Friday, 27 September 2013

"You Can Keep Your Existing Health Insurance"

I wondered about this statement at the time Obama made it.  Clearly, by changing all the rules of health care insurance and mandating conformity, it was unlikely that the vast majority of Americans would not find themselves forced by 'The Affordable Care Act' to have to deal with a completely different health insurance plan and completely different set of health care providers.

I now understand what Obama meant.   He was speaking to his immediate family and (politician) friends.  They are exempt from the "Affordable Care Act."  Clearly what he meant to say was: "if you are exempt from Obamacare, like me and my family, you can keep your existing health insurance."  He never meant to mislead.

Thursday, 26 September 2013

Things We Now Know

The poor are losing ground in the new Obama world.  The facts are showing up even in the halls of collectivist extremes like the New York Times.  The rich are getting richer and poor are being locked in place.  Big government is throttling the economy and the hopes and dreams of lower and middle class Americans.

Today's Wall Street Journal's article by Simon Constable lays out some of the simple and obvious facts of the Obama era: "The richest 20% of households account for 38% of spending, according to government data for 2011, the latest available.  Compare that with 2003 when the top earners spent 26% of the total."  The article goes on to say..."it could get even worse."  It will.

Who really benefits when the regulators strangle the banks?  Do banks really need to get much more conservative in their lending practices?  Why does the government know best?  How far can you stretch the FDIC guarantees before American banking is simply a subsidiary of the US government?  We are now getting clear answers to these questions.

The big losers are minorities, the poor, the struggling middle class.  These are the folks that are being devastated by Obama's big government agenda.

The next hammer to fall on the middle class is the 'Affordable Care Act,' which, in theory, is due to begin implementation next week.  This 'Act' will destroy the American health care industry, impoverish the average American, and create a bonanza for bureaucrats and politicians.  The wealthy are totally unaffected, as are the politicians.  We don't know this yet, but soon we will know.  This will be the straw that breaks the camel's back.

Stuck under this morass of regulation, that tells you where you can send your kids to schools, what they should eat, what you should eat, where you should go to get your health care, what kind of car you can drive, and even what size soda bottles you are permitted to purchase, is the average American.  The land of opportunity is now the land of regulation and oppression.

Given how bad the public schools are, you might think that learning on the job might be able to give you just the lift you need to begin climbing the ladder of the American dream.  The big government boys have an answer for that too.  The minimum wage.  By escalating the minimum wage, the ladder's bottom rungs are effectively sawed off.  Too bad if you are poor, uneducated and striving to improve your circumstances.  Every opportunity to break out of the low income world has now been criminalized.

Meanwhile, JP Morgan may be facing an $ 11 billion fine from the big government boys.  Like everything else, this is a tax on the American worker, since he/she  are the owners of JP Morgan and will pay this $ 11 billion.  Who won't pay the $ 11 billion are any of the perpetrators of the so-called crimes for which this $ 11 billion is a settlement.  The janitor sweeping out the building will pay this fine and retire on a lower income thanks to the big government boys.  Meanwhile, the directors and senior executives at JP Morgan will see their compensation continue to sail higher and higher.  The rich get richer, the poor get poorer, courtesy of the US government and its cronies.

In every way, government is waging war on its own people.  These things we now know.

Tuesday, 24 September 2013

5 Unusual Tricks to Help you Save Up

Saving money is not always as easy as it first seems, and all those good intentions and budgets can fly out of the window without you even noticing – so why not try some more unusual money saving tips? Here are five of our best tips to help you save up!


  1. Never pay with coins
    That’s right, take out all those coins weighing down your purse or wallet and put them in a piggy bank or jar instead. That 10 Sen coin isn't worth much on its own, but once you start saving up all your coins, it can add up to a considerable sum. Avoid the temptation of dipping into your coin fund by storing in it a tin with just a coin slot at the top. If you have to get out a can opener to access those coins, you’re more likely to wait until it’s full before you open it!

  2.  Never say NO to a freebie
    Whether it’s free shampoo and soap from a hotel or free condiments from a restaurant, stock up! These free products are just as good, but with the added bonus that they cost you nothing. It also means that you get better value on your hotel room and meal out, so it’s a win-win situation.

  3. Sleep on it
    Make a deal with yourself: Don’t buy something the first time you see it. Shopping can be a dangerous experience for those wanting to save up, and sometimes all that temptation can get too much. So avoid all that hassle and post-shopping regret by not buying anything the first time you see it or try it on. Go home, sleep on it, look at your finances and your budget and decide whether you
    really need it, or whether you can survive without it.

  4. Find a partner who’s good with money
    If your partner is always overspending, borrowing money from you and forgetting to pay their bills, chances are you’re not going to be that good with money either. We’re not saying you should break up with your partner if they’re not good with money, but you should definitely sit down together and discuss your expectations when it comes to finances – money is the number one cause of arguments in relationships, so don’t let it ruin yours too.

    If you’re still single, on the other hand, why not add “good with money” to your list of criteria? A smart spender will encourage you to save, and will help you to get back on track if you fall off the saving bandwagon.

  5. Save the environment and your money at the same time
    You've heard it a thousand times before: switch off the lights when you’re not in the room, reuse paper, bottles and everything possible… It’s all great for the environment, but there’s another key reason to save energy and reduce, reuse and recycle: it saves you money!

Exclusively for Finance Malaysia Blog, this money saving tips is brought to you by comparehero.my, Malaysia's leading comparison portal.

Saturday, 21 September 2013

Poor Policies; Poor Predictions

The Obama Administration and the Federal Reserve have consistently over-estimated the strength of the US economy.  The Fed has, on no occasion since 2009, had a remotely accurate prediction, constantly and consistently over-estimating economic growth by well over 40 percent on average.  With that record, one wonders why anyone cares what the Fed thinks about the future.  (The Wall Street Journal on Thursday reported, in a graphic, the predictions that the Fed had made over recent years).

Now, economists like Laura d'Andrea Tyson, a Clinton economic advisor, wonders why the poor are getting poorer in the Obama non-recovery since 2009.  After five years of government expansiveness and a Federal Reserve out-of-control, the rich are getting richer and the poor and middle class are losing ground.

Strangely, these results were perfectly predictable.  They follow from the Obama policies.  We have implemented in detail what David Stockman, in his recent book "The Great Deformation," has excoriated as 'crony capitalism' that benefits mainly rich folks.  It is no wonder that Warren Buffett supports all of this.  He does well in an Obama economy.  I doubt that his secretary's income is growing as fast as his personal wealth, regardless of who pays what in taxes.

Buffett, like other rich folks, is a hypocrite.  He knows that Obama's policies mainly benefit folks like him and destroy opportunity for the middle class and reduces them to scrambling for part-time work or applying for food stamps and other subsidies.  For Buffett, that works.  For Obama, that works.  For the poor and middle class, this is disaster.

Obama's only economic initiative this year is to encourage expansion of a law that makes it a criminal offense to hire an employee below a certain wage level.  This means that low-skilled workers that wish to learn a skill on the job are told.....no!  Forget about taking a job, without pay if necessary, to learn a useful skill that will enable you to get a real job.  That kind of apprenticeship, long a staple of growing economies, has been criminalized.  Obama would like to criminalize it further.

You wonder why Obama doesn't just propose a law saying that no one can hire a worker unless they are willing to pay them $ 150,000 and provide them with free health care.  That would pretty much eliminate any opportunity for folks below the top 25 percent in income and wealth.  I feel certain that Buffett could endorse such a proposal.  Then he could fire his secretary and no longer have to worry about what taxes she pays.

The hypocrisy of folks like Obama, Bernanke and Buffett knows no bounds.  They have spent the last five years in a successful effort to shut down the great American economic engine.  They have succeeded.  Expect the rich to get richer and the poor to get poorer.   That's where these folks are taking us.

Wednesday, 18 September 2013

A Rose By Any Other Name

The Fed announced today that it would continue it's bond buying binge to the tune of $ 85 billion monthly, a policy that has been in place since the 2008 financial collapse.  This has expanded the once miniscule Fed balance sheet to over $ 4 trillion. 

The Fed, of course, can create money digitally.  That's what it uses to buy the bonds.  It just says:  "let there be money" and there is money.   This massive expansion in the monetary base has created huge excess reserves in the nation's commercial banking system.  Why doesn't anyone loan this money out?

The pitiful loan activity is a result of two factors.  Dodd-Frank and activism in the Justice Department and others has made it a criminal activity to loan money to anyone who doesn't have the very, very best credit.  And people with that kind of credit have lost interest in borrowing to build businesses in the new Obama world of massive regulation and impending soaring health care costs.  So, not too many loans are getting on bank books.  The reserves are simply piling up.

But what happens if, heaven forbid, the economy recovers?  Ah, an outcome not contemplated by the Obama-Bernanke clique.  So far, they have successfully prevented any serious chance of a strong economic recovery that would quickly expand loans and the money supply, bringing on the inevitable out-of-control inflation.  But, that won't happen if you keep the economy from recovering.  I think that I am beginning to understand the Obama-Bernanke plan.  It's working.

Tuesday, 17 September 2013

Why Gold and Silver? Why Online Store?

Are you first time gold and silver buyers? Why don't you invest in these popular metals? If you did so, you have had a wonderful investing experience after 2008 global financial crisis. But, do you really understand these metals? Were they really precious (especially now)?


Traditionally, gold and silver were one form of exchange. Because of the invention of fiat money, they were being turned into some short of "back-up" currency, in case our fiat money system go burst. It's natural when things go wrong, gold and silver tends to appreciate in value. In other words, people hold precious metals to preserve the value of their assets.

3 Reasons Why Gold and Silver...

  1. Still hot in demand, especially by emerging affluent Chinese. Traditionally, Chinese loves gold. They bought it for events such as new born baby, new year, wedding and even funeral ceremony.
  2. Strengthening USD ??? Yes. It's a correct reason also. Why? Because of news that US going to stop QE3, USD is strengthening so much. But, we must not forget that Europe is still printing money. Then, how about Japan who jump into the bandwagon of money printing?
  3. Simply for portfolio diversifying purpose. As a rule of thumb, 10% of our investment portfolio should allocate to precious metals like gold and silver. When everything goes haywire, precious metals tends to react reversely positive.

Alternative Distributing Channel...
Other than the commonly seen channel like banks and goldsmiths, have you ever think about online purchase? Why?

  1. Normally, it's cheaper because it does not need to open a shop and employ security guard.
  2. Convenient. You can view and select with the pleasure of your time, comfortably at home.
  3. Safe delivery. It's depend. But, I will feel safer if it delivers to my doorstep, instead of going to purchase at goldsmith. Do you know someone might be following you?


Of course, some of you may skeptical about the reliability of the online store. You may try it with small purchase first (test the water before diving in). On this matter, one of the most popular online store in town was SilverMalaysia.com which already features in major dailies with wide media coverage. You may open an account, then explore further.

* Finance Malaysia Blog DO NOT holds any form of liabilities regarding the recommendations. Investors are advised to read and understand the terms and condition thoroughly.

Saturday, 14 September 2013

Inequality and the Poverty of Economics

The Journal of Economic Perspectives is an academic journal that summarizes the state of research in various fields of Economics.  Perusing this journal shows the extreme political bias of much of modern day economic research.  The Summer 2013 issue was devoted to "income inequality."  The main theme was that rich folks are getting richer, but, of course, the facts actually show just the opposite.  Not deterred by the facts, the various economists that opine in this edition blithely parrot absurdities such as wealthholders ability to "sustain their preeminence.

What is the analysis?  Imagine that you wanted to know if baseball teams created dynasties and "perpetuate" their dominance of baseball.  What facts would you want to assemble to prove this?

Here's the way economists think:  collect data that shows that back in the old days, the baseball teams that won the pennant won 65 percent of their games each year.  Then show that, today, the teams that win the pennant win 70 percent of their games each year.  (Don't bother to check whether the teams that won in the old days are the same teams that win today.  Why would that matter, say economists?)  Would that evidence convince you that certain teams are dominant and "maintain their preeminence?"  That is the precisely the kind of logic that perpetuates the factually incorrect myth that the rich get richer.  Check out the articles in the JEP and you will see.

The truth is that if you list out the 100 richest Americans today and then compare that to the one hundred richest Americans 25 years ago, you will find very little overlap.  The richest folks have more of the wealth (if you totally leave out the huge proportion of wealth transferred by government transfers such as social security, welfare, medicaid, food stamps and on and on), but it is a different set of rich folks as time goes on.  Wealth rises and falls in the US.

The opposite is true in Europe.  The wealthiest families in Europe are the same families that were wealthy 50 years ago.  Contrary to the complete nonsense you read from economists, the chances of improving your lot in Europe are almost non-existent.

Now, in the US, the Obama Administration would like to create the European model, which traps people into whatever economic group that are born in....or, actually reduces the life chances of the folks born into the bottom half of the income distribution.

Notice the data since Obama came into office.  Since mid-2009, long after the bottom of the financial collapse and well after the Obama $ 800 billion stimulus package, the economic position of lower income folks in the US has deteriorated.  The Obama sledgehammer on business has delivered results.  Jobs are scarce and what few jobs there are, are part-time.  (Obamacare, of course, influences this trend toward part-time employment by creating built-in disincentives to businesses to hire full time employees).

The real truth is that the US has historically always been the best place to be born if you want a chance to move up in the income distribution and it remains the best place for that purpose.  Obama is trying to kill off that opportunity, but so far he has not totally succeeded in this strange endeavor.

Economists have done a disservice to the public by presenting facts in a way that is totally misleading and obscuring the real truth about the economy and about the historical dynamism of the US economy.

Thursday, 12 September 2013

3 Tighter Rules for Property Sector? (Sept 2013)

Prior to Budget 2014 (to be tabled next month), speculation has rift up on a few proposal to tighten the rules, especially on property sector. Following the outcry from public stating the alarming high property prices, measure should be taken to tackle the issue before bubble was formed.


The Bubbling Biz...

Among the measures being proposed were:

  1. Non-other than Real Property Gain Tax (RPGT)

  2. Higher Stamp Duty:
    ~ 5% of purchase price for 3rd property
    ~ 7.5% for 4th property
    ~ 10% for 5th property onward

  3. Loan-to-Value ratio reduce to 60% for 3rd property onward


While the above info need to be ascertained further, some banks already implemented their in-house ruling. What's that? It was to limit the maximum term for refinancing of property to 10 years. Yes. Sooner or later, all of the banks will follow.

* Please note that the above 3 rules need to be ascertained further. Stay tune!

Saturday, 31 August 2013

College Grads and Jobs

There is a growing discussion about whether or not college graduates are generally prepared for the workforce.  This is a very interesting (and revealing) discussion.

This is not so much about GPA as it is about more fundamental problems -- attitude tops the list.  Far too many college graduates think that they have 'paid their dues' by attending college and collecting a degree.  Many seem to think that joining the work force is akin to joining a fraternity or sorority.  They seem disappointed that employers' have high work expectations and are in no hurry to provide massive benefits and a club-med work environment to a rookie employee.

What every employer wants is someone committed to work hard, to learn new skills, and to already possess basic writing and mathematics skills.  The vast majority of college graduates, measured against these expectations of business do not measure up. 

That's the sad truth about higher education.  We don't insist that our graduates have adequate writing and math skills to perform at a high level in the work force.  Those graduates who do have these skills, likely had them before they entered college.  They certainly don't gain or nurture these skills in college.

As for attitude, there is no more-forgiving environment than the modern university.  Students can argue a C grade into an A grade, if they understand how things work.  It is a simple task to manage one's GPA to end up with a 4.0 without serious study.  Meanwhile, skipping classes, scrimping on assignments, cheating, massive drug and alcohol abuse are all tolerated with little or no punishment.  Moving from the university environment to a work environment is a real culture shock for most college graduates in the modern era.

More and more the modern college and university is a great four year social experience that probably makes it more, not less, difficult to adjust to the realities of a market-based economy.




















Wednesday, 28 August 2013

Work Ethic of 70s, 80s, 90s

Different generations have their own view on working. You like it or not, working is part of our live. No work = No life. However, this equation has since changed to "Working = No life". Do you agree?


Generally, those born in 70s were perceived to be loving their job. They work hard mainly because of 3 meals/day. For them, a secured life means having a stable job with stable income. They believe that with every efforts you put in, that will reward you back later. As such, over time (OT) is nothing for them.

As a responsible 70s, losing their job is a serious matter they tend to avoid. That's why they usually found another job first, before resigning.

How about 80s?
Other than chasing for stable income, those 80s working adults will also look into the job scope, opportunity for promotion, or working environment. They will take initiative to find for better job. Hence, job hopping is very common for them.


Notably, 80s are reluctant to sacrifice their quality of life because of work. So, don't expect them will OT without paying extra.

Free and easy 90s?
Just because almost all of them are graduates, 90s always hoping to find a "reasonably good pay" kind of job. However, employers reluctant think in contrast. This is why many fresh graduates still unemployed, while employers facing difficulties to find suitable candidates.


Other than salary, they also emphasize on working environment and their interest. Otherwise, will they resign? Yes. They don't care and will resign straightaway, maybe, because of their wealthier parents. Why want to force themselves into job? They can become boss and entrepreneur anytime.

What do you think?

Tuesday, 27 August 2013

How Much You Need To Save If You Ever Want To See Your Kids Graduate?

In an age where the common degree has become a pre-requisite and not so much an advantage, ensuring that you have enough to see your children through a reputable university has inadvertently become one of the most important responsibilities you’ll face as a parent.

Unfortunately, knowing how much to save for your kids’ tertiary education is not an easy question to answer.  In fact, it is downright complex in view of the vast differences in costs from degree to degree, university to university, and country to country.  And even for those who do have a number in mind, there is still the question of when you should start saving, using which savings / investment vehicle.

If you have been wondering about your financial capabilities to finance your kids’ tertiary education, or you have been seeking a workable method to save a sizable study fund for your children; allow iMoney to shed some light on this matter with their latest infographic:


Courtesy of iMoney.my

Friday, 23 August 2013

Lesser Amount can be Withdrawn for EPF Members Investment Scheme effective January 2014

Are you an EPF member who withdraw money out for investment scheme? Then, this is a very important news to you.


Effective January 2014, the minimum basic savings required in Account 1 was revised upward. This will affect all of YOU who withdrawn certain amount from EPF account 1 for eligible investment purpose. Higher limit means lesser money you can withdraw from EPF in the future.

How much will be increased?
Based on the chart below, the percentage increased can be as high as 64%. Generally, the increasing amount was at least 50% once you're age 27 onward.


How to calculate how much can I withdrawn from EPF account 1?

What's the different or impact?
Depending on your age and how much savings in account 1, the impact varies by members. For better explanation, please see example below:



Finance Malaysia hopes this post can enlighten you on EPF members investment scheme withdrawal. You may share this to your friends. Thanks.

Thursday, 22 August 2013

The Nasdaq Flap

The Nasdaq halted trading today and was down for a couple of hours.  Listening to the financial media (CNBC, Larry Kudlow, etc.), you would have thought a great crime had occurred.  99 percent of the investing public had no idea and could care less, me included.

What serious investor could possibly be harmed by a two hour shutdown of the Nasdaq?  Are these pundits serious?  If there was ever an 'inside baseball' issue, this is it.  Only manic traders and hedge funds could possibly care one way or another about the Nasdaq shutdown.

No portfolio of any serious investor could possibly be damaged by a temporary shutdown of a stock exchange.  This is a ridiculous tempest in a teapot.

Obama and Higher Education

Just what we need, the Obama tenacles reaching into higher education.  In typical style, Obama points to a problem -- the high cost of higher education -- and proposes a solution that has nothing to do with the problem and actually will likely make the problem far, far worse than it is now.  This has been the pattern with the economic rescue plan, with the 'affordable' health care act, with wind and solar initiatives, and on and on.  Every problem that Obama has inherited has become a much bigger problem under his leadership.

What is wrong with higher education?  Mainly the government, as in most other things.  Federal funding for research grants and student loans has made higher ed less interested in scholarly pursuits and more interested in the pursuit of federal largesse.  Students are borrowing huge amounts of money to maintain a college lifestyle that for prior generations was simply unavailable.  Who could spend that kind of money on beer and fitness centers in the good old days?

Education itself doesn't cost much to provide; less today than a generation ago thanks to the advent of the digital age.  But 'higher education' is no longer in reach for middle income Americans unless they are willing to bankrupt themselves and their children to enrich university bureacrats and aging academics (and they are aging thanks to tenure).  There is a growing gap between 'education' and 'higher education.'  More and more these two concepts are separate and distinct -- perhaps, incompatible.

Obama is going to measure the inputs to higher education to figure out what the outputs are -- a completely absurd approach to measuring the effectiveness of an education program.  Why not measure the difference between a student's life chances when entering the institution with the life chances when leaving the institution.  The 'elite' colleges would not fair very well using a measure like that.  But, if only inputs are measured -- the Obama plan -- then the elite colleges will do very well indeed (that's why they are called 'elite'), but the community colleges, who fare much better using my measure will not do well under the Obama plan.

Once more, under Obama, the rich get richer and the poor and middle class will be left holding the bag.

Media Misleads Once Again

Reuters has a story today about the jobless claims number that is completely absurd.  According to Reuters, "...then new claims... rose...but...gave a positive signal for hiring during the month."  This conclusion is based upon absolutely nothing. 

What the data, in fact, shows is that jobless claims rose last week and rose more than the market expected -- not good news at all.  Worse, the numbers are barely (five percent on average) lower than the numbers in the early part of the year.  Given that revisions are typically well above five percent, a drop of five percent is statistically irrelevant.

The real truth is that the economy is not producing enough jobs and the few that are produced are mostly part-time, low wage jobs.  Not surprising, given the Obama economic program, which guarantees economic stagnation as far as the eye can see.

The media has made a habit of consistently distorting the truth about the American economy in their cheerleading effort to defend failed policy.

Read David Stockman

A new book by David Stockman, "The Great Deformation," challenges the current orthodoxy of financial market regulation.

This book is a great read.  Don't expect a calm and collected analysis.  This book is definitely not calm and collected.  Stockman takes on all comers and his style is blatantly polemical.  He aims his brickbats at the right and the left as he excoriates the rise of indebtedness, public and private, since the 1960s.

Don't think conservatives get a free ride in this book.  They don't.  Ronald Reagan and Milton Friedman are targets of Stockman.  Indeed, Stockman sees Reagan and Friedman as major culprits in the incredible growth of America's financial liabilities.  Some of this is, no doubt, sour grapes for his well-publicized split with the Reagan Administration in the 1980s when Stockman was Director of the Bureau of the Budget.  He resigned that post in a feud with the Reagan folks over their unwillingness to support spending reductions to accompany the famous Reagan tax cuts.

But, the heart and soul of Stockman's book is his interpretation of the 2008 financial crisis.  Here, Stockman makes a real contribution to what has been an embarassingly simple-minded consensus view of government policy.   Stockman argues that the federal government, including the Fed, should not have intervened to save AIG, Morgan Stanley and Goldman Sachs.  According to Stockman, saving these firms was the main purpose of the hastily-assembled $ 780 billion bailout backage, known as TARP.

Stockman argues that the financial system and the American economy was not threatened by the collapse of AIG, MS, and GS, as was argued at the time.  He shows, by analyzing the balance sheets of these firms, that the American economy could have easily survived the collapse of these firms.  Few, today, agree with that, but Stockman makes his case convincingly.

In essence, Stockman is challenging the "too big to fail" crowd that dominates government policy today and that dominated government policy in the Bush Administration in 2008.  By challenging a hackneyed consensus devoid of analytical underpinning, Stockman has done a great service, writing this book.  He's right.  Read his book.

Monday, 19 August 2013

Should or Would Government Privatizing MAS? (Aug 2013)

Both of our ex & current Prime Minister already voiced their views regarding this matter. Yesterday, our ex-PM said Government should SELL MAS if it can be run more effectively by private sector. Meanwhile, when asked, our current PM said there was no plan to privatize MAS now because it was on track to its turn around plan under the helm of new management. So?


In fact, this was like a million ringgit question for many speculative investors. Maybe, they or YOU were hoping for the deal to materialize if you bought the shares just recently. Anyway, it won't be as easy as you might think.

  1. MAS is a national carrier. It carries the national flag wherever it goes. (Some more, national day is approaching now)
  2. How much to privatized? Especially for a still loss-making company... Definitely, Government won't get much if MAS being privatized now.

However, everything is possible given the facts below:

  1. National company is just a company anyway. We have just witnessed the privatization of KTM, POS and PROTON few years back.
  2. Government's coffer is more important. You can't keeps on letting the pumping money to save a company. Why not let go the 'vampire' of money?


The score now is 2-2. Anything to add?
* Hint: RHB research puts in a target price of RM0.43 for MAS in its report dated 25th July 2013. It this was the offered price, would you satisfy?



Conclusion:
It depends on whom being asked this question. If posted to share investors, the answer would be YES because you most probably can profit from it (if higher premium was offered). However, the answer might be the opposite if posted to Government.

Time to Buy Emerging Markets?

Emerging market stocks have been hammered this year as the US and Europe have enjoyed one of the best stock markets in history.  Why?  What happened to the argument that slow (GDP) growth in the developed world and much higher (GDP) growth in the emerging economies argued in favor of a heavy commitment of investment funds to emerging market?

As it turns out, emerging market economic growth has, indeed, been much, much higher than economic growth in the Western nations.  So, why did their stock markets put in such a pitiful performance thus far this year?  A similar pattern occurred in US history when foreign investors, mostly British and Russian investors, lost bucketloads of money betting on growth in the US economy in the 19th century.  This is not the first time that dramatic GDP growth failed to help investors in public stocks.

Many of the most vibrant companies in the countries that fall into the 'emerging market' category are not public companies.  They are privately owned companies that aren't included in any of the emerging market portfolios that you and I can own.  Instead, roughly 40 percent of the capitalization of 'emerging market' ETFs are typically government-owned or heavily regulated companies, such as the local telephone company or local utility company.  Are these good investment bets in a third world political environment?

If emerging markets boom, you are much more likely to make money owning Coca Cola stock than the stock in the local telephone company in Egypt or Venezuela.  The inherent logic behind huge investments in emerging markets never made any sense in the first place.

That said, it may now be time to buy the emerging markets, since everyone seems to be abandoning them in a rush.  India's stock market lost four percent of its value in a single day at the end of last week. 

It may be time to take another look at emerging markets, now that their staunchest supporters seem to be running for the exits.  But, one should be cautious.  Emerging markets involve stocks that have fundamentally different characteristics and corporate governance rules than Western investors may be accustomed to.

Wednesday, 14 August 2013

European Recovery -- Seriously?

The news services are abuzz this morning with the "news" that Europe has finally turned the corner with an economic rebound in the 2nd quarter of this year.  Underneath the headline is the dismal number of an annualized 0.3 percent estimated growth rate for the 2nd quarter.  Whoop-to-doo!  This is a recovery.  This number is not significantly different from a negative number, given the pattern of revisions.  Meanwhile, unemployment in Europe remains above 12 percent and sovereign debt is soaring on to new highs.

There are further stories that Greece is on the road to recovery.  What are their current statistics?  GDP only dropped an annualized four percent in the first half of this year.  Wow!  That's really something to write home about.  Combined with almost 28 percent unemployment overall and nearly 70 percent unemployment among youth, it sure sounds like Greece is just humming along.

Wonder what the statistics would show if Europe was doing poorly?

Monday, 12 August 2013

Some Good News for the US

Steve Moore's column today in the Wall Street Journal is worth a read.  The sequester, according to Moore, has worked.  Total federal spending has been slowed, even reversed, in the past two years, according to Moore.  This is, indeed, good news.  Let's hope it continues.

Moore notes that all it takes to continue to hold federal spending in line is to not undo the budget deal that led to the sequester in the first place.  It will be interesting to see if politicians can stick with the plan by doing nothing.

Update on Greece

Now, after five years of European Union policies, how do things look in Greece.  The headline today on Yahoo looks encouraging: "Greece Beats January-July Budget Target."  In fact, Greece did not do any such thing.  More bailout funds from the EU, though, made it look that way. 

Here is what the EU has done for Greece:  GDP today is 20 percent lower than it was in 2008, when the EU bailouts began.  Unemployment is at a record pace, pushing toward 30 percent.  These numbers are not very different from where the US was in 1933 at the lowest point of the Great Depression.

Meanwhile, civil order is breaking down in Greece.  Crime is rife and the only things growing are the nation's indebtedness and the black market.   Political discourse is moving to the extremes as the center breaks down.

Finally the debt to GDP ratio is rapidly climbing to 200 percent.  The EU has made a small problem into a large problem and has obligated the entire European continent to back a bailout that has absolutely no hope of success.  Politicians hard at work again!

Sunday, 11 August 2013

The Changing Face of the American Workplace

The US economy was once the envy of the world.  From 1865 to 1965, the US economy grew faster than any large economy in the world.  The great American middle class came into prominence during this period and American income and wealth had no rivals anywhere in the world.  For most of these years, there was no Federal Reserve or central bank in the United States, though central banks had a long history in every other large country in the world.  For most of these years, there was little business regulation and no income tax.  The Federal Reserve and the Federal income tax came into existence in 1913, coming on the heels of the best 60 years of economic growth in the history of the US.

Not that everything was rosy.  Financial panics and the great depression occurred during this 100 year span.  Unemployment rose and fell.  Markets rose and fell.  The dynamics of American growth were chaotic, though powerful.  But, with all of the chaos and panic, the American pie grew at an unprecedented rate, matched, in world history, only by modern China.  The standard of living of the average American grew at the fastest pace ever.  Unemployment levels above 6 percent were considered a sign of a 'recession.'  The current 7.6 percent unemployment rate would have been seen as an extreme economic slowdown  (not an economic recovery).

Since 1965, the American economy has grown at a dramatically slower pace.  The American middle class has consistently struggled, except for the 20 year period that followed the inauguration of Ronald Reagan.   The financial position of the average American is today untenable, if proper account is taken of the federal, state and local government debt.  America is headed for financial disaster and the American middle class is sitting in the passenger seat.

In the driver's seat is the new political class.  The fastest growing demographic in America is the American government or quasi-government employee.  On the defensive is the American private economy.  Besieged by so much regulation that most companies are not even aware of most of the regulatory burden that they face, small business is no longer the engine of American economic progress -- government is where the real growth is taking place.  Government employment has been the largest source of employment growth in the US economy since 1965.

Unfortunately, government doesn't produce anything but problems for the private sector.  Most government employees (including public school teachers, university professors, and bureaucrats of all stripes) view the private sector with suspicion.  They see private businesses as quasi-criminal enterprises bent on polluting the environment and exploiting their employees.  This culture dominates the media characterizations, not only in the daily news, but in television series and movies.

So what does all of this mean for the workplace in modern America?  Private businesses realize that they are the target of the political classes and they make adjustments.  They know that if they hire full time employees, their regulatory burden goes up.  They know if they hire 50 employees or more, they fall into certain categories that must face significantly higher costs of complying with the modern legal environment that has been imposed upon them.

So, what happens?  Small business reacts by hiring as few full time employees as possible.  Part time workers are easier to fire and are not subject to Obamacare and other regulatory burdens.  Many companies keep their companies deliberately smaller to avoid certain employment trigger levels that put companies under a much more severe regulatory regime.  Employees that are 'protected' under current laws -- minorities, women, persons over the age of 55 -- involve far greater expense to a private business than other employees.  So, fewer of them are hired.  Protecting an employee with legislation simply means making that employee more expensive to the employer.   Employers aren't stupid (a common assumption of the political class that supports these 'protections).'

So, today, the workplace is a very rigid bureaucratic environment.  The blizzard of paperwork that employees face is nothing compared to the blizzard of paperwork that companies face.  There is more concern with what might be said at the water cooler than what the work output might be.  Private email communications are now perused for politically incorrect comments.  Free speech doesn't apply to the workplace.  In financial service companies, mistakes or errors are seen as criminal (the 'whale' episode at JP Morgan is a modern instance).  Gone are the old processes of free people making free decisions in free markets.  Now you have to worry about whether Barney Frank or Elizabeth Warren is looking over your shoulder.

All of this means that America is in a period of relative economic decline.  The middle class will remain an endangered species as the political class bent on the destruction of the middle class continues to claim that all they care about is the middle class.  Gradually, less and less of America is based upon free market economics and more and more is driven by un-elected elites, who have spent most of their lives either in politics or academia.  The workplace is now a bureaucratic environment with rigid rules and little or no room for initiative and energy.  The dull and the routine is more and more a description of the modern American workplace.

The workplace is also becoming more and more a land of part-timers.  Businesses in America, like their European counterparts, are increasingly reluctant to hire people that, by law, they cannot fire.  Workers now have protections and guarantees that mean, even if workers received no wages at all, they are still very, very costly to business.  Increasingly, wages are a smaller and smaller fraction of the costs to an employer of hiring an employee.  The result is a much reduced take home pay and more and more of worker income is siphoned off to worthy causes, favored by elite bureacrats in the Elizabeth Warren mold -- bureacrats with virtually no life experiences similar to that of ordinary American workers.

A hundred years ago, a young employee could take a job at a reduced wage or no wage at all as a way of entering the work force and learning a trade.  Minimum wage laws, promoted by big unions, are designed to block such work force entrants and preserve a monopoly for existing workers.  These laws are effective and help destroy a large part of the Horatio Alger culture that once was.  The elite that make these rules don't face such problems since they, by and large, go to elite colleges and universities and find that entry into the work force doesn't involve wage and salaries anywhere near the minimum wage.

It is no accident that college students are in the forefront of the call for a "living wage."  A living wage virtually guarantees that the college students will not face future competition from folks whose start in life is not as pampered as their own.  The poor simply can't get through the front door, since their skill set rarely justifies a "living wage."  Meanwhile, those who support the "living wage' think of themselves as bastions of morality, while crushing the hopes of folks who would simply like to have an opportunity to move up in the world through their own work efforts.

Great wealth creates idle time for the wealthy.  It is no accident that the wealthiest US politicians are also those who most vociferously support the agenda of ever bigger government.  Why not?  It will never effect them.  As fewer and fewer Americans derive their living from the free market, the free market has fewer and fewer defenders.  The wealthy and the new bureacrats are the power brokers in modern America.  Their contempt for the American middle class and for free enterprise is on display every day in our media and in their political program.  It has changed the face of America and the American workplace.  Meanwhile, folks like Obama ponder why part-time workers are replacing full time workers in America.  He blames that on greedy businesses.  But, the reality is that Obama policies are one of the key reasons that full time workers are becoming an endangered species.

Friday, 2 August 2013

Another "European" Jobs Number

162,000 new jobs in July.  Not only is that an absurdly low number for an economy as large as the US, the job numbers for both May and June were revised downward as well.  No one is much interested in hiring anyone.  That's the main message of this report.

A subtext is reflected in the unemployment rate, which fell to 7.4 %.  How, if a pitifully low number of jobs are created each month, is the unemployment rate falling?  When people give up looking, they aren't counted anymore and more than 6 million have given up looking. Unemployment could get down to 1 percent if almost everyone just gave up and went on public assistance.  Is this the Obama plan?

The White House is succeeding in getting the economy that they have wanted -- the European economy -- no growth, no opportunity for the young and ever rising debt levels that have no conceivable way of being repaid.  This is the liberal dream.

Interviewing 非常好歌 Superstar - Quek Shio Yee

Learned piano and violin since young, started writing songs when in high school. This is the background of new born superstar - Quek Shio Yee. After wining the BEST SONG with Lexi Chan, Finance Malaysia blog managed to grab the opportunity to know her better.


When asked about her future direction, the UCSI undergraduate yet to plan for it. Hmmm... I guess her fans out there for sure would loved to see her on stage again. Right?

Full Interview here:
  1. When did you realized that you're in love --- with music? How did it started?
    I started my music lessons since I was 4 years old. Since then I've always been musically active. It has been important to me. My parents led me into the world of music. 

  2. On the BEST SONG you won with Lexi, what goes into your mind when she find you to sing in the first place?
    I was introduced to the program by my friend and auditioned. The producer gave me a few demo songs to try, and I was chosen to sing Lexi’s Mission Incomplete. I was happy to sing it because of its sad and powerful meaning. I’m very thankful for the opportunity.

  3. Since then, do you feel that you're a superstar now? Any changes/funny things happen in your life?
    I don't feel like a superstar at all. I'm not worthy of that title, and I have a lot more to learn and improve on at the same time. Sometimes I feel self-conscious and anxious in public, especially when someone recognizes me. I am still not used to it yet, but I'm always excited when people just come and say hi and tell me they like the song, I’m sure Lexi would be very happy to hear it too. 

  4. Will you venturing into music industry after graduates?
    I haven't made a final decision yet, but I'll most probably take up a career that involves music. I compose music too, so I will also be taking that into consideration.

  5. Between Passion and Money, which one you prefer in future?
    Passion is more important to me, it is what I need to pursue what I love and to maintain my determination. Money is something that I need to get by with, in life, and it is a necessity after all.

    With this, Finance Malaysia would like to thanks Shio Yee once again for the interview. We are confident that she will do well in the future, judging by her excellent voice and talents. All the best!


Thursday, 1 August 2013

Big Companies More Valuable Than Small Companies

So what explains the surging stock market, when the fundaments of the economy remain weak?  Again, micro-factors favor large companies with access to government.  This is true for banks as well as for non-financials.  Smaller companies are getting hammered by higher tax rates, more mandates, and looming ObamaCare.  Large businesses, with some exceptions like coal, can deal with all the bureaucratic regulatory stuff because they have so much scale.  Not true for smaller businesses.

So what you're seeing is a change in the playing field.  The big guys are doing relatively well and small business is in the doldrums.  That is keeping with the Obama playbook of the grand corporate-government teamwork.  Obama can relate to big giant companies, because they are so much like the government and, in some ways, indistinguishable.  But small business is an annoyance in the Obama scheme.

The problem is: small business produces the new jobs for the economy; big business is a stagnant employer in the aggregate.  So folks looking for a job are out of luck.  The Obama economy is great if you're big and rich, but not so great if you're an out of work American or a small business enterprise.

Wednesday, 31 July 2013

Urban Renewal -- The Big Government Way

Having spent the past four days wandering the neighborhoods of Washington DC, it is clear that this city is a prosperous, booming area.  Wonder what business enterprises are sparking this growth?  Big government.

Years ago, when I was a newbie intern for the US Treasury, walking a couple of blocks from One Washington Circle (where I lived back when it was an apartment complex) was a dangerous undertaking.  No More.  For miles around, there are now leafy suburbs with casually dressed joggers and dog walkers.  The homes are well maintained and coiffed and the comfortable residents seems at ease with their plush surroundings.

Who lives here?  The new "protected" class.

These are the people that work for the federal government or the numerous so-called private businesses that devote their endeavors to providing services to government or lobbying to gain a share of government largesse.  These are the folks that view people outside the beltway as moronic environment-destroyers and homophobes.  They are comfortable in the knowledge that they are doing God's work, protecting the environment and defending the minorities and the poor from the caprices of the evil private sector.  These are the regulators, the tax collectors and the righteous -- living high on the taxpayer.

Out in the hinterland, struggling Americans are laboring with massive unemployment and stagnant economies and providing the tax revenues to support this ruling class that lives in modern luxury in much of Washington DC.  No real products are produced here. Indeed, the primary function for most of these Washington upper income folks is to find ways to restrict the private sector and to increase the flow of resources into their own pockets.  This is the new "European prosperity" for the ruling classes.

You wonder how much longer this can continue.  A dwindling private sector carries this elite group on its backs.  Meanwhile the poor in DC are shunted off into ghettoes with some of the worst public schools in America.  But, those folks are out of the view of this elite.  This elite lives in safe neighborhoods with protected jobs.  Even folks who take the fifth amendment before Congress, when they are asked about what they are doing, continue to prosper at full pay with zero work responsibilities.  This is the liberal dream, right here in Washington DC.

Understanding the Habits of the Rich

Fancy getting rich? Here are the rich man’s habits.



Seminars, webinars, Social events/ gatherings, book launches... These right here are some of the main events circled on the rich people’s calendars!

Ever wonder why?

At one of the many book launches I have been to I had a chance to chat up the local best-selling author Azizi Ali, brilliant mind I must say. He told me that the number of books published in a country mutually relates to the wealth of the citizens.His explanation therefore was the more publications per annum, the more the development countrywide hence increase in the wealth of the individuals.


Not so long ago while I was at a luncheon with this brilliant friend of mine, he mentioned that “rich people seldom eat alone”. I was quite ecstatic because this is a habit that I unknowingly practiced for quite a while now. What he said is totally true come to think about it. Its quite funny that there is an entire book dedicated to this subject “Never Eat Alone”. If you read this book, you will learn a thing or two and where you have been going wrong all his while.

According to the above scenarios, did you notice the common customs of the rich people?

Ask yourself why the rich become richer, the poor become poorer and the “Average” stay stagnant?
THE RICH ENJOY READING. TREMENDOUSLY!
In this dynamic era, the rich still find time to read despite the diverse media. They have plenty to choose from that is to say magazines, books, newspapers, and  of course the internet which is the most dominant of them all.

In this world we live in, you have got to spend money to make money. I know it may sound cliche but take a look at the those thousand dollar seminars and courses, they are always full to the bream! They never go unattended, why? Simply because the rich love to learn. If you fancy an opportunity to meet all these filthy rich people all congregated in one room, I suggest you attend one seminar or course in the area near you. Trust me.

Now I understand not everyone has a couple of thousands of dollars at their disposal that is why I advise you to get familiar with the term webinars. This term is a derived from two words that is to say web and seminar. Thanks to technology we now have webinars which you too can enjoy from the comfort of your couch. They are always scheduled to happen at some stipulated time over the internet. Usually there is a number of slots available depending on the organiser of the webinar. Guest speakers and renowned financial consultants are the people that run these webinars. 

Are you rich yet?

NO! Me neither. So until we all regard ourselves rich, let us acquaint ourselves with the these terms below:
     Seminars
     Book launches
     Webinars
     Courses
     Social events/ gatherings

This way, we will keep track of the rich and hey we could be involved in their circles.
Thank me later!


This is a guest post by KCLau. KCLau is the best selling author of Top Money Tips for Malaysians. His popular personal finance blog is one of the most visited websites in the financial blogosphere with thousands of email subscribers. He also hosts regular and free online financial training featuring different financial experts. You can follow his latest updates by visiting www.KCLau.com

Friday, 26 July 2013

Guilty Until Proven Innocent

I carry no brief for people that break laws, but, in the securities industry, indictments destroy businesses and innocent shareholders are usually left picking up the tab.  That was the result when Drexel Burnham was indicted in 1988.  Many of Drexel employees who trudged silently in the back office found their retirement hopes and dreams destroyed when Rudolph Guliani's over-zealous indictment caused Drexel to go bankrupt overnight -- long before anyone produced any evidence to a judge or jury to peruse.  Most of the folks who lost their life savings by the indictment of Drexel were innocent and had no knowledge of any wrongdoing.  That's what happens when you indict corporations, as opposed to individuals.

This same theme plays out in the litigation and settlement arena.  Pension funds who trumpet their lawsuits against corporations are really only suing themselves and enriching the legal profession.  The wrongdoers go unscathed, while innocent shareholders get hammered.  This is what happened in the tobacco settlements, in the BP settlement, and on and on.  Shareholders, who often have no idea that they are really shareholders, find their own retirement hopes and dreams crushed by breast-beating righteous souls who run these pension funds involved in all of this litigation.  The lawyers love this as they salt away fortunes.  It's simply a transfer from working class people to wealthy lawyers, while pension executives proclaim that they are fulfilling their fiduciary duty.

In the SAC case, why doesn't the government indict individuals?  How can a corporation get inside information without an individual being involved?  Could it be, they can't prove their case.  By simply indicting SAC, they destroy the business and, presumably, a lot of Stevie Cohen's net worth.  But, what if Cohen is innocent (and I am not saying that he is).   We may never know.  What we do know is that SAC is done for, whether innocent or guilty.  The indictment will destroy SAC's future and much of Stevie Cohen's net worth, regardless of guilt or innocence..  At least in this case there are no public shareholders being looted -- just Mr. Cohen as far as I can tell.  But, still.

What happened to the rule of law?

How to Become a Financial Planner?

After the two series of article on Financial Planning and Financial Planner. Some of you may asked: "Is it difficult to become a Financial Planner? What's the requirement needed?"


Hmmm... Good news is it is not difficult, but the bad news is it's not easy either and the requirements for sure will be raised in the future.

So, how?
In Malaysia, those who practice as Financial Planner must pass any one of below examinations:
  1. Registered Financial Planners (RFP) issued by Malaysia Financial Planning Council (MFPC)
  2. Certified Financial Planners (CFP) issued by Financial Planning Association of Malaysia (FPAM)

After you have passed the said examination, it doesn't mean that you're a Licensed Financial Planner straight away. Why? It's just serves you an entry passport only. Once you have accredited the qualification, you must apply the required licenses with Bank Negara Malaysia (BNM) and Securities Commission (SC) before you can carry out financial planning activities.

By then, you can claimed the following title:
  • Financial Adviser Representative (FAR) by BNM
  • Licensed Financial Planner by SC
Please take note that passing the said examinations doesn't carry you the titles, getting the licenses does. If not, you're deem to have convicted an offence which can land you in jail or subject to hefty fine.

Other requirements include:
  • Must be a Malaysian citizen
  • At least 21 years old
  • Have minimum 3 years related experience
  • Must be a FULL time practitioner
  • Then, you must fulfill the minimum hours for personal development programs every year

Next, we will talk about "The Challenges Faced by Financial Planning Industry in Malaysia"

This article was contributed by Alex Yeoh, a licensed financial planner with a reputable financial planning firm. Finance Malaysia blog will work together with Alex in bringing more interesting articles on personal financial planning. You may reach him via email alexyeoh@vka.com.my

Thursday, 25 July 2013

New Fund: Kenanga Asia Pacific Total Return


After merging with ING Funds Berhad, Kenanga Investors Berhad launched its first new fund of the enlarged family. In this uncertain global economic environment, how much return can a fund generated was the main concern for many investors. Want to get higher return? Then, we cannot runaway from higher volatility! Are there any balance in between?


Yes. To cater for such investors, this new fund aims to provide a compounded rate of return of at least 10% per annum over market cycle (5 years) by investing in a diversified portfolio of Asia Pacific equities.


3 Reasons WHY it benefits you:


Well... Unlike others, this fund DO NOT has any benchmark constraint. This allows flexibility in identifying and implementing the most optimum investment strategy. Picture below shows the differences between Absolute and Relative return:

Still not yet convinced? How about the proven track record?



Source: Kenanga Investors Bhd