Friday, March 27, 2009

Executive Rewards

" When reward is at it's pinnacle, risk is near at hand" - John Bolge

My eyes popped out after reading a report of S$20.5 million bonus to CapitalLand CEO, Liew Mun Leong. For that amount of money, we can get 10 Singapore Prime Minister, Lee Hsien Loong or more than 30 US President, Barack Obama for the job. They would have done a much better job at a substantially lower remuneration.

CapitalLand reported a 88.4 per cent fourth-quarter net profit plunge to S$78 million, due to revaluation losses on its investment property portfolio, a lack of write-backs for provisions and weak sales. I would give Mr Liew a F grade for that kind of performance. Are there no better person in this world for the job at a more decent remuneration?

In order for such huge bonuses, most CEO would have to take a much higher risk on behalf of the company and without doubt CapitalLand have purchased many properties at the peak in the last 2 years. Shareholders would have to bear the brunt of the CEO's and his senior executives mistakes for being too aggressive in their pursuit of profits.

CapitalLand recently completed a one-for two S$1.84 billion rights issue further squeezing blood out from shareholders who are already hard hit by the financial tsunami. Mr Liew said the group is bracing itself for a long, cold winter ahead, I would suggest he donate some of his bonuses to buy winter clothing for the shareholders.

Sunday, March 22, 2009


"The perfect speculator must know when to get in; more important he must know when to stay out; and most important he must know when to get out once he is in" - Michael W. Covel

We have not put up any trade for the week as we have no idea where the market is heading in such a quiet and narrow market range.

Our profit/loss remains the same as last week.

Inflated Insurance Claim

First, we have the greedy bankers, now unscrupulous lawyers banding together with errant workshop owners and doctors to inflate injury claims from even minor accidents. The "profit" to be eventually shared between the workshop owner, the lawyer and the claimant.

General Insurance Association (GIA) reported that bodily injury claims had shot up 86 per cent - from 8,704 in 2007 to 16,174 last year with a record underwriting loss of $214 million. Insurers are definitely not doing enough to combat the abuses and simply passing on the costs to motorist. Many claims are suspicious definitely with the help of crook lawyers who exploit the loop holes in the law.

More than 20 years ago, I had a friend whose partner was a workshop owner. I was introduced to him as a brave stunt man. After much probing, my friend later explained that his partner normally will inflate the insurance claim by ramming a minor accident vehicle into a tree himself to make it more serious. Before that, he will dismantle those parts that he need to replace when he repairs the vehicle later. He will then take photographs of the severely damaged vehicle to submit the inflated claims.

In order for a smooth claim, my friends partner entertained the insurance surveyors at the nightclub and bribe them over drinks and girls.

Another incident happened a few years back when my company van driver got into a minor accident with another van. We sent the van for repair that cost less than S$300 and imagine our shock when the opposite party claimed our insurance S$6,000 for the minor repair to his van. That's outright cheating, ridiculous and unbelievable but the insurance company paid up, just to avoid long costly legal battle with the claimant's lawyer.

More enforcement need to be done and the errant workshop owners and their accomplice brought to justice to prevent the situation from getting worst at the expense of the motorist.

Saturday, March 21, 2009

AIG Scandal

"In nature there are no rewards or punishments; there are consequences" - Horace Annesley Vachell

I can understand the intense public fury over the huge staff bonuses announced by AIG doling out US$165 million to its employees including those executives from the financial products unit that brought the insurer to near collapse. AIG has received US$180 billion in aid to date after numerous bailout from the US taxpayers who are tired of the corporate greed and excesses.

I have a number of insurance policies with AIA for my family and was very angry after they announced a few years back to increase another 4 years of premium I must pay for the policies which was fixed at 15 years. What can we do except to curse and swear at the company for shifting the goal post? The company has mislead us into buying insurance policy from them with small print protecting them from misrepresentation. I am one of those suckers who have to pay a few years of additional premium so that these greedy, dishonest executives can have a bigger bonuses.

Why are we always on the losing end? Why didn't the Singapore government step in to help the thousands of policy holders caught in the same situation? Miscalculation by AIA? 1 year of additional premium would be more than enough but 4 years is daylight robbery! Where are all these additional premium going to? Bonuses for the employees and excutives who have made the mistakes?

Saturday, March 14, 2009


"Optimism means expecting the best, but confidence means knowing how to handle the worst" - Max Gunther

We have taken another hit for the week as our profit continued to head south. I am still holding long 1 Topix against short 2 Nikkei contracts with a paper loss of around S$2,000.00. I did not expect the Tpx/Nk spread to open up so wide in just 2 trading days from +40 pts to a low of -360 pts. I was caught off guard with such a big move but was lucky to just hold a small position in this special account.

I suffered a much heavier losses in my own trading account as I was holding a much bigger position. Over confidence and wrong assessment of the market wreck havoc in my trading for the week. Though I have not fully recover from my operation, not being fighting fit has cost me dearly, but no excuses, I have made the wrong call.

Our profit to date for the special account has drop to S$15,806.00. It's lucky that I have been conservative, if I have gone in full margin for the Tpx/Nk position, it would have wipe off all the profits we have accumulated for the past few months. Making money is so difficult, so much time and effort taken to slowly built it up but losing money is so easy once you are extremely confident and just a little stubborn.

Monday, March 9, 2009

Warren Buffett

"It's not just whom you sleep with, but also whom they are sleeping with" Warren Buffet on Derivatives contracts which keep various parties entangled for years and can create real hazards once those assets start deteriorating.

In his annual letter to shareholders he admitted making at least one major mistake and several lesser ones calling it "unforced errors", his worst year in four decades. Berkshire Hathaway posted a 62% drop in net income for 2008, and it's shares which peaked in late 2007 at over US$148,000 each closed 27/2/2009 at US$78,600 each.

For the most revered investor in the world, he admitted "did some dumb things". I admired his courage to face up to his mistakes unlike those from Temasek and GIC. Being human, we are sure to make mistakes, most importantly, we have to acknowledge the mistakes and learn from it to avoid repeating the same.

Saturday, March 7, 2009


Market players have been extremely nervous over the past few weeks resulting in a smaller trading range and a choppy market that make trading very tough. Account 1 took a hit as we went long in the Simsci (Singapore Index) and shorted the TW (Taiwan Index) to hedge our position. We have not expected the TW to be the only one in the Asian market that went against the trend. Luckily we cut our losses to minimise the losses, it's a real short squeeze that kill many shorty.

Pit traders have always call the TW market the gangster pit, the big boys control the market and squeeze the smaller players. They are very good in pushing the market up and down sometimes for no apparent reason. But, it is precisely because of all these players that the TW market is very active with good daily trading volume as many professional scalpers join in for a piece of the cake.

I am more conservative in handling Account 2 and has built it up slowly taking mostly hedging position between Nikkei and Topix which I am very comfortable with. Could have done better if I have a tip top trading platform and once I fully recover from my operation.

From the performance of Account 1, I think Robert is having problem adjusting and focusing, we need to be patient and give him more time. I believe he will be able to do it.

We lost some ground and our profit to date is S$17,601.00.

Sunday, March 1, 2009


A tough week, market continue to test new lows despite the stimulus package. I am not sure where the bottom is and with more bad news streaming in, it might take longer than expected for any recovery.

We have been very cautious and profit to date is S$20,061.00

As reflected from the statement 2, I am holding a outstanding hedge position 0f -4 Topix and +8 Nikkei.