Diving Stock Market

Since the financial crisis really started about a month ago, I’ve dreaded to check the market value of my investments.  My fault for not keeping a closer eye on the stocks and by the time I checked, it was too late to do anything as they had started to nose-dive.  After the first onslaught, I checked the value and immediately had a bad day.  Since then, I haven’t bothered to check everyday because, it just affects my mood and spoils my day. 

After almost a week of not checking my portfolio, I just took a peek.  The funny thing is although it is worst than it was a week ago, but I actually started giggling.  I mean, how much lower can it go.  When I bought half the counters, they were still in the dollar region… but they are all now penny-stocks… sigh. 

On my way to work today, I picked up The Standard – Free English paper.  One of the more interesting stories were on the Lehman-back investments which are now almost worthless.  One of the investors lost HKD 1million, buying this investment… I sure am glad, I’m not that person.  Here’s the full story:  http://www.thestandard.com.hk/news_detail.asp?we_cat=11&art_id=73544&sid=21206785&con_type=1&d_str=20081029&fc=4

Warren Buffet has a single most important investing philosophy, which is don’t invest in something that you don’t understand.  Alot of us don’t practise this philosophy and rely alot on the company’s profile / reputation in the market.  Although I can draw wisdom from my line of work, I’m ashamed to say that I’ve been fooled too.  The truth is, publicly available information which most of us use in making investment decisions, are controlled and delayed.  So a good reputation may just be clever PR, with little substance.  After recent events, maybe it’s still safer to hide money under the mattress.

Cause of current Economic Crisis

I’ve been reading international newspapers and these papers have been predicting a recession since last year!  The funny thing is, Governments and economist are now talking about restoring consumer confidence, but can they blame the consumer for the lack of confidence when the papers keep telling us, the worst is yet to come.

I’m sure many of us don’t really understand about the subprime mortgage crisis and how it caused all this mess.  Luckily for us in Malaysia and HK, our exposure to subprime mortgage is minimal, because such ‘arrangement’ doesn’t yet exist.  From what I’ve read and understood, the subprime mortgage crisis is generally due to 2 causes:

1) People who should not get loans to buy houses, were given such loans. 

They were a credit risk, due to their low / unstable income-earning potential or lack of other forms of collateral.  But it seems that a large portion of the American adult population falls into this category.

I also read that President Bush is responsible for this mess because during his tenure, he promoted housing for every American.  Banks were encouraged to give out loans to such credit-risk customers, in return for their houses (as collateral) and a graduated interest-rate plan.  Graduated interest-rate plans mean that banks entice you with a low entry interest-rate, which may be fixed for a few years.  After the “honeymoon period”, the interest-rate will jump up and you’re basically “screwed”.

Alot of the people who bought houses, using such loans said that they did not know about these graduated interest-rate plans.  As an observer, I think that these people only have themselves to blame.  Remember the latin term “Caveat Emptor” - Let the Buyer beware.  I don’t mean to be rude / crude, but we pay for what we get.  Think of this – a person with an unstable income or in the low income bracket, buying a house which is normally beyond his/her means, but which was made affordable by the “low” interest-rate.  Didn’t they stop to think – what’s the catch?   

So when the high interest-rates kicked in, these people couldn’t afford the monthly payments and the bank had to foreclose and attempt to auction the house.  The problem is there were so many of such foreclosures and no buyers.  So banks now held houses which are not worth the loan given out and no cash inflow from loan repayments.  Quite similar to the crisis in Malaysia in 1997, which gave birth to Danaharta and Danamodal.  Such high risk loans were then packaged by some smart alec and sold to other financial institutions, so that everyone shared the risks.

2) People who took out a 2nd/3rd mortgage on the value of their houses

This is something I read yesterday in USA Today.  They profiled several families who recently lost their homes to foreclosure.  Their stories were so familiar -  a few years ago during the property boom, the value of their homes appreciated sometimes double the purchase price.  All of them took out a 2nd and sometimes, 3rd mortgage, maximising the increased property value and used the loan money to buy a car, go on vacation, buy a swimming pool etc.  

When property prices started to drop and banks called, requiring the customers to pay-down their loan to the current property prices, many of them were caught without sufficient funds.

I couldn’t help but shake my head as I read and I don’t mean to be condescending when I say this, but perhaps what is lacking is planning and preparing for the (worst) future.  Alot of us, never experienced the economic crisis of 1997 but I know that my dad was retrenched many times and money was tight.  Luckily Mum’s job was more secure because she worked for the government.  So in a sense, this is my first-hand experience during an economic crisis.

Of cause, there were some unfortunate people who lost their homes because they lost their jobs, largely due to the economic crisis.  Those still in denial that it won’t affect them personally, please realise that this will affect all of us, the question is not if, but when.  So save your money and don’t take on any loans for the time-being.  I know the banks have been very enthusiatic with their personal loans etc. but don’t be tempted.  Let’s ride out the “storm” and hopefully emerge without too much damage.

Two Horses

Thanks to David for emailing me this…. it’s so touching and poignant that I want to preserve it on this blog. 

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Two Horses
Author – unknown

Just up the road from my home is a field, with two horses in it.

From a distance, each horse looks like any other horse. But if you stop your car, or are walking by, you will notice something quite amazing….

Looking into the eyes of one horse will disclose that he is blind. His owner has chosen not to have him put down, but has made a good home for him.

This alone is amazing.

If you stand nearby and listen, you will hear the sound of a bell. 
Looking around for the source of the sound, you will see that it comes from the smaller horse in the field.

Attached to the horse’s halter is a small bell.

It lets the blind friend know where the other horse is, so he can follow.

As you stand and watch these two friends,
you’ll see that the horse with the bell is always checking on the blind horse,
and that the blind horse will listen for the bell and then slowly walk
to where the other horse is,
trusting that he will not be led astray.

When the horse with the bell returns
to the shelter of the barn each evening,
it stops occasionally and looks back,
making sure that the blind friend isn’t too far behind to hear the bell.

Like the owners of these two horses,
God does not throw us away just because we are not perfect
or because we have problems or challenges.

He watches over us and even brings others into our lives
to help us when we are in need.

Sometimes we are the blind horse
being guided by the little ringing bell of those who God places in our lives. 

Other times we are the guide horse, helping others to find their way….

Good friends are like that you may not always see them, but you know they are always there.

Please listen for my bell and I’ll listen for yours.
And remember…
be kinder than necessary-
everyone you meet is fighting
some kind of battle.

Live simply,
Love generously,
Care deeply,
Speak kindly….
Leave the rest to God

Outlook bleak with layoffs and pay freezes on cards

I guess I shouldn’t be wishing for bonus or increment next year… sigh

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News courtesy of The Standard, HK’s free english newspaper.

 

Tuesday, October 21, 2008

Hong Kong Baptist University and the Hong Kong People Management Association interviewed 45 companies between October 13 and 17 to find out their future plans.

Two in every five companies have decided to scale down pay hikes in the wake of the economic downturn, while nearly one in 10 has or is planning to lay off staff, a survey shows.

About 40 percent, or 19 companies, said they will scale down pay rises while eight companies (17.8 percent) said they will wait and see. Four (9 percent) said they were under pressure to lay off staff.

Another survey conducted between July and September interviewed 83 companies – comprising 55,440 workers – about their employment status between July 2007 and June this year. About a quarter said they sacked a total of 1,293 employees during the year.

The largest layoffs came in the electronics and electrical sector, in which 461 staff (35.7 percent) were laid off. This was followed by the property management sector with 353 staff losing their jobs.

However, the same survey forecast next year’s pay rise will be between 4.8 and 5 percent compared with 4.5 percent this year.

A survey of 95 operating units in China involving 168,801 staff was a clearer indication of the times.

Those contacted in July indicated pay rises for next year would be higher than this year but in a second survey in October, 22 of the 57 companies that responded said they intended to scale down rises and 10 said they were under pressure to cut staff.

Management association vice president Pauline Chung Hei-ching said the situation could deteriorate further though the impact of the financial tsunami is still not clear. She said there were also fears that legislation on a minimum wage could negatively affect the employment market.

Crow tests positive for bird flu

Got this from today’s The Standard, HK’s free english newspaper.  The place mentioned-Sham Shui Po- is quite near to my place… about 3 MTR stations away.  Should I start worrying? 

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A house crow found dead in Hong Kong has tested positive for the deadly H5N1 bird flu virus, an agricultural official said.

The crow was found dead in the refuse area of a park in the Sham Shui Po district on October 15 and tests showed it was carrying the virus, the Agriculture, Fisheries and Conservation Department spokesman said.

Hong Kong was the location of the world’s first outbreak of bird flu in humans, which hit the city in 1997, leaving six people dead.

Migratory birds have been blamed for the global spread of the disease, which has killed more than 240 people and ravaged poultry flocks worldwide since 2003.

AGENCE FRANCE-PRESSE   

http://www.thestandard.com.hk/breaking_news_detail.asp?id=8193&icid=3&d_str=20081020

Women-only carriage

This is a picture that I snapped, while travelling on Manila’s MRT.  In case you’re wondering where are all the men, well they are in the back carriages.  I was told that there are designated carriages for Females, old people and children, which men (unless you’re old) is not allowed to enter.   No wonder, the first time I took the MRT I entered at the back carriage and found so many men staring at me.  I wondered where were all the women… hmm. 

One rule to this arrangement - Couples must ride in the men’s section.  To enforce the ruling, a guard is stationed near, where the first carriage stop and it is this guard that makes sure no men “slip” in without permission.  The guard also decides if a men qualifies to ride in that section, under the “old” category.

I think this is a really great idea and should be enforced everywhere.  Rush hour traffic has often given molesters the opportunity to flex their hands.   Thumps up to the Manila MRT Board.

Ok food with GREAT Company

I just returned from dinner with the clients.  They are very hospitable and have taken me out for lunch everyday since I started the review.  And everyday it is a different type of food.  But for dinner tonight, they decided that we should try Filipina food, so we went to this restaurant in Greenbelt (it’s this upscale mall near the hotel), which specialises in bbq / grilled filipina food.

I’ve tried Filipina food before and didn’t find it appetizing, both visually and smell.  It taste quite bland and uninteresting, among the many cuisines that I’ve tasted.  So I knew what to expect from the food at dinner.  But although the meal wasn’t wonderful but the conversation and company more than made up for the shortfall in the meal.  The clients were obliging and mindful of my “dietary” expectations, i.e. foods that I don’t eat.  Throughout dinner, although they talked about things that happened in their office (localised matters) but they spoke as-if, I was “there” and regaled me with their stories, filled with wit and humour.  They never once talked in Tagalog among themselves, even when ordering food just to ensure that I understood everything that was being spoken…. so open and transparent.  I truly appreciate the effort they took, to make sure that I never felt left out.  I felt as if I was among friends, that was how comfortable and accepted, they made me feel. 

I’ve believed for a long time that asians, especially those in South East Asia (Malaysia and Thailand is a good example), are very tolerant of other races.  And we go out of our way to make a newcomer feel included.  Everyone wants to be accepted, especially when we’re new, and by nature, Malaysians, Thais and Filipinas do this naturally as if it is the normal thing to do.  Sadly, having visited many countries, I find that what I believed to be natural behaviour is actually quite rare in other parts of the world.  In some of the places that I’ve visited, the locals have closed clique and make it difficult for visitors to “penetrate”.  Going the extra mile for a visitor is treatment reserved for “special” people.  

Although I am surrounded by many people but I have sometimes felt lonely and this has partly to do with other’s slow acceptance and inclusion of me.  When in my home country, I’ve never found it difficult to be accepted or included in a new environment, neither have I made it difficult to accept or include another.  Sometimes when I think of it, I find it childish that even as adults we still have such strong cliques… it’s like back in school when we used to form groups and gang-up on others (I don’t wanna friend you!!!).

Today I’ve been fortunate to experience the warmth of strangers and the care and concern they showed me just makes me feel loved.  We can never have enough of THAT.

Weekends

This is my 3rd trip to Manila and during all these trips, I meet locals and one of my favourite conversation starters are what do they do during the weekend.   Here are some of the more interesting answers I got:

• One stays in a hostel in the city during the weekday but come Sat, she travels by bus back to her hometown.  It’s a 3 hour bus ride, each way.  She has done this every weekend, for as long as she has been working in Manila
• Two own farms.  One of them plants rice on his farm and the other breed fighting cocks.  Both farms are also out-of-town, at least 3 hours car ride.

All Filipinos that I’ve met, complain about the pollution and traffic, even on weekends.  So most of them escape the city by going outstation.  The idea of having a farm sounds relaxing, but I’ve been assured that it is hard work and require alot of money.  I’m sure that not many of us, can boast of owning a farm, no matter how far away it is.  That is the reason, I found it interesting that some of these Filipinos would go to the trouble of driving so far out of town, plough the land and then drive back to town, all within the span of 2 days.  Now that’s what I call, getting the most out of the weekends.

So what do YOU do, during the weekends? 

Correcting misconceptions

I have several misconceptions which needs to be corrected.  The realisation that my analysis and therefore, conclusion was flawed was due to reading the newspapers and observations in recent weeks.

1st misconception – anyone with a strong belief in his/her religion will not commit a crime, whether it be a petty crime or a felony.

Fact – religious people are humans too and anyone is capable of commiting a crime, if that person is pushed to desperation or the opportunity arises.

Observation – I used to think that most Filipinos are outwardly religious and with their strong faith, it was unlikely that they would resort to crime.  My understanding was that, anyone with deep faith convictions would have a equally strong conscience.  And this is our small voice or if you prefer, guardian angel who warns us as we’re about to do something bad / against faith.  The truth is, desperation can drive anyone to commit a crime.  Cab drivers in Manila think nothing of scamming tourist for exorbitant fares, although they don’t normally do that to a local.  Bribery is still a problem in the Philippines and it is an accepted way of life, if you want a problem to disappear, just cough out the money.  Corruption is rampant and most of the money spent on infrastructure goes to someone’s pocket, so much so, that the contractors tasked with building the infrastructure, has to cut corners because of cost constraints. 

I’m not qualified to criticise the way things are in Philippines but as an observer, I am sadden to see development concentrated in a few areas… normally where the rich live, while most parts of Manila is broken, dirty and chaotic.  You can see children roam the streets when they should be in school;  old buses and vans, letting out clouds of black, thick smoke polluting the air; potholes on almost every road that I’ve travelled… I could go on for a long time.  It is a vibrant city and its people are warm and friendly.  But the people in power are ruining it with their mismanagement and greediness.

“Coolie” – Never use this word on another

I’m currently reading Mahatma Gandhi’s autobiography, which cronicles his life from his childhood until his adulthood.  I’ve so far read upto the chapter where he went to South Africa in 1890 something, to assist on a legal case.  While there, he experienced many racist attack, because of the colour of his skin.  From his words, I could already imagine what it was like in South Africa before apartheid ended.  I felt anger at reading his account, of how the Indian staying there had put up with such terrible treatment and just accepted that they are the minority and therefore couldn’t do anything. 

He narrated this incident, where he had paid for a 1st class rail ticket. which should allow him to travel in the 1st class cabin.  But when the ticket collector came to inspect his ticket, he was scolded for travelling in 1st class and despite having a ticket, he was physically pushed to the lower class section of the rail.  In another incident, he had paid fare to travel in a horse carriage.  Before the journey started, a white guy asked him to give up his seat inside the carriage, for him (the white guy).  Gandhi didn’t want to start a fight and gave up the seat to sit outside the carriage, beside the driver.  During the journey, the white guy wanted to sit outside to smoke and again rudely told Gandhi to seat on the floor!!  Of cause Gandhi didn’t budge and this white guy started to verbally abuse him and raised his hands to hit Gandhi.  Thankfully the other passengers stopped the white guy and difused the situation and Gandhi was allowed to remain in his seat.  Oh ya, in case you’re wondering how this incident ended, the white guy asked his Indian servant to sit on the floor, so that he (white guy) could sit outside.

Gandhi explained that the term “coolie” was used by the oppressors, the gwailos to term the indian labourers who had the lowest status in the community.  If you were an Indian merchant, you might have a slightly higher status but the gwailos, of cause could not tell who was a merchant or a labourer and to most of them, an Indian was a coolie.  Over time it became a racial slur, one which the Indian forefathers did little to dispel / correct. 

It is an injustice when you’re treated differently from others without knowing the reason, more so if it’s due to superficial reasons like your skin colour, your caste (?), background, anything except what you know and who you are.  And most of us have this burning desire in our hearts to correct any injustice towards us and our loved ones but few among us, have the strength of character to do something about it…. make a difference.

Until I read this book, I never really understood the meaning of the word – coolie, but now that I’ve been educated of its origins, I will make sure that I never utter that word to anyone.  It is a shame that although there are many words with noble meanings in the dictionary, men had to also invent words that belittle, hurt, discriminate and brand a human being. 

Even bigger shame on those who know the meaning of the word and STILL use it to taunt, incite, inflame racial tension – shame on our politicians who despite pledging to represent all races, use such words as and when the moment suits them, to cause divide and disunity.  Those of us who know better must remove such politicians from power because they DO NOT represent the majority of Malaysians, the majority who wants racial unity and are colour-blind. 

I’ll post another entry as I progress further into the book.  My next post could be on the power of the people.