Meeting at Speaker's Corner 18 Oct, 6-7 pm

[Ah Hai]

Thursday, November 20, 2008
Investing in ETF
Hi Mr. Tan,
I came across your blog on ETF ..
http://tankinlian.blogspot.com/2008/07/invest-in-indexed-fund.html

Given many global banks are currently in stress, can you advice what happen will
happen to Lyxor or STI ETF (value) if in the worst scenario, their parent company like StateStreet or Barclay go under?

John

REPLY
If the fund manager goes under, I believe that it is easy for another fund manager to be appointed to take over their work. The assets are held by trustees in separate accounts. They should not be adversely affected.

This is my guess but I am not a legal expert on such matters.
Posted by Tan Kin Lian at 6:33 AM

 

[Ah Hai]

Thursday, November 20, 2008
How I was misled (3)
Dear Mr. Tan
I wish I had read your blog before purchasing my pinnacle notes series 6 last year.

The picture painted by the sales representative was so good, I was convinced it was a great investment. I even encouraged my two daughters to invest their hard earned savings, something I have not stopped regretting since the downturn.

On hindsight, I should have realised that there were some things that were not so right. The prospectus was not shown to me although it was sent to me much later, by post, after I had closed the deal. I tried to read it, but the technicality floored me. So many pages of fine print. The copies of the agreement were not sent to me either.

When I called the representative's mobile, he didn't answer my calls. Then I called his office at H and discovered that he had left. Subsequently, the manager very kindly did a trace and delivered the copies by hand to me. By then I had managed to read some of the stuff in the prospectus and realised that I could lose all my money as it was not capital protected. It was too late to do anything except pray, but it looks like prayers didn't help.

I don't know if there is anything left of what we invested. Is there anything that can be done? I have left out the names of the people as I don't know if I should at this stage. I hope you can help in some ways.
Sincerely,

Mary
Posted by Tan Kin Lian at 6:46 AM

 

[Ah Hai]

Thursday, November 20, 2008
A tsunami of hope or terror
http://www.businessspectator.com.au...-of-hope-or-terror-LHRJP?OpenDocument&src=spb

Here's how it works: a bank will set up a shelf company in Cayman Islands or somewhere with $2 of capital and shareholders other than the bank itself. They are usually charities that could use a little cash, and when some nice banker in a suit shows up and offers them money to sign some documents, they do.

That allows the so-called special purpose vehicle (SPV) to have "deniability", as in "it's nothing to do with us" – an idea the banks would have picked up from the Godfather movies.

The bank then creates a CDS between itself and the SPV. Usually credit default swaps reference a single third party, but for the purpose of the synthetic CDOs, they reference at least 100 companies.

The CDS contracts between the SPV can be $US500 million to $US1 billion, or sometimes more. They have a variety of twists and turns, but it usually goes something like this: if seven of the 100 reference entities default, the SPV has to pay the bank a third of the money; if eight default, it's two-thirds; and if nine default, the whole amount is repayable.

For this, the bank agrees to pay the SPV 1 or 2 per cent per annum of the contracted sum.

Finally the SPV is taken along to Moody's, Standard and Poor's and Fitch's and the ratings agencies sprinkle AAA magic dust upon it, and transform it from a pumpkin into a splendid coach.

The bank's sales people then hit the road to sell this SPV to investors. It's presented as the bank's product, and the sales staff pretend that the bank is fully behind it, but of course it's actually a $2 Cayman Islands company with one or two unknowing charities as shareholders.

It offers a highly-rated, investment-grade, fixed-interest product paying a 1 or 2 per cent premium. Those investors who bother to read the fine print will see that they will lose some or all of their money if seven, eight or nine of a long list of apparently strong global corporations go broke. In 2004-2006 it seemed money for jam. The companies listed would never go broke – it was unthinkable.

Here are some of the companies that are on all of the synthetic CDO reference lists: the three Icelandic banks, Lehman Brothers, Bear Stearns, Freddie Mac, Fannie Mae, American Insurance Group, Ambac, MBIA, Countrywide Financial, Countrywide Home Loans, PMI, General Motors, Ford and a pretty full retinue of US home builders.

In other words, the bankers who created the synthetic CDOs knew exactly what they were doing. These were not simply investment products created out of thin air and designed to give their sales people something from which to earn fees – although they were that too.

They were specifically designed to protect the banks against default by the most leveraged companies in the world. And of course the banks knew better than anyone else who they were.

As one part of the bank was furiously selling loans to these companies, another part was furiously selling insurance contracts against them defaulting, to unsuspecting investors who were actually a bit like "Lloyds Names" – the 1500 or so individuals who back the London reinsurance giant.

Except in this case very few of the "names" knew what they were buying. And nobody has any idea how many were sold, or with what total face value.

It is known that some $2 billion was sold to charities and municipal councils in Australia, but that is just the tip of the iceberg in this country. And Australia, of course, is the tiniest tip of the global iceberg of synthetic CDOs. The total undoubtedly runs into trillions of dollars.

All the banks did it, not just Lehman Brothers which had the largest market share, and many of them seem to have invested in the things as well (a bit like a dog eating its own vomit).
Posted by Tan Kin Lian at 6:50 AM

 

[Ah Hai]

Thursday, November 20, 2008
Our Continued Fascination with wall street bankers leading to our Downfall ?
Contributed by LA

1) Die die must have wall street bankers here ( somehow, more wall street bankers here = top financial hub )

2) Die die must have wall street bankers advise us.

3) Die die must have wall street bankers to better run our own banks here.

4) Die die must have wall street bankers to better run our sovereign funds. http://asiasentinel.com/index.php?option=com_content&task=view&id=1549&Itemid=233

5) Die die must have wall street bankers sell us ( Town Councils included ) poisonous "investment" products.

Afterwards, ….. we all die ?

P.S. maybe we are all fascinated by their obscene buddy-buddy compensation – how would you like to receive US$25 Million for being a Merrill Lynch banker for just 4 months ?
http://www.fool.com/investing/dividends-income/2008/10/22/another-insane-wall-street-pay-story.aspx
how would you like to crash big name banks and still receive tens of millions dollars - no prior experience required ?
http://whatilearnd.com/post/52449126/golden-parachutes

And we are told off we are greedy for 5% return, and deserve our pain and suffering !

LA
Posted by Tan Kin Lian at 6:53 AM

 

[eeoror88]

Mr Hai (hope you not cantonese),

Can you please stop your monotonous ramblings ?? You sound like a broken down recorder !!

 

[Ah Hai]

Mr Hai (hope you not cantonese),

Can you please stop your monotonous ramblings ?? You sound like a broken down recorder !!

who are you to tell me when to fxxk how to fxxk??

 

[Ah Hai]

Thursday, November 20, 2008
Personal values and characters
I wish to share some of my personal values that define my character:

> work for the benefit of all, and not for self-interest
> respect other people, including the poor and weak
> be fair
> be honest
> be courageous

I hope that more Singaporeans can share these values, for the good of the people of Singapore.

AFTERNOTE:
I wish to thank Everlearning for the following additional values (which I agree with):
> be humble
> be kind-hearted (or thoughtful or considerate)
Posted by Tan Kin Lian at 7:33 AM

 

[Ah Hai]

Thursday, November 20, 2008
Explanation on CDS - Vanguard's Bogle
http://www.iddmagazine.com/issues/2008_44/187499-1.html?partner=dealbook&page=1

Suppose you have a house and you insure it against fire for $200,000. Now, suppose that you have 130 neighbors, 65 of whom are betting that it will burn down and 65 of whom are betting that it won't. And, that's approximately the ratio we have got here.

It's supposed to be about $2 trillion debt instruments covered by CDS and $62 [trillion] or $65 trillion of credit default swaps. Half of them are in one side and half of them are in the other. So, you could say "well what's the matter with having your neighbors insuring or betting your house will burn down or betting it won't burn down?"

What's the matter is you have to keep a close eye out for arsonists. So, we have arsonists out there playing the CDS market, to sink your firm, make money for themselves and their hedge funds. They want those premiums to go way up and playing games like that

 

[Ah Hai]

Thursday, November 20, 2008
Sieze the opportunity
Some people said that I "siezed the opportunity" to represent the misled investors. This statement has a negative connotation. It does not fairly reflect my intent.

I hope that the Government can help to find a fair collective solution for all investors who have been misled into these investments, regardless of their age or education level (provided that the independent investigation shows that they were misled).

I do not enjoy being the target of personal attacks and cynicism, and to take the burden of attending to so many aggrieved persons asking for assistance. I wish to have a more tranquil life.
Posted by Tan Kin Lian at 1:14 PM

 

[Ah Hai]

Thursday, November 20, 2008
Straits Times deleted these sentences
The Straits Times Forum editor published my reply to Chua Sheng Yang but deleted the following sentences:

I can only recall the saying, “None are so blind as those who will not see the truth”.

Mr. Chua made a personal attack on my character in the last three paragraphs of his letter. I am surprised that your newspaper found it fit to print these unsubstantiated remarks, as they are not relevant to the main issue. I shall not respond to them.
Posted by Tan Kin Lian at 7:27 PM

 

[Ah Hai]

Thursday, November 20, 2008
Lodge your complaint now, before the fund collapsed
Dear Mr. Tan,

I have just visited to H. I think you may want to highlight the following:

1. PS6 is not worth 1.7% of original value

2. PS6 now has a high chance of worthless, but no letter was sent. However, the letter dated 10 Nov 2008 from H only said credit event has occurred. It is up to you to research. Thanks to your website, which is very informative.

3. I try to see my wife’s RM and I can sense that they are systematically preventing her from meeting us. They arranged until we insisted, or otherwise they give us a written letter whey we could not see our RM. I thieir strategy is that once you lodge the complaint, the RM dropped out. At it becomes words against words, in cold environment. RM become shun from lying infront of the client.

4. I went to the branch and they originally sent a very junior RM who is only prepared to take complaint and not explaining the product.

5. My RM was on MC although I had scheduled and confirmed meeting with her. Even the branch manager did not even know she is on MC. She said she only started relieving as Br Mgr the day before.

[I had 3 different stories. The counter staff said RM was having outside appointment and will contact her. The relieve RM said she was very sick, but did not know we spoke to our RM the day before. The more senior RM said my RM has stomach flu. The branch manager did not know my RM was on MC until I told her what they told me.]

6. The RM whom met us even dare to say, even if the prospectus is given after sale, as long it is given on the same day, it is considered given BEFORE sale. It shows how green those people they use to speak to us.

IMPORTANT
I think you may want to advise others their complaint for mis-selling, if any, even before the fund collapsed.

As for my case. I am clear it was mis-selling, because the RM today said differently about the product compared to the RM at point of sale. I think it is very likely that the current RM and original RM may not understood the product.

I think we will do a SD and file it, and let nature takes its course, bec it is already a dead horse unless the Authority really takes action.

I really feel painful for those who may not know how to take care of themselves. I am saddened not because of the loss of my $50,000, but how institutions take advantage of ordinary main-street workers’ hard earn saving. This is SOFT TALK for our HARD CASH.

We are grateful that you stood for ordinary men and women, and yet being criticized by the Chua Chap [don’t even bother to remember his name].

LKH
Posted by Tan Kin Lian at 8:33 PM
7 comments:

Anonymous said...

how this not be a POLICE CASE?

PURE FOOTBALL KICKING AROUND.
8:41 PM
Anonymous said...

for a bank which holds your FD, all your maturity date are known to them, Sr Mgr Knows when to assign RM in cosy environment with a cup of italian brewed coffee....and sweet talk sales.

I wonder how many RM dare to sacrifice herslef and be on the witness stand?

AG can call these RMs turn on witness , only can we know the dirty sales tactics to switch ahPek and AhSoh FD to subscribe Mini-Bond.

Now they are undergo another Training, how to talk so that the bank are not an Idiot.

friend 50,000 is a lot of money.
8:55 PM
Anonymous said...

I think this is typical experience of the victims, repeated many times in various forms but with the same substance - to quote MM Lee " go in with your eyes open" and "case closed".

As I said before, be strong to prepare for the worst.

Or to put it bluntly, you can struggle and fight fiercely but finally still got killed.

Only Heaven can provide justice later to the victims.
8:59 PM
Anonymous said...

Get it in your head before you might decide to do anything

There will be NO COMPENSATION.

Only once you accept that, you will be clearer what to do. next or whatever.
9:04 PM
Anonymous said...

you till have another Power....>

RUN on the bank. What other bank can we swtich..?
9:11 PM
Anonymous said...

Exactly the same happened to me at Hong Leong. I was told on Monday the RM on sick leave for 2 weeks therefore they will call me in 2 weeks later. Then my friend went there following day and was told the very same RM is on long vocation. These FI are delaying our complaint for as long as possible with such lies.
MAS should mandate FI to settle all complaint within 3 working days.
11:01 PM
Anonymous said...

This time next week you will be told that the RM has been retrenched. Case closed. Lets move on. More good years. Golden Period.
1:26 AM

 

[Ah Hai]

Thursday, November 20, 2008
Poor return from Living policy
Dear Mr. Tan,

I bought a Living policy with NTUC when you were CEO. Lately, I read that you recommended against the Living policy. Can you clarify?

REPLY
I have just surrendered my Living policy. After paying premium for 12 years, my cash value is still below the total premiums paid.

In the earlier years, the bonus was quite attractive. Later, the bonus was cut due to the economic downturn in 2003.

There was a chance to restore the bonus earlier this year, before the financial crisis, but the management refused to do so. I have decided to terminate the policy as it is likely to provide a poor return over the next few years.

This poor return applies to most life insurance policies issued in recent years. It is better for the consumer to buy term insurance and invest the savings in a low cost investment fund. With the drop in investment values, there is potential for a good return over the next 10 to 20 years.

http://www.tankinlian.com/faq/savings.html
Posted by Tan Kin Lian at 9:06 PM

 

[Ah Hai]

7 comments:

zhummmeng said...

In the past Whole life Living products gave 'decent yield' because of many factors, like low cost of operation, lower salary for the ceos, and senior management and of course the bond yield was high and the cost of mortality was low.Equity markets were good.
Participating product or WL is a function of these factors. These factors determine and impact the value of protection and return.
If you notice consumer products like electrical appliances and others why do you think their cost is getting lower and lower over time. It is because there had been new developments, new discoveries and new methods of manufacturing and the demand for them has resulted in economy of scale..
Can you say the same for life insurance products like WL and endowment? Can whole life products be manufactured in a low cost jurisdiction?
No.!!! Were there any discovery or innovation or scientific discovery that reduced the cost of whole life product? What about the bonds? Have the bond yields gone higher or the equity or other assets return got any better? Has productivity of human capital returned better yield? NO, all costs have gone up, salary for ceo has gone up many folds , senior managers, distribution cost spiral up, investment return gone lower.
Take your living WL product you bought many years ago and compare to the present products. Look at the cost of insurance(in the premium), the protection value per dollar premium and the return, the break even, you can see the products are very poor in term of protection and return(projected 3% after 35 years)
Most people buy WL for both protection and return, right?
There is no way a product can deliver both. You must identify your needs carefully and separate them. Then you can get the best out of them.
WL products deprive you of adequate coverage because it is expensive that you can't afford to address your needs FULLY.If you think you don't need to be fully covered I suggest that you don't even buy it at all.If you think that something is better than nothing then i pity your family. You only please the insurance agent.
The truth is today it is VERY DIFFICULT to justify the use of WL to address needs.There used to be one last use of WL but when estate duty was repealed it was the last nail to the coffin of WL.
I hope I have convinced you why WL products suck. If you look at today's products, eg. like ntuc vivolife you can see the insurance company is desperately trying to hide the rotten return and protection with 'red herrings' to distract you. In fact it is not uncommon that the unethical salespeople use the 'red herrings' to misrepresent the product.
And limited payment product is a marketing gimmick that doesn't add value instead increases the difficulties for more people to be insured adequately.Good for the agents' commission only. Another red herring. Don't be fooled. Back to basic is the still the ideal.
Today WL products have lost all its uses but due to the greed and unethicalness of the agents and the companies and the ignorance of consumers that WL is still around.To gratify their greed insurance agents or consultants are stooping to unethical means to con the consumers resulting in money no enough or protection no enough. This fact is borne out by MAS statistics that even after centuries of insurance selling by the "noble insurance agents" people are still grossly under insured and unable to retire. MAS found out that it has been due to CONFLICT OF INTEREST.The deputy MD of MAS in his address to LIA urged that this must be changed and the commission must be replaced by fairer way of remuneration to avoid conflict of interest.. Averagely people with small family need at least $500K to address dependent replacement income but unfortunately they have about $100K only and this is only one need and there are still others.. (MAS's statistics)
My advice is to cancel and replace it with a living term and cover yourself up to 5 times your family living expenses. Whatever remains invest them in a regular plan like ID7 ideal plan from NTUC BUSiness centre.Remember it is not ID2..
10:58 PM
Anonymous said...

In buying insurance policies, you don't know whether you are in for a bad deal until after a long time because cash value is not guaranteed. But at least these won't become zero unlike Minibonds because NTUC INCOME or our local banks won't become bankrupt, no matter what. If these can become bankrupt, Singapore and Sing dollar also finished. So rest assured.
10:59 PM
Anonymous said...

Of course NTUc won't go bankrupt but you will ..the policyholders.
Not enough to provide your family when you leave this world because the agents made you buy limited whole life living. You only left enough for your family to bury you.
or the annuity conversion option leaves you barely enough for subsistence living that you need supplementing by foraging the rubbish bins for extra.
How can you buy something that you leave it to chance?Let me tell you your special bonus has gone down the drain in this financial turmoil.
11:43 PM
Anonymous said...

Yes , buy term and invest the rest.
Cancel your living policy and buy a term. NTUC vivolife and revosave are rotten products. Avoid them. Avoid the agents disguised as some kind of
consultants . Can't you see through the disguise, the salesman, the product pusher below? Beware of the
product pusher. See the damage the RMs in the banks have done by pushing the products.

Twice beaten thrice shy
12:12 AM
adego said...

many surveys shown that at least 80% of investors lost money and can't beat the benchmark.

not many are good enough to handle their own investment.

if u invest into funds, we are exposed to market risk and currency risk (underlying assets), and the 'weighted-average of biz risk'. index funds? not much choices in Singapore. and recent extreme volatility has not done any good to the index funds.

direct into sgs bonds? do yr own stock picks?

unless u have a strategy or game plan that is robust, and u follow it religiously. Even with all discipline and care, there is no guarantee of success.

buy only term?
sounds good and economical, however, there are short-comings that needs to be addressed, such as non-guaranteed premium, highly expensive premium for permanent term plans.
It's still a good tool with some limitation.

At the end of the day, be it WL or BTITR, we won't know which is better for us. Why so?

If we choose Path Z, that will lead us to a cross road of P, Q, R & T, then we choose Q, that lead us to... basically, it's not our call to know what will happen if we choose Q, Y, or H...

simple illustration:
Fund managers buy into Lehman bros, Fannie and Freddie, Citiraya, CAO, China Printing, Unifood, IndyMac, AIG, etc...
These fund will underperform the index, and will cause substantial losses to the fund u bought, do u konw it or have control over that? u owned a singapore equity fund or even a global equity fund from aunty lucy? what if their fund has a few of the above companies? u won't know till it happens!

Another situation...
Theoretically, Plan A sounds good,low cost term ins, low cost investment, and when you implement Plan A for Mr. X, he just screw it up. Why so? becos Mr. X can't handle investment or some money discipline issues. very frequently, we make decision based on emotion.
1:25 AM
Anonymous said...

Fool me once, shame on you.

Fool me twice, shame on me.
5:49 AM
Anonymous said...

the 4 comments sound like same persons...
insurance is insurance.
FD minibonds is minbond

Friend...if you die, you get pay.
Minibond, if you die, you die. if you fight till die, you may never get any cent back.
6:01 AM

 

[Ah Hai]

Thursday, November 20, 2008
Relief loans to repay credit card debts
Many people expect the next big financial crisis to be triggered by the failure of the credit card debts.

I hope that action can be taken to minimise the impact of this impending crisis. I believe that a large number of people borrowed on credit cards due to reduction or loss of their earnings. The high interest rate on the credit cards add to their burden.

I suggest that a relief loan be provided to these people who have runned up the credit card debts for this reason. This relief loan can help them to reduce their heavy debts. My proposal for this relief loan is set out below:

http://tankinlian.blogspot.com/2008/11/relief-loans-to-replace-loss-of.html

I suggest that the banks should give a discount on the repayment of the credit card debts through the relief loan. As they have earned a high rate of interest before, they should take a reduction in return for the repayment of the loan.

I also hope that a limited amount of relief loan be given to other borrowers who have incurred a credit card debt for other reasons, e.g. over-spending.

The relief loan, charged at a modest rate of interest, will give the borrower a better chance to repay the borrowings, and prevent another round of financial crisis.

This targeted approach is better than giving every person a cheque under a stimulus package (as was practiced recently in USA).
Posted by Tan Kin Lian at 9:24 PM 8 comments

 

[Ah Hai]

Anonymous said...

Your approach is to keep the goose alive. This is the long-term view.

Their approach is to kill the goose and roast it. This is the short-term view.

Your view and both humane and profitable.

Their view is both pragmatic and maximizes profits (for the current CEO).

9:56 PM
Anonymous Anonymous said...

Banks may have no time for these ideas as it is troublesome and the benefit is minimal to them. The most you can expect is a restructuring of repayment or failing that, bankruptcy to the borrower. This has been the practice for many years and during boom and bust times.

Anyway some people even view bankruptcy as no big deal. That's why they will spend and spend without 2nd thought.

10:51 PM
Anonymous Jacky Goh said...

I think banks are legalise loansharks. Come on, 24% interest! Imagine compounding 24% interest, it will accumulate very fast. I wonder who approve such a high interest. Anyway, the banks are looking for trouble themselves. Why give easy credit especially to those who cannot afford to pay? I think it is just another sub-prime crisis waiting to happen.Sometimes I think banking is a business with no conscious. They are out to make profit at the expense of people.

11:41 PM
Anonymous Anonymous said...

Perhaps you might be interested in the view of our minister at http://www.p65.sg/ on Lehman or Layman Woes.

11:53 PM
Anonymous Anonymous said...

in that case, those who holding multiple cards, go to the counter, just cut into two and cancel it.

Just keep one with the minimum credit limit.

Use cash.

Cos the lesser the people in the country uses FUTURE EARN money the lesser bankers can play with selling yet another credit, which is a hunded of billions. Everyday, they ask you to spend and free Toasters...why?

Chances of banker earn 18% on O/s balance is 60%,
Chances of VISA/MASTER.earning 1..2% from transaction is 100%.
Merchant pays for goods sold, which could already marked up to include card fee.

Use cash. Cash flowing in the economic help the growth.

Electonic money...debit card..ya ya..what u say?

would you enjoy everyday counting all your cash in your wallet, pockets?
Or sorting out credit card chits and month end statement?

I had just cancel one of my Gold card...

12:12 AM
Anonymous Marc said...

I do not agree with this view at all. People should learn to be responsible for their own actions. One of the way for them to learn is through pain. If there is always an easy way out, they will never learn!
Once again, it is about personal responsibility

12:21 AM
Blogger adego said...

there are enough good advise, however, very few take heed of sound counsel.

How did credit card company make money, while they openly declare they are loan sharks, charging 24%p.a.?

nobody force the cardholders to roll over their credits!
while some may have the will to pay, many just let it roll over, due to poor money management.

It's the human weakness of handling credits - the card company has done their sum, that's why the huge 'bad debt' is just a piece of cake, they will continue to make money, and credit card biz and its 'bad debt' is unlikely to create any credit crisis.

12:48 AM
Anonymous Anonymous said...

perhaps it would be better to offer relief to jobless who cannot meet their debt obligations by allowing them to "borrow" from their own CPF accounts instead

much like buying a house, you can take money out of CPF, but once you get a job, some money will have to go back to 'repay'/top up your CPF

this might be a better solution as no interest needs to be charged. borrower is 'borrowing' from his own retirement funds, but as with buying a house or taking out study loan with CPF, this money will be repaid

lastly, this should only be a facility for jobless people. those who have been irresponsible with spending need to learn a hard lesson; unless proven that they suffered an UNFORESEEN drop in income that cause them to be debt (something like a big pay cut instead of a job loss) then they can be considered applicable

2:28 AM
Anonymous Anonymous said...

i have used credit cards for more than 30 years now and between my wife and i, we have 12 cards but we never use the credit extended. we use the cards in 2 ways. one as a mode of payment instead of cash for convenience and security and the other to get discount by merchants like food outlets. we never spent just because there is a card promotion. we will spent because we wanted to and the cards are just a mode of payment. the balaces are settled monthly.

7:33 AM

 

[Ah Hai]

Friday, November 21, 2008
Top up on margin calls
If you borrow money and pledge shares, the bank will check the prices each day. If the values of your holdings fall below the amount borrowed less a safety margin, the bank ask you to put in additional money. If you do not, you have to sell the shares at its depressed prices. This is called "margin call".

This causes the prices to fall further. As they are no buyers, the prices can drop a lot. This triggers more margin calls.

Solution: do not invest with borrowed money. Invest with long term savings.
Posted by Tan Kin Lian at 7:39 AM

 

[Ah Hai]

Friday, November 21, 2008
Much to learn from American politics
When John McCain lost the election, he gave a magnanimous speech conceding defeat and pledging to work with Obama as "my President".

In turn, Obama acknowledged McCain's long record of dedicated public service to America. He pledged to work with McCain.

Obama met with McCain a few weeks later to discuss how they can work together to solve America's problems.

Here is a country with 60 times the population and talent pool of Singapore. They know how to work together to find the best people to solve their problems.

In Singapore, we have a limited talent pool. We need to find a way to tap the best of our limited talents. We should rely on our local talents, instead of foreignt talents who do not have a long term interest of our nation.
Posted by Tan Kin Lian at 7:58 AM

 

[Ah Hai]

Friday, November 21, 2008
Mental health concerns during difficult times
Dear Mr. Tan,
First of all, thank you for all the help and info you provided in your blog and in Hong Lim Park.

With the recent saga over the structured products and mini-bonds, most of the affected investors are going through emotional stress as well as financial stress.

Sad to say that I am also exposed to one of the products and have to go through emotional “struggle” everday.

On one side of my mind, I have to stay alert to handle the daily routine, the other side worrying on what will be the outcome of my hard-earned money … etc

I believe that all investors are affected will be going through the followings : before taking every steps, during the process and while waiting for more info, you have to go through the stressful grinding of you brain (and heart) again and again.

> Complaining to the FIs …..
> Waiting for reply ….
> Going to FiDrec ….
> Waiting for more info from the news ….
> Will I get back my hard-earned money … how much … when …

It is like, going forward, but dragging your feet in a muddy field.
It is like, when you are taking a break, you mind is still spinning.
It is like, when your child gives you a smile, you have to put in extra effort to move your facial muscles to reply his greeting.
It is like, you want to shut down the computer, but the hard disk refuses to stop and keeps spinning.
It is like, you want to sleep, but you are worried about the outcomes.
It is like, you want to sleep, but you are also worried about other investment on hand that may have “toxic ingredients” in them.

BUT don’t know how to check, don’t know whether you should believe you RMs or insurance agents (or friends that you have bought from). Not saying that they are lying but they may not have the knowledge to “detect” the “toxic ingredients”

This list will go on and on and on and on … …

With all said above, I would like to chip in some of my thoughts that I think it will be helpful to all the distressed ones :

Calling all volunteers from appropriate organizations, reach out to these people to help relieve their emotional stress, especially the old folks, uneducated ones and those that are all alone (either they have no friends and relatives to approach for help, or they are afraid to let them know about they involvement in the structured deposit products)

Seek medical help if you are having problem coping with the stress and having problem sleeping at night. I have done so. I have to “force” myself to sleep by taking the medication from my doctor, so that I can handle the routines in the day.

This is a list of useful phone numbers that I have found from the web :

Samaritans of Singapore (SOS. 24 hrs) 1800-221-4444
Singapore Association for Mental Health Helpline 1800-283-7019
Care Corner 800 Hotline (in Mandarin, 10am-10pm daily) 1800-353-5800
Touchline Mon-Sat (10am-10pm)(for 13 to 25 year olds) 1800-377-2252
BABES (For teenage girls facing pregnancy crisis) 1800-833-6666
Pregnancy Crisis Service Mon-Fri (9am-5pm), Sat (9am-1pm) 6339-9770
Association of Women for Action and Research Helpline (AWARE) Mon-Fri (4pm-10pm) 1800-774-5935
National Family Service Centre (FSC) Helpline 1800-2255-372
SENIORS helpline (for older persons and their care-givers) 1800-555-5555
TOUCH Caregivers Centre 1800-352-1622
SAGE helpline Mon-Fri (9am-5pm), Sat (9am-1pm) 1800-3538633
Alcoholics Anonymous 6475-0890
Eating Disorders Helpline - Tel: 6345-3435 (10:00am - 4:00pm Phone Mail Mon-Fri
Source : http://www.giftoflistening.com/resources.html

Thank you Mr. Tan for being so helpful and kind, and taking your time to read this letter.

My wife and I are so stressed that we have to seek medical help so that on top of our busy daily routine, we will not neglect our toddler son and of course our health.

This is in fact the main message I would like to get across to all the distressed and worried ones out there. While fighting for what we believe is right, we still have to take good care of ourselves and our loved ones.

God Bless All !

FO

 

[Ah Hai]

Friday, November 21, 2008
Social grace in commenting in other people's blog
I wish to thank Everlearning for this comment in my blog:

Hi Mr. Tan
Coming back to this blog ..... (I was shocked) to read some unhappy comments. As a guest, I have no rights to impose my host in whatever way in his house. I suppose bloggers have to exercise some discreet and courtesy when commenting in other people's blog. This is social grace.

MY VIEWS
I have received several personal attacks and sarcastic comments by people posting anonymously or under a false name. They expect their comments to be published here in the name of "presenting the other view". I expect these people to use their real identity, if they wish their contrary views to be posted.
Posted by Tan Kin Lian at 9:35 AM

 

[Ah Hai]

Friday, November 21, 2008
How RMs are taught to sell financial products
Dear Kin Lian,

I read you blog with interest everyday and after hearing about this fiasco with the minibonds. I am glad that I had left the banking sector many years ago. I have no interests in any of the minibonds. Things may have changed now, but I would like to relate my experience as a RM in a local bank then.

I personally feel that banks should try not to sell so many different types of financial products to the mass market.

This should be done by the broking housings as they are more equiped to do so. Anyway back to my experience.

During the haydays when units trust were just being introduced to the markets, I remember Aberdeen Global Tech Fund was trading about 1.90+ many banks were scrambling to earn commission given by the fund houses. (There was an upfront sales charge of 5%, how much given to the bank, I am not sure.) Banks were flushed with Fixed Deposits and management was very short sighted. why? Because it was a liability for the bank to hold fixed deposits.

As bank sales staff, we were like attending fund launches almost every week. The product manager would come in, talk a little about the fund and give us sales target. Also started to say what customers are suited. With sales target, what does it mean? It means you need to milk you customers. We were given customers details especially those that were going to expire and also made to stay after work to make calls to them to `recommend' them this product.

Well, as sales people, we can't argue right. We were employed to do sales. How we achieve it is not they problem, just sell and be rewarded with commissions. But at the same time, we were named Financial Planner. What about this?

I remember that there was this time that the bank was selling `capital protected' funds. Of course we knew that Capital Protected is a marketing gimmick. Your capital is protected less certain charges.

Anyway, I was in mass market sales. There was a bank staff that managed to persuade a customer to place SGD 2.5 milllion in the fund.(Guess what, the fund total size was 50 mil) Any financial planner would know that is not the way. It would be best to diversify to Cash account, Fixed Deposits, Equity funds, etc). We were like shocked when we heard this.

One more point to add, usually bank sales staff have a limited time to do sales and they are taught to close the seal in the shortest time possible. (We were actually taught to close a `long term saving plan' in 15 minutes.(which is actually an insurance plan) I am not against this, but wouldn't it be better to take some more time to explain to customer if she/he actually needs this?

Let me say again, this happened many years ago. I don't know whether is it the same. If you are saying that banks had introduced the FNA (Financial Needs Analysis) signed by the customer, let me ask you one thing, WAS IT DONE PROPERLY? Do you think the aunties and uncles who do not speak English know what this document is about? I can tell you they just sign the document based on the trust of the bank or the sales staff.

This is all I have to say. Thank god I left that industry.

LW

Posted by Tan Kin Lian at 3:06 PM