MusingsOfA50YearOldBoy.com

Category: Uncategorized

  • What Now From Here?

    Been doing a lot of reading to understand the many points of views with regards to the world after Trump’s win. We in Asia may be screwed as America become more protectionist and withdraw from this part of the world. Hence we have seen China and Japan trying to expand their circle of influence towards other Asian countries (eg. India, Malaysia, Philippines, Myanmar) in recent months. The joke in S’pore is that our next elected President may not be allowed to visit America as he is most likely to be Muslim.   
    Trump seems to be drawing up his immediate to-do list which includes some of the promises made during the campaign – kill Dodd-Frank and tighten immigration, while he rewards his inner circle with important roles in the new administrative team. It leaves to be seen if the rhetoric he spouted during the campaign was just a masterful marketing ploy to win or if he is dead serious on the divisive hate agenda. Like a politician, he will probably realistically only eventually do a fraction of the multiple promises he made in the campaign. Let’s hope that he is dead serious on uniting the country, rather than cultivating more of the same destructive forces, after having torn up all norms during the Presidential elections.
    George Yeo is one of our well-respected ex-ministers who have retire from political office a few years ago after having lost his constituency in the elections. He gave a very good speech yesterday to frame his thoughts on the world and how it impacts S’pore. I have copied the link below : 
    He talks about human identity, cycles of history and new challenges, how it will affect ASEAN and in turn, S’pore in this new world order after the Trump tsunami this week. Well worth a read on his thought-provoking insights. 
    “In having to grapple with these tensions, which are never fully resolved, we develop a Singapore culture, a higher Singapore identity, which is accommodating and inclusive, while being always sensitive to issues touching on race, language and religion. Each and every Singaporean has multiple identities. Being Singaporean means understanding and accepting this reality, even celebrating it. The Singaporean has to be big-hearted and broadminded in order to embrace others not like himself. This is the Singapore idea which is worth living and fighting for. Indeed it is an idea the world desperately needs. Singapore is only Singapore if it has this universal appeal.”
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  • Aftermath of the Trump Win

    Everyone got this wrong. All the polls showed that Clinton will have at least a 90% probability of winning. Naturally, the market was upset and you could see equity markets going deep into the red as the final result was announced. Since then, markets have staged a recovery back to levels last seen on Monday.

    Based on total votes counted, Clinton had 200k more votes than Trump. But in the swing states that mattered, the Republicans managed to edge out with a majority as slim as 2%. Even after all the sexist assault charges, 40% of women still voted for him. What was most surprising was that the Hispanic votes did not materialize for Clinton in Florida after Trump’s attacks on Mexico.

    Seems like Trump will be more USA-centric and America First going forward. We in Asia will be at the losing end as a whole. China and Japan are already trying to rapidly extend their circle of influence not only for Asian countries but also towards the rest of the world. Russia is also not far behind as Trump’s USA is expected to pull back from its global responsibilities. It’s every country for itself now.

    It will be a few more weeks of guessing before we get a clearer idea of where Trump’s strategy is heading since he was very vague on concrete plans during the campaign. On the other forceful ideas that he pushed for (Mexican wall, extreme vetting, 35% tax on companies moving production out of USA), I suspect that most of them will die a natural political death, either being too impractical to implement or that it may not have enough political willpower to continue. Given that he practically tore apart the GOP and that most of the Republican elites disowned him, it is difficult to figure out at this point if he will have the full support of his own party to rubber stamp all his initiatives in the Senate and House.

    This current surreal feeling is reminding me of the new TV show “Designated Survivor” where Kiefer Sutherland accidentally became the president when a bomb destroyed everyone on Capitol Hill. Why do I feel that the show is to close for comfort in mimicking real life now???

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  • What a Surprising Result!

    The American people have spoken and from an outsider’s point of view, it defied all logic . The Republicans had a landslide victory, winning all 3 votes for the presidency, house and senate. They can now technically bulldozed their proposals through with little resistance. There will probably be none of the government deadlock issues that Obama had faced over the last 8 years. The Democrat party had just realized their worst case scenario.

    Trump’s victory speech looks conciliatory and he calls for everyone to help rebuild the country, that politics is “nasty stuff”. A very different picture from the past 15 months of the brutal campaign. Would he unite the country or make it more divisive? Would he have a team staffed with just his own people or only the most competent ones, regardless of party? The first 100 days will tell. Reality TV for real now. The Americans want change, they will get change. In what form, only time will tell. It’s America first now, the rest of the world can wait.

    Reminds me of the Gore/Bush 2000 fight. The rest of the world saw Gore as a more capable candidate but he lost. Bush went on to wage wars after 9/11 and it cumulate with the 2008 GFC crisis which swept Obama to power.

    Twitter stock price will probably be only one of the few that will show a positive rise tonight.

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  • Expected Lifespan

    Crossing 50 this year has given me a different perspective of life.

    I have technically more than crossed my life journey’s halfway mark. My parents are still very healthy at 82/87 this year. Average life expectancy in my country is 82 now, versus 75 in 1990. People in my age group are more aware about health issues now and do generally take better care of ourselves. Baring any unforeseen situations plus new medical advancements, I could possibly live till at least 100.

    This brings up another set of issues. Can our retirement funds last? Latest studies say that you need at least $1 million to retire. Assuming that you spend just 5% of this amount (50k/year) and given that interest rates are almost non-existent, your funds will run out in 20 years. This is just for basic living requirements and it does not include emergency medical needs which tend to increase in probability of happening as we age.

    While the government is more aware that the number of seniors will increase dramatically and the population pyramid will invert in the future, they have started to introduce retirement planning schemes like CPF Life, SRS and health insurance coverage to help us prepare for old age.

    An individual also has a responsibility to build up his own next egg, to look for more streams of passive income to supplement his expenses. These may be in the form of stock dividends, bond interest payments or rental income. Ideally, we should also aim to be free of any housing loans by the time we retire.

    Family wise, I have also reminded my kids that we will financially support them till they graduate with a degree in hand. After that, they are expected to be independent. It would also be nice if they can help foot some of the household living expenses by then (assuming that they are still living with us), as we will be nearing retirement age then. We do not want to be a funancial burden to them and neither should they be on us after they start working.

    The journey into the 2nd half of our lives will also be long. We need to be proactively planning it early and not assume that everything will take care of itself.

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  • Predicting the Next Few Months

    I am going to stick my neck out and try to predict what is likely to happen to the financial markets in the next few months.

    Firstly, the US presidential elections. Given the many twists and turns in this “exciting” campaign so far, Clinton should win. Trump’s team had a small boost last Friday but his whining is starting to look stale. His exit strategy will be to blame everyone but himself. Will the GOP do a self-reflection of itself after this and try to be a stronger and better party? Not likely as there are still too many populist politicians in their midst. Trumpism still has some mileage to go. Trump will use this extremism surge to his business advantage while keeping everyone guessing of his intentions into the next elections in 2020. He wouldn’t want to run to be the new leader of RNC anytime soon – too much work and too little financial rewards.

    The US Fed will hike interest rates in Dec. Economic numbers are improving and the last hike was a year ago in Dec 2015. It is expected that rate hikes going forward will be slow and steady. Since the GFC in 2008, we have had slow growth for 8 years. An aggressive rate hike strategy is not in the interest of the Fed.

    Given that America is the only country that had hike rates and will do so next month, the US dollar will strengthen further against most currencies. This in turn will lead to a weak equity market environment, where revenue numbers have been shrinking across the board. This will be a good opportunity to pick up stocks that has a good track record of stable dividends (eg. REITs, Blue Chips) and can weather a few more years of a low interest rate environment.

    Markets may be more volatile into year end. It is mainly due to most banks withdrawing from market making functions and trying to prepare for more Basel 3 capital restrictions. We will see Lehman like moments in the coming months and it is likely that they will be European banks. CS and DB are still struggling big time, can you imagine what the 2nd and 3rd tier ones are going through? China seems to have stabilised and its well formulated plans to spur growth internally via urbanisation is gaining momentum.

    I see more of the same slow growth into Q1 of 2017. Developed countries will still have more of the same while Asia is slowing building up a sustainable base for long term growth.China and Japan are actively courting India, ASEAN and Indochina, helping to kick start many multi-billion infrastructure projects that will also benefit their countries’ MNCs.

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  • Running Towards the Finishing Line…

    Too much tension on the coming days into the 08 Nov US Presidential elections already. Markets are just going quiet as this digital event may swing either way.
    No one can make head or tail of the latest polls as they regularly swing like a pendulum whenever a new revelation is revealed. A tight race is expected and there may even be a vote recount like Gore/Bush. The parties are preparing for a long drawn out battle.
    Honestly, whatever the outcome, the Americans deserve whoever they choose to be the next President. Democracy is such that the majority, however slim, wins the right to choose the winning candidate, although sore losers are expected if Trump loses…
    If most citizens just do not support either candidates and either skips the voting or vote for the independents instead, then Trump will have an upper hand. Clinton, Obama and Michael Moore are encouraging all who can vote to make a special effort to do so next Tuesday. A high voter turn out is crucial.
    The rest of the world watched in amazement as the biggest democracy descends into chaos and new lows in ugliness and hatred. After the fall of communism, is democracy next?
    Trump must be having second thoughts about all the work he has to do for the next 4 years on a tiny 200k salary versus his business world now. I would not be surprised if he pulls a rabbit out of his own hat to sabotage his own campaign into the final days. Then he can say that the elections is rigged, that GOP did not support him and spend the next 4 years keeping everyone guessing for 2020 and maximising his profit potential with the free publicity he gets. That would have been a well spent $50 M investment of his own money into the Trump campaign, no?
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  • Meritocracy Dilemma

    All throughout our local education history, we have been taught that regardless of race, language or religion, everyone should be treated equally. That based on a meritocratic system, the best and most qualified person should be chosen to do the job.

    When I started working, I too believe that meritocracy is the way to go, that your results will speak louder over the long run. Our country was run like a company, a well-oiled machinery with an open economy. We imported lots of cheap labour and also opened our borders to everyone.

    In the current global environment, things have changed. Most citizens are becoming more protective of their home ground and immigrants are not so welcomed anymore. Our government had also been re-assessing the situation and had tightened the rules on getting Foreign Talent (FT).

    Is this too late? Are we locals able to turn inwards now and protect ourselves from the foreign invasion, after so many years of open arms policy? We see certain overseas ethnic groups that fiercely protects their own kind but yet us locals don’t seem to even want to lift a finger to do likewise to support our fellow citizens. Is it because of our educational upbringing on meritocracy or is it due to our “every man for himself” attitude that is slowing killing us locals? We seemed too disunited and we become easy prey for FT.

    Had lunch today with a long time friend. It seems that the government is starting to realise this. She told me about a training course done recently that invited the top 40 citizens currently working in the banking industry to attend. The objective was to hopefully cultivate a strong networking environment that will allow this group to actively steer a “locals first” initiative eventually.

    I really have no answer to this issue. At the back of my mind, I still think that we should always get the best person to do the job. But I do feel jaded nowadays as I witness incidents of unfairness and also personally experienced it during my career.

     

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  • All Quiet on the Market Front

    This has been one of the quietest October months I have ever seen in the financial markets. Traders normally try to do one last push to meet their budget after coming back from summer holidays before the banks wind down for year end to close their books.

    A simple explanation is that big risk events are happening into Nov and Dec. Most markets are trading within a very tight range now. The exception : equity markets in general as investors try to trim their portfolio and increase their cash weighting.

    Everyone can’t wait for the US Presidential elections to end next Tuesday. The soap opera worthy excitement and the multiple twist and turns are just killing everyone. Poll results continue to flip flop as new revelations hit the markets. Everyone seems to agree that if Trump wins, the world would suffer.

    Michael Moore put it so well in his latest film “Trumpland”. His fervent supporters are trying to send a “Fuck you!” message to the whole establishment to protest against the system. But if Trump really wins, they may wake up to a massive hangover after that, full of regret when the full impact of the false promises hit home, like what happened in Brexit.

    Then the US Fed may also hike interest rates in the Dec FOMC meeting. The year-end liquidity situation may be bad as banks are now already withdrawing from market making activities due to stricter capital policies like Basel 3. Coupled with the bleak economic situation worldwide, traders are not expecting to be rewarded with a fat bonus anytime soon by being a hero and taking large bets.

    The 2 events mentioned above are like digital options (either a 0 or 1 outcome) where it is too difficult for economists to even try to predict accurately. Different end results will swing markets violently to either side. Most investors, myself included, have been slowly reducing our equity holdings to increase our cash portion. Volatile markets may create buy opportunities later. We are all like the rabbit in the middle of the road that is frozen in its tracks and staring at an oncoming truck heading directly towards it…

     

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