There are three sources of profit for equity investments. These are: Capital gain, dividends and reinvestment income. Reinvestment income is the result of reinvesting the dividends back to the same investment. Mathematically it is: Total Profit = Capital Gain (or lost) + Dividends + Reinvestment Income. For portfolio it may not be easy to track what is the exact amount of dividends because … [Read more...]
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Lesson learnt on Temasek’s investment in Barclay
Today's Straits Times reported that Temasek sold its Barclay shares during the December/ 2008/ January 2009 period. This period is right at the bottom of the financial storm. I am sure Temasek is going to face the firing squad again. It is not my intention to criticise them but there are precious lessons we can learn as private investors: * As Temasek has a huge army of smart analysts and … [Read more...]
Stocks are subjected to “Phantom Profit” manipulation
Many clients have asked me to help them to invest in stocks. I have thought about it for a very long time and considered all possible business model that I can use to do that (i.e. how am I going to charge clients fee for doing this). Finally, I figured that the best way to advice in stock is to educate my clients on how to do that on their own. Similarly to what I feel in other financial matters, … [Read more...]
Difference between customers, bondholders & shareholders
Yesterday, Prudential Asset Management came to our office to provide a talk on market outlook and to promote their funds. The speaker said that the valuation for bonds are very low. This is because the current default rate is 20% but the bond prices are reflecting a default rate of more than 50%. In the Great Depression time, the bond default rate was 47%. So based on this reason, bonds are … [Read more...]
The Parable of the Rich Fool is a good short investor, poor long-term investor
There are two types of persons in this world: Those who plan and those who do not plan. For those who plan, there are further sub-categories of people – those who plan for short-term and those who planned for long term. I have something to say about these two sub-categories. There are many kinds of planning. Time management, project management, business planning, succession planning, estate … [Read more...]
Simple Financial Planning For A YOUNG GRADUATE
Upon graduation and finding a job, the first thing a new graduate would like to spent is their first paycheck. However, is this the right way to do? We advocate that the young person starts making a financial plan. For young graduate, financial planning need not be complicated. In fact, it is quite simple. In this issue of INVEST FEB/MARCH 2009 edition, Wilfred Ling tells us how young graduates … [Read more...]
Learning From Crisis / Build a Better Portfolio
How is money created and why the manner it was created is causing havoc in the marketplace? What are the things we can learn in this financial crisis? Moreover, how does one build a better portfolio in view of the current economic climate? For December 2008 issue of the INVEST, WIlfred Ling appears in two articles. Learning From Crisis and a interview with INVEST on Build a Better Portfolio. … [Read more...]
How a structured product can con you through a probability game
Many people like to buy structured product. Although this product is currently not popular anymore due to its poor publicity, but it will become very popular again because people has very poor memory. Some of these structured product is really lousy. To understand why, you will need to use probability maths to figure it out. Product A is linked with the performance of 6 companies. Product A’s … [Read more...]
Lessons to learn from Minibond (MiniBomb) at el
CIMB-GK Securities, DMG and Partners, Kim Eng, OCBC Securities, Phillip Securities and UOB Kay Hian announced that they may be compensating the “vulnerable” group of investors who have lost their money in structured notes linked to the Lehman Brothers. This follows after similar move by DBS Bank, Hong Leong Finance and Maybank. While many investors are happy about the outcome, there are many … [Read more...]
Profiting from Death (Life Settlements Wholesale Fund)
The first collective investment scheme for Life Settement was introduced in Singapore early this year for accredited investors. The Life Settlements Wholesale Fund attracted attentions from financial advisers and investors. Many financial advisers were wary of this fund because the risks involved are unfamiliar. Wilfred Ling investigated and did research into the fund and identify what kind of … [Read more...]
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