.
I am no PAP supporter nor a fanatic patriot, but I am a supporter of wisdom. The choices we have to make sometimes is "hard". And sometimes, people really do not understand what they are asking for. Youths who complain that MM Lee was a strict leader has actually never really experienced this so called strict leadership. Those who complain about the 1 party leadership often complain for the sake of doing so. Of course there are those who vote wisely and vote for the opposition for wise reasons and I respect these people for doing their homework before voting. But I know just too many people who complain about the government (or as Singaporeans like to call garrmen) merely because we have been ruled by PAP for so long.
I do not like the idea of serving 2 years of NS but at the policy level, somethings have to be done. Everyone knows the problems of war--destructions, economic standstill etc. But we hardly realise the pain of peace--complacency and lack of appreciation of the state of affairs. And complacency broods sentiments and complains.
Back to my original point; are we really ready to accept these truths? Apparently MM Lee thinks so (or at least he probably hopes) Truths can come painful, so painful people like to reject it. Truths can displace myths, and some of these myths may be what the common Singapore citizen do not want displaced. I'm not sure if I can judge if we are ready for truth but 1 thing is for sure. We have no choice but to be ready for it.
Thursday, October 21, 2010
Koi
I'm queueing for the koi milk tea I just bought and can't help but to muse over 2 ideas. What is the secret behind koi? Why am I queueing here (which leads to another question: why is there a queue)
Conceptually, bubble tea has been around since time immemorial (ok at least since I was a kid) but why the sudden koi story?
I think quality is the first step. Economists love to think at the margin and this is how koi is. Their bubble tea isn't extremely awesome but it is NICER than others. And in a monopolistic comp market, sometimes that added edge is all that is needed. Simple sweetness, smoothness and chewy pearls can mean all the difference.
Expectations. Koi and Starbucks achieved something more than what they set out to do. They became stories, news and even part of our community. The koi queue breeds longer queues for several reasons: curiosity. Enough said. 2: gift, koi has become a social gift because of the queue. People are willing to queue for giving koi is a practical yet "sweet" gift (pun intended).
Will koi last? Well this is an MC market :)
Conceptually, bubble tea has been around since time immemorial (ok at least since I was a kid) but why the sudden koi story?
I think quality is the first step. Economists love to think at the margin and this is how koi is. Their bubble tea isn't extremely awesome but it is NICER than others. And in a monopolistic comp market, sometimes that added edge is all that is needed. Simple sweetness, smoothness and chewy pearls can mean all the difference.
Expectations. Koi and Starbucks achieved something more than what they set out to do. They became stories, news and even part of our community. The koi queue breeds longer queues for several reasons: curiosity. Enough said. 2: gift, koi has become a social gift because of the queue. People are willing to queue for giving koi is a practical yet "sweet" gift (pun intended).
Will koi last? Well this is an MC market :)
Wednesday, October 13, 2010
Moving on, I cant help but look back and realise there are parts of my life which I really miss.
The life where I could wake at insane hours to pump miles into my legs. Run and run before my friends even woke up. Push down long stretches of tarmac on my bike before cars even get onto the road. Feel as if my day is already over by the time the sun comes up.
I miss my buddies in cross. The people who are beside me when we have a 16km run to complete. The people who are around when I know training is hell. The people who pull me when I am tired and want to stop, the people who scream in my face to go faster when I'm going as fast as I can. I miss the faces of everyone who was so determined and so focused. We were so hungry for speed for power. We lived for being a better runner.
I missed the days when I didnt really like rest days because im not allowed to train. I miss the days when I was so happy to know that I am allowed to run extra miles than what was given. The days when I am allowed to cross train so I could cycle after exhausting my milage quota. Days where we finished training and went to swim to build more cardio.
And even the days where I had to study like a madman, dig deep into books day and night and night and day.
Well, months down the road, I might be missing today.
Heck.
The life where I could wake at insane hours to pump miles into my legs. Run and run before my friends even woke up. Push down long stretches of tarmac on my bike before cars even get onto the road. Feel as if my day is already over by the time the sun comes up.
I miss my buddies in cross. The people who are beside me when we have a 16km run to complete. The people who are around when I know training is hell. The people who pull me when I am tired and want to stop, the people who scream in my face to go faster when I'm going as fast as I can. I miss the faces of everyone who was so determined and so focused. We were so hungry for speed for power. We lived for being a better runner.
I missed the days when I didnt really like rest days because im not allowed to train. I miss the days when I was so happy to know that I am allowed to run extra miles than what was given. The days when I am allowed to cross train so I could cycle after exhausting my milage quota. Days where we finished training and went to swim to build more cardio.
And even the days where I had to study like a madman, dig deep into books day and night and night and day.
Well, months down the road, I might be missing today.
Heck.
Tuesday, October 5, 2010
ok i'm reviewing my foundation in finance so im gonna just ramble and ramble. correct me if im wrong, good for you if you learn something.
Credit Default Swap?
Look at it as an insurance policy. It insures the buyer against a certain default, meaning bankruptcy, defaulting payment, downgrade of credit rating etc. Of course, the buyer pays a premium (usually 1/4ly)
Why is it even around?
Collateralized Debt Obligation. Wall st essentially bought tonnes of mortgages (loans for houses) and packed all of them into a huge folder and called it a CDO. Then CDO has different parts, the least risky part was rated AAA and slapped on with a CDS.
Stocks
You buy a piece of the company when you buy its stock. 2 main ways of earning money from stocks (assuming you dont short) are to receive dividends and the standard buy-low sell high policy. I'm a value investor so i usually dont recommend shorting. (I will discuss about it slightly later)
Lets discuss stocks with my portfolio now:
My portfolio is about 30% REIT (real estate investment trust/ stocks of land developers) REITs usually pay off good dividends and regardless of the current price of the stock, dividends are paid in cash. So look at it as pocket money from the company for rewarding you. Instead of reinvesting all profits (usually from rental), they pay you some in cash. For many value investors, this is pretty important.
I also happen to be holding on to DBS. For the sake of discussion, lets look at it as an ordinary stock and not a bank. If you had bought DBS when it is $13, and sold it now (1lot). Assuming the current price to be 14.52, you earn (14.52-13.00)x 1000 dollars. 1 lot = 1000 shares btw.
Ok so whats shorting. This is usually used by traders. You need a decent risk appetite for this so you DONT want to be overexposed in this area, could really burn your fingers. Instead of buying low and selling high. you sell high and buy low. Confused? This is how it works: Say I am selling you a shirt, i sell it to you for $120. however, i dont deliver the good just yet (cause i dont even own it). I go and buy the shirt for $100 AFTER you have bought it from me and deliver the goods to you. Thus earning 20bucks in the process. So shorting makes you money when the price is going down down down. Now think of this problem... think you got forever to deliver that shirt?
What is risk?
To simply matters, risk is when price changes are volatile. Meaning in a SHORT period of time, there can be huge changes in price. Big companies (blue chips) do not have much risk. The lowest risk products out there are usually government bonds and bills. They are guaranteed by the government so unless a military junta takes over your nation, you should be pretty safe.
High risk products are usually like forex (discussed later) and small companies-- they can enter both hypergrowth and bankruptcy court in the short term :)
Amplify risk?
Ever came across the term LEVERAGE? or has someone talked to you about gearing ratio and you think he is talking about his modified subaru?
Leverage is the magic that makes bankers multi-million/billionaires. BUT it also gave birth to rock bottom markets in 2008.
In layman terms, leverage is BORROWING to invest. so a man with $10 goes and borrows $1000 (ratio of debt to capital of 100). He invests $1000 and earns 1%, then returns the $1000. Check out the final return on capital. earn $10 with $10 investment... 100%. Now increase the earnings (cause 1% is really really low) to 5% and the leverage to $10,000 and you have him reaping a 5000% profit.
Problem? what is there are NEGATIVE earnings :(
If there isnt leverage, FOREX traders will be earning a few dollars a day. Sometimes, the opening and closing price of a forex coupon don't even differ by $0.01.... so spending a good $10,000 (on a $1 to $1 forex coupon) without leverage will earn our friend would have earned him a $100... Doesnt sound like a traders pay eh.
So to the chase, how do you earn money?
Be wise, always invest according to what type of risk you can afford. If you are a multimillionaire and want to take huge risks, go ahead, for the rest of us commoners, I say stick to low risk stocks and bonds. If you want, you can even hedge with gold or bills.
I dont wanna recommend anything to buy. I do recommend anyone who wants to buy to go and properlly do some research. Go read up, and learn the right philosophies. Think long term, do not be tempted by the good money of short term trading.
The best investment I have had so far?
Education. Never regretted a cent I spent. (Save for those damn uniball pens which spoil every time they drop)
Credit Default Swap?
Look at it as an insurance policy. It insures the buyer against a certain default, meaning bankruptcy, defaulting payment, downgrade of credit rating etc. Of course, the buyer pays a premium (usually 1/4ly)
Why is it even around?
Collateralized Debt Obligation. Wall st essentially bought tonnes of mortgages (loans for houses) and packed all of them into a huge folder and called it a CDO. Then CDO has different parts, the least risky part was rated AAA and slapped on with a CDS.
Stocks
You buy a piece of the company when you buy its stock. 2 main ways of earning money from stocks (assuming you dont short) are to receive dividends and the standard buy-low sell high policy. I'm a value investor so i usually dont recommend shorting. (I will discuss about it slightly later)
Lets discuss stocks with my portfolio now:
My portfolio is about 30% REIT (real estate investment trust/ stocks of land developers) REITs usually pay off good dividends and regardless of the current price of the stock, dividends are paid in cash. So look at it as pocket money from the company for rewarding you. Instead of reinvesting all profits (usually from rental), they pay you some in cash. For many value investors, this is pretty important.
I also happen to be holding on to DBS. For the sake of discussion, lets look at it as an ordinary stock and not a bank. If you had bought DBS when it is $13, and sold it now (1lot). Assuming the current price to be 14.52, you earn (14.52-13.00)x 1000 dollars. 1 lot = 1000 shares btw.
Ok so whats shorting. This is usually used by traders. You need a decent risk appetite for this so you DONT want to be overexposed in this area, could really burn your fingers. Instead of buying low and selling high. you sell high and buy low. Confused? This is how it works: Say I am selling you a shirt, i sell it to you for $120. however, i dont deliver the good just yet (cause i dont even own it). I go and buy the shirt for $100 AFTER you have bought it from me and deliver the goods to you. Thus earning 20bucks in the process. So shorting makes you money when the price is going down down down. Now think of this problem... think you got forever to deliver that shirt?
What is risk?
To simply matters, risk is when price changes are volatile. Meaning in a SHORT period of time, there can be huge changes in price. Big companies (blue chips) do not have much risk. The lowest risk products out there are usually government bonds and bills. They are guaranteed by the government so unless a military junta takes over your nation, you should be pretty safe.
High risk products are usually like forex (discussed later) and small companies-- they can enter both hypergrowth and bankruptcy court in the short term :)
Amplify risk?
Ever came across the term LEVERAGE? or has someone talked to you about gearing ratio and you think he is talking about his modified subaru?
Leverage is the magic that makes bankers multi-million/billionaires. BUT it also gave birth to rock bottom markets in 2008.
In layman terms, leverage is BORROWING to invest. so a man with $10 goes and borrows $1000 (ratio of debt to capital of 100). He invests $1000 and earns 1%, then returns the $1000. Check out the final return on capital. earn $10 with $10 investment... 100%. Now increase the earnings (cause 1% is really really low) to 5% and the leverage to $10,000 and you have him reaping a 5000% profit.
Problem? what is there are NEGATIVE earnings :(
If there isnt leverage, FOREX traders will be earning a few dollars a day. Sometimes, the opening and closing price of a forex coupon don't even differ by $0.01.... so spending a good $10,000 (on a $1 to $1 forex coupon) without leverage will earn our friend would have earned him a $100... Doesnt sound like a traders pay eh.
So to the chase, how do you earn money?
Be wise, always invest according to what type of risk you can afford. If you are a multimillionaire and want to take huge risks, go ahead, for the rest of us commoners, I say stick to low risk stocks and bonds. If you want, you can even hedge with gold or bills.
I dont wanna recommend anything to buy. I do recommend anyone who wants to buy to go and properlly do some research. Go read up, and learn the right philosophies. Think long term, do not be tempted by the good money of short term trading.
The best investment I have had so far?
Education. Never regretted a cent I spent. (Save for those damn uniball pens which spoil every time they drop)
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