What investment portfolio after 2009 crisis ?

When stock markets started picking up strength and rallied sometime july-august 2009 last year, soon after the financial crisis, seems that mainly the bold and those with extra bucks dare start to dash in hoping to get their investment multiplied. [ Big guns like Oei Hoeng Leong, Indonesian billionaire, has got nothing to lose and what he had lost, he had sued Citibank and gotten back an undisclosed sum out of court settlement.  Looks like the rich individual has got the right advice from his legal adviser to sue and even one of the biggest bank in the world did not dare fight back ! ! ]


Many others were wary, including myself without any guts and only getting a miserable 0.002% interest from savings put in banks or no interest at all, might as well spend the money for a cause. Was this a false dawn, only to be followed by more market mayhem? They were reasonable fears, given the prognostications of so-called experts.

But now that the market rebound is proving resilient, many more investors have regained their confidence and are keen to take their chances. However, prices of stocks looks like have peaked to back in 2007 highs and is now still a time to dive in ??

A recent nationwide survey by Citibank on the financial well- being and attitudes of Singaporeans showed that consumers are looking for higher returns and ways to better build their wealth, though it did indicate that there is also greater caution now.

A total of 44 per cent of respondents stopped investing during the crisis, but have either resumed investing or are open to doing so once the right opportunity arises.

One plus is that the survey found that the majority of Singaporeans are not relying on their Central Provident Fund (CPF) savings as their only source of retirement income. About 73 per cent of respondents believe CPF will provide 'only some' or 'very little' of their retirement income.

The start of 2010 is an opportune time to reassess the impact of the financial turmoil on your portfolio, learn from mistakes and re-work your investment strategy if you have some spare $$$ in hand to try and see if you senses giving the right note.

If you are doing just that, here is what some financial experts recommend for investors:

AGE GROUP ( where I am in this category and going to reach 55 years soon in a blink of the eye )
41 - 59

If you are employed, keep working. After a review of your portfolio, you may need to re-organise your affairs and set new financial priorities.

The risk outlook for this group of investors, particularly those nearing 55, should be moderate as retirement is not far away. Besides, you are likely to have school-age children entering the tertiary phase of their education so you would need cash.  [ My two girls, one will be going JC and the other first year of secondary education....... so I am in need of MORE $$ ?? ]

With this in mind, you are likely to be shifting your investment mix towards a balanced portfolio.

A suggested asset allocation would be 30 per cent to 50 per cent fixed income and 50 per cent to 70 per cent equities exposure. Think of creating an income stream when in retirement.

Investors who took a beating in the crisis should stay invested to recover their losses but how to when you got no $$$ and if you lost your pants during last year ???  However, as these investors approach the maturity of the investment timeline, it is important to move towards safer assets. This might occur about three years from retirement or when they need the cash to fulfil an objective.

Another tip is 'Watch your spending and start reducing your debt'. That is standard theory and everyone should follow, not just this age group investors. But what if some has sickness and need $$$ to set aside for treatment, insurance would be better bet and make sure you are covered.

AGE GROUP
60and above

If you have not done so, it is time to reassess your retirement nest egg by determining your sources of retirement funds. Re-examine how long the funds would last you and take actions such as lowering your cost of living. This means you will have to eat less into your retirement portfolio every month.

You should work towards creating an income stream for when you retire. This includes seeking part-time jobs and downsizing your home or renting out one of the rooms at your existing home to supplement your income.  [ OK, I will start looking for part time tution at some private institutions offering degree courses maybe ]

Capital preservation is key for this age group. One tip is to move some of your assets into high interest or dividend bearing instruments for income. A recommended portfolio mix is 20 per cent to 30 per cent in equities and 70 per cent to 80 per cent in fixed income.

Keep track of your expenses to make sure you are not living beyond your means. And ensure you have adequate medical insurance coverage.

At the end of the day, a retiree's investment mix would be determined by his personal situation. For instance, a rich retiree who has already built up his retirement nest egg can probably afford to take on more risk and have a higher equity allocation. But a retiree with only enough money to get by cannot afford any losses and needs to be more conservative. Needless to say about the rich, their wealth nest would have enough to suffice till their next generation if they have cash assets in the region of double digit millions and above........ what have they got to lose ?  Those lower income earners would have hard time and if they need to support kids and their parents, I just wonder how they will get through at the end of the day. Ask the financial advisers, they tell you from the book after crunching some figures and those are ridiculous calculated sums that no one would be able to achieve in their lifetime.

Will Google Phone create impact ?

Google Nexus is competing against handset partners like Motorola, HTC, Sony Ericsson, LG and Samsung, which have been rolling out their own smartphones running on Google's Android operating system software.


“Android is a mobile operating system running on the Linux kernel. It was initially developed by Android Inc., a firm later purchased by Google, and lately by the Open Handset Alliance. It allows developers to write managed code in the Java language, controlling the device via Google-developed Java libraries. The unveiling of the Android distribution in late 2007 was announced with the founding of the Open Handset Alliance, a consortium of 47 hardware, software, and telecom companies devoted to advancing open standards for mobile devices. Google released most of the Android code under the Apache License, a free software and open source license”.

Android phones are now making an impact and are expected to surge from their current 2 per cent global market share of smartphones to 14 per cent in 2012 - placing the search giant in second position behind long-time market leader Symbian (most commonly found in Nokia phones).

Google selling the N1 directly to customers through its new Web store, Google is ruffling the feathers of telcos globally which might see their direct relationship with consumers using lock-in contracts weakened.

SingTel, is launching a Motorola Android phone here (new to Singapore, but already launched months ago worldwide). But with the latest top-of-the-line N1 now available via a three-day DHL delivery, it has taken the shine off the impending launch.

Google has proven itself to be a master strategist in the way it works. When it was a dwarf, it played its role as a humble free search engine for the Web, making friends with everyone and enemies with no one. But since becoming a public-listed behemoth, Google has pulled out all the stops to compete and is not afraid to ruffle feathers. Google looks set to disrupt the tech world by giving out free software to consumers. Unlike other tech companies which make money by selling products, Google earns money from online advertisements, and the more people get online, the more Google earns.

Integral to that, Google will try to grow the base of Android phones. If Android becomes a dominant phone platform, then Google can make its apps and ads optimised for the phone. At the same time, it is insurance against other phone platforms blocking its apps, as Apple did when it blocked Google Voice from the iPhone's App Store in 2009.

The N1 is designed by Google but made by HTC, so if the phone sells well, HTC benefits. But by choosing HTC over other handset makers, Google risks alienating them. Will Google work with all of its key handset partners to roll out the N2s and the N3s ?? Wait and see.

Predicting Metal in 2010

Indication from BT on future of metal pricing,

Gold

The yellow metal has had a good run, having posted nine consecutive years of higher average annual prices.

An investor-led surge in demand in last year, triggered by weakness in the greenback, saw gold prices break decisively above the long-held resistance level of US$1,000 per ounce to reach fresh records in closing months of 2009.

Physically backed gold exchange-traded funds are now worth a record US$70 billion, while a new Central Bank Gold Agreement has come into force as central bankers' gold appetite appear insatiable.

A key risk though is the unwinding of the massive short US dollar/long gold position, when the market has greater certainty on the timing of a turn in the interest rate cycle in the US, widely expected in the second half of next year.

'We are now soft-peddling on our price stance as gold starts to face headwinds of an end to the gifting season and a stronger trade-weighted US dollar,' said Nick Moore, who heads the commodities team at RBS. 'By 2013, we see gold averaging a record US$1,300 per ounce.'

'Gold is money - a very special form of money. It is gold's monetary function that drives its price beyond its relative value as a commodity . . . Applying a valuation to gold is tricky. There is no absolute independent measure that determines when gold is cheap, expensive or fairly valued.'

Based on production costs, gold is not cheap, says the report. But compared to other assets such as oil or stocks, 'gold appears to be at least fairly valued if not inexpensive'. The stock-to-gold ratio is one yardstick that is often cited, for instance. In 1900, the ratio was two - that is, it took two ounces of gold to buy the whole Dow Jones Index. It remained below five for the next 25 years, and then shot up to 15 during the market boom of the 1920s.

With the US in recession in 1980, that ratio fell to one. It picked up speed in 1990s and during the technology bubble, was an astonishing 35. Since then the ratio has been falling to its current level of about eight. Given that the long term average price of the Dow Jones Index is 5 ounces, gold is still somewhat cheap compared to stocks, which is the same as saying that stocks are still somewhat expensive compared to gold.

The target of gold price is about US$1,500 per ounce in 12 months time. Of course, any sharp intensification of the sovereign debt crisis in Europe could propel the gold price even higher, but the downside risks should not be discarded lightly either. Any dip below US$1,200 is a buy. We would expect investors to be richly compensated for the risk they take.

UBS' report also advises investors on their approach to gold. Investors, it says, should be clear about why they want to invest in gold. There are typically four considerations - portfolio diversification; thematic exposure through structured notes; yield enhancement using options; and opportunistic trading. Those objectives will exist alongside varying investment horizons.

It favours direct investments in gold rather than mining shares. A higher gold price may not have a strong impact on a company's share price. Shares are also affected by the broader market, as witnessed in the steep drop of mining shares in 2008.

In a portfolio, it does not advise allocations of more than 10-15 per cent in the long term. 'Even though the correlation with equities is rather low, especially in difficult investment environments, gold fails to deliver adequate returns over a multi-decade investment horizon. An allocation of more than 10-15 per cent harms the historical risk/return profile of a balanced US dollar portfolio.'

There are of course, risks to gold. High real interest rates, for instance, could trigger outflows out of gold and a fall in price, it says. For now the likelihood of this is believed to be low, given a still fragile economic backdrop.

In Singapore, buying physical gold incurs GST.

Silver

Traditionally, silver is the weakest of the precious metals and the most vulnerable to investor fatigue. But the precious metal is a geared play on gold and investor appetite remains strong.

Indeed, buoyant exchange-traded fund activity has just about absorbed 2009's large surplus but sizeable surpluses could persist in 2010-11 despite a rebound in industrial demand.

RBS forecasts that silver will spend long spells below US$17/oz in 2010-11, but will then move back above US$20/oz in 2012.

Copper

With the exception of lead, copper has been the best performing metal in 2009, by a large margin. Last year, London Metal Exchange cash prices rose by about 130 per cent in the US dollar, reflecting the impact of aggressive Chinese restocking in the first half of 2009, relatively low inventory levels, scrap tightness and a limited amount of idled capacity.

Morgan Stanley thinks that these factors could continue to drive prices again this year. Indeed, Chinese 'indigestion' from excess imports should subside this year, even as global growth prospects continue to recover.

In such an environment, the elements of any renewed price strength in 2010 will be the persistence of tightness in the scrap market, especially in China, resulting in upward pressure on demand for primary feedstock. Concentrate supply, in turn, is also expected to struggle in the face of the long-term trend of falling head grades and the impact of rising labour militancy in a number of key copper regions.

A forecast shortfall in refined supply in the face of improved demand for refined copper in the OECD and strong growth in China is, in turn, expected to put renewed downward pressure on the stock-to-usage ratio and upward pressure on price.

Platinum

In a year when gross auto sector platinum purchases have fallen by almost a third as a result of the Great Recession, it is remarkable that total demand for platinum is likely to be down only 4-5 per cent owing to strong growth in Chinese jewellery demand, essentially for restocking and further stock building.

Last year's spike of over 80 per cent in the US dollar price means that jewellery demand could be eroded in 2010 in this very price-sensitive sector.

Although some recovery in consumer purchasing of platinum jewellery is expected with an improvement in economic growth, analysts do not expect to see a repeat of the inventory-driven surge in Chinese demand either in that country or elsewhere.

The small surplus in the 2009 supply-demand balance should turn into a deficit on higher industrial demand and a higher base in jewellery demand.

Looks like the highs of 2008 are unlikely to be repeated.

How to get staff loyalty?

Frequently talk to your staff on any subject

It is important to build rapport with your staff and any subject in the conversation will kick start the day

Some of the dialogue to start with:

• Do you understand where the company is going?
• Do you see how you fit in?
• Do you care enough to take action?
• How loyal are you to your projects and your team?
• What are the aspects of your work that you like most?
• What would you like to learn?
• What are your aspirations?
• Which of your talents gives you the greatest satisfaction?

Create work opportunities

What’s interesting in a job? Individual expectations naturally vary, some surveys reported on several common factors for job satisfaction:

• Task variations
• Workplace human relationships
• Fair treatment and procedures
• A equality between how much effort staff put it and the rewards they receive
• There must be certain level of autonomy and control for employees to work within their capability and independently. They want meaningful work that makes use of their talents and interests, and that offers good compensation — not just financial rewards, but also importantly recognition, authority, or leadership.

Very important to know their personal goals and make sure that they have the tools to achieve them. Set aside some time in annual reviews to collaborate on goal-setting. What would they like to do more of? Get their feedback and their interest. What would make their jobs more interesting? Every job has elements that are repetitive, but these can be distributed amongst staff with different work tasks and different type of projects that give employees freedom to indulge an interest or acquire another skill that can prove helpful to our rig building design and business.

Create career paths

Company need to develop an extended career plan for staff — even if that plan means the individual must leave the business to achieve a certain professional goal. The reality is that some of your key people will either choose for transfer or depart for a variety of reasons, no matter how much they seem to like their jobs. McKinsey and Microsoft realized this and created online alumni networks to keep in touch with departed colleagues.

No blame culture

Most staff don’t leave their organization but they leave you — i.e. the boss, says entrepreneur and author Jo Owen, author of “The Death of Modern Management.” If you want engagement and commitment from the staff, you must show that you care, delegating more than just the "mundane" tasks that you would not want to involve. A senior manager who is quick to point the blame for mistakes their staff made is highly corrosive and not going to help staff morale. You will be quite surprise to realise some big organization with senior management highly qualified but do not "walk the talk" and they are quick to point the mistakes at their subordinates. Delegating effectively means sharing credit and taking blame. The staff will like you very much if you show that you do not finger point and better off “take the rap” on the staff behalf. Do that, and the staff will all way out to work for you and this is imminently required for success. They’ll do it with you and for you even they need to take some calculated risk at times.

Acknowledge individuals

There are many ways to deserve great respect among your team. If you’re a manager, make sure you make yourself available to people when they need to speak to you. Do not close your door to them, this create a sense of communication barrier. Specific and personal thanks goes a long way. Try moving from “Good job, team” to “Thanks, Tom, for working O/T last night.”

Put staff in the big picture

Every manager thinks about from recruitment onwards. Employees look to team leaders to remind them why their work is important in the big picture, and to create job excitement and what the company is doing. There’s no quick way to achieve this. It’s your job to align business values and goals for employees. Explore ways to make people feel like their work has an impact on the overall business, such as keeping them in the loop on what happens next for a project they’ve completed or acknowledging when their work has generated more businesses or revenue.

Medical "code of conduct"

Straits Times 13th Jan 2010

It was good news that the SIN government taken steps in updating the Changes in doctors' code of practice and conduct.

THE Medical Registration Act, strengthened on Monday with tougher enforcement and oversight, comes 12 years after it was gazetted though the period seems rather long without much updates. During that time, patients' expectations of doctors' competence and "ethical" observance rose sharply with an outpouring of medical information in books and online. Although much simplified for layman use, a lot of it comes from doctors themselves and reputable hospitals and medical schools. An impression began to be formed that some doctors here who had malpractice and other complaints made against them were getting off lightly. You see some cases of patients suing doctors but not much impact on these professionals though.  Another grievance was that complaints took too long to be investigated and results were not made public.

The new penalties and professional requirements written into the amended Act are thus forbidding, in the circumstances. Fines for doctors in breach are raised by a whopping 10 times to $100,000 ( but I think this sum is not going to hold much weight or cause any stir compare to the money they earn yearly ) and they can be suspended for longer than the present limit of three years. Most significant is a refinement of the law of evidence: Health Ministry investigators can remove documentary and other evidence from a doctor's office without notice. This will eliminate negative inferences, as the practice has been for the doctor complained against to produce the records. The Medical Council's count of statutory members and outside personnel hearing cases will also be augmented to expedite clearing of complaints. And to keep matters focused, lawyers will have a role in disciplinary tribunals adjudicating on complaints.  

Without prejudice to doctors, the majority caring of patients' welfare, the lay public will see the enhancements as an overdue balancing out. Doctors' actions undoubtedly will be scrutinised more closely and the development should properly be regarded as a social advance, of benefit to patients (their rights) and doctors (their professional standing).

The process of advancement is incomplete, however, until transparency is made an ingredient. Hearings and outcomes of complaints before the Medical Council are closed-door affairs. This has to change. Citing patient confidentiality is not as convincing an argument in serving justice, as giving cause to the unquestioned virtue of full disclosure. Justice has to be seen to be done and I think our health minister is working hard on this and have full confidence in him and no doubt about his capability looking back at his actions for the past two years on health cost and fee, H1N1, etc.