Knowing Too Little, Knowing Too Much – Investment Culture
Enough talk on Ukraine.
I claim the right to rant about what my Singaporean friends (who will not leave Hong Kong) say about Hong Kong investors being leaps and bounds ahead in sophistication over the average Singaporean investor.
Singapore has caught up !The latest Index of Economic Freedom has Singapore catching up with Hong Kong which has reigned tops for 20 years since the inception of the index. http://www.heritage.org/index/
My case is failing fast.
1. FAIR – Financial Advisory Industry Review
has brought to our attention that perhaps not all financial advisors in Singapore are up to scratch which is, err, serious enough for an overhaul of industry standards.
http://www.mas.gov.sg/~/media/resource/publications/consult_papers/2013/5%20Mar%202013%20Consultation%20Paper%20on%20FAIR.pdf
Zico, our in house equity consultant, was sharing with me his exasperation in dealing with some of his peers. His friends who are heavyweight fund managers, brokers and investors. Singaporeans managing millions of dollars. All stuck in the mindset of investing on tip offs and microscopically fascinated in only Singapore equity.
Nonetheless, they are hugely successful in their own right. Reeling profits of 50% in the recent Hankore run up in a month (which incidentally makes Hyflux a sell, for their dated technology) which matches Zico’s own painstakingly researched gem investment in Tencent, which took longer to deliver.
2. STI vs HSI
30 vs 50 stocks. 6 vs 9 industry groups. HSI has basic materials, tech companies and utilities which makes it slightly more diversified with twice the market capitalisation of Singapore, basically leveraging off their China links.
There are more active ETFs in Hong Kong, starting with our favourte 2823 HK (FTSE A50 China) and 2801 HK (MSCI China Index).
I guess the investment culture is more ingrained in the fabric of Hong Kong society where everybody fancies themselves with superior information. There are more millionaires in Hong Kong http://blogs.wsj.com/searealtime/2013/06/19/hong-kong-eclipses-singapore-in-millionaire-wealth-pool/ and people pay more attention to their finances because there is no CPF to grandmother them.
It starts at preschool, if this photo taken off Twitter can be relied upon. 
Yet it takes most Singaporeans less than 10 years to become a millionaire. That is the fastest rate anywhere in the world, says a wealth report released by the Barclays Bank on July 5, 2013 in Singapore. http://www.forbes.com/sites/neerjajetley/2013/07/08/singaporeans-are-the-fastest-in-the-world-to-become-millionaires/
There is no conclusion if you ask me.
And why should Zico’s friends bother with what is happening with Tesla and the likes at all when we have Blumont and the likes in our backyards ? And with tongue in cheek comments out of Zerohedge like the one below on where the QE monies go.
Yes. There is no problem with knowing too little, avoiding anything but the familiarity of penny stocks and Singapore shares, sticking to just the SGD dollar or recommendations from your inner circle of friends for opportunities in Myanmar or the Philippines. And there is no problem with knowing too much from reading publicly available reports and analyses.
I have been toying with the idea of arranging bond seminars and it is increasingly looking like a waste of time for Singapore. Bonds are not going to make anyone rich and it is just so much better for us to stick to what we are good at doing, getting a close friend with the next Blumont tip.
Th,
Bond seminars is a good idea! You should follow through!
What an interesting comment and for once I totally agree, there does seem to be an absence of big thinking, or even logic itself.
Its more a game of manipulation and insider trading, makes me laugh when I hear people talk about regulation in Singapore. By the way, Bernie Madoff also did well. Manipulators, syndicates, cartels etc etc, they do well because they have an information advantage, by defintion.
But looking at he Singapore market as a whole, its gone nowhere on average. So what makes me rich will make you poor etc, i.e., its a zero sum game, just a redistribution of wealth from the manipulators, pumpers, dumpers, cartels, insider traders and outright conmen, plus a few genuinly good investors and the rest. So beware.
Im happy to have stuck with a few local stocks that have paid me well over the years but close my ears to the rude cacophony of meaningless noise that passes for investment debate in Singapore….makes astrology, reliance on tea leaves, your fortune teller, feng shui, yoga or even shape of the morning bowel movement a better guide..Im serious…in what way would any of those things contain a natural bias?. If you want logic go elsewhere, like the US, UK , Europe.
Disagree on redistribution. It is called wealth building. If valuations go up, there is wealth creation – look at Blumont etc stocks.
Of course then it will have to be realised along the way if you need to buy a bungalow with your profits, so you will have to sell it to someone else who buys with the expectations that it will generate a return.
Wealth-building can only happen the company keeps making increasing profits and dishes out more dividends. Otherwise, it is a zero-sum game. If you look at Blumont, with no history of dividends, isnt it just a case of redistribution of wealth? The net gain by all the Blumont investors is effectively 0.