Top Reads this Week (22 Sep)


Rounding up top reads from around the web, including articles shared by fellow investors in the Financial Horse Facebook Group.

Here Are 8 Secret CPF Hacks And Tips That All Singaporeans Need To Know (Seedly)

  1. Upgrade your Medishield Life to an Integrated Shield Plan (ISP) from a private insurer
  2. Understand the new Careshield Life for everyone who turns 30 (disability insurance)
  3. Keep $20,000 in your Ordinary Account instead of wiping it all out when you purchase your first flat
  4. Consider using cash payments for mortgage payments instead of OA monies
  5. Invest your OA money with CPFIS (CPF investment scheme) or transfer money from OA to SA
  6. Top up your Special Account (SA) with cash
  7. Understand what happens to your CPF monies at 55
  8. Start a Supplementary Retirement Scheme (SRS) account with just $1

How Sequence of Returns Risk Messes Up Retirement and the 4 percent rule (Life Finance)

  1. It is safer to retire when markets are down, and yet you have enough to finance your lifestyle using the 4 percent rule
  2. If you retire when markets are still going strong, be careful by withdrawing less than the 4 percent rule!
  3. It helps when your dividends and other income is more than enough to cover the yearly withdrawal amounts

Demystifying The Global US Dollar Shortage (Zero Hedge)

The global regime is starved of its monetary oxygen. That’s why there are no winners; the dollar shortage isn’t a redistribution of demand, it is the slow erosion and even destruction of it (as it infiltrates the supply side, like in China).

We see these same effects on the other side of the US merchandise ledger, too. While American importers are bringing in fewer Chinese goods because they are being marked up by levies, they aren’t making up for them by buying extra anywhere else. Imports into the US are falling as inventory builds up across the domestic supply chain.

The global slowdown is a global slowdown. The monetary squeeze is not entirely fixated on global trade, that’s just where it is most visible and easily discernible. It therefore proposes a far different set of solutions (from a US perspective) than kill the dollar.

Meituan Dianping’s Path towards Profitability (GGV Capital)

China’s Super App Meituan Dianping just turned profitable. A year after its IPO, the 9-year-old company finally arrived at the inflection point investors have pined for.

Similar to Amazon’s profitless path to domination, Meituan Dianping had been aggressively focusing on expansion over profitability since its founding. It merged with Dianping in 2015 and acquired the bike-sharing app Mobike in 2018.

Fund managers would produce better returns if they simply sold stocks in their portfolio at random. The main reason for this is that managers tend to sell when they are forced to due to market conditions rather than by studying individual stocks. The first stocks that managers tend to sell are those that have made the most extreme moves in either direction. They sell the big losers or the big gainers at a 50% higher rate. Selling in this manner tends to be a mistake.

When portfolio managers focused on company-specific information, they were able to improve their selling decisions substantially. When selling to simply raise cash or reduce market exposure the decisions were suboptimal.

  1. Have a plan for selling.
  2. Be proactive about selling.
  3. To produce better returns, focus more energy on selling.
  4. Substantially reducing positions on a random basis can be a helpful way to reset your emotions and the way you view the market.

What I Learned From Losing $200 Million (Getpocket)

In their 2003 paper “Trading on Illusions,” the organizational-behavior researcher Mark Fenton-O’Creevy and his colleagues argued that the stress, competition, and choice involved in trading financial instruments naturally give rise to illusions of control, something my own experience affirmed. They also found that those illusions are inversely related to trader performance. They even got it down to a number: “An increase in illusion of control of one standard deviation is associated with a decrease in annual remuneration of £58,000 [$87,500].”

But what’s the alternative to estimating probabilities? If we can’t say anything about what the probabilities are, then we really are forced to worry about the absolute worst possible scenario. A trader would never sell options or short stocks, since his losses could be infinite. People would avoid cars, planes, marriages … everything really, for fear of the worst possible result. We’d all be paralyzed. Which is why Rebonato told me that professed ignorance of probabilities is “a form of tyranny that’s an excuse for inaction.” And why his favored approach to stress testing (a technique called Bayesian nets) doesn’t involve trying to derive probabilities at all, but rather asks the user to just “produce your best-informed guess.”

You don’t argue when someone’s handing you a big check, but I wondered what the hell he was thinking. To me, everything important had come after. Only by managing that monstrosity through the crisis did I come to fully appreciate how unlike physics markets are, how crucial to outcomes other people and luck are, and how, no matter how hard I worked or how much I prepared, there would always be some things I couldn’t completely fathom.

How much money millennials have, compared to what their parents had at the same age (CNBC)

“While young adults in general do not have much accumulated wealth, millennials have slightly less wealth than boomers did,” the Pew Research Center explains in a 2019 report.

This modest difference in wealth can be partly attributed to differences in debt by generation. Millennials also tend to owe more.

However, millennials aren’t necessarily making more. Plus, life is getting more expensive and salaries aren’t going as far as they used to to cover the necessities, let alone the soaring cost of college, housing and child care.

Fed cuts interest rates, signals holding pattern for now (Reuters)

The U.S. Federal Reserve cut interest rates again on Wednesday to help sustain a record-long economic expansion but signaled a higher bar to further reductions in borrowing costs, eliciting a fast and sharp rebuke from President Donald Trump.

Describing the U.S. economic outlook as “favorable,” Fed Chair Jerome Powell said the rate cut was designed “to provide insurance against ongoing risks” including weak global growth and resurgent trade tensions.

“If the economy does turn down, then a more extensive sequence of rate cuts could be appropriate,” Powell said in a news conference after the Fed announced it had lowered its benchmark overnight lending rate by a quarter of a percentage point to a range of 1.75% to 2.00%. It was the second Fed rate cut this year.

Senior manager lost $1 million in ‘inheritance money’ scam (Straits Times)

Just agree to add his name to an inheritance policy, and stand to inherit more than US$9 million (S$12.4 million). Steve (not his real name) could not believe his luck when the offer was made to him in June this year by a United Kingdom-based “solicitor” who faxed him a letter asking for his cooperation. There seemed to be little to lose in this “risk-free” venture so he went along with it, said Steve, a senior manager in his 50s.

Little did he expect to lose around US$1 million in the two months the “solicitor” led him on in futile attempts to get the inheritance.

Securities watchdog looking into billionaire couple’s purchase of Chip Eng Seng shares (Business Times)

THE Securities Industries Council (SIC), which administers Singapore’s takeover code, is looking into the circumstances that saw billionaire couple Celine and Gordon Tang emerge as substantial shareholders of Chip Eng Seng in October last year.

The Tangs forked out S$201 million to become Chip Eng Seng’s largest shareholders last October, through married deals with members of Chip Eng Seng’s controlling Lim family that were done at a premium to the market price. However, the Tangs chose not to buy out the Lim family’s entire stake. Instead, they bought enough to take their stake to 29.73 per cent. By keeping their ownership below 30 per cent, the Tangs avoided having to buy out Chip Eng Seng’s minority shareholders at the same price that the insiders were bought out.
So when Chip Eng Seng proposed a rights issue last month that will be sub-underwritten by the Tangs, corporate governance advocates raised concerns that the relatively unattractive rights offering could lead to the Tangs raising their stake to as high as 43.43 per cent of the enlarged issued capital, allowing them to strengthen their control over the property and construction group without paying minority shareholders a dime.

MIT, Keppel DC Reit to issue shares to fund their respective data centre buys (Business Times)

MAPLETREE Industrial Trust (MIT) is looking to raise at least S$350 million through a private placement to partially fund its joint purchase of a North American data centre portfolio worth US$1.37 billion, of which its share of the bill is about S$965 million.

Tee International controlling shareholder Phua Chian Kin receives offers for his shares (Straits Times)

Mr Phua, who has been in the spotlight for allegedly instructing unauthorised transactions totalling $6.55 million made by Tee International subsidiaries to related parties, also updated the company on the same night of his shareholdings in the company, which stands at a direct interest of 39.24 per cent and deemed interest of 6.37 per cent.

Tee International announced it had appointed PricewaterhouseCoopers Risk Services as an external investigator to look into the unauthorised transactions. Earlier this month, Mr Phua was relieved of his current role and duties as group chief executive and managing director.

Tee International said: “Mr Phua has informed the board that he is currently in negotiations with certain third-party purchasers for the sale of part of his shares in the company. Based on the information provided to the board by Mr Phua, the board is not aware if the potential transaction, if completed, will lead to an offer for the shares of the company in due course.

Singapore data centre Reits growing in popularity among investors, with up to 51% returns (Straits Times)

Singapore is now the world’s largest repository for storing and processing data. Facebook Inc alone is setting up an 11-story facility, its first such custom-built centre in Asia.

Keppel DC Reit, which is seeking a combined $478.2 million from a private sale of shares and a preferential issue, saw the placement fully covered within the first hour of bookbuilding at the top of the price range. Shares have risen 44 per cent over the past year. Including dividends, the returns have been 51 per cent. Keppel DC Reit will use the newly raised funds to expand its portfolio to $2.58 billion, spread across 17 data centres globally.

A world awash in cash helps boost the attractiveness of Reit dividends for small savers who would otherwise have to lunge for risk to earn decent yields. Not surprisingly, Mapletree Industrial Trust increased the size of its private placement to $400 million after it was covered 6.3 times. The Singapore Reit, which wants to acquire data centres in North America, has handed 30 per cent returns to investors over the past year.

A millionaire CEO is giving away thousands of dollars on Twitter (7news)

31-year-old Bill Pulte inherited a fortune from his billionaire grandfather and has been using Twitter to share it with those in need.

He calls it ‘Twitter Philanthropy’ and it all started after a challenge to one of the platform’s most prolific users. Pulte promised to donate $30,000 to a veteran in need if the President re-tweeted his message.

His very public generosity has triggered a feel-good movement, with other rich-listers joining in. Together they’ve donated thousands to teachers and schools, bought brand new cars for grateful strangers, given cash to families struggling to cover bills and sometimes they just shell out money for fun. Pulte has also managed to build a huge social media following in the process, referring to his 747,000+ followers as ‘teammates’.

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