Saturday, August 27, 2011

Reasons for the choice of President on 27 Aug 2011

Today is Presidential election day for Singapore. Voting is a duty which should be taken seriously by all citizens. Even though each individual will reach different conclusion, the decision making process must be a rational one. This is a prerequisite to a healthy democracy. I write this post for my own decision-making process.

Here are my reasons for voting Tan Kin Lian;

For this presidential election, all 4 candidates are good. So, whatever the outcome, it cannot go too wrong.

As a Singaporean, I rate the most important responsibility of the President as looking after our money and watching over our hard-earned reserves. The 2 most important qualities are independence and competence. They are the same qualities that we seek in an auditor who watch over the companies of which we are shareholders.

In terms of knowledge and competence, Dr Tony Tan beats all his competitors. However, the position of president puts him in a conflict of interest as a former key man at GIC(Government Investment Corp) which invests our government's reserves. As the president's job is to watch over our reserves, putting Tony Tan as President is like putting a retired CEO to head the auditing team for his former company. It is like getting an auditor to watch over his own past work. I do not feel comfortable about this conflict of interest. Besides, even if Tony Tan does not become president, his talents will not go to waste. Given his close ties to the PAP, the government can always seek his advice at a personal level even if he is not President. In fact, if he is indeed a financial expert as widely believed, Dr Tony Tan going back to GIC to generate more investment returns may be more beneficial to Singapore than he becoming a President with no executive powers. This is a good deal for Singaporeans. Singaporeans can vote in another President and still enjoy the benefit of having Tony Tan around to work for the country.

Much has been said about Tan Jee Say being independent and most willing to stand up to the government to ask pertinent questions. In fact, many people think he is too confrontational as he is most associated to the opposition currently. I have reservations on this point and fear the opposite may happen. Tan Jee Say got a good headstart in his career in the civil service. Any decent person will feel grateful to his former bosses who gave him a good start in his career. I believe Tan Jee Say is a good man of gratitude who will repay his benefactors because he was a filial son who took personal care of his mother in her last days. If Tan Jee Say becomes President, it is politically correct to expect that PAP ministers will try to become friends with him. In politics, friends and enemies turn on a dime. Old friendships will return and it is possible that TJS may become too close with the government to be independent. He owes some of the PAP ministers a moral debt for giving him a good start in his career. As a decent man, he cannot ignore this moral debt.

Tan Cheng Bock has a mind of his own. He has a track record of speaking out against the PAP when he disagrees with them. He is not a yes-man. Also, I do believe him when he claims to be to be financially competent. However, the key consideration is whether he is more financially competent than the other candidates. In comparison to Tan Kin Lian, TKL's experience in NTUC Income which he took from a start-up to a respectable power in the insurance industry should provide better financial training than Tan Cheng Bock's experience as a non-executive chairman of Chuan Hup. The financial competence level required of the President is not to be underestimated. The President is only 1 person. The cabinet is full of smart people with experience managing the whole economy. Should there be any disagreement, a president not armed with sufficient financial knowledge is as good as a puppet if he cannot hold his own against a powerful, competent cabinet. If the President is not competent enough, then whatever the other side says, he will just nod his head. What else can you do if the other side is much more knowledgeable and can run circles round you with their eloquent arguments? Compared to a full-time CEO in an insurance company, a medical doctor is not likely to be more financially competent, even if he is a very smart person.

Tan Kin Lian spoke out for Singaporean victims who lost money in the Lehman Brothers Minibond debacle. It is a move which lost him friends and gained powerful enemies in the financial services industry which he worked in all his life. I respected him for the sacrifice. In fact, as a retail investor, I am surprised he is not sitting on the board of directors on any public-listed companies given his background. I guess he made too many powerful enemies. From what has been seen in the Lehman Brothers Minibonds episode, I have no doubt of his independence and the courage to speak up when the need arises. Given his background as a CEO who brought NTUC Income from a start-up to a power to be reckoned with in the insurance industry, I have no reason to doubt his financial competence. I think he is the most independent and second-most financially competent candidate among the 4.

Therefore he gets my vote.

Saturday, August 20, 2011

Presidential Election 2011: Letter of appreciation

Come next week on 27 Aug 2011, Singapore will be holding the hottest contested Presidential election in its short history.

This blog is about financial literacy. Naturally, it will support the candidate who has contributed most to financial literacy.

About a year ago, I wrote a letter of appreciation to Mr Tan Kin Lian. At that time, I did not know that he will be running for the President of Singapore on 27 Aug 2011. I wish him all the best on 27 Aug 2011.

Here is the contents of my letter of appreciation;

18 Jul 2010
Dear Mr Tan Kin Lian,

I would like to write a letter of appreciation to express my respect and admiration for your efforts in imparting financial literacy to Singaporeans and defending the victims who were bullied by the financial sharks.

I have been following your blog from time to time since the Lehman Brothers Minibonds collapse put you in the public eye. Although I am not a victim, this financial fiasco fascinates me as managing my own money has been a hobby of mine for the past 7 years.

I respect you for standing up and using your financial expertise to speak up for the victims. It is not merely an extension of help to needy people as you have to take on the risk of antagonizing powerful people with links to the mighty banks. I also thought it was extraordinary of you to educate the public and expose the tricks of the insurance industry given that you are likely to make enemies and lose old friends in an industry which you have worked all your life.

As an investor in Singapore stocks, one can easily observe that someone of your background should be sitting on the directorships of several public-listed companies. By taking on the path that you took, I am not surprised that these high-paying cushy part-time jobs are closed to you. Hence, I think you have made tremendous sacrifices in sticking out your neck for your principles. In general, people would speak out for themselves if they were wronged, but very few would speak out for strangers when one has much to lose and little to gain. My calculative mind tells me it is not wise to do what you have done. However, I cannot help but admire and respect your actions. You certainly put the self-serving yes-men to shame. To be honest, you put me to shame as well because being a selfish person, I would not have done the same thing as you did.

Selfish as I am, I am not going to be so selfish as to encourage you to keep up the good work because I do not think it is in your interest to do so. Do not get me wrong. I am not someone from the financial sector with an interest to see your mouth shut. I even have my own blog that shares what I know to educate the public on financial literacy. 

It is with these reasons that makes me respect someone from the industry coming out to educate suckers and warning them against the sharks whom he used to rub shoulders with.

Yours Truly,
An anonymous, secret admirer
18 Jul 2010

Sunday, August 14, 2011

Market commentary on the stock market collapse that began on 2 Aug 2011

The recent global stock market collapse began on 2 Aug 2011. As of today, the Straits Times Index has dropped more than 10%. As of now, I do not have a significant position in the market to bias my opinion on the market. Differing opinions are most welcome.

Even if the global economy is headed for recession, I am actually quite confident that we will at least have a strong rally before the Singapore stock market heads down further (assuming it does). I don't think the Singapore market will continue its decline at this point.

In the week before 2 Aug 2011, I was surprised by the resilience of the Singapore market in the face of weaknesses in the European and US markets. Compare the price charts of the Straits Times Index with the European and US markets to appreciate its resilience. I suspected foreign fund inflows into the Singapore market to explain our market's resilience. The negative swap offer rates complained by UOB reinforced this suspicion.

There are plenty of cash on the sidelines. In fact, there is so much cash hanging around that the Bank of New York Mellon is charging fees on big deposits instead of paying interest.

The market needs cash to feed a rally. Otherwise, expressions of optimism are just empty talk that cannot be translated into action. At this moment, there is plenty of cash in waiting to jump in once the market stabilises and rationality comes back.

In the past 2 weeks, I observed several SGX announcements on insider purchases. Meanwhile, there are still several stocks on the watchlist with valuations which allows one to buy with peace of mind. In the US, CEOs have been buying back their stock in the past two weeks.

Hence, I am quite confident that we will at least have one more strong rally even if a global recession is impending. I do not think the Singapore market will continue its decline at this point.

My preferred end-of-day SGX price/volume data vendor

There are 2 types of analytical toolboxes available to investors - Fundamental Analysis (FA) and Technical Analysis (TA). Some investors rely on financial statements only for their investments (FA) and some traders rely on price/volume charts only for their trading (TA). I think it is wise to rely on both. You need TA because it provides useful market information like whether the stock you are buying is in an uptrend or downtrend, the strength of the buying and selling, how it reacts to corrections, whether a climax buying or selling is happening ...  You use FA because it is common sense to read financial statements before buying a stock since you are buying part of a company. In the long-term, it is the financial performance of the company that drives the price.

You need data for both types of analysis (FA and TA). Financial statements are basic data for FA and the price/volume information is data for TA.

This post is about the best price/volume data vendor I have found for SGX stocks and indices. Please note that you will still need a Technical Analysis software like Metastock, Amibroker, TradeStation to present the data in a chart and analyse the data using technical indicators.

The best value-for-money bargain that SGX price/volume data is DataFolio.

It is the cheapest in town. Other data vendors charge annual subscription of more than SGD100. For DataFolio, there is no annual subscription. You just pay a one-off SGD88. In terms of price, it is a no-brainer.

The data quality is superb. Its data source comes from SGX website itself, so I do not question its accuracy.

Prices for individual stocks are auto-adjusted for corporate events like stock-splits, rights and dividends. These auto-adjustments are needed so that awkward price gaps that distort analytical results are removed. However, I noticed that not all stocks are adjusted, at least not in a timely fashion.

Some may argue that this is not a good recommendation because there are free data vendors around like Yahoo. Although Yahoo provides price/volume data for free, it is not suitable for SGX stocks. Yahoo provides price data up to 2 decimal places. This is inadequate for the majority of SGX stocks which are penny stocks and require price data up to 3 decimal places.

DataFolio provides historical price/volume data all the way back to 1987.

ChartNexus is also a good product for Technical Analysis. However, I prefer the flexibility of specialized TA software like Metastock or Amibroker which gives me the power to write my own proprietary indicators and algorithms. This is my edge as an engineer and it makes sense to make use of one's strengths to beat the competition.

I recommended DataFolio to a relative. He praised Mr Cho Sing Kum for his excellent technical support. Mr Cho is the creator of DataFolio. I do not have first-hand experience of his technical support service because being an engineer, I have a tendency to figure things out and solve problems myself. However, when I asked question on the ChartistUnited forum whom Mr Cho frequents, his response speed is simply incredible.

By the way, if you do buy DataFolio, please keep your password in a safe place. Mr Cho is quite sick of people asking for passwords. This is actually what prompted me to write this post to lend him support.

I am not paid to do advertisement for DataFolio. Mr Cho does not know who I am. I am just a grateful customer for a product that gives me value-for-money.

Lastly, this is a Singaporean product created by a Singaporean that beats all foreign competition hands-down. As a Singaporean, what is there not to support?