If you want to be an executive, billionaire, or US president, it’s a good idea to graduate from Harvard Business School!
You can read more about this on "The 25 Most Successful Harvard Business School Graduates" at this URL...
-------------------------------
The 25 Most Successful Harvard Business School Graduates
Business Insider By Richard Feloni
If you want to be an executive, billionaire, or US president, it’s a good idea to graduate from Harvard Business School.
Founded in 1908, HBS was the first institution in the world to grant a Masters in Business Administration.
The Harvard MBA has since been a hallmark of the elite, with George W. Bush, Mitt Romney, and Michael Bloomberg all earning the degree.
We sifted through HBS’s sterling history to find the most powerful, prominent, and financially successful grads that came out of Cambridge.
Walter Haas, Jr., Class of 1939, succeeded his father as the CEO of Levi Strauss & Co. He grew Levi’s from a regional California brand to one of the world’s biggest apparel companies.
1939 MBA Robert S. McNamara served as the US Secretary of Defense during the Vietnam War.
After nabbing his MBA in 1942, Philip Caldwell took over as the first non-Ford to run Ford Motor Company, where he led one of the biggest turnarounds in American business history.
Stephen R. Covey, Class of 1957, become tremendously influential after publishing his bestselling book ‘The Seven Habits of Highly Effective People.’
Robert Kraft, MBA graduate of 1965, is the chairman and CEO of the Kraft Group, which most notably owns the New England Patriots. He’s worth an estimated $4 billion.
Michael Bloomberg finished his MBA in 1966 and went on to found financial data company Bloomberg in 1981 and serve three terms as New York Mayor. He is worth an estimated $34 billion.
George Kaiser graduated from HBS in 1966 and is the chairman of BOK Financial Corporation. He’s worth an estimated $10 billion and his foundation donates over $40 million a year, mostly to early childhood education.
Henry Paulson finished his MBA in 1970, and joined Goldman Sachs in 1974, working his way up to CEO. In 2006, he left the bank to become the US Treasury Secretary.
Stephen Schwarzman, Class of 1972, is the chairman and CEO of the Blackstone Group. He’s worth an estimated $10.6 billion.
Ray Dalio got his MBA in 1973 and is the highly influential founder and co-chief investment officer of Bridgewater Associates. He’s worth an estimated $15.2 billion.
After finishing his MBA in 1974, Mitt Romney had a long career with Bain Consulting. He was elected Massachusetts governor in 2002 and has since been a never-say-die presidential candidate.
George W. Bush graduated from HBS in 1975 before working in the oil business, owning the Texas Rangers, becoming governor of Texas, and then serving as US president from 2000 to 2008.
Jim Koch, Class of 1978, left management consulting to start the Boston Beer Company, which makes Samuel Adams. He’s now a billionaire.
Anne Moore earned her MBA in 1978 and went on to the top of publishing, becoming the first female CEO of Time, Inc., in 2002.
Meg Whitman, MBA graduate of 1979, is the chairman, president, and CEO of Hewlett-Packard. She’s worth an estimated $2 billion.
John Paulson got his MBA in 1980 and went on to found the investment management firm Paulson & Co. He’s worth an estimated $13.7 billion.
After finishing his MBA in 1981, Chase Carey started an influential media career. He helped launch FoxNews and FoxSports, was CEO of DirecTV, and is now the president of News Corp.
Jamie Dimon graduated from HBS in 1982. He’s the chairman, president, and CEO of JPMorgan Chase and No. 22 on Forbes’ list of the world’s most powerful people.
Jeffrey Immelt, Class of 1982, is the chairman and CEO of General Electric. He was selected as Jack Welch’s successor in 2000.
Michael Lynton, MBA graduate of 1987, is the CEO of Sony Entertainment and the chairman and CEO of Sony Pictures. He also sits on Snapchat’s board.
Abigail Johnson got her MBA in 1988 and is today the chair of Fidelity Worldwide Investment. She ranks among the richest women in the world, with an estimated net worth of $13.2 billion.
Bill Ackman has taken over Wall Street since his ’92 MBA and turned Pershing Square into a $12 billion hedge fund.
Mark Pincus, MBA graduate of 1993, is the cofounder of social media gaming company Zynga. Today he’s worth around a billion dollars.
Sheryl Sandberg is largely credited with making Facebook profitable. The 1995 HBS alum initiated a global conversation about women and work with her bestselling book ‘Lean In.’
Sal Khan, Class of 2003, is the founder of the increasingly popular online learning site Khan Academy, which has received funding from the Gates Foundation and Google.
-------------------------------
Tuesday, September 30, 2014
Sunday, September 28, 2014
Why rate hikes are good news for stocks!
A friend had liquidated all stocks, citing Fed going to hike rates which is bad for stocks.
I held the contradictory view, in that I believe the rate hike is a sign that US economy is on a very firm footing, and hence several more very GOOD years to come for stock prices!
If only below news article come out earlier and my friend has read it.............
-------------------------------------------------
Why rate hikes are good news for stocks
History shows higher interest rates don't always upend stocks
Associated Press By Steve Rothwell, AP Markets Writer
FILE - In this Thursday, July 3, 2014, file photo, specialist Jay Woods is reflected in a screen at his post that shows five years of the Dow Jones industrial average, on the floor of the New York Stock Exchange. History shows higher interest rates don’t always upend stocks. The Fed is set to end its bond purchases in October and most economists expect the first short-term rate hike by mid-2015. These early increases, analysts say, are unlikely to derail the current bull market for stocks, because the Fed is raising rates in response to a growing economy. (AP Photo/Richard Drew, File)
The Fed's unprecedented economic stimulus has in large part driven a surge in stock prices since 2009. The central bank has bought trillions of dollars of bonds and kept short-term interest rates close to zero. That's allowed businesses and consumers to refinance their debt at lower rates, freeing up cash to spend.
But if history is a guide, investors have nothing to fear.
In the nine instances since 1955 that the Fed has started raising rates after a recession, the Standard & Poor's 500 index has risen by an average of 58 percent between the first hike and the peak of the market, according to LPL Financial, an independent broker-dealer based in Boston.
The Fed is set to end its bond purchases in October and most economists expect the first short-term rate hike by mid-2015.
These early increases, analysts say, are unlikely to derail the current bull market for stocks, because the Fed would be raising rates in response to a growing economy. Manufacturing expanded in August at the strongest pace in more than three years. Hiring is also picking up, along with consumer confidence.
"Rising interest rates are usually a symptom of the success of the economy, and companies are benefiting from it," says Seth Masters, chief investment officer for Bernstein Global Wealth Management. "Generally, that's pretty good if you're a stock investor."
RISING RATES, RISING STOCKS
Research from Burt White and Jason Nicastro at LPL shows that after an initial bout of volatility, stocks typically rise along with rates.
The last time the Fed raised rates was 2004. The market flinched at first, with the S&P 500 dropping 3.4 percent in July after rates rose from 1 percent to 1.25 percent. The index then climbed for another three years, gaining 37 percent between the first rate increase and the market's peak in October 2007.
Stocks rise when the Fed lifts rates enough to contain inflation, but not by so much that the hikes suffocate borrowing and lending. If the economy continues to expand, the benefits of stronger growth outweigh any headwind from higher borrowing costs.
A healthier economy also means stronger corporate earnings, which drive stock prices, says Jim McDonald, chief investment strategist at Northern Trust Asset Management.
Upcoming hikes are expected to be small and gradual, so they don't choke off growth, says Brad Sorensen, a director of market and sector research at Charles Schwab.
The median short-term rate supported by Fed policymakers at the end of next year is 1.38 percent, up from a range of zero to 0.25 percent currently.
RISKS
Of course, the Fed won't always read the economy right, and that's what makes stock investors nervous.
Four of the five previous bull markets since 1970 ended as investors got spooked by a recession, or the anticipation of one, and sold stocks. And what causes recessions? In three of the past five, it was the Fed hiking interest rates to slow inflation.
Typically, though, the problems for the economy and stock market don't come until after the Fed has hiked rates a number of times, not early in the process. Eventually, higher rates put a brake on the economy and crimp earnings, prompting investors to sell stocks.
The last cycle of rate hikes topped out at 5.25 percent, with the final increase coming in June 2006. Stocks peaked in October of the following year.
Still, some investors worry that the next hikes will defy historical patterns because of the Fed's unprecedented stimulus.
Once the central bank ends its third round of quantitative easing after its next meeting that starts Oct. 28, its balance sheet will stand at close to $4.5 trillion, about five times its size from before the financial crisis.
"A pessimist could say 'well, it's going to be different this time because the market's going to be inflated by all the stimulus from the Fed,'" Northern Trust's McDonald says.
Like Sorenson, though, he thinks the most likely scenario is that the Fed will raise rates gradually, the economy will continue expanding, and stocks will keep rising.
Some parts of the market are more vulnerable to rising rates:
— Dividend-rich shares of utilities, phone and consumer staples companies could get hurt, says James Liu, Global Market Strategist for J.P. Morgan Funds. Investors typically buy these safe-and-steady stocks when they are worried about a slowing economy. This year, they have been buying them for income because interest rates are low. Utilities have gained 9.3 percent, compared with 6.8 percent for the S&P 500.
— High-yield bonds, one of the riskiest parts of the debt market, are another worry for Liu. This debt is issued by companies that are more likely to default. If rates rise, the probability of companies defaulting also increases.
Investors will listen for more clues to the Fed's rate strategy at its next policy meeting in late October. Until more is known, investors may be in for a bumpy ride.
"We're going to be right back where we started in six weeks," says Liu, "So, it's not over yet."
-------------------------------------------------
I held the contradictory view, in that I believe the rate hike is a sign that US economy is on a very firm footing, and hence several more very GOOD years to come for stock prices!
If only below news article come out earlier and my friend has read it.............
-------------------------------------------------
Why rate hikes are good news for stocks
History shows higher interest rates don't always upend stocks
Associated Press By Steve Rothwell, AP Markets Writer
FILE - In this Thursday, July 3, 2014, file photo, specialist Jay Woods is reflected in a screen at his post that shows five years of the Dow Jones industrial average, on the floor of the New York Stock Exchange. History shows higher interest rates don’t always upend stocks. The Fed is set to end its bond purchases in October and most economists expect the first short-term rate hike by mid-2015. These early increases, analysts say, are unlikely to derail the current bull market for stocks, because the Fed is raising rates in response to a growing economy. (AP Photo/Richard Drew, File)
The Fed's unprecedented economic stimulus has in large part driven a surge in stock prices since 2009. The central bank has bought trillions of dollars of bonds and kept short-term interest rates close to zero. That's allowed businesses and consumers to refinance their debt at lower rates, freeing up cash to spend.
But if history is a guide, investors have nothing to fear.
In the nine instances since 1955 that the Fed has started raising rates after a recession, the Standard & Poor's 500 index has risen by an average of 58 percent between the first hike and the peak of the market, according to LPL Financial, an independent broker-dealer based in Boston.
The Fed is set to end its bond purchases in October and most economists expect the first short-term rate hike by mid-2015.
These early increases, analysts say, are unlikely to derail the current bull market for stocks, because the Fed would be raising rates in response to a growing economy. Manufacturing expanded in August at the strongest pace in more than three years. Hiring is also picking up, along with consumer confidence.
"Rising interest rates are usually a symptom of the success of the economy, and companies are benefiting from it," says Seth Masters, chief investment officer for Bernstein Global Wealth Management. "Generally, that's pretty good if you're a stock investor."
RISING RATES, RISING STOCKS
Research from Burt White and Jason Nicastro at LPL shows that after an initial bout of volatility, stocks typically rise along with rates.
The last time the Fed raised rates was 2004. The market flinched at first, with the S&P 500 dropping 3.4 percent in July after rates rose from 1 percent to 1.25 percent. The index then climbed for another three years, gaining 37 percent between the first rate increase and the market's peak in October 2007.
Stocks rise when the Fed lifts rates enough to contain inflation, but not by so much that the hikes suffocate borrowing and lending. If the economy continues to expand, the benefits of stronger growth outweigh any headwind from higher borrowing costs.
A healthier economy also means stronger corporate earnings, which drive stock prices, says Jim McDonald, chief investment strategist at Northern Trust Asset Management.
Upcoming hikes are expected to be small and gradual, so they don't choke off growth, says Brad Sorensen, a director of market and sector research at Charles Schwab.
The median short-term rate supported by Fed policymakers at the end of next year is 1.38 percent, up from a range of zero to 0.25 percent currently.
RISKS
Of course, the Fed won't always read the economy right, and that's what makes stock investors nervous.
Four of the five previous bull markets since 1970 ended as investors got spooked by a recession, or the anticipation of one, and sold stocks. And what causes recessions? In three of the past five, it was the Fed hiking interest rates to slow inflation.
Typically, though, the problems for the economy and stock market don't come until after the Fed has hiked rates a number of times, not early in the process. Eventually, higher rates put a brake on the economy and crimp earnings, prompting investors to sell stocks.
The last cycle of rate hikes topped out at 5.25 percent, with the final increase coming in June 2006. Stocks peaked in October of the following year.
Still, some investors worry that the next hikes will defy historical patterns because of the Fed's unprecedented stimulus.
Once the central bank ends its third round of quantitative easing after its next meeting that starts Oct. 28, its balance sheet will stand at close to $4.5 trillion, about five times its size from before the financial crisis.
"A pessimist could say 'well, it's going to be different this time because the market's going to be inflated by all the stimulus from the Fed,'" Northern Trust's McDonald says.
Like Sorenson, though, he thinks the most likely scenario is that the Fed will raise rates gradually, the economy will continue expanding, and stocks will keep rising.
Some parts of the market are more vulnerable to rising rates:
— Dividend-rich shares of utilities, phone and consumer staples companies could get hurt, says James Liu, Global Market Strategist for J.P. Morgan Funds. Investors typically buy these safe-and-steady stocks when they are worried about a slowing economy. This year, they have been buying them for income because interest rates are low. Utilities have gained 9.3 percent, compared with 6.8 percent for the S&P 500.
— High-yield bonds, one of the riskiest parts of the debt market, are another worry for Liu. This debt is issued by companies that are more likely to default. If rates rise, the probability of companies defaulting also increases.
Investors will listen for more clues to the Fed's rate strategy at its next policy meeting in late October. Until more is known, investors may be in for a bumpy ride.
"We're going to be right back where we started in six weeks," says Liu, "So, it's not over yet."
-------------------------------------------------
Friday, September 26, 2014
Perpetual bonds bad for you and me
Why is perpetual bonds good for issuers and bad for you and me? You can read more about perpetual bonds at this URL...
In general, when you buy perpetual bonds, you are buying something similar to "shares", but yet without the liquidity in trading these perpetual bonds like shares, and the perpetual bonds are yet treated like shares by Monetary Authority of Singapore (MAS) and companies can issue as many units of perpetual bonds as they like without making their balance sheet appears too much in debt (when in fact they would have if they have treated perpetual bonds as debts just like the other "bonds"!).
Also, perpetual bonds are the lowest ranking among all bonds, and the coupons payments are not guaranteed and issuers can choose not to pay the coupons, and these coupon payments are not cumulative.
So in summary, when you buy perpetual bonds, you are buying something like shares, yet without the liquidity of trading it like shares (you may never be able to sell them at a reasonable price!), and without the opportunity to participate in price appreciation like shares.
Similarly, when you buy perpetual bonds, you are buying something like bonds, yet without all the benefits that come with real bonds!
So, you are better off buying shares or bonds if you prefer the former or the latter, but don't buy perpetual bonds!
------------------------------------------
Property Nuggets: A closer look at perpetuals
What’s New
• Mapletree Logistics Trust (MLT) is the first S-REIT to issue perpetual securities (perpetuals), raising S$350m at an interest rate of 5.375%.
• Our view is that this form of fund raising is generally positive for REITs if used to finance accretive acquisitions, but would be expensive to replace debt.
• We anticipate that this may be the beginning of more such issuance to come and highlight some of the implications for REITs.
Essentials
• Avoiding additional leverage. The Monetary Authority of Singapore’s (MAS) guidelines allow REITs to account for perpetuals as equity, as opposed to debt, thus reducing aggregate leverage when used to finance acquisitions. However, credit rating agencies do treat these hybrid securities as 50% debt/ 50% equity in calculating leverage, and excessive levels of perpetuals would trigger a credit downgrade.
• More competitive than equity fund-raising. Given that the cost of debt for REITs ranges from 2-4%, 5-5.5% perpetuals would be an expensive replacement for debt. However, when matched against the cost of equity at between 6-9% for REITs, perpetuals can be a viable alternative to raising equity.
• Essential to acquire properties with funds raised. Due to their costs, REIT managers should only issue perpetuals to fund acquisitions, and our view is that the issuance of perpetuals is a market signal that sizeable acquisitions are forthcoming. REIT managers would likely take care to closely match the timing of acquisitions and the issuance of perpetuals due to their high holding costs.
• Higher likelihood of being used by industrial and hospitality REITs due to higher acquisition NPI yields for industrial (6.5-8.5%) and hospitality (6-6.5%) properties compared against lower NPI yields for office (3.5-4.5%) and retail (5- 6%) properties. This would enable acquisitions financed through the perpetuals to be DPU-accretive to ordinary unitholders. Perpetuals could also be used to fund overseas acquisitions, especially in countries where the cost of debt is high, such as Australia, although this exposes the REIT to exchange rate risk.
• Risk is in fixed payments and higher priority vs ordinary unitholders. The main risk for REITs is in the fixed payout for the perpetuals, which would not change due to shifts in occupancies or rentals. Holders of perpetuals would also rank higher in priority than ordinary unitholders, but would not enjoy potential dividend growth in the longer term.
Action
• Larger REITs with higher exposure to the industrial and hospitality sectors are likely to issue perpetuals to fund yield-accretive acquisitions. Top picks include Ascott Residence Trust, MLT and Mapletree Industrial Trust.
------------------------------------------
In general, when you buy perpetual bonds, you are buying something similar to "shares", but yet without the liquidity in trading these perpetual bonds like shares, and the perpetual bonds are yet treated like shares by Monetary Authority of Singapore (MAS) and companies can issue as many units of perpetual bonds as they like without making their balance sheet appears too much in debt (when in fact they would have if they have treated perpetual bonds as debts just like the other "bonds"!).
Also, perpetual bonds are the lowest ranking among all bonds, and the coupons payments are not guaranteed and issuers can choose not to pay the coupons, and these coupon payments are not cumulative.
So in summary, when you buy perpetual bonds, you are buying something like shares, yet without the liquidity of trading it like shares (you may never be able to sell them at a reasonable price!), and without the opportunity to participate in price appreciation like shares.
Similarly, when you buy perpetual bonds, you are buying something like bonds, yet without all the benefits that come with real bonds!
So, you are better off buying shares or bonds if you prefer the former or the latter, but don't buy perpetual bonds!
------------------------------------------
Property Nuggets: A closer look at perpetuals
What’s New
• Mapletree Logistics Trust (MLT) is the first S-REIT to issue perpetual securities (perpetuals), raising S$350m at an interest rate of 5.375%.
• Our view is that this form of fund raising is generally positive for REITs if used to finance accretive acquisitions, but would be expensive to replace debt.
• We anticipate that this may be the beginning of more such issuance to come and highlight some of the implications for REITs.
Essentials
• Avoiding additional leverage. The Monetary Authority of Singapore’s (MAS) guidelines allow REITs to account for perpetuals as equity, as opposed to debt, thus reducing aggregate leverage when used to finance acquisitions. However, credit rating agencies do treat these hybrid securities as 50% debt/ 50% equity in calculating leverage, and excessive levels of perpetuals would trigger a credit downgrade.
• More competitive than equity fund-raising. Given that the cost of debt for REITs ranges from 2-4%, 5-5.5% perpetuals would be an expensive replacement for debt. However, when matched against the cost of equity at between 6-9% for REITs, perpetuals can be a viable alternative to raising equity.
• Essential to acquire properties with funds raised. Due to their costs, REIT managers should only issue perpetuals to fund acquisitions, and our view is that the issuance of perpetuals is a market signal that sizeable acquisitions are forthcoming. REIT managers would likely take care to closely match the timing of acquisitions and the issuance of perpetuals due to their high holding costs.
• Higher likelihood of being used by industrial and hospitality REITs due to higher acquisition NPI yields for industrial (6.5-8.5%) and hospitality (6-6.5%) properties compared against lower NPI yields for office (3.5-4.5%) and retail (5- 6%) properties. This would enable acquisitions financed through the perpetuals to be DPU-accretive to ordinary unitholders. Perpetuals could also be used to fund overseas acquisitions, especially in countries where the cost of debt is high, such as Australia, although this exposes the REIT to exchange rate risk.
• Risk is in fixed payments and higher priority vs ordinary unitholders. The main risk for REITs is in the fixed payout for the perpetuals, which would not change due to shifts in occupancies or rentals. Holders of perpetuals would also rank higher in priority than ordinary unitholders, but would not enjoy potential dividend growth in the longer term.
Action
• Larger REITs with higher exposure to the industrial and hospitality sectors are likely to issue perpetuals to fund yield-accretive acquisitions. Top picks include Ascott Residence Trust, MLT and Mapletree Industrial Trust.
------------------------------------------
Wednesday, September 24, 2014
NOL and its logistic business - Spin-off via listing or sell?
In my previous post, I made a summary of Neptune Orient Lines (NOL) and about its latest quarterly results. I believe its current CEO, Ng Yat Chung, should be able to pull it through to future profits. I have personally crossed path with several people who have worked with NOL's CEO before, and is able to obtain some insight into how he strategize and manage. I have faith in him and his ability, just like the many people who have worked with him.
Meanwhile, the below are some news regarding NOL's logistics business:
20 August 2014 NOL clarifies reports on plans to sell logistics business
SINGAPORE - Following media reports on Wednesday that Neptune Orient Lines (NOL) is planning to sell its logistics business, the Singapore-listed shipping company said such considerations are "preliminary and exploratory in nature".
Clarifying the report in a filing to the Singapore Exchange, NOL said it "continually evaluates all available options to improve the strategic positioning and performance of its businesses".
"These include considerations of a potential sale or initial public offering and listing of its logistics business as a separate, stand-alone unit from NOL," the company added.
It also stressed that "there is no assurance that any definitive transaction for the sale or an IPO of NOL's logistics business will be concluded".
Reuters reported early Wednesday morning that NOL, which is 67 per cent-owned by Temasek Holdings, is looking to sell its logistics business for more than US$750 million (S$935 million).
Shares in NOL jumped 3 per cent to their highest level in more than three months after the news.
20 August 2014 NOL shares jump 3% on news of potential logistics unit sale
SINGAPORE (Reuters) - Shares in Singapore's Neptune Orient Lines jumped 3 per cent on Wednesday to $1.01, their highest level in more than three months, on news that it is considering selling its logistics unit.
Reuters reported earlier that NOL, a shipping and logistics company in which Singapore's state investor Temasek Holdings owns a 67 per cent stake, is hoping to sell its logistics business for more than US$750 million (S$935 million).
20 Aug 2014 10:36 NOL: Considering Sale Or IPO Of Logistics Business
Neptune Orient Lines Limited continually evaluates all available options to improve the strategic positioning and performance of its businesses. These include considerations of a potential sale or initial public offering and listing of its logistics business as a separate, stand-alone unit from NOL. These considerations are preliminary and exploratory in nature. There is no assurance that any definitive transaction for the sale or an IPO of NOL's logistics business will be concluded.
20 August 2014 Logistics arm's sale or IPO 'preliminary and exploratory': NOL
SHIPPING and logistics company Neptune Orient Lines (NOL) on Wednesday clarified a Reuters report that said it is looking to sell its APL Logistics division for more than US$750 million and cited anonymous people familiar with the situation.
"NOL wishes to state that it continually evaluates all available options to improve the strategic positioning and performance of its businesses.
"These include considerations of a potential sale or initial public offering (IPO) and listing of its logistics business as a separate, stand-alone unit from NOL.
"These considerations are preliminary and exploratory in nature. There is no assurance that any definitive transaction for the sale or an IPO of NOL's logistics business will be concluded," it said.
NOL is made up of two major divisions - APL Logistics, a global freight management and logistics business, and a separate container shipping business named APL.
Reuters had reported that the company plans to launch a process in the autumn to find a buyer for APL Logistics and has hired banks to assist with that effort, according to sources.
Meanwhile, the below are some news regarding NOL's logistics business:
20 August 2014 NOL clarifies reports on plans to sell logistics business
SINGAPORE - Following media reports on Wednesday that Neptune Orient Lines (NOL) is planning to sell its logistics business, the Singapore-listed shipping company said such considerations are "preliminary and exploratory in nature".
Clarifying the report in a filing to the Singapore Exchange, NOL said it "continually evaluates all available options to improve the strategic positioning and performance of its businesses".
"These include considerations of a potential sale or initial public offering and listing of its logistics business as a separate, stand-alone unit from NOL," the company added.
It also stressed that "there is no assurance that any definitive transaction for the sale or an IPO of NOL's logistics business will be concluded".
Reuters reported early Wednesday morning that NOL, which is 67 per cent-owned by Temasek Holdings, is looking to sell its logistics business for more than US$750 million (S$935 million).
Shares in NOL jumped 3 per cent to their highest level in more than three months after the news.
20 August 2014 NOL shares jump 3% on news of potential logistics unit sale
SINGAPORE (Reuters) - Shares in Singapore's Neptune Orient Lines jumped 3 per cent on Wednesday to $1.01, their highest level in more than three months, on news that it is considering selling its logistics unit.
Reuters reported earlier that NOL, a shipping and logistics company in which Singapore's state investor Temasek Holdings owns a 67 per cent stake, is hoping to sell its logistics business for more than US$750 million (S$935 million).
20 Aug 2014 10:36 NOL: Considering Sale Or IPO Of Logistics Business
Neptune Orient Lines Limited continually evaluates all available options to improve the strategic positioning and performance of its businesses. These include considerations of a potential sale or initial public offering and listing of its logistics business as a separate, stand-alone unit from NOL. These considerations are preliminary and exploratory in nature. There is no assurance that any definitive transaction for the sale or an IPO of NOL's logistics business will be concluded.
20 August 2014 Logistics arm's sale or IPO 'preliminary and exploratory': NOL
SHIPPING and logistics company Neptune Orient Lines (NOL) on Wednesday clarified a Reuters report that said it is looking to sell its APL Logistics division for more than US$750 million and cited anonymous people familiar with the situation.
"NOL wishes to state that it continually evaluates all available options to improve the strategic positioning and performance of its businesses.
"These include considerations of a potential sale or initial public offering (IPO) and listing of its logistics business as a separate, stand-alone unit from NOL.
"These considerations are preliminary and exploratory in nature. There is no assurance that any definitive transaction for the sale or an IPO of NOL's logistics business will be concluded," it said.
NOL is made up of two major divisions - APL Logistics, a global freight management and logistics business, and a separate container shipping business named APL.
Reuters had reported that the company plans to launch a process in the autumn to find a buyer for APL Logistics and has hired banks to assist with that effort, according to sources.
Monday, September 22, 2014
Is $1M enough to retire for 20 years? - Review-2
After I posted the first post on whether "Is $1M enough for a person to retire for 20 years?", I received comments that my assumptions and figures are not correct because of the following reasons:
1) How many people in Singapore can accumulate $1M a year by the age of 62 years old?
2) My figure does not include property costs (be it rental or money sunk into property and should be deducted from the $1M I mentioned).
3) My costs of living figures are just too low! They ask me to inflate the figures and see what will happen in the new scenarios!
Ok ok, valid points raised! Let me try to recalculate the figures again, using new assumptions. This time, I would use household incomes and household expenses for a couple (2 persons, husband and wife) and then divide by 2 as it is easier to get the hard figures for these and also to include property because it is usually owned by a couple (especially for HDB flats in Singapore)...
Let's first review comments (1)-(3):
(1A) Based on Singapore's household income statistics for the year of 2013, about 80% of households earn more than $3,000 per month in Singapore (inclusive of CPF contributions)(excluding retirees households which consist of 6.1%).
If these couple saves half of their income and spend the other half, from age 25 years old to 62 years old (for 37 years), they would have $666,000 in total - This does not include returns on capital nor their property.
Now, assuming that the couple spent $250,000 on a 4-room HDB flat, payable by instalments from 25 years old to 37 years old at $877 per month for a mortgage rate of 2.6%, and if remaining cash earns return of 4% (CPF Special account rate) from 25 years old to 37 years old, he would have fully paid for a property and still have cash/liquid assets of $632,000 at the end of 62 years old.
Again, the above indicates that Singapore's government policy of including property as an asset is a very important policy measure! It helps the low income a lot! Furthermore, with the property fully paid off, the couple can engage in "Lease Buyback" to get more cash to spend and can also earn extra cash by renting out 1 or 2 of their 3 bedrooms of their 4-room HDB flats!
However, in order to be able to rent out these retirees' rooms, the government need to allow more foreigners to come to work in Singapore (otherwise there will be nobody to rent these retirees' rooms for them to earn extra income)!
The above also indicates that helping the low income group to invest to get higher return is another very important aspect the Singapore government needs to look into!
(2A) See "(1A)" above.
(3A) Ok, I will inflate the figure a little, but still has to be realistic for ordinary folks, not including luxuries...
Let's calculate the Cost of living per month for a person (average figure):
(Note: Most of below figure are based on reasonable figures from Singapore's cost of living calculator at this URL...)
* Food (cook at home, with occasional eat out) $400.00
[cook at home : $200 - $400 monthly]
* Transport (bus and trains only, should be much less for retiree) $180.00[taking public transport (buses and trains) : $170 - $190 monthly]
* Utilities (electricity, water, gas, sewage) $90.00
[This is based on national average of $180 per household per month for 4-room flat with gas usage and hence $90 per person per month]
* Communications (mobile phones subscriptions & internet) = $62.90
[Internet access : $24.90 (25mbps) - $39.90 (100mbps) monthly (assumes home broadband services from StarHub)]
[Mobile phone plan : $38 - $205 monthly (assumes mobile services from StarHub)]
* Clothings and footwear = $100.00
[What kinds of brands do you spend on for new clothing and footwear? Budget/house brands : $80 - $100 monthly]
* Medical insurance & expenses (assume the rest covered by insurance) = $200.00
* Some frails and luxury = $200.00
* Rental costs = $0.00
Total per month per person = $1,232.90
Note: Rental costs is $0 because the person has a fully paid property.
Let's assume inflation of cost of living is 2% per year.
Let's assume this single person put all his cash of S$316,000 (half of $632,000 for a couple) into annuity earning 2% per year at the age of 62 years old.
Based on my calculations, this person would have enough to last till 83 years old, and this is without touching his property or engaging in "Lease Buyback" for his property or even rent out a room or 2 for his 4-room HDB flat to get more cash to spend!
So, in conclusion: 80% of the people in Singapore has sufficient money to retire if they have been prudent with their expenses and able to manage their savings to earn decent return!!
1) How many people in Singapore can accumulate $1M a year by the age of 62 years old?
2) My figure does not include property costs (be it rental or money sunk into property and should be deducted from the $1M I mentioned).
3) My costs of living figures are just too low! They ask me to inflate the figures and see what will happen in the new scenarios!
Ok ok, valid points raised! Let me try to recalculate the figures again, using new assumptions. This time, I would use household incomes and household expenses for a couple (2 persons, husband and wife) and then divide by 2 as it is easier to get the hard figures for these and also to include property because it is usually owned by a couple (especially for HDB flats in Singapore)...
Let's first review comments (1)-(3):
(1A) Based on Singapore's household income statistics for the year of 2013, about 80% of households earn more than $3,000 per month in Singapore (inclusive of CPF contributions)(excluding retirees households which consist of 6.1%).
If these couple saves half of their income and spend the other half, from age 25 years old to 62 years old (for 37 years), they would have $666,000 in total - This does not include returns on capital nor their property.
Now, assuming that the couple spent $250,000 on a 4-room HDB flat, payable by instalments from 25 years old to 37 years old at $877 per month for a mortgage rate of 2.6%, and if remaining cash earns return of 4% (CPF Special account rate) from 25 years old to 37 years old, he would have fully paid for a property and still have cash/liquid assets of $632,000 at the end of 62 years old.
Again, the above indicates that Singapore's government policy of including property as an asset is a very important policy measure! It helps the low income a lot! Furthermore, with the property fully paid off, the couple can engage in "Lease Buyback" to get more cash to spend and can also earn extra cash by renting out 1 or 2 of their 3 bedrooms of their 4-room HDB flats!
However, in order to be able to rent out these retirees' rooms, the government need to allow more foreigners to come to work in Singapore (otherwise there will be nobody to rent these retirees' rooms for them to earn extra income)!
The above also indicates that helping the low income group to invest to get higher return is another very important aspect the Singapore government needs to look into!
(2A) See "(1A)" above.
(3A) Ok, I will inflate the figure a little, but still has to be realistic for ordinary folks, not including luxuries...
Let's calculate the Cost of living per month for a person (average figure):
(Note: Most of below figure are based on reasonable figures from Singapore's cost of living calculator at this URL...)
* Food (cook at home, with occasional eat out) $400.00
[cook at home : $200 - $400 monthly]
* Transport (bus and trains only, should be much less for retiree) $180.00[taking public transport (buses and trains) : $170 - $190 monthly]
* Utilities (electricity, water, gas, sewage) $90.00
[This is based on national average of $180 per household per month for 4-room flat with gas usage and hence $90 per person per month]
* Communications (mobile phones subscriptions & internet) = $62.90
[Internet access : $24.90 (25mbps) - $39.90 (100mbps) monthly (assumes home broadband services from StarHub)]
[Mobile phone plan : $38 - $205 monthly (assumes mobile services from StarHub)]
* Clothings and footwear = $100.00
[What kinds of brands do you spend on for new clothing and footwear? Budget/house brands : $80 - $100 monthly]
* Medical insurance & expenses (assume the rest covered by insurance) = $200.00
* Some frails and luxury = $200.00
* Rental costs = $0.00
Total per month per person = $1,232.90
Note: Rental costs is $0 because the person has a fully paid property.
Let's assume inflation of cost of living is 2% per year.
Let's assume this single person put all his cash of S$316,000 (half of $632,000 for a couple) into annuity earning 2% per year at the age of 62 years old.
Based on my calculations, this person would have enough to last till 83 years old, and this is without touching his property or engaging in "Lease Buyback" for his property or even rent out a room or 2 for his 4-room HDB flat to get more cash to spend!
So, in conclusion: 80% of the people in Singapore has sufficient money to retire if they have been prudent with their expenses and able to manage their savings to earn decent return!!
Sunday, September 21, 2014
Perpetual bonds rush causes alarm in Singapore
This is a note of warning on perpetual bonds, a follow-up to my previous post warning on "So my advise is, never ever invest perpetual bonds!" I think perpetual bonds is more dangerous than properties in Singapore!
You can read the following alarm regarding perpetual bonds rush in Singapore at this URL...
------------------------------------------
Perp rush causes alarm in Singapore
Mon, May 14 2012
By Kit Yin Boey
SINGAPORE, May 14 (IFR) - The unprecedented run of perpetual bond sales in Singapore's local market has caught the attention of the city state's regulators.
The Monetary Authority of Singapore is growing concerned about the number of potentially risky bonds that have ended up in the hands of individual investors. Bankers said MAS officials had voiced their concerns over retail holdings of perpetual bonds during at least two informal meetings in recent weeks.
The central bank's scrutiny is preliminary, and there is no suggestion of any wrongdoing on the part of the banks or companies involved in the recent flurry of perpetual bond issues.
But the discussions show that the regulator is worried that individual investors may be taking on too much risk - or buying securities without a full understanding of the product.
More perpetual bonds were sold in Singapore in the first three months of 2012 than in the previous decade and a half.
The product offers companies the tantalising opportunity to raise funds with no dated maturity, typically winning some equity treatment under accounting rules and avoiding any impact on gearing ratios.
The higher coupons are attractive for investors in a low interest-rate environment, but the notes come with high duration risk since there is no guarantee of repayment.
Companies including Singapore Post, Mapletree Logistic Trust and Temasek-backed Olam International sold perpetual bonds earlier this year, lifting perpetual sales to S$3.1bn (US$2.5bn) in the first quarter.
A large proportion of those deals went to private banks, investing on behalf of individual clients.
MAS's focus, however, has sharpened since Genting Singapore offered S$500m to the public, giving the retail public the chance to invest via the automated teller machines of the city's local banks.
The retail offering was only the second such offering of perpetuals, with Hyflux being the first to do so when it launched the first corporate perpetual issue in April last year.
The problem with ATM machines is that, unlike stocks or other structured investment products sold over the counter, investors have no access to advisory services that can point out risks.
Retail investors are supposed to read the prospectus, but in practical terms no arranger can guarantee that they have done so.
For the moment, bankers said they have not been told to pull back from retail offerings of perpetual, nor have they heard of any suggestion that MAS would be making recommendations for selling agents to protect investors in such sales.
But the chatter that the central bank is keeping an eye on the retail market may prompt underwriters to take a more cautious approach on any future retail offerings.
"I won't be surprised if MAS would be watching the developments in this space, as they have always been careful with products that are sold to the public," said one local banker.
Memories of Lehman
The MAS has been extremely cautious on the sales of structured investment products ever since the Lehman structured products collapsed in the global financial crisis.
That episode, which caused a huge public outcry, saw 8,000 individual investors, including retirees, losing a chunk of a combined S$508m of investments in Lehman-linked structured notes from nine banks and brokerages in Singapore.
Since then, the central bank has put in place several policies that have increased investor protection.
"After the Lehman debacle, I don't think MAS can afford to drop another ball," said another local banker. "So, it is only right that they should watch that retail investors are protected in the perpetual offerings. There are, after all, a lot of risks in such instruments."
Compared with straight vanilla bonds, perpetual securities often allow coupon deferrals, although this usually means the issuer also cannot declare dividends, and some include non-cumulative features as well.
And, as the name suggests, the bonds are perpetual and issuers have the right not to exercise a call option, which means investors may not see the return of their principal investment.
The critical point for retail investors is that they have no recourse if the issuer decides not to call. This risk is all too real, as events in the US over the past two weeks showed. Well known US banks JP Morgan and Bank of America decided against making their respective calls on their Lower Tier 2 bonds, raising the ire of bondholders who had traded the paper as five-year notes.
Margin calls
Any similar development in the Singapore perpetual paper in four to five years time will have a rippling effect on other outstanding perpetuals.
Local bankers said the risks have been escalated because private bankers, the main takers of the recent perps, were buying on the margin - sometimes using leverage granted by the lead managers themselves.
Some purchases were done on 100% margins, said one foreign banker.
The MAS's concerns come amid talk that that more Singapore and foreign issuers are exploring perpetual bond sales - although most are expected to target the institutional market.
Hong Kong conglomerate Hutchison Whampoa has been repeatedly linked with a return to the Singapore dollar metks, and local conglomerate Keppel Corp was heard to be hunting for arrangers for a perpetual.
Keppel, however, is said to have demanded hard underwritten bids, and bankers - worried that the market is already full - may be reluctant to stick their necks out that much.
------------------------------------------
You can read the following alarm regarding perpetual bonds rush in Singapore at this URL...
------------------------------------------
Perp rush causes alarm in Singapore
Mon, May 14 2012
By Kit Yin Boey
SINGAPORE, May 14 (IFR) - The unprecedented run of perpetual bond sales in Singapore's local market has caught the attention of the city state's regulators.
The Monetary Authority of Singapore is growing concerned about the number of potentially risky bonds that have ended up in the hands of individual investors. Bankers said MAS officials had voiced their concerns over retail holdings of perpetual bonds during at least two informal meetings in recent weeks.
The central bank's scrutiny is preliminary, and there is no suggestion of any wrongdoing on the part of the banks or companies involved in the recent flurry of perpetual bond issues.
But the discussions show that the regulator is worried that individual investors may be taking on too much risk - or buying securities without a full understanding of the product.
More perpetual bonds were sold in Singapore in the first three months of 2012 than in the previous decade and a half.
The product offers companies the tantalising opportunity to raise funds with no dated maturity, typically winning some equity treatment under accounting rules and avoiding any impact on gearing ratios.
The higher coupons are attractive for investors in a low interest-rate environment, but the notes come with high duration risk since there is no guarantee of repayment.
Companies including Singapore Post, Mapletree Logistic Trust and Temasek-backed Olam International sold perpetual bonds earlier this year, lifting perpetual sales to S$3.1bn (US$2.5bn) in the first quarter.
A large proportion of those deals went to private banks, investing on behalf of individual clients.
MAS's focus, however, has sharpened since Genting Singapore offered S$500m to the public, giving the retail public the chance to invest via the automated teller machines of the city's local banks.
The retail offering was only the second such offering of perpetuals, with Hyflux being the first to do so when it launched the first corporate perpetual issue in April last year.
The problem with ATM machines is that, unlike stocks or other structured investment products sold over the counter, investors have no access to advisory services that can point out risks.
Retail investors are supposed to read the prospectus, but in practical terms no arranger can guarantee that they have done so.
For the moment, bankers said they have not been told to pull back from retail offerings of perpetual, nor have they heard of any suggestion that MAS would be making recommendations for selling agents to protect investors in such sales.
But the chatter that the central bank is keeping an eye on the retail market may prompt underwriters to take a more cautious approach on any future retail offerings.
"I won't be surprised if MAS would be watching the developments in this space, as they have always been careful with products that are sold to the public," said one local banker.
Memories of Lehman
The MAS has been extremely cautious on the sales of structured investment products ever since the Lehman structured products collapsed in the global financial crisis.
That episode, which caused a huge public outcry, saw 8,000 individual investors, including retirees, losing a chunk of a combined S$508m of investments in Lehman-linked structured notes from nine banks and brokerages in Singapore.
Since then, the central bank has put in place several policies that have increased investor protection.
"After the Lehman debacle, I don't think MAS can afford to drop another ball," said another local banker. "So, it is only right that they should watch that retail investors are protected in the perpetual offerings. There are, after all, a lot of risks in such instruments."
Compared with straight vanilla bonds, perpetual securities often allow coupon deferrals, although this usually means the issuer also cannot declare dividends, and some include non-cumulative features as well.
And, as the name suggests, the bonds are perpetual and issuers have the right not to exercise a call option, which means investors may not see the return of their principal investment.
The critical point for retail investors is that they have no recourse if the issuer decides not to call. This risk is all too real, as events in the US over the past two weeks showed. Well known US banks JP Morgan and Bank of America decided against making their respective calls on their Lower Tier 2 bonds, raising the ire of bondholders who had traded the paper as five-year notes.
Margin calls
Any similar development in the Singapore perpetual paper in four to five years time will have a rippling effect on other outstanding perpetuals.
Local bankers said the risks have been escalated because private bankers, the main takers of the recent perps, were buying on the margin - sometimes using leverage granted by the lead managers themselves.
Some purchases were done on 100% margins, said one foreign banker.
The MAS's concerns come amid talk that that more Singapore and foreign issuers are exploring perpetual bond sales - although most are expected to target the institutional market.
Hong Kong conglomerate Hutchison Whampoa has been repeatedly linked with a return to the Singapore dollar metks, and local conglomerate Keppel Corp was heard to be hunting for arrangers for a perpetual.
Keppel, however, is said to have demanded hard underwritten bids, and bankers - worried that the market is already full - may be reluctant to stick their necks out that much.
------------------------------------------
Friday, September 19, 2014
Is Neptune Orient Lines (NOL) a buy now?
I have started to have very strong interest in Neptune Orient Lines (Singapore stock quote N03.SI (on Yahoo Finance)), currently at S$0.960.
There may be changes/updates following some reports on review of their logistic business - either to sell or to list it as a separate entity.
NOL in early August 2014 reported yet another quarter of red ink, as expected, a core net loss of US$55m in 2Q14, inline with analysts' forecast.
Losses have been lowered both on a y-o-y and q-o-q basis, largely owing to the deployment of a newer more efficient fully owned fleet replacing expensive charters. Liner revenue was down 2% y-o-y though on the back of a 6% decline in volumes, as NOL strove to lower its exposure to loss making backhaul routes. As a result of this change in volume mix, average freight rates trended upwards by 7% q-o-q to US$2,321 per FEU. Results would have been better if not for one off costs incurred during the period, including some restructuring charges, port congestion effects in South California, G6 alliance related startup costs among others, which resulted in opex per FEU for the liner business climbing 3% y-o-y and 4% q-o-q to US$2,595 per FEU.
NOL has lost money for 2 out of the last 3 years, and NOL's improving operational efficiency has been derailed by one-off cost. However, NOL has recorded some success in passing through peak season hikes in early August on Transpacific routes, of about US$400/ FEU on the Transpacific
route from 1st August – lower than the proposed US$600/FEU – but still a reasonable success. US East Coast rates have actually jumped to their highest in a while, propped by diversion of cargo from the US West Coast ports, which are grappling with port worker pay related problems, with threat of strikes looming. Asia-US trade is up about 4.5% YTD in 2014, according to management, and if some of the rate hikes can hold up through the ongoing peak season, that could bring some near term cheer to the liners. However, longer term, the oversupply situation is still a distance from being resolved and losses for the industry could drag well into FY15.
The outlook looks bleak at the moment, but there is positive undercurrent coming its way considering the economic recovery of US.
Company Profile:
Neptune Orient Lines Limited (Singapore stock quote N03.SI (on Yahoo Finance)), an investment holding company, owns and charters vessels and other related assets worldwide. The company operates in two segments, Liner and Logistics. It offers ocean shipping and container transportation services through intermodal operations. The company provides container shipping services in trade lanes comprising the Trans-Pacific, Trans-Atlantic, Latin America, Asia-Europe, and Intra-Asia trades. It operates a fleet of approximately 45 owned ships and 76 chartered vessels totaling 640,000 twenty foot equivalent units. The company also offers logistics services, including end-to-end services, such as supply chain design and engineering, shipment consolidation and deconsolidation, freight forwarding and customs management, and warehousing and distribution networks management services, as well as information technology solutions. In addition, it provides international, land transportation, contract logistics, and automotive logistics services, as well as ocean, air, truck, and rail freight management services. In addition, it provides other related and complementary services, including ship management; and incidental activities comprising the disposal of vessels, containers, and related assets. The company operates a network of approximately 190 facilities with 26 million square feet of warehouse space. It serves customers in various industries, including automotive/industrial, retail, consumer goods, electronics and technology, and other industries. The company was founded in 1968 and is based in Singapore. Neptune Orient Lines Limited is a subsidiary of Temasek Holdings (Private) Limited, which in turn is owned by the Singapore Government.
Financials & Outlook:
Last traded = $0.960
Market Capital = $2.48B
Current P/E = -
P/S = 0.28
Dividend Yield = 0
Debt/Equity = 2.3
P/B = 1.0
ROE = -
Profit Margin = -
The technicals show strong support at about $0.96.
I rate it a buy at current price.
People will be very scared with NOL because of its multiple years' losses, but they will have to understand why.
For me, I believe NOL is going to turn the corner. For such company whose business is very cyclical, catching them at rock bottom stock price will pay off very handsomely, and I believe this is probably about the time to get back this stock..................
There may be changes/updates following some reports on review of their logistic business - either to sell or to list it as a separate entity.
NOL in early August 2014 reported yet another quarter of red ink, as expected, a core net loss of US$55m in 2Q14, inline with analysts' forecast.
Losses have been lowered both on a y-o-y and q-o-q basis, largely owing to the deployment of a newer more efficient fully owned fleet replacing expensive charters. Liner revenue was down 2% y-o-y though on the back of a 6% decline in volumes, as NOL strove to lower its exposure to loss making backhaul routes. As a result of this change in volume mix, average freight rates trended upwards by 7% q-o-q to US$2,321 per FEU. Results would have been better if not for one off costs incurred during the period, including some restructuring charges, port congestion effects in South California, G6 alliance related startup costs among others, which resulted in opex per FEU for the liner business climbing 3% y-o-y and 4% q-o-q to US$2,595 per FEU.
NOL has lost money for 2 out of the last 3 years, and NOL's improving operational efficiency has been derailed by one-off cost. However, NOL has recorded some success in passing through peak season hikes in early August on Transpacific routes, of about US$400/ FEU on the Transpacific
route from 1st August – lower than the proposed US$600/FEU – but still a reasonable success. US East Coast rates have actually jumped to their highest in a while, propped by diversion of cargo from the US West Coast ports, which are grappling with port worker pay related problems, with threat of strikes looming. Asia-US trade is up about 4.5% YTD in 2014, according to management, and if some of the rate hikes can hold up through the ongoing peak season, that could bring some near term cheer to the liners. However, longer term, the oversupply situation is still a distance from being resolved and losses for the industry could drag well into FY15.
The outlook looks bleak at the moment, but there is positive undercurrent coming its way considering the economic recovery of US.
Company Profile:
Neptune Orient Lines Limited (Singapore stock quote N03.SI (on Yahoo Finance)), an investment holding company, owns and charters vessels and other related assets worldwide. The company operates in two segments, Liner and Logistics. It offers ocean shipping and container transportation services through intermodal operations. The company provides container shipping services in trade lanes comprising the Trans-Pacific, Trans-Atlantic, Latin America, Asia-Europe, and Intra-Asia trades. It operates a fleet of approximately 45 owned ships and 76 chartered vessels totaling 640,000 twenty foot equivalent units. The company also offers logistics services, including end-to-end services, such as supply chain design and engineering, shipment consolidation and deconsolidation, freight forwarding and customs management, and warehousing and distribution networks management services, as well as information technology solutions. In addition, it provides international, land transportation, contract logistics, and automotive logistics services, as well as ocean, air, truck, and rail freight management services. In addition, it provides other related and complementary services, including ship management; and incidental activities comprising the disposal of vessels, containers, and related assets. The company operates a network of approximately 190 facilities with 26 million square feet of warehouse space. It serves customers in various industries, including automotive/industrial, retail, consumer goods, electronics and technology, and other industries. The company was founded in 1968 and is based in Singapore. Neptune Orient Lines Limited is a subsidiary of Temasek Holdings (Private) Limited, which in turn is owned by the Singapore Government.
Financials & Outlook:
Last traded = $0.960
Market Capital = $2.48B
Current P/E = -
P/S = 0.28
Dividend Yield = 0
Debt/Equity = 2.3
P/B = 1.0
ROE = -
Profit Margin = -
The technicals show strong support at about $0.96.
I rate it a buy at current price.
People will be very scared with NOL because of its multiple years' losses, but they will have to understand why.
For me, I believe NOL is going to turn the corner. For such company whose business is very cyclical, catching them at rock bottom stock price will pay off very handsomely, and I believe this is probably about the time to get back this stock..................
Thursday, September 18, 2014
Which company is better: RWE AG or E.ON AG?
I am in the midst of exploring investing in Germany's utility companies. I feel that their current share price is unduly suppressed ever since the Japan's nuclear disaster.
Any German friend can give local insight of how these 2 companies, RWE AG and E.ON AG, compare to each other in terms of businesses, their services, pricing competitiveness etc?
Any German friend can give local insight of how these 2 companies, RWE AG and E.ON AG, compare to each other in terms of businesses, their services, pricing competitiveness etc?
Notes on BYD from Charlie Munger's DJCO 2014 Shareholder Meeting
If you don't know who is Carlie Munger, you may have heard of his partner in Berkshire Hathaway, Warren Buffett. Charlie Munger was said to have heavily influenced on the way Buffett invest since his early days, and here is Charlie Munger's comments on BYD:
" BYD is getting widely recognized as being in a sweet spot of Chinese electric cars and buses – longevity of Beijing is 10 years less due to emissions – will stop burning gasoline soon; China recognizes that it must change this behavior that is killing tons of people; iron phosphate solution to lithium fire problem is good even though it is heavy; “Even engineers go crazy – a customer says ‘I want the last 2 pounds,’ which will kill you; you can't take any more steel out of the bridge or make a battery any lighter. BYD is in a privileged position but it is not like the company has a first lien on the passage of time.” "
" BYD is getting widely recognized as being in a sweet spot of Chinese electric cars and buses – longevity of Beijing is 10 years less due to emissions – will stop burning gasoline soon; China recognizes that it must change this behavior that is killing tons of people; iron phosphate solution to lithium fire problem is good even though it is heavy; “Even engineers go crazy – a customer says ‘I want the last 2 pounds,’ which will kill you; you can't take any more steel out of the bridge or make a battery any lighter. BYD is in a privileged position but it is not like the company has a first lien on the passage of time.” "
Most Retirees Manage by Adjusting Lifestyle to Reduced Income
Forget about those preaches about needing to have enough retirement fund to cover pre-retirement expenses during retirement! Latest findings, as reported in this following article on "Most Retirees Manage by Adjusting Lifestyle to Reduced Income" at this URL...
--------------------------------------------------
Despite Curve Balls, Most Retirees Manage
The Key: Adjusting Lifestyle to Reduced Income
By TOM LAURICELLA CONNECT
Sept. 6, 2014 8:18 p.m. ET
Rob Shepperson
And now for a little good news.
Most of the stories we read about retirement planning tend to be dominated by "unpleasant realities" and savings goals that can seem like Mount Everest. And then … the brakes go out on the car again.
Indeed, many people head into retirement with little money and little planning. And life has a way of throwing financial or health-related curve balls even when we have planned ahead or think everything is under control.
But the reality is that most people simply find a way to adjust.
Roger Burdette, a married 67-year-old living in Great Falls, Va., is a retiree who didn't let planning go by the wayside. In his mid-50s, he started tracking how much he would need to live the lifestyle he wanted once he could walk away from the office.
But his investments took a beating during the financial crisis and have been slow to recover. When he retired a year ago from a job as a computer-systems engineer, he realized that if he wants to make his savings last, he needs to live on a tighter budget than he had hoped.
"You think back to when you go to college and you don't have a lot of money, so you've got to find ways to make it go farther," he says. "It's the same approach for retirement."
Mr. Burdette's views found their way into a recent sampling of retirees published by T. Rowe Price Group, TROW -0.28% the mutual-fund company. The survey focused on individuals who had stopped working in the past one to five years and who had a 401(k) plan or an individual retirement account that had been rolled over from a 401(k).
Fewer than one in five said their postretirement income matched their pre-retirement paycheck. Instead, on average, their retirement income was just 66% of what they had been making. "There's a focus on whether you should target 80% or 85% of your pre-retirement income," says Anne Coveney, a vice president at T. Rowe Price. But she says it was a "reality check" to see 52% of respondents say they were getting only 41% to 80% of pre-retirement income.
Along the way, 40% said they have discovered that they can adjust their lifestyle to match their income by a "great deal," and 37% agreed that the same term applied to the statement: "I don't need to spend as much as I did before I retired to be satisfied."
David Hartness, chief client officer at Iron Gate Partners in Wilmington, N.C., says that when clients have to make adjustments, he urges them to consider a big-picture question: "Take a step back and ask, 'What are the most important things in this new season of life?'
Usually, the biggest drain on retirement budgets is housing. Mr. Hartness suggests to some clients that they look beyond just selling a big house and buying a smaller one, and consider renting.
"There are a lot of places where you can rent and have full amenities like a country club," he says, without having to be responsible for the upkeep of a house.
He also has found that many clients can drop the hefty bills that come with golf-club memberships and still get in plenty of tee time. He tells of one client who dropped her membership and has ended up playing more golf since, as friends have invited her to join them.
In the background, current retirees don't have to be as reliant on their savings as will likely be the case in years to come. Vanguard Group released a similar survey of retirees with investment accounts this year and found that 20% of household incomes in its sample were coming from pensions and 28% from Social Security.
"Everyone is talking about the new retirement," where retirees have to fund their lifestyles out of savings, "but it's not here yet," says Steve Utkus, director of Vanguard's Center for Retirement Research.
Mr. Burdette uses Social Security income as the base for his budgeting and has tried to adjust his fixed expenses down to match what he gets from the government.
Downsizing to a small house is central to his revised plan. "We're going to have to live a little more modestly," Mr. Burdette says.
He's also looking at holding on to his current car longer than might have otherwise been the case.
But all told, Mr. Burdette counts himself as satisfied in retirement, having turned a hobby of numismatic research into an area to which he can devote more time.
In the T. Rowe Price survey, some 90% of respondents said they are "very satisfied" or "somewhat satisfied" with their retirement. Of course, many people do struggle, especially when retirement is forced on them earlier than expected for health reasons. And the T. Rowe Price survey found that unmarried women among respondents tended to have a harder time making ends meet.
But for the most part, says Ms. Coveney, "retirees are making it work and being flexible with their spending in the early years of their retirement."
--------------------------------------------------
--------------------------------------------------
Despite Curve Balls, Most Retirees Manage
The Key: Adjusting Lifestyle to Reduced Income
By TOM LAURICELLA CONNECT
Sept. 6, 2014 8:18 p.m. ET
Rob Shepperson
And now for a little good news.
Most of the stories we read about retirement planning tend to be dominated by "unpleasant realities" and savings goals that can seem like Mount Everest. And then … the brakes go out on the car again.
Indeed, many people head into retirement with little money and little planning. And life has a way of throwing financial or health-related curve balls even when we have planned ahead or think everything is under control.
But the reality is that most people simply find a way to adjust.
Roger Burdette, a married 67-year-old living in Great Falls, Va., is a retiree who didn't let planning go by the wayside. In his mid-50s, he started tracking how much he would need to live the lifestyle he wanted once he could walk away from the office.
But his investments took a beating during the financial crisis and have been slow to recover. When he retired a year ago from a job as a computer-systems engineer, he realized that if he wants to make his savings last, he needs to live on a tighter budget than he had hoped.
"You think back to when you go to college and you don't have a lot of money, so you've got to find ways to make it go farther," he says. "It's the same approach for retirement."
Mr. Burdette's views found their way into a recent sampling of retirees published by T. Rowe Price Group, TROW -0.28% the mutual-fund company. The survey focused on individuals who had stopped working in the past one to five years and who had a 401(k) plan or an individual retirement account that had been rolled over from a 401(k).
Fewer than one in five said their postretirement income matched their pre-retirement paycheck. Instead, on average, their retirement income was just 66% of what they had been making. "There's a focus on whether you should target 80% or 85% of your pre-retirement income," says Anne Coveney, a vice president at T. Rowe Price. But she says it was a "reality check" to see 52% of respondents say they were getting only 41% to 80% of pre-retirement income.
Along the way, 40% said they have discovered that they can adjust their lifestyle to match their income by a "great deal," and 37% agreed that the same term applied to the statement: "I don't need to spend as much as I did before I retired to be satisfied."
David Hartness, chief client officer at Iron Gate Partners in Wilmington, N.C., says that when clients have to make adjustments, he urges them to consider a big-picture question: "Take a step back and ask, 'What are the most important things in this new season of life?'
Usually, the biggest drain on retirement budgets is housing. Mr. Hartness suggests to some clients that they look beyond just selling a big house and buying a smaller one, and consider renting.
"There are a lot of places where you can rent and have full amenities like a country club," he says, without having to be responsible for the upkeep of a house.
He also has found that many clients can drop the hefty bills that come with golf-club memberships and still get in plenty of tee time. He tells of one client who dropped her membership and has ended up playing more golf since, as friends have invited her to join them.
In the background, current retirees don't have to be as reliant on their savings as will likely be the case in years to come. Vanguard Group released a similar survey of retirees with investment accounts this year and found that 20% of household incomes in its sample were coming from pensions and 28% from Social Security.
"Everyone is talking about the new retirement," where retirees have to fund their lifestyles out of savings, "but it's not here yet," says Steve Utkus, director of Vanguard's Center for Retirement Research.
Mr. Burdette uses Social Security income as the base for his budgeting and has tried to adjust his fixed expenses down to match what he gets from the government.
Downsizing to a small house is central to his revised plan. "We're going to have to live a little more modestly," Mr. Burdette says.
He's also looking at holding on to his current car longer than might have otherwise been the case.
But all told, Mr. Burdette counts himself as satisfied in retirement, having turned a hobby of numismatic research into an area to which he can devote more time.
In the T. Rowe Price survey, some 90% of respondents said they are "very satisfied" or "somewhat satisfied" with their retirement. Of course, many people do struggle, especially when retirement is forced on them earlier than expected for health reasons. And the T. Rowe Price survey found that unmarried women among respondents tended to have a harder time making ends meet.
But for the most part, says Ms. Coveney, "retirees are making it work and being flexible with their spending in the early years of their retirement."
--------------------------------------------------
Wednesday, September 17, 2014
US$ exchange rate will be going up soon, what should you do?
If you are a Singaporean, and all your CASH is denominated in Singapore Dollars (S$), you may want to consider to invest in other currencies that may be gaining strength, such as US Dollars (US$). As US$ gains strength, the exchange rate of US$ vs S$ is expected to increase, and S$ will drop.
Next question then will be: how high will US$:S$ go?
Well, nobody knows, but what we can be confident is that US$:S$ will not stay at such low level as 1.26 as US$ gains strength. Remember, we have seen the trough at about 1.24xx.
Next question then will be: how high will US$:S$ go?
Well, nobody knows, but what we can be confident is that US$:S$ will not stay at such low level as 1.26 as US$ gains strength. Remember, we have seen the trough at about 1.24xx.
Tuesday, September 16, 2014
Introducing Elec & Eltek USD (E16.SI)
Company Profile:
Elec & Eltek International Company Limited (Singapore stock quote E16.SI), an investment holding company, manufactures and distributes high density interconnects and backplane printed circuit boards (PCBs) worldwide. The company is involved in the provision of quick-turn around services; sales and marketing services; trade of PCBs; and manufacture and distribution of PCB raw materials. It serves various customers in electronics sectors with primary focus on communication and networking, computer and computer peripherals, automotive, and consumer electronics.
Note that Elec & Eltek International Company is today one of the world’s leading designers, manufacturers, and distributors of double-sided, multi-layered, and high-density printed circuit boards.
Financials & Outlook:
Last traded = US$1.50
Market Capital = US$280.4M
Current P/E = 25.86
P/S = 0.54
Dividend Yield = 6.67%
ROE = 4.8%
Profit Margin = 3.14%
The technicals show strong support at about US$1.50.
Elec is one of rare company which is a leader in its field and with very high dividend yield. I believe it's stock price has hit rock bottom and I rate it a strong buy at current price.
Elec & Eltek International Company Limited (Singapore stock quote E16.SI), an investment holding company, manufactures and distributes high density interconnects and backplane printed circuit boards (PCBs) worldwide. The company is involved in the provision of quick-turn around services; sales and marketing services; trade of PCBs; and manufacture and distribution of PCB raw materials. It serves various customers in electronics sectors with primary focus on communication and networking, computer and computer peripherals, automotive, and consumer electronics.
Note that Elec & Eltek International Company is today one of the world’s leading designers, manufacturers, and distributors of double-sided, multi-layered, and high-density printed circuit boards.
Financials & Outlook:
Last traded = US$1.50
Market Capital = US$280.4M
Current P/E = 25.86
P/S = 0.54
Dividend Yield = 6.67%
ROE = 4.8%
Profit Margin = 3.14%
The technicals show strong support at about US$1.50.
Elec is one of rare company which is a leader in its field and with very high dividend yield. I believe it's stock price has hit rock bottom and I rate it a strong buy at current price.
Singaporean's household median wage for 2013 is S$7,999 per month
月入2万元以上本地家庭激增
2014年09月15日
洪奕婷 报道
angyt@sph.com.sg
新加坡的高薪家庭越来越多，家庭月入达2万元或更高的本地居民住户比率创下13年新高，从过去的2.4％大幅上升至近10％。
不仅如此，以前相对占少数的高薪住户，即月入1万5000元或更高的住户比率增幅显著。其中，月入至少2万元的住户如今超越其他月入群，在全国所有居民住户中占据最大比率。
新加坡统计局2000年至2013年的数据显示，本地居民住户的月入结构过去13年来起了明显变化。本地居民住户包括新加坡公民以及永久居民，当局没有进一步细分。
截至去年，本地的居民住户共有117万4500个，也就是说有多达约11万个住户享有2万元或以上的高月入。13年前，这类住户只有约2万个。
数据也显示，本地居民住户的整体家庭月入都有所增长，家庭月入中位数已从2000年的4000元上升至7030元。在月入超过7000元的居民住户比率全面上扬的同时，月入低于7000元的居民住户比率相应减少。其中，以月入介于1000元至4000元的中低群体，减幅最显著。
受访学者认为，国家强劲的经济增长和国人教育水平的提升，带动了全民收入的提高。
Cost of Living Calculator
Recently, I came across this Singapore's cost of living calculator at this URL...
I found it very interesting because it will help me in my calculation of whether $1M is enough for a person to retire for 20 years?
Some useful information on Singapore's cost of living from this website is as follow:
--------------------------------------------------------
* What will be your regular mode of transport?
I will be taking public transport (buses and trains)
$170 - $190 monthly
I will be taking taxis
$700 monthly (assume two 20-minute taxi rides per day at peak period over 20 days)
I will buy and drive a car
$1,000 - $2,000 monthly (low-range or middle-range vehicle)
--------------------------------------------------------
Where do you plan to have your meals daily?
I will eat out at budget joints
$10- $15 daily
I will eat out at mid-priced restaurants
$35 - $50 daily
I will eat out at fine dining establishments
$80 - $150 daily
I will cook at home
$200 - $400 monthly
--------------------------------------------------------
What kinds of brands do you spend on for new clothing and footwear?
Budget/house brands
$80 - $100 monthly
Mid range brands
$120 - $200 monthly
Luxury brands
$240 - $470 monthly
--------------------------------------------------------
What communications and home entertainment services will you require? (select all that apply)
Home phone rental
$29.43 every quarter
Internet access
$24.90 (25mbps) - $39.90 (100mbps) monthly (assumes home broadband services from StarHub)
Mobile phone plan
$38 - $205 monthly (assumes mobile services from StarHub)
Cable TV
$33.17 - $50.29 (assumes cable TV from StarHub)
$53.50 one-time activation charge applies for a new home phone line
--------------------------------------------------------
Which of the following recreational activities do you enjoy? (select all that apply)
Movies
$12 per visit
Clubbing
$100 per visit
Art exhibitions/Museums
$5 - $30 per entry
Plays and musicals
$25 - $300 per ticket
Theme parks
$74 per entry (Assuming one-day pass for adults aged 13-64 to Universal Studios Singapore)
Club memberships
Varies for monthly subscription fee, entrance fee and deposit
--------------------------------------------------------
Education
If you have children, you may wish to add education fees to your budget.
Here's the estimated monthly cost per child
Kindergarten $400 - $1,500 Public School $246 - $772
International School $1,000 - $3,000 University $1,900 - $3,840
--------------------------------------------------------
I found it very interesting because it will help me in my calculation of whether $1M is enough for a person to retire for 20 years?
Some useful information on Singapore's cost of living from this website is as follow:
--------------------------------------------------------
* What will be your regular mode of transport?
I will be taking public transport (buses and trains)
$170 - $190 monthly
I will be taking taxis
$700 monthly (assume two 20-minute taxi rides per day at peak period over 20 days)
I will buy and drive a car
$1,000 - $2,000 monthly (low-range or middle-range vehicle)
--------------------------------------------------------
Where do you plan to have your meals daily?
I will eat out at budget joints
$10- $15 daily
I will eat out at mid-priced restaurants
$35 - $50 daily
I will eat out at fine dining establishments
$80 - $150 daily
I will cook at home
$200 - $400 monthly
--------------------------------------------------------
What kinds of brands do you spend on for new clothing and footwear?
Budget/house brands
$80 - $100 monthly
Mid range brands
$120 - $200 monthly
Luxury brands
$240 - $470 monthly
--------------------------------------------------------
What communications and home entertainment services will you require? (select all that apply)
Home phone rental
$29.43 every quarter
Internet access
$24.90 (25mbps) - $39.90 (100mbps) monthly (assumes home broadband services from StarHub)
Mobile phone plan
$38 - $205 monthly (assumes mobile services from StarHub)
Cable TV
$33.17 - $50.29 (assumes cable TV from StarHub)
$53.50 one-time activation charge applies for a new home phone line
--------------------------------------------------------
Which of the following recreational activities do you enjoy? (select all that apply)
Movies
$12 per visit
Clubbing
$100 per visit
Art exhibitions/Museums
$5 - $30 per entry
Plays and musicals
$25 - $300 per ticket
Theme parks
$74 per entry (Assuming one-day pass for adults aged 13-64 to Universal Studios Singapore)
Club memberships
Varies for monthly subscription fee, entrance fee and deposit
--------------------------------------------------------
Education
If you have children, you may wish to add education fees to your budget.
Here's the estimated monthly cost per child
Kindergarten $400 - $1,500 Public School $246 - $772
International School $1,000 - $3,000 University $1,900 - $3,840
--------------------------------------------------------
Monday, September 15, 2014
AliBaba and the Forty Thieves! Yee ba!
"Alibaba and the 40 thieves"? That is what always come to my mind when I think about "Alibaba". Oh gosh, time to wake up! Face it, this is "Alibaba" conglomerate, the Alibaba Group that is about to take the IPO crown when it’s expected to debut on Sept 18, 2014. It’s a long awaited debut for what is the largest Internet and e-commerce based company in the world!
Alibaba has a myriad of operations, and investments, from its Alibaba marketplace (wholesale business-to-business sales and service), Taobao marketplace (think Amazon and EBay combined), Alipay (think PayPal and all mobile payments combined), TMall (think online BestBuy), cloud services (think SalesForce.com), Tudou (think Netflix and Youtube), and many more. Basically almost everything you can buy or do on the internet in China, Alibaba has some ownership of it. It has also recently started expanding into a more global company, bringing its services and products to a larger audience. In many ways, Alibaba’s IPO is regarded as the next coming of Internet-driven riches, following the likes of Facebook, Google, Amazon, and eBay, minting millionaires by the thousands.
I have used Taobao marketplace and TMall before and I was amazed with the great variety of goods I can buy online and arrange for transport company to ship from China to Singapore! I can purchase these exactly same products on Taobao at 1/3 to 1/2 the price (inclusive of shipping to Singapore!) of what I need to pay in Singapore! As a result, I foresee great price competition for non-perishable goods that are sold in shops in Singapore! This could have a great detrimental effects on retail and shops rentals in Singapore! From this, I am avoiding retail and shops' properties in Singapore! I am also avoiding industrial properties in Singapore! Great danger lurks for investment in these properties (unless you have the choicest locations!).
Alibaba has a myriad of operations, and investments, from its Alibaba marketplace (wholesale business-to-business sales and service), Taobao marketplace (think Amazon and EBay combined), Alipay (think PayPal and all mobile payments combined), TMall (think online BestBuy), cloud services (think SalesForce.com), Tudou (think Netflix and Youtube), and many more. Basically almost everything you can buy or do on the internet in China, Alibaba has some ownership of it. It has also recently started expanding into a more global company, bringing its services and products to a larger audience. In many ways, Alibaba’s IPO is regarded as the next coming of Internet-driven riches, following the likes of Facebook, Google, Amazon, and eBay, minting millionaires by the thousands.
I have used Taobao marketplace and TMall before and I was amazed with the great variety of goods I can buy online and arrange for transport company to ship from China to Singapore! I can purchase these exactly same products on Taobao at 1/3 to 1/2 the price (inclusive of shipping to Singapore!) of what I need to pay in Singapore! As a result, I foresee great price competition for non-perishable goods that are sold in shops in Singapore! This could have a great detrimental effects on retail and shops rentals in Singapore! From this, I am avoiding retail and shops' properties in Singapore! I am also avoiding industrial properties in Singapore! Great danger lurks for investment in these properties (unless you have the choicest locations!).
Cost of living
According to the following website by Singapore's campus of James Cook University (JCU),
The Cost of Living in Singapore is estimated to be $10,200 - $23,400 per year, broken down as follow:
Accommodation $400 - $1,000
Meals $200 - $400
Travel Expenses on Public Transport $100 - $150
Personal Expenses $150 - $400
TOTAL PER MONTH $850 - $1,950
TOTAL PER YEAR $10,200 - $23,400
Please note that the living costs above are an estimate and serve as a guide only. Living costs will depend on type of accommodation chosen, lifestyle needs etc and vary from person to person.
The Cost of Living in Singapore is estimated to be $10,200 - $23,400 per year, broken down as follow:
Accommodation $400 - $1,000
Meals $200 - $400
Travel Expenses on Public Transport $100 - $150
Personal Expenses $150 - $400
TOTAL PER MONTH $850 - $1,950
TOTAL PER YEAR $10,200 - $23,400
Please note that the living costs above are an estimate and serve as a guide only. Living costs will depend on type of accommodation chosen, lifestyle needs etc and vary from person to person.
Sunday, September 14, 2014
Is $1M enough for a person to retire for 20 years?
Is $1M enough for a person to retire for 20 years (assuming the person retire at 62 years old and live till 82 years old)?
Recently, there are many people who are starting to complain that cost of living in Singapore has gone too high, and $1M is not even enough for a person to retire! Is this a fact or a myth (just belief and misconception)?
To be realistic, we have to take the cost of living of basic necessities, no frails - because cost of living for frails and luxuries are not necessities and are just WANTs, not NEEDs...
Ok, why not we put a hard figure to it once and for all to prove or disprove it? Here we go!...
Costs of living per month per person (average figure):
- Food = $330 (cook at home, with occasional eat out)
- Transport = $150 (bus and trains only, should be much less for retirees)
- Utilities (electricity, water, gas, sewage) = $120
- Communications (mobile phones subscriptions & internet) = $80
- Clothings and footwear = $100
- Medical insurance & expenses = $200 (assume the rest covered by insurance)
Total per month = $980 per month per person.
Let's assume inflation of cost of living is 2% per year.
Let's assume this person put his $1M into annuity earning 2% per year at the age of 62 years old.
At the end of 82 years old, he would still have about S$1,153,000 !!
So, $1M is more than enough for a person to retire!!
Recently, there are many people who are starting to complain that cost of living in Singapore has gone too high, and $1M is not even enough for a person to retire! Is this a fact or a myth (just belief and misconception)?
To be realistic, we have to take the cost of living of basic necessities, no frails - because cost of living for frails and luxuries are not necessities and are just WANTs, not NEEDs...
Ok, why not we put a hard figure to it once and for all to prove or disprove it? Here we go!...
Costs of living per month per person (average figure):
- Food = $330 (cook at home, with occasional eat out)
- Transport = $150 (bus and trains only, should be much less for retirees)
- Utilities (electricity, water, gas, sewage) = $120
- Communications (mobile phones subscriptions & internet) = $80
- Clothings and footwear = $100
- Medical insurance & expenses = $200 (assume the rest covered by insurance)
Total per month = $980 per month per person.
Let's assume inflation of cost of living is 2% per year.
Let's assume this person put his $1M into annuity earning 2% per year at the age of 62 years old.
At the end of 82 years old, he would still have about S$1,153,000 !!
So, $1M is more than enough for a person to retire!!
SEC review reveals web of payments between funds and brokerages
There has always been speculations and suspicions about active fund managers and their high management fees and expenses charged. This may have resulted in the USA's SEC review on payments between funds and brokerages which you can read at this URL...
SEC review reveals web of payments between funds and brokerages
Final analysis could lead to an overhaul of the industry
[NEW YORK] The tens of millions of dollars in annual fees that mutual fund companies pay to brokerages and their financial advisers to encourage sale of certain funds to retail investors are growing in size and variety, but the phenomenon is largely invisible to investors.
The US Securities and Exchange Commission, which 18 months ago began a review of fees paid among mutual fund advisers, fund companies and the brokerage firms that sell the funds, has uncovered a complex geometry of payments that may lead to sales of certain funds at the expense of others and is not clearly disclosed under regulators' current requirements, according to a person familiar with the review.
A final analysis of the fee infrastructure and disclosure holes is expected to be completed by year-end, and could lead to an overhaul of how the industry pays for sales and how the brokerage industry discloses the bounty it collects.
Past attempts by the SEC and the Financial Industry Regulatory Authority to improve disclosure and end certain incentive payments have faltered.
SEC review reveals web of payments between funds and brokerages
Final analysis could lead to an overhaul of the industry
[NEW YORK] The tens of millions of dollars in annual fees that mutual fund companies pay to brokerages and their financial advisers to encourage sale of certain funds to retail investors are growing in size and variety, but the phenomenon is largely invisible to investors.
The US Securities and Exchange Commission, which 18 months ago began a review of fees paid among mutual fund advisers, fund companies and the brokerage firms that sell the funds, has uncovered a complex geometry of payments that may lead to sales of certain funds at the expense of others and is not clearly disclosed under regulators' current requirements, according to a person familiar with the review.
A final analysis of the fee infrastructure and disclosure holes is expected to be completed by year-end, and could lead to an overhaul of how the industry pays for sales and how the brokerage industry discloses the bounty it collects.
Past attempts by the SEC and the Financial Industry Regulatory Authority to improve disclosure and end certain incentive payments have faltered.
Thursday, September 11, 2014
How to become a MILLIONAIRE!
It is actually quite possible for any ordinary person earning a very average salary to become a MILLIONAIRE and retire early - the secret is "save more spend less, and earn higher return on your capital"!
Just give a very simple example:
Gross Median household income from work of employed residents (excluding non-employed and retiree) in Singapore is S$7,870 per month in 2013.
Note that this figure for Household income from work includes employer Central Provident Fund (CPF) contributions.
Let's just assume that household expenditure is $5,594 per month.
That means the median household can save $2,276 per month or about 29% of the income per month.
Let's assume the household maintain this savings for 30 years, and they are able to obtain 5% return per year.
At the end of 30 years, they would have: $1.894m for the couple or almost $1M for 1 person!
So, you can see that it is actually quite easy to become a MILLIONAIRE in Singapore!
But then, the next question pops up: Is $1M enough for a person to retire for 30 years (assuming the person retire at 62 years old and live till 82 years old)?
Well, Let me try to start some number crunching based on the available statistics and inflation figures............
Just give a very simple example:
Gross Median household income from work of employed residents (excluding non-employed and retiree) in Singapore is S$7,870 per month in 2013.
Note that this figure for Household income from work includes employer Central Provident Fund (CPF) contributions.
Let's just assume that household expenditure is $5,594 per month.
That means the median household can save $2,276 per month or about 29% of the income per month.
Let's assume the household maintain this savings for 30 years, and they are able to obtain 5% return per year.
At the end of 30 years, they would have: $1.894m for the couple or almost $1M for 1 person!
So, you can see that it is actually quite easy to become a MILLIONAIRE in Singapore!
But then, the next question pops up: Is $1M enough for a person to retire for 30 years (assuming the person retire at 62 years old and live till 82 years old)?
Well, Let me try to start some number crunching based on the available statistics and inflation figures............
Tuesday, September 9, 2014
Introducing American International Group Inc (AIG)
Company Profile:
American International Group, Inc. (US stock quote AIG) provides insurance products and services for the commercial, institutional, and individual customers in the United States and internationally. The company operates in two segments: AIG Property Casualty, and AIG Life and Retirement. The AIG Property Casualty segment offers casualty insurance products that cover general liability, commercial automobile liability, workers' compensation, excess casualty, and crisis management insurance; industrial energy-related and commercial property insurance products, which cover exposures to man-made and natural disasters; aerospace, environmental, political risk, trade credit, surety and marine insurance products for small and medium sized enterprises; and various forms of professional liability insurance products. It also provides personal accidental and supplemental health products for individuals, employees, associations, and other organizations; and life products, as well as a range of travel insurance products and services for leisure and business travelers. This segment distributes its insurance products and services through brokers, agents, and direct marketing and partner organizations, as well as the Internet. The AIG Life and Retirement segment offers a suite of products and services to individuals and groups, including term life insurance, universal life insurance, accident and health insurance, fixed and variable group annuities, administrative and compliance services, mutual funds, and financial planning. This segment distributes its products through banks, broker-dealers, financial advisors, independent marketing organizations, insurance agents, structured settlement brokers, benefit consultants, and direct-to-consumer platforms. The company also provides private residential mortgage guaranty insurance and direct investment book services; and derivatives intermediary services.
Financials & Outlook:
Last traded = US$55.32
Market Capital = US$78.54B
Current P/E = 9.08
P/S = 1.16
Dividend Yield = 0.9%
Beta =
Quick ratio = -
Debt/Equity = 0.36
P/B = 0.74
P/Cash = 43.2
P/FCF = 15.04
ROE = 8.6%
Profit Margin = 13%
Div Payout ratio = 7.4%
The technicals show strong support at about (BUT doesn't mean the stock will fall to this price).
AIG has come a long way since 2009 when it nearly collapsed after Lehman's crisis saved only by US government's bailout and it seemed to have recovered very nicely.
AIG will benefit from impeding increase in Fed rate in late 2015...
As this is a very interest rate sensitive stock, any small increase in Fed rate will have big benefits to AIG.
I would rate this as a strong buy now.
American International Group, Inc. (US stock quote AIG) provides insurance products and services for the commercial, institutional, and individual customers in the United States and internationally. The company operates in two segments: AIG Property Casualty, and AIG Life and Retirement. The AIG Property Casualty segment offers casualty insurance products that cover general liability, commercial automobile liability, workers' compensation, excess casualty, and crisis management insurance; industrial energy-related and commercial property insurance products, which cover exposures to man-made and natural disasters; aerospace, environmental, political risk, trade credit, surety and marine insurance products for small and medium sized enterprises; and various forms of professional liability insurance products. It also provides personal accidental and supplemental health products for individuals, employees, associations, and other organizations; and life products, as well as a range of travel insurance products and services for leisure and business travelers. This segment distributes its insurance products and services through brokers, agents, and direct marketing and partner organizations, as well as the Internet. The AIG Life and Retirement segment offers a suite of products and services to individuals and groups, including term life insurance, universal life insurance, accident and health insurance, fixed and variable group annuities, administrative and compliance services, mutual funds, and financial planning. This segment distributes its products through banks, broker-dealers, financial advisors, independent marketing organizations, insurance agents, structured settlement brokers, benefit consultants, and direct-to-consumer platforms. The company also provides private residential mortgage guaranty insurance and direct investment book services; and derivatives intermediary services.
Financials & Outlook:
Last traded = US$55.32
Market Capital = US$78.54B
Current P/E = 9.08
P/S = 1.16
Dividend Yield = 0.9%
Beta =
Quick ratio = -
Debt/Equity = 0.36
P/B = 0.74
P/Cash = 43.2
P/FCF = 15.04
ROE = 8.6%
Profit Margin = 13%
Div Payout ratio = 7.4%
The technicals show strong support at about (BUT doesn't mean the stock will fall to this price).
AIG has come a long way since 2009 when it nearly collapsed after Lehman's crisis saved only by US government's bailout and it seemed to have recovered very nicely.
AIG will benefit from impeding increase in Fed rate in late 2015...
As this is a very interest rate sensitive stock, any small increase in Fed rate will have big benefits to AIG.
I would rate this as a strong buy now.
Sunday, September 7, 2014
Introducing Hartford Financial Services Group (HIG)
Company Profile:
The Hartford Financial Services Group Inc. (US stock quote HIG), through its subsidiaries, provides insurance and financial services to individual and business customers primarily in the United States and Japan. The company’s Property & Casualty Commercial segment offers workers’ compensation, property, automobile, marine, livestock, liability, and umbrella coverages, as well as customized insurance products and risk management services, including professional liability, fidelity, surety, and specialty casualty coverages. Its Consumer Markets segment provides standard automobile, homeowners, and personal umbrella coverages to individuals. The company’s Property & Casualty Other Operations segment manages property and casualty insurance. Its Group Benefits segment offers group life, accident and disability coverage, group retiree health, and voluntary benefits to employers, associations, affinity groups, and financial institutions. The company’s Mutual Funds segment provides mutual funds for retail and retirement accounts; and investment-management and administrative services, such as product design, implementation, and oversight, as well as includes the runoff of the mutual funds supporting the company's variable annuity products. This segment distributes open-end funds and 529 college savings plans to national and regional broker-dealer organizations, banks and other financial institutions, independent financial advisors, and registered investment advisors; and The Hartford’s funds to professional buyers, such as broker-dealers, consultants, record keepers, and bank trust groups.
Financials & Outlook:
Last traded = US$36.80
Market Capital = US$16.5B
Current P/E = 14.1
P/S = 0.79
Dividend Yield = 1.96%
Beta = 1.91
Quick ratio = -
Debt/Equity = 0.31
P/B = 0.85
P/Cash = 10.9
P/FCF = 3.24
ROE = 3.3%
Profit Margin = 3.0%
Div Payout ratio = 42.6%
HIG will benefit from impeding increase in Fed rate in late 2015...
As this is a very interest rate sensitive stock, any small increase in Fed rate will have big benefits to HIG.
I would rate this as a strong buy now.
The Hartford Financial Services Group Inc. (US stock quote HIG), through its subsidiaries, provides insurance and financial services to individual and business customers primarily in the United States and Japan. The company’s Property & Casualty Commercial segment offers workers’ compensation, property, automobile, marine, livestock, liability, and umbrella coverages, as well as customized insurance products and risk management services, including professional liability, fidelity, surety, and specialty casualty coverages. Its Consumer Markets segment provides standard automobile, homeowners, and personal umbrella coverages to individuals. The company’s Property & Casualty Other Operations segment manages property and casualty insurance. Its Group Benefits segment offers group life, accident and disability coverage, group retiree health, and voluntary benefits to employers, associations, affinity groups, and financial institutions. The company’s Mutual Funds segment provides mutual funds for retail and retirement accounts; and investment-management and administrative services, such as product design, implementation, and oversight, as well as includes the runoff of the mutual funds supporting the company's variable annuity products. This segment distributes open-end funds and 529 college savings plans to national and regional broker-dealer organizations, banks and other financial institutions, independent financial advisors, and registered investment advisors; and The Hartford’s funds to professional buyers, such as broker-dealers, consultants, record keepers, and bank trust groups.
Financials & Outlook:
Last traded = US$36.80
Market Capital = US$16.5B
Current P/E = 14.1
P/S = 0.79
Dividend Yield = 1.96%
Beta = 1.91
Quick ratio = -
Debt/Equity = 0.31
P/B = 0.85
P/Cash = 10.9
P/FCF = 3.24
ROE = 3.3%
Profit Margin = 3.0%
Div Payout ratio = 42.6%
HIG will benefit from impeding increase in Fed rate in late 2015...
As this is a very interest rate sensitive stock, any small increase in Fed rate will have big benefits to HIG.
I would rate this as a strong buy now.
Thursday, September 4, 2014
Options vs Futures as your trading instrument
Between "Options" and "Futures", I would say Futures is a better trading instrument, and easier to make money, but that could be just me because I have been able to grasp "futures" much better than "Options".
Options just appear too complicated to me as compared to Futures. In investing, we always have to KISS (Keep it simple stupid!) so that we can understand very well what we are getting/investing into.................
Options just appear too complicated to me as compared to Futures. In investing, we always have to KISS (Keep it simple stupid!) so that we can understand very well what we are getting/investing into.................
Wednesday, September 3, 2014
New SGX trading rules - The issue that has yet to be tackled
Recently, SGX has came out with a slew of changes for stock trading on Singapore Stock Exchange (SGX), and you can see this news, title "New SGX trading rules: What you need to know" at this URL...
In particular, I don't see how the new rules will help the young investors and small investors, as claimed in the article:
" Board lot size reduction
What is this?
This move cuts the minimum purchase "lot" of SGX-listed securities from 1,000 to 100 units.
That means you will be able to buy just 100 DBS shares, for example, instead of having to purchase a minimum of 1,000, which is the case currently. For example, to invest in pricier blue chips like DBS, which closed at $17.92 last Friday, you would need to put up $17,920 to buy 1,000 DBS shares. But under the new rule, you can buy 100 shares for $1,792.
How does it benefit investors?
This will make blue chips and index component stocks more affordable and help investors build portfolios with a smaller capital outlay.
Young investors with typically smaller cash reserves will have a wider range of equities to choose from, while longstanding investors can diversify further into blue chips.
For example, an investor could easily build an equity portfolio by buying 100 DBS shares, 200 Keppel Corp shares, 100 Jardine C&C shares and 300 Global Logistics Properties shares - all for an investable amount of $10,000. "
You see, 1 of the main issue that has not be raised, let alone tackled, to allow young investors and small investors to trade or even dollar-cost average every month is the high minimum commission charged by Singapore stock brokerages. This minimum commission ranges from $25 to $35 dollars just for online trading of stocks (with no stock broker / remisier's help). For example, if somebody is going to buy 100 DBS shares at $1,792 and pay a brokerage commission of $25, that would be 1.4% in commission!
In order to achieve their stated aim, they have to seriously look into this high minimum commission issue....................
In particular, I don't see how the new rules will help the young investors and small investors, as claimed in the article:
" Board lot size reduction
What is this?
This move cuts the minimum purchase "lot" of SGX-listed securities from 1,000 to 100 units.
That means you will be able to buy just 100 DBS shares, for example, instead of having to purchase a minimum of 1,000, which is the case currently. For example, to invest in pricier blue chips like DBS, which closed at $17.92 last Friday, you would need to put up $17,920 to buy 1,000 DBS shares. But under the new rule, you can buy 100 shares for $1,792.
How does it benefit investors?
This will make blue chips and index component stocks more affordable and help investors build portfolios with a smaller capital outlay.
Young investors with typically smaller cash reserves will have a wider range of equities to choose from, while longstanding investors can diversify further into blue chips.
For example, an investor could easily build an equity portfolio by buying 100 DBS shares, 200 Keppel Corp shares, 100 Jardine C&C shares and 300 Global Logistics Properties shares - all for an investable amount of $10,000. "
You see, 1 of the main issue that has not be raised, let alone tackled, to allow young investors and small investors to trade or even dollar-cost average every month is the high minimum commission charged by Singapore stock brokerages. This minimum commission ranges from $25 to $35 dollars just for online trading of stocks (with no stock broker / remisier's help). For example, if somebody is going to buy 100 DBS shares at $1,792 and pay a brokerage commission of $25, that would be 1.4% in commission!
In order to achieve their stated aim, they have to seriously look into this high minimum commission issue....................
Tuesday, September 2, 2014
Introducing Devon Energy (DVN) - US marching to be an energy-independent country
For people who do not know, US will soon be an energy-independent country - That is, it does not need to import any oil & gas for its domestic needs. In fact, they can produce more that they have capacity for exports!
Why so? Well, this is thanks to newer technology which have allowed extraction of natural gas and liquids and oil sands etc from what has been almost impossible or too costly to extract, and companies such as Devon Energy (US stock quote DVN) are the beneficiary of such trend...
Company Profile:
Devon Energy Corporation (US stock quote DVN), an independent energy company, is engaged primarily in the exploration, development, and production of oil, natural gas, and natural gas liquids. The company holds interests in various properties located in Anadarko Basin, Barnett Shale, Mississippian-Woodford Trend, Permian Basin, Rockies, and other regions in the United States. It also owns oil and gas properties in Canada. As of December 31, 2013, the company had 701 MMBoe of proved undeveloped reserves. It also operates approximately 24,000 wells. In addition, Devon Energy Corporation offers marketing and midstream services, such as gathering, compression, treating, processing, fractionation, and marketing services to the company and other third parties.
Financials & Outlook:
Last traded = US$75.42
Market Capital = US$30.85B
Current P/E = 18.91
P/S = 2.27
Dividend Yield = 1.27%
Beta = 1.76
Quick ratio = 0.90
Debt/Equity = 0.58
P/B = 1.42
P/Cash = 18.09
P/FCF = -
ROE = 7.8%
Profit Margin = 11.9%
Div Payout ratio = 24.20%
The technicals show strong support at about US$60 (BUT doesn't mean the stock will fall to this price).
DVN Energy started off mainly as a natural gas exploration and production company, but due to the continual suppressed prices of natural gas in US, DVN has started to explore and switch to increase production of natural gas liquids and oil from their sites, which will give them much better margins and profits. DVN has been pretty successful up to now on pursuing this strategy and the management's effort is starting to bear fruit.
I rate DVN as a buy.
Why so? Well, this is thanks to newer technology which have allowed extraction of natural gas and liquids and oil sands etc from what has been almost impossible or too costly to extract, and companies such as Devon Energy (US stock quote DVN) are the beneficiary of such trend...
Company Profile:
Devon Energy Corporation (US stock quote DVN), an independent energy company, is engaged primarily in the exploration, development, and production of oil, natural gas, and natural gas liquids. The company holds interests in various properties located in Anadarko Basin, Barnett Shale, Mississippian-Woodford Trend, Permian Basin, Rockies, and other regions in the United States. It also owns oil and gas properties in Canada. As of December 31, 2013, the company had 701 MMBoe of proved undeveloped reserves. It also operates approximately 24,000 wells. In addition, Devon Energy Corporation offers marketing and midstream services, such as gathering, compression, treating, processing, fractionation, and marketing services to the company and other third parties.
Financials & Outlook:
Last traded = US$75.42
Market Capital = US$30.85B
Current P/E = 18.91
P/S = 2.27
Dividend Yield = 1.27%
Beta = 1.76
Quick ratio = 0.90
Debt/Equity = 0.58
P/B = 1.42
P/Cash = 18.09
P/FCF = -
ROE = 7.8%
Profit Margin = 11.9%
Div Payout ratio = 24.20%
The technicals show strong support at about US$60 (BUT doesn't mean the stock will fall to this price).
DVN Energy started off mainly as a natural gas exploration and production company, but due to the continual suppressed prices of natural gas in US, DVN has started to explore and switch to increase production of natural gas liquids and oil from their sites, which will give them much better margins and profits. DVN has been pretty successful up to now on pursuing this strategy and the management's effort is starting to bear fruit.
I rate DVN as a buy.
Monday, September 1, 2014
Dissecting TDSR (Total Debt Servicing Ratio) introduced by MAS (Monetary Authority of Singapore)
It has recently been reported in the news that there are many people whom have been unable to refinance because of the Total Debt Servicing Ratio (TDSR) that has been introduced by the Monetary Authority of Singapore (MAS). Usually, policy implemented should not be retrospective, i.e. should not apply to people who already bought and financed their properties. However, TDSR has affected many people retrospectively, when they needed to refinance to get out of the higher rates being charged by their banks after the lock-in period (which usually incurs much lower rates during the lock-in period).
Not sure whether it is due to TDSR, or may be due to a combination of other property cooling measures like ABSD (reducing number of buyers significantly), the mortgagee sales (banks' forced-sold properties) advertised seem to have more than doubled after the introduction of TDSR.
Because of the above, my curiosity was arose as to how TDSR is being computed and why suddenly so many people are affected? So I decided to take a deep look into the TDSR components and dissect it, and have made the following discovery in the process:
1) Your free-holding S$ cash has depreciated current value in the eye of MAS, because MAS instructions to banks is to only considers 70% of your free-holding S$ cash value as the computable asset value into its TDSR calculation....
2) Somehow, free-holding foreign cash is so much more inferior to S$ cash in the eye of MAS that MAS instructions to banks is to only considers 30% of your free-holding foreign cash value as the computable asset value into its TDSR calculation (as compared to 70% of value for S$ cash!)...
3) Even if you pledge your foreign cash to the banks, MAS instructions to banks is to only considers 70% of your free-holding foreign cash value into its TDSR calculation (vs 100% for S$ cash).....
4) Your other free-holding financial assets (like shares, bonds, gold, unit trust holdings etc) are only worth 30% of their value according to MAS instructions to banks in calculation of TDSR.......
5) Your other financial assets (like shares, bonds, gold, unit trust holdings etc), even after you pledged to the banks for their loans, are only worth 70% of their value according to MAS instructions to banks in calculation of TDSR.......................................
I am really bewildered about all the above though, is MAS expecting foreign cash to depreciate by 40% against S$ to have such instructions to banks to consider its value at only 30% of current value vs 70% of S$ current value? Not only is the above 40% depreciation assumption totally unrealistic (because currency won't depreciate by so much in short-term), BUT I would have expected that going forward, it is very very likely, >90% chance, that S$ will depreciate against other major currencies like US$ and hence it should be S$ cash that should have lower value than Foreign cash instead?
Is MAS expecting other financial assets (like shares, bonds, gold, unit trust holdings etc) to depreciate >70% to give banks instructions to only consider 30% of their current market value in calculation of TDSR? This is at a time when global economy is recovering? Won't it be more realistic to expect further gains of such financial assets, and hence they are of more value than S$ cash on hand???
All the above rules for computing TDSR not only seem arbitrary to me, but also do not gel with reality, such as why free-holding foreign cash is only worth 30% of its market value while free-holding S$ cash is worth 70% of its market value in the computation of TDSR etc!!!!........................
Not sure whether it is due to TDSR, or may be due to a combination of other property cooling measures like ABSD (reducing number of buyers significantly), the mortgagee sales (banks' forced-sold properties) advertised seem to have more than doubled after the introduction of TDSR.
Because of the above, my curiosity was arose as to how TDSR is being computed and why suddenly so many people are affected? So I decided to take a deep look into the TDSR components and dissect it, and have made the following discovery in the process:
1) Your free-holding S$ cash has depreciated current value in the eye of MAS, because MAS instructions to banks is to only considers 70% of your free-holding S$ cash value as the computable asset value into its TDSR calculation....
2) Somehow, free-holding foreign cash is so much more inferior to S$ cash in the eye of MAS that MAS instructions to banks is to only considers 30% of your free-holding foreign cash value as the computable asset value into its TDSR calculation (as compared to 70% of value for S$ cash!)...
3) Even if you pledge your foreign cash to the banks, MAS instructions to banks is to only considers 70% of your free-holding foreign cash value into its TDSR calculation (vs 100% for S$ cash).....
4) Your other free-holding financial assets (like shares, bonds, gold, unit trust holdings etc) are only worth 30% of their value according to MAS instructions to banks in calculation of TDSR.......
5) Your other financial assets (like shares, bonds, gold, unit trust holdings etc), even after you pledged to the banks for their loans, are only worth 70% of their value according to MAS instructions to banks in calculation of TDSR.......................................
I am really bewildered about all the above though, is MAS expecting foreign cash to depreciate by 40% against S$ to have such instructions to banks to consider its value at only 30% of current value vs 70% of S$ current value? Not only is the above 40% depreciation assumption totally unrealistic (because currency won't depreciate by so much in short-term), BUT I would have expected that going forward, it is very very likely, >90% chance, that S$ will depreciate against other major currencies like US$ and hence it should be S$ cash that should have lower value than Foreign cash instead?
Is MAS expecting other financial assets (like shares, bonds, gold, unit trust holdings etc) to depreciate >70% to give banks instructions to only consider 30% of their current market value in calculation of TDSR? This is at a time when global economy is recovering? Won't it be more realistic to expect further gains of such financial assets, and hence they are of more value than S$ cash on hand???
All the above rules for computing TDSR not only seem arbitrary to me, but also do not gel with reality, such as why free-holding foreign cash is only worth 30% of its market value while free-holding S$ cash is worth 70% of its market value in the computation of TDSR etc!!!!........................