Dear all,

I’d stopped writing for quite sometime due to some of our new company’s policies. All website or blogs maintained by advisers have to be approved by the company regardless if the FA firm is named or un-named as long as wealth planning issues are discussed. Every future new blog postings must be also approved by the compliance team.

I am also not supposed to receive any leads or enquiries from the blog as it will constitute that this blog is meant to solicit business and cannot be regarded as a personal blog. If I have intention to get any referrals from this blog, then all my previous postings have to be reviewed and future articles have to go through checks to be approved.

i.e, If I am to write a personal blog, this blog must not mention any financial matters that can interest anyone to ask about the topic.
If I am to write a blog with mention of financial matters that can interest anyone, then all my articles will need scrunitisation and future articles need to be compliance approved.

I will need time to adjust. I have to remove my name, contacts as well as any links that people will know who I am before I can post my next article.

Posted by: XXX | April 17, 2011

Habits of a Successful Adviser

I hope any advisers who wants to be a good and honest will be encouraged by what I wrote below and strive to be better in your respective career. The items mentioned below are more sales related but the professionalism are assumed to be also in place. I’ll also be adopting these habits to better myself. Enjoy…

Habit 1 – Always be positive
* Your client reflect you, if you smile, so will yr client
* Magnify the good, justify and combat the bad
* use client relationship management programs
* Focus on the good things, everyday is a good day, if you wake up.
* Make it your job to make you client happy

Habit 2 – Run client updated regularly
* Activity is the source of new business
* No prospect or suspect = no opportunity
* Be there when yr client is ready to buy not just when you are ready to sell
* Dr Wendy Evans System of client monitoring

Habit 3 – Seek referral everywhere
* Establish a referral process
* Practice your approach
* Let them know what you will be doing for their referral. Don’t always presume that they don’t give you.
* Eg – I help people retire with dignity, to protect their family (Elevator conversation – What do you do?)
* If you don’t tell them, its like looking at a woman in a dark room
* Include a reward system, psychological reprecrocity
* Don’t stop asking, Practicing by role playing
* Referral Card, Testimonial request after closure of sales

Habit 4 – Network till it hurts
* Schools, sport associations, service clubs, business conferences, etc

Habit 5 – Mine the diamonds in client base
* What % of your revenue is from existing clients
* Profitability from existing clients

Habit 6 – Set goals, plan and do it
* Know your stats – appt to plan to sales, etc…
* If you know, you will have a better idea of what a phone call means to you. How much $$ each call is meant to you.
* Set a target
* Plan your activity. Client updates, networking, referrals
* Keep results religiously – Measure what you do
* Do what you say you going to do

Habit 7 – Get someone else to do the paperwork
* High producers have help
* You make money seeing clients
* Make a balance of 3-2 ratio of time taken to see clients to doing paperwork
* Your focus should be how many people you meet. Determine which brings you more money

Habit 8 – Have a ticket in the game
* Do more and different than other people
* Try involve different things with new ways to grow your business
* Work night when others don’t, work weekend if others don’t, go networking when you wish to go home
* Make that extra 5 phonecalls

***************

One advice given to me by another Guru is that “Financial Advice” needs to be persuaded to the people.  Those who wake up remembering that they must plan are largely those with plenty of time who will do all the research for the DIY solutions. Many of them will squeeze financial adviser dry with hundred and one questions and expect not to pay anything in return. I think we have to be selective on the people we serve as well as we will not hope to meet those who will eventually negotiate with us on why we can’t give lower rates than DollarDex, SAF Group Term, Major Illnesses and Disability Income, ETFs and Capitalmall Bonds and just took up Incomeshield Plan Basic and you are stuck with him/her for life.

Posted by: XXX | April 4, 2011

An insurance portfolio that makes my blood boil.

I was at one point wondering if Financial Advisers in Singapore are helping people or they are helping themselves by exploiting the people. I have been compiling portfolios over the years and I seldom come across a portfolio which in my opinion, proper… I’ll like to show one classic example on the type of portfolio that I frequently compiled. I’m sure that this supposedly IFA is making a very good income by such planning for his clients…

(Ps: I’m not saying that all Financial Advisers are bad. I am far from perfect either. However I have an interesting observation which is “Many(not all) of the Star Performers sell plans like those below” and they are termed “Successful” by the company, industry and public) Those who spend time analysing and thinking what best for clients cannot even hit sales quota for promotion or even earn a simple “Senior” title to his namecard, regardless of how much experiences he/she has. They are also treated like dirt by the company because they are likely not the one who brings in the big money.

**************

* Young Lady – 27 yrs old executive earning around $3+k/mth
* May have plan for marriage and getting a property in the near term
* In order not to get myself in trouble by posting this, I’d deleted many columns, including the insurer’s and policy names…


I do not expect her to get anything from me but I just gave my views…

*************
Risk Management
You are currently spending around $3,860/yr on Risk Management including ILP riders and Whole Life.
* The Insurance premium looks reasonable and kept within 10% of your income but this will keep increasing as the riders for your ILP gets higher yearly with your age. The premium can be quite amazing after 20-25 years down the road.
* This portfolio have not factored any form of disability Income coverage, Accidents and Hospitalisation coverage, which seems missing.
* In my opinion, you are on the high side for Critical Illnesses and I will prefer that you have lower Life Coverage to free up more for term and  investments.

Wealth Accumulation
You are currently putting in around $13,315/yr on Wealth Accumulations.
* This amount is probably nearly 35% of your current take-home pay.
* Your Endowments are too long (all 25 years) and a bit too many based on your current income
* Your investments happens to be those with too high cost
* Your accumulation will get lesser over time when insurance premium for ILP increases. It is very hard to track your investment when you tag insurance with it.
* You are certainly a good saver and I commend you for it but you probably met an adviser (IFA) who cared for his own interest more than yours.
* I would have recommend a different strategy for you if I am your adviser…

Posted by: XXX | March 9, 2011

Woman and Financial Planning

It is the 100th anniversary of the International Women’s Day today and I like to write a bit more about woman on this special Day. 

I always feel that woman is a very special creature. My observation is that they are a very hardworking, determined and meticulous when we compare them to man. I also admire their spirit in going through the ordeal of child bearing and motherhood. In today’s society, they also carry the burden of bringing additional income for the betterment of the family.
 
 In term of Financial Planning, woman tends to have some disadvantages compared to the men. I will like to share some of my observations with you.

Longer Life Expectancy and keep rising
Based on statistics, Singapore men are expected to call to the Lord at the age of 77 whereas women at 82. The life expectancy age is expected to increase further and 88 to 90 can be of no surprise in future. Taking Japan and Hong Kong as reference, it seems that the Life Expectancy of Men do not rise as fast as Women and hence the gap will gets wider. When L.E of women get to 88 one day, men’s L.E probably may probably remain at only 81. (5 years widens to 7 years)

Longer Period living without Spouse
Women also generally marries men who are older and hence they might be expected to live without their husband for probably as long as 5 to 10 years. These years can be their twilight years and they need to live by themselves. It is hence crucial that they have Hospitalisation and Long Term Care insurances as well as enough savings to last them through.

Slowing Corporate Ladder Climb during Career Peak
My experiences with many of my clients gave me the impression that income level of women are generally higher compared to men before having children but once the 2nd child arrived, their mentality changes slightly to lean towards the family. They slow down their career climb and spend more time with the children. Some, who couldn’t cope with work and family, will stop working for as long as 5 to 10 years, just to focus on coaching their children. It may be difficult for them to resume the employment after a long gap.

Divorces and Singlehoods
Women today are more independent and frequently have a stronger say in term of finances than the men. With such independence, they will also demand more from men towards the family. With more demands, it may result in a mismatch of requirements the women asked from men. This eventually causes more separations and divorces in an urbanised society like Singapore. Marriage failures are inevitably taken into consideration in woman’s financial planning. Under the Women Charter, they are most likely the custodian for the children on divorces and there is no guarantee they can get sufficient alimony to take care for the children. There are also more single women now compared to 10-20 years ago which means another set of financial planning requirements.

Woman are better investor?
Having said all the negative points on woman, I have a good one for you. According to a behavioral finance study conducted by Terrance Odean (professor at University of California), it concludes that men’s overconfidence and hyper active trading actually results in lower investment returns as compared to women. As a result, women turn over their portfolios an average of 53% a year; while men’s portfolios turnover at a rate of 77% a year. This excessive trading leads to lower performance. Here’s what Odean found: married women actually get better returns than men — 1.4 percentage points better, and single women did even better — 2.3 percentage points a year over single men.

To conclude, I just like to encourage woman to plan way ahead and be more disciplined and conscious towards financial planning than the men. You have a bigger reason to do it than men.

Posted by: XXX | February 28, 2011

Wisdom on How to Live Life


For those who knows me will know that I’m not someone who are keen in reading except financial reports and occasionally motivational books. One series of books that actually caught my attention sometime early last year was by Dr Tommy Wong S.W. The name of the 3 books are “Wisdom on How to Live Life”… I just like to share a few note about these book and perhaps it might interest you.

Dr Wong uses conversations between Tom and 2 Gurus named Dick and Harry to convene his message in all his 3 books. Tom is a young man seeking to understand how the world works and ways to be happy. Guru Dick is a very successful man in term of power and money. Guru Harry is a very spiritual man who view success in other angles and explain why so many people remains unhappy.

Guru Dick first opened up our eye in realising the type of money and power that we are seeking daily. It shows how the world works when there are power and money. The things that Guru Dick told Tom are what we see daily in our life and probably how most of us are living it. Tom, seemingly agreed with Guru Dick until he met another Guru named Harry.

Tom discussed what he learnt from Guru Dick with Guru Harry and Guru Harry starts to discuss on what are considered as successful and what our purpose are while living in this worldly Earth. He tries to explain how we can bring Heaven down to Earth so that we should not struggle so much in our daily walk.

From the 3 books, Dr Wong shared many of his concepts via the 4 meetings Tom had with Guru Harry. In the 2nd book, Guru Harry was given 6 more months to live and Guru Harry discussed things such how we can handle the certainty of death ourselves and the loved ones. It also encourages us to live by Divine laws and not only man-made laws. 

In the 3rd book, Guru Harry is dead and his spirits communicate with Tom. Guru Harry’s spirit shared the difference of living with and without a body. He also shared why there are so many struggles in the Earthly world because of the materialistic and selfish nature of mankind.

In conclusion, there are too many things for me to write above. They are extremely readable and with my standard, I can complete each book in around an hour. The issues discussed are original and thought provoking which brings us from climax to climax. I prefer to look it from the angle on how to live a happier life and not to use religious thought to judge what the author says.

One warning is that you should not read it before you sleep as you won’t be able to stop reading once you start. To know more about Dr Wong’s book, you may refer to http://wisdomlife.page4.me/index.html

Posted by: XXX | February 21, 2011

Enquiry on Term or WL plan

From Mr T, whom I will be meeting to understand his financial needs and direction soon…

++ QTE ++
Hi akhiat
 
I’m XXX, i read your blog online.
I would like to seek advice from you, currently i’m having a whole life insurance policy under TM asia legacy plus 20yr plan – cover S$100k plus S$100k dread disease rider, annual payment of $2294.

I took up this policy under my friend agent, i read your articles and find out that term policy are more affordable than whole life. for my case this coming jun 2011, my whole life policy under TM asia will make deduction from my giro account. i opt for annual payment thus save abit of money compare to monthly payment.

My issue is that, after reading articles comparing term and whole life policy, i am not sure should i hold on to TM asia policy or sign-up for a term policy and the different use for investment either with bank or unit trust by saying this, my first policy payment for TM asia i will not get anything back.
++ UNQTE ++

From Akhiat
++ QTE ++
Hi XXX,

To choose a Whole Life or Term plan is a matter of choice and I don’t have the definite right or wrong answer. In theory for BTITD (Buy Term Invest the Difference), if the investments fetches around 5-6%p.a, you will be better off using this strategy. Historically, 5-6% p.a on investments are not that difficult. In reality, the person who adopt this strategy must be very conscious that he is investing the difference for the very long future so that he can self-insured when the term plan ends.

Getting a WL plan (For those with Critical Illnesses) is not meant to be surrendered for cash value, the purpose of a WL plan is to give the person coverage upon old age after 65 or 70 yrs old. Cash Value yield is usually terrible because the insurer have to reserve much funds to take care of the insured when he is old. Protection Yield is acceptable even if the person contract illnesses at old age such as 70 or 75(High chances).

Term plan is to take care of the current problem especially when ones cashflow is on the tighter side and WL plan is to take care of the future problem when continuity is a concern. Different people have opinion as of if coverage is necessary at old age when a medical insurance may suffice.

In my opinion, WL plan is more of a privilege for those who have good cashflow and sufficient funds for many other items. For practicality, he can use WL plan to solve his future problem on coverage continuity and at the same time, he is also able to meet his other pressing needs. I do not agree when people says that WL plan are all bad and like to present them in all negative light, using basis of reduction in yield and distribution cost. If $2k/yr is really a concern for your cashflow and you are grossly under-insured for your current situation, then it might be better to take care of your current problem via a term first.

Both Term and WL have their merits and if you get a term that covers you beyond 70 or 80 yrs old, you can expect the premium to be close to what you see for a WL plan and yet not limited in premium term…

Its your choice if you wish to consciously save for your own protection when you are 70 or 80 yrs old. As for me, I have a good combination of WL, Term and Group Term to give me the coverage I needed with a partial hedge against Critical Illnesses Coverage at old age. In conclusion, I don’t have the answer for you and your situation…
++ UNQTE ++

Reply from Mr XXX
++ QTE ++
hi akhiat

thank for your opinion. look like there is no define answer for me, only problem is how much i can afford.
i shall talk to my FA and see what she can advise me.
++ UNQTE ++


Akhiat’s reply

++ QTE ++
As mentioned, there are no rights or wrongs. If you ready to adopt the BTITD strategy, you must be clear on what you are doing and maintain the strategy. You must not let other temptations interupt this strategy. I have seen far too many people who don’t even buy term insurance and spend their money on the next holiday, shopping spree and a bigger car. There are too many things in our life that interrupt our savings discipline.

Do something that you are comfortable with. I had maintained a small WL plan because I wants an assurance of some coverage after 65 when my term plan ends. I don’t think that premium is really hurting me that much too. At the same time, I’m savings considerably through a portfolio of unit trust and shares.

Its up to you on the strategy you wish to adopt. Good luck in whatever choice you decided upon…
++ UNQTE ++


From Mr XXX

++ QTE ++
Hi adrian
 
surprise to recieve your email at this point of time, i am currently reading through articles about insurances.
 
this afternoon i met up with my agent and i express my concern about the policy i’m holding, the reason she quote me was that, WL policy shld be lay as the basic foundation and term policy add to enhance the whole protection.
 
if only getting term plan which cover till 65yrs old, what about the part after 65yrs when you are old and needed protection the most and for whole life i only need to pay 20yrs and 100k coverage for whole life while term, you hv to pay every year till you do not want it anymore.
++ UNQTE ++

My reply
++ QTE ++
Her answer was expected from a typical adviser. She was not entirely incorrect but she missed out 5 points which I can think of now…

1) You can have have your own strategy to accumulate this fund for Self-insurance by the time the term policy ends. (its not difficult if we are disciplined enough)
2) It is also not true that when we are old, we need the insurance more, in fact should be less. (higher occurrence not equal to higher needs)
3) The Sum at Risk for a Whole Life policy get lesser over the years, especially when you are older (Sum at risk = Sum Assured – Cash Value). This means the insurer’s liabilities get lesser and more despite your Sum Assured seemingly gets more.
4) If you are under the TM Legacy Plus, your Sum Assured beyond 65 is likely to be lower than the minimum Sum Assured.
5) There is a good chance that Insurance company may cut bonuses over the years and your Sum Assured might be lesser than what you see.

The above are reasons why I’m not a very pro Whole Life insurance person and remains a poor adviser, recommending term, disability income and medical insurances… Despite saying all these, I still keep a small amount of Whole Life insurance to hedge the other side of the coin…

++ UNQTE ++

Mr XXX then contacted me and arranged to meet and understand more…

Posted by: XXX | February 9, 2011

Distribution of CPF monies on death

As I was helping with my client’s death claim recently, I got to recap on some of the issues arising from CPF monies on death. I was surprised that many people had so many different versions on how CPF monies are distributed upon death. The common misconceptions are: CPF monies will only transfer to beneficiaries CPF accounts, Medisave monies cannot be withdrawn, CPF monies goes back to government, CPF monies are equally shared between Parents and Spouse regardless with Children or not…

If valid CPF Nomination was made prior death
* CPF Board will invite the beneficiaries to come forward to file a Claim. Monies need not go to Public Trustee…
The following will be distributed to your nominees in the proportion as stated in your nomination upon your death:
(a) Savings in the Ordinary, Special, Medisave and Retirement Accounts;
(b) Discounted SingTel (ST) shares.

The following are not covered by CPF Nomination and will form part of the deceased estate:
(a) Cash and investments held in the CPF Investment Account under the CPF Investment Scheme-Ordinary Account  (CPFIS-OA);
(b) Investments held under CPF Investment Scheme-Special Account (CPFIS-SA);
(c) Properties bought with CPF savings; and
(d) Dependants’ Protection Scheme (DPS) claim proceeds

When CPF Nomination was not made
* The CPF savings will be paid to the Public Trustee in accordance to Section 25 of the CPF Act (Cap 36) for distribution to the family according to the intestacy laws(Interstate Succession Act Cap 146) upon demise.
* If deceased is a Muslim, then the CPF monies will be distributed in accordance to the Administration of the Muslim Law Act (Cap. 3)
* Even if the deceased made a Valid Will, this money will still be distributed according to the Intestacy Law.
* If deceased nominated a minor as beneficiary, the Public Trustee will hold the money in trust till minor reaches 18 years old.
* If deceased did not make a nomination and a minor is given a share as per the intestacy law, the Public Trustee will hold the money in trust till minor reaches 21 years old.
* When the Public Trustee is holding to the minor’s monies in trust, the parents or legal guardian have to make applications for monthly maintenance or education use.

Its good to make your CPF nomination
* You can freely nominate your CPF monies as per what you really desire. This is especially so if you have aged parents and that you are married with Children now.
* This will reduce the hassle that monies goes to Public Trustee and subjected to the instestacy and minor’s share to be held till 21 years old.
* You can decide if you prefer to nominate Adults or Minors. If beneficiaries are all adults, the monies need not be held in trust till minor reaches 18 years old and we need not apply for monthly maintenance which we are not sure how easily the applications can be approved.

Points to note about making CPF nominations
1) A marriage will automatically revoke an earlier nomination.
2) A divorce does not revoke an earlier nomination.
3) A Will does not supersede an earlier nomination.
4) If your nominee is below the age of 18 years at the time of payment, his/her share will be forwarded to the Public Trustee for administration until he/she reaches 18 years of age.
5) If any of your nominees is an undischarged bankrupt at the time your CPF savings are paid out, the Board will be legally obliged to inform the Official Assignee (OA) of any assets that are due to him as his estate is vested in the OA by virtue of the laws in Singapore relating to bankruptcy.

Act Now
Well. What are you waiting for? Download the forms from CPF Website. Fill up the form properly, sign in the presences of 2 valid witnesses and send to CPF office. Its actually a 10 minutes job.

Posted by: XXX | January 28, 2011

Too Little, Too Late…

On 23rd January 1:02am, I received an sms from one of my policyholder’s brother-in-law. He informed me that MG had passed away in Tan Tock Seng Hospital due to a sudden cardiac arrest. MG was 33 years old, perfectly healthy and fit, active in Lion Dance. He left behind his elderly mother, 3 years old son and his wife. MG was referred to me in 2006 through his brother-in-law, who also happens to be my policyholder. Back then, MG was a storeman, working in a logistic firm, earning around $1,300/mth.

He was interested to get a medical insurance for himself. After 2 meetings in 2006, he purchased an incomeshield plan Basic. Half a year later, he told me that he wish to start some savings with a budget of $50+. I told him that he might as well get a basic Life coverage with Critical Illnesses first than to save a mere $50 back then. He eventually signed up a $30,000 Life insurance in early 2007 which is within his $50 budget.

In late 2007, he had a newborn son and we met again in Jan 2008 when his wife purchased the same Incomeshield for her son. I tried to convince him to increase his cover and plan for his son but he only agreed to top up with only $50k Personal Accident coverage.

I follow up several times in 2008 but failed to meet up till I relooked into his case in May 2010. I know that his cover and salary is low and it is my wish to help him with more coverage and to plan for the child. We did not managed to meet in May10, I again contacted him on 15th Dec 10, 02nd Jan 11 and the last time I spoke to him was 11th Jan and last sms on 17th Jan. He died on 23rd January. The frequent recent contacts made me so shocked when I knew of his demise.

I was guilt stricken over the next few days as I blamed myself for not pushing a term plan for him back in 2007. I find myself shameless for delivering a $30k cheque for the family. He was looking out for a savings plan when he contacted me and the next thing in my mind was to give him a plan with more cover and less savings. My mindset was just like a typical insurance agent back then. “Close the case he wants and move on later.”

 I attended his funeral wake over 3 days with one of the day watching the night till morning. I’ll be helping out with the claims of which the Personal Accident plan will be disputable. Over the 3 days, many of his relatives asked me how much Insurance MG purchased and how the money will be distributed. I do not wish to divulge any information to them and they started speculating and say things like “Must be quite a few hundred thousand”, right? etc. I keep mum and I find it so hard to disclose to his mother that he only has $85k cover, including DPS.

 I am still feeling the guilt and asked myself, “Why I never call him more often and why I never push him harder for higher coverage when I have chance to meet him, etc”. Being a financial Adviser, I could have done so much more for the family and I failed in my job for my death claim. I hope NTUC Income will ne compassionate and offer an ex-gratia payout to his family for his disputable accident policy, which by old 2008 accident definition, very unlikely to pay…

Posted by: XXX | January 14, 2011

Papaya measures to curb property prices

This is a good piece of news to me as a concerned Singaporeans and probably to many of our fellow friends who are looking towards buying their first property and yet being deprived by the speculators. The measures taken in September last year are too soft which in my opinion are not effective. The measures taken back then only reduce the crazy mode to a less crazy mode.

Previously it rose at a rate of 30% a year and it reduces to around 20% a year. Back then, the private housing market had resisted rounds of cooling measures and surged 38.2% in June last year, exceeding the historical peak of 1996. Property, in my view is best to grow at a moderate rate near to the overall inflation of the country. So what are the changes?

1) The holding period for imposition of Seller’s Stamp Duty (SSD) will be raised to four years from the current three. Singapore’s homeowners who sell a property within a year of purchase will now have to pay a tax of 16 percent, from 3 percent before. That drops to 12 percent in the second year, 8 percent in the third, and 4 percent in the final year.

2) The Loan-To-Value (LTV) limit would be lowered to 50 per cent on housing loans for property buyers who are not individuals. The LTV limit would also be lowered to 60 per cent for individual property buyers with one or more outstanding housing loans.

********
Singapore’s three-month interbank rate fell to 0.43751 percent on Jan. 3, the lowest since Bloomberg began compiling the data in 1999. It was at 0.43779 percent as at 13th January. It created a false impression that credit will always be so cheap and many people continue to max their loan limit to buy properties. There was simply too much liquidity in the market and over optimism about properties.

The long term implication for individuals and economy will be bad if such trend of property prices continue and the bubble continue to build up. This is a good move by the Papaya and will be assured a few more votes especially from the younger population in the next coming elections.

Papaya had shown boldness and creditibiity in their governance and I believe property prices for the mass and mass affluence market will drop for a while and rise moderately over the next few year. Creditibility because they show that they are serious about this issue and keep acting on it till results are seen.

Posted by: XXX | January 3, 2011

3 minutes investment updates – 01/2011

First of all, I’ll like to wish all of you a very happy new year. May 2011 be a blessed and fruitful year for all of you.

 In my first day at work back in office, I’ll like to give you some updates on the indices movement for this year and my personal views for 2011. Pls note that whatever I wrote will be my personal opinion and not from any firm that I may represent. Pls regard me just as a member of public, innocently giving opinion..

First Minute – Let me summarise on the indices that I monitor on regular basis.

1) December is generally a positive month for most economies with Russia and Korea rising strongly and closed the year with a 20.8% and 22.5% increment respectively. They are the best performers among the indices I monitor.
2) Emerging Markets and Asia Ex-Japan did relatively well especially in South East Asia like Indonesia and Thailand which performed rose as much as 40% in 2010. Surprisingly, China HS Mainland 100 Index had dropped 0.2% for the whole of 2010.
3) Developed nations like US and Europe, despite all the sovereign debts crisis and straggering unemployment numbers, still rose in excess of 10% for 2010.
4) Gold is the best asset class in 2010, having rose nearly 30% in 2010 alone
5) Oil Prices spiked in Nov and Dec to end the year with nearly 19% increament for whole of 2010.
6) US Consumer Sentiments had not changed much during the year and unemployment remains stubbornly high.
7) Investor’s fear, using Vix index as a reference shows that fear had dropped compared to a year ago
8) The Baltic Dry index which is used to measure shipping demand and transportation cost have been volatile over the year had dropped to 1773 since Dec last year.

2nd Minute – What I see from the Indices?

1) Russia and Korea, despite rising over 20% this year is still considered relatively attractive. Their 2011 PE ratio remains attractive at 7.3 and 10.3 respectively. Russia is heavily reliant on its Oil money and Korea is driven more by technology and industrials.
2) South east Asia nations like Indonesia and Thailand had rose significantly and I suspect the spike is largely due to the large foreign funds inflow. Net inflows are at high levels and an outflow will likely cause the market to fall, if it happens in 2011.
3) US is using quantitative easing measure to boost the economies compared to Asia and Emerging nations who are trying to stem growth. If US succeed in boosting their economy, it will have a good chance for funds to flow back to America.
4) Europe is using quantitative discipline to rein the Eurozone soveriegn debts issues. They are solving problems by the painful way and not like US who are adding problems to their  problems. However it was uncertain on how much more the Eurozone is willing to spend and how fast they will act whenever their eurozone nations faces problems.
5) Gold had spiked when US continue to print money but it cannot be denied that the spike be likely caused by speculations in the financial market. In my view, its over valued for the moment and gold price can drop when funds flow out of gold into other financial instruments which gets more attractive.
6) Oil prices rose partly due to the cold winter, it should normalised back to the $80+ after the winter but prices will still be reliant on the strength of the global economies
7) I do not expect the consumer confidence to grow much in 2011 as unemployment remain high and the debt level of the Americans are dropping too slowly.
8) Volatility will remain high in 2011 and shipping cost will increase with an increase in demand and commodity prices

3rd Minute – What you can consider

1) I believe Equities will likely do better than bonds in 1H2011. There are still a lot of money sitting on the fence, waiting to be invested due to fear. Valuations are still below long term fair value for most economies and companies are expected to announce good profits in 2011 with increased revenue and reduced expenses. I recommend a neutral to slight overweight position in equities, at least for the moment.
2) Emerging markets, especially North Asia are expected to do better than South East Asia where market had run up quite a fair bit. China are using slow administrativre meaures to stem inflation of which result are very uncertain. Nevertheless, China, being the laggard of 2010 gives good opportunities, esp if RMB is to appreciates vis-à-vis other currencies. I will recommend Greater China funds which will include Hong Kong, Taiwan and Korea.
3) There is a good chance that resources especially oil, will increase in 2011 but Gold may lose its lustre for this year. We may look into Resources for 2011 as well.
4) Asia currencies are expected to remain stronger compared to US and Euro because Asia is stemming growth by keeping more money and the developed nations are spending more money to grow. With positive inflow of funds, Asia currencies are expected to increase their dollar value. Pressure is specially high for the RMB. Hence for bonds portfolio, I will suggest Asia Bonds
5) Last of all, I will like to highlight that there are always risk involved in investments. What if the Fed loses its power and creditibility and cannot exercise another round of quantitative easing in future? What if Asia, especially China fails in their policies to rein inflation, either over-do or under-do. What if the Eurozone soveriegn debt crisis worsen?
6) 2011 will remain volatile, the recovery in US will be slow and painful but this is the type of opportunities I see when people see uncertainties.

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