FinTips August

Et tu, Germany?! If you are an avid reader, love history and historical plays, you might have linked the earlier sentence to the famous Shakespearean Quote “Et tu, Brute?!” It is the Latin phrase that was used to poetically represent the last words of the Roman dictator Julius Caesar to his best friend Marcus Brutus at the moment of his murder by stabbing. It can be translated into English as “You too, Brutus?!” and has been used to signify the utmost betrayal. So now the question… Why did I replace Brutus with Germany? Well, let’s go into the details! But before that (where are my manners?!), I hope that you had a wonderful Aidil Fitri and enjoyed the holidays that followed it.

As the global economic scene has been unveiling a distorted tapestry, by parts, for the past 3 years, the end of the tunnel is still not quite in sight; At least for the US and the EU (European Union). When we shift our focus to the EU, we see that the region was affected quite badly during the economic crash of the US due to the debt mortgage issue. But that’s another story for another time. Back to the EU… When Greece had to default on its bonds and technically declare bankruptcy, the countries in the EU chipped in to grease up the sticky situation. But the problem was that, the countries that helped Greece grease up, got a little too much grease onto themselves leaving them to slip and slide one by one. The domino effect started with Spain, then Portugal, Italy and now has come to Germany. The pumping of funds into Greece was to not just aid the country but to yield some returns to these countries. But when this once prominent star collapsed onto itself and became a black hole (where no amount of money is enough… and by the way, that is how a black hole is formed), these countries that went to its aid are being sucked into the vortex, slowly but surely. If the pattern continues, chances are that France might be the next target to be pulled into the vortex as they too have invested a large amount towards Greece’s recovery… But I COULD be wrong on that (hopefully).

How is that going to affect us? Well, if you have invested in Asia / ASEAN, you’re relatively safe. If you have invested in the EU… let’s just say that there is a long way to go till you see the light at the end of the tunnel. Now, before we start jumping for joy, caution has to be applied even when investing in the Asian and ASEAN region. Countries that are safe would include countries such as Malaysia, Indonesia, Thailand, Philippines and India as these countries have taken steps towards internalizing their markets.  Some countries that may not be performing well in the coming months would include countries like Singapore, China and UAE as they still have a high invested interest with the US and the EU. 

So for those who have invested during the market crash, your gains are already being noticed and should be pleasing in no time. For those who are still waiting… you may choose to invest now as there are signs of stability in the economy. If you still choose to wait, you would be choosing to marginalize your returns. As most funds have just declared their dividends (which range from 10% - 26% for a year), the funds are low in price, urging investors to pump in their investments. To put it into perspective, the Growth Fund which was at RM 0.4729/unit is now at RM 0.4130/unit. Commodity prices have been on the upward trend and are expected to be so for quite a while. The market, and many experts had predicted a sudden BOOM in commodity pricing and so, since the market was ready for it, it didn’t happen. Somehow, that seems to be the current market pattern. I guess it (the market) is putting the phrase “Expect the Unexpected” into perspective. But honestly, how do you expect something when you don’t know what to expect for? It is like saying “I’m seeing the thing that I can’t see”

FinTips June

I still remember the last day of one of my classes in the university. It was a physically painful day. Here is how it all went down… I was first asked to bring 4 of my 5 major text books to class, each weighing nothing less than 5kgs. So with approximately 25kgs in my backpack, I began my 2 mile walk to class. And to make the event all the more dramatic, the university was hit by an unexpected blizzard the night before, leaving behind 9 inches of snow. So after crossing the “arctic circle” and having reached my class and while defrosting myself, my professor walks in, with a garbage can in hand, while speaking the following ,“those who have brought your books may throw them into the trash can if you’d like, for they will hardly serve you in the real world”… It took me a while to understand this statement as my brain was still thawing, but once it hit me, IT HIT ME! 

                The truth of his statement can be seen in today’s financial market. Economic cycles are all over the place, the index charts look like the doodles of a 3 year old and  SUPER POWERS are becoming super powers… The knowledge that had been written in the books has started to lose their grounds in the current economic climate. With drastic changes, the system has evolved into something very new and very unpredictable. Market vigilance has become a ‘must’ for every individual. 

                At the beginning of the year, prices were maintained and then raised to keep inflation under control. However, with the turn of events that happened along the way, market predictions had to be done on a daily basis. That was how the first half of the year had been functioning. And now, ready or not, here comes the second half. 

                The second half is going to have both the good and the bad. Due to the lack of money circulating in the system, changes are bound to happen in the market. The good news would come from the corporate sector as it would look into new ways of acquiring money for their projects and would lead to a healthy performance of the equity market.  The bad news would come the property markets as prices of properties might start heading south (but nothing like the American housing bubble crisis) simply because people might start cutting back on their expenditures. And with the lack of liquid money in the system, loans are not going to be that easy to acquire for these buyers. Of course… this would be revamped a little when the next war happens, pandemic breaks out or natural disaster strikes…

                So as an investor, what are we to invest into for these coming months? My bets are on the equities, particularly the Asia Pacific region. As the American and European markets are walking a thin line and looking at a possible crash, the Asian/ASEAN region has become a (relatively) safe haven for investments. And looking at the strides the Asian/ASEAN region is making, it is only a matter of time until it becomes completely self sustaining. And this wave should be surfed while still young coz when it booms, there is really not much room for gain.   

FinTips May

  It has been a while since I had written my last article. Due to much traveling and potential new business ventures, let’s just say that time was stretched to its limits. However, I have come back to just keep you posted on the current market situation.

 When we look at the market since the beginning of the year, the one thing it has NOT been is PREDICTABLE. Everything that was predicted at the beginning of the year can be very well discarded as the world seems to be functioning on an ad-hoc system nowadays. Earth quakes, elections, economic crashes, Osama’s assassination (although I still have this deep feeling that it is a conspiracy), an almost nuclear holocaust and readjustment of prices, everything had never been predicted at any point in time. And basically what this does is that it makes the market severely VOLATILE.

 So, if you are a REGULAR INVESTOR, this is the chance to make gains simply because the prices of investment options would tend to readjust every now and then. But these gains can only be made if you were to have someone monitor your investment and buy into the investment when the price is low. If you were to make a standing instruction, you are as good as shooting a moving object with a blindfold on as you may not know if the price for that day would be a market high or low. 

 As for a ONE-TIME INVESTOR, it might be a risky venture to go into volatile investments as the price readjustment might make your money have a stunted growth. But like I have told many people, to make an individual lose all their money in regulated funds would take A LOT of effort. It may devalue their money but you would not lose all of it. However, just as how time mends all (or most) wounds, time would heal the “cut” on your investments. 

So, if you are a regular investor, get your cheque books out and get some postdated cheques ready and give them to an investment advisor who can do the job. If you are a one- time investor, you might want to reanalyze your strategy and think of becoming a regular investor as the trade off is much better.

By,

Ashveen Chakravarthy Sekaran

(B.A Actuarial Science, Statistics and Finance)

May 12^th, 2011

And So, It Begins...

This has been something that was needed to be done a while back. As i have been disseminating financial tips to my personal clients, friends and colleagues, many have not been able to get in touch with the articles that i have come to write. Hence, the decision to start my own blog. THE WISSE!  An avenue by which i can play my part towards creating a financially literate society.

By definition, the wisse means:

To show; to teach; to inform; to guide; to direct.

As said by Chaucer in the Middle Ages:

Ere we depart I shall thee so well wisse
That of mine house ne shalt thou never misse

I will do my part to share the knowledge i posses in hopes that this knowledge shall continue to live on in the minds of those who read it.

-S.A. CHAKRAVARTHY