Tuesday, October 28, 2008

NUS dean also exposed to loss


Today Weekend, October 25, 2008, By Lin Yanqin

HE HAD built his career on his expertise and knowledge in the field of finance, but like thousands of others, he too fell victim to the collapse of Lehman-backed structured products after the American investment bank folded.

Professor Bernard Yeung, the new dean of NUS Business School, recalled the moment when he received the bad news from his broker.

“She said ‘Bernard, you’re exposed to Lehman Brothers’. I won’t tell you how much I lost, I basically feel like I’m working for free right now,” said Prof Yeung.

The Lehman fiasco prompted Prof Yeung to pull together the business school’s academics to share their knowledge and expertise on the issue.

“We said, ‘This is our social responsibility’... So we asked the faculty to write about this crisis, to help society understand what has happened,” said the 55-year-old Hong Kong-born Canadian, who met the media on Friday.

This culminated in a 13-part series in The Straits Times, as well as various articles in Today (picture) and The Business Times.

Such, Prof Yeung says, is how he envisions Singapore’s oldest business school spreading its knowledge beyond the ivory tower — drawing from its “peaks of excellence” to make a social impact.

Not only does he want to create a culture of intellectual curiosity and integrity in the school, Prof Yeung wants the knowledge created to be shared through teaching, journals and books, as well as the mass media.

Apart from the articles in the newspapers, the school also organised a panel discussion with industry leaders, faculty and alumni to educate its students about the impact of the ongoing financial crisis.

A special module on the crisis will be taught next month for the whole university, with lectures on topics like moral hazards, governance and government policy.

Prof Yeung, who came to NUS after nine years at New York University’s Stern School of Business, said NUS would play to its strengths and “focus on the basics”.

“The whole industry needs to train people back to the basics. We need to understand risk management better, we need to understand finance even better, and we need to think about this concept of responsibility,” he said.

“There’s a lot of self-reflection going on in the industry.”

Prof Yeung also spoke about the importance of rankings. These measures matter because they reflect what a school is about. Hence it is important to create a culture of learning and impart this to students — a hallmark of well-ranked schools. “If they deliver, we’ll always be the best,” he said.

His appointment at NUS — a three-year renewable term — allows him to be immersed in what he sees as the “Asian Renaissance,” with Asia becoming central to the world’s economy.

“It’s very exciting to be here,” said Prof Yeung, who intends to retire here.


Anonymous said...

Professor also kena so retail investors no chance lah!

Everlearning said...

Our Government believes the American banks and dumped in billions of US$. Solid and branded banks they said. But not for too long!

Prof Yeung believes the Singapore banks and sorry to say it is not what it seems!

Now the pertinent question is "Do you still think the Singapore System can last a very, very long time?

Everlearning said...

Oops, Prof Yeung believes a broker.
Must be a trusted friend.

I think it will not be too heart-breaking for him to overcome this experience. He has long learnt how to diversify his wealth.

G C said...

As I always believe for any investment that required an investor to read a thick documents that is call prospectus is tough, no to mentioned that most of the investors could not and willnever read it any way. So most of the investors will just invest in what it appear the return will be and without any second thought on the risks involved. The understanding on the risks factors are also difficult to understand by most of the investors regardless how educated you are and how relevant your education back ground would be. It is therefore why I strongly agreed with what Mr. Tan has been mentioned in his comment that a good investment product should be easy to understand by a investors.

It is also important that all conditions attached should be simple and take minium time to explain to prospective investors other wise it will not be suitable to be market to the masses, and it will most likely only allowed to be market to institution investors. Time to have serious think on the issues now.

Anonymous said...

That's simply the price of ignorance. That could happen to anyone. Just like a seasoned fund manager can sometimes make a big boo boo, due to ... ignorance, wrong judgement, and etc.

Anonymous said...

Hi G C & all

Thank you for highlight the 'norm & basic' requirements in the process of investment. But nowaday, RM don't bother to open ad explain in details of the pro & con of the investment/products. To them this may waste their time and may lost the sales, due to possible of disclose more risk details to the clients. I'm sure most if not all, the Minibond victims are experience this. For my case,(3 series altogether). The RM did not even flip open the prospectus booklet. Maybe, they also don't know what they are selling of and the potential reputational risk they are created for their FI. Hope that this will end with a fair & justice to all very soon. Keep calm & hope for the best. Thank you.


Anonymous said...

I am not sure why people are surprised that a Professor losses money in investment. It only shows that good investment decision making does not come automatic regardless of a person's education level and background. It only warns everyone not to take things for granted.Things that people tend to take things for granted are like:

(1) Believe everything the mass media says - like journalists' opinions
(2) Believe everything what politician says
(3) Believe everything their banker/RM says
(4) Believe everything bloggers say
(5) Believe that money is safe in the bank (it is safe for now but never forever)
(6) Believe that investment is so easy.
(7) Believe that prudent investment is boring investment (for example, during the good times nobody bothers about asset allocation)

Actually all the cries about massive losses about the current investments have been due to very poor asset allocation. It is quite unbeliever that people can put 90% of their nest eggs in Lehman SD or 90% in stocks. Some even put 100% of the wealth with one bank allowing just one RM to manage everything.

ym said...

i think our local universities imported some "subprime" finance professors from america and europe..

abt prof bernard yeung, he apparently didnt learn much from the superior NYU professor nouriel roubini!..

i wonder if he can cry mis-selling since is an expert of finance?..

Anonymous said...

Earlier last year, i heard that an actuary said "market will never fall". I hope he has not jumped out of the window.

Highly educated professionals are human being too. They are subjected to the same human deficiencies as uncles/aunties on the street. And they are more prompt to these weaknesses if they are too proud of their own achievements and abilities.

cindii said...

I am a graduate. I am also caught in this blood sucking saga. I bought S$50k mini bond series 2 from OCBC Securities. I trust everything that is sold in Singapore! Singapore is SAFE! Naive or ignorant? I don't know what to do now....

Anonymous said...

quote the article on sunday:

"A corporate support officer, who gave her name only as Madam Teoh, 45, and her 50-year-old husband who was retrenched in 2006, had invested about $240,000 in Lehman Minibonds they bought from Maybank and Hong Leong Finance in 2006 and last year respectively.

The couple, who have two teenage sons, say a large part of their savings is tied up in the bonds .

'We're so worried. Can we get our money back or are we losing it all?' said Madam Teoh. "

the writers still referred the now infamous minibonds as bonds - this means the creation of this name was an apparent attempt to mislead.

Anonymous said...

If a NUS Finance Academic had invested in the Lehman products - it shows how complex and misleading the structured investment products are even to an academic whom should be knowledgeable about risky investments.

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