Wednesday, November 12, 2008

Rebuttal to "invest with your eyes open"

Dear Mr. Tan

Thank you for your invitation and organizing the petition.

In case you are addressing the audience and making rebuttal to the statement by our leader on the remarks “with their eyes open” I would like to point out that if an investor is prepared to take such a risk, i.e. to lose their entire principal sum they would opt for so many other investment that pay much higher then 5%. I myself has been led to believe that my only risk is not getting the coupon if the said companies is in default.


It will be more effective if you write directly to the government leader who made the remark, or write to the newspaper who reported this remark.


Chan J C said...

Not to further comment on effective communication, I want to agree with you that even I "invest with my eyes open", I can only see what I am given.

And true enough, my belief and decision on signing the investment is such as the Notes is lending money to the REs (i.e. Singapore, Australia, Hong Kong, Temasak, SingTel for Pinnacle Series 9)

G C said...

All must be braved to request the authority to start prob on the like mis selling and the inappropriate in the marketing of the structured products. If Singapore don;t do it who should do it knowing that Singapore is placing great importance of the financial service sector.

G C Tham

Anonymous said...

Whether the eyes are open OR closed, so Wheres the money?

zhummmeng said...

The chairman of DBS speaks of overhauling the sales tactics but is he very serious about rejecting cases where they are found unsuitable. Will he transmit the order down through every layer right to the RMs? I doubt it will be heeded and complied with. In a sale oriented outfit it is shooting one's foot.
RMs and the insurance agents are the same kind of animal. Their motive is sale and how can they let go of a potential sale. Die die they will not let go. They will fabricate information and reasons to justify the sale. After all they have been so good at it all this time. As long product selling and commission is at the heart of selling and not changed I cannot see what Mr. Koh's new sale tactic can change much.
Enforce need based and eliminate commission perhaps the advice will be more objective. In financial planning discharging oneself from dealing with a case is acceptable course of action if the customer is found to be unreasonable .The objective is different from product selling.I am talking from the perspective of a fee based advisory platform. This is the right thing to do.
If the section 27 of the FAA is not amended to remove product advice option unbiased and objective advice will be a farce or wayang. This wayang has been played all these years by the insurance companies and the FIs ,what makes MAS think that these FIs will be disciplined enough to follow the need based approach. AS long as product advice option is not removed the minibomb trouble will be there waiting to explode.
MAS, forget about the crap Caveat Emptor the former MAS chairman saw as a liberalising factor making Singapore the financial hub.It will prove to be the downfall of Singapore.Investors don't get protection. It will only attract the 'cowboys' to have free rein. In fact many of them are already here, with one down who got shot by stray toxic bullet.
Do the right thing and not with eyes open , is the right thing to do.If it is not, even with eyes open big big you also cannot see below the heap of decoy triple AAA.You need more than X-ray eyes to discover the toxic.
Do what is the right thing like enforce all the laws and make some changes to the way sale is conducted and to the remuneration and things will get right.

Anonymous said...

In trying to protect their own turf, he is speaking heartlessly with his eyes closed and his ears closed.

Anonymous said...

Ooh hes speaking with all his heart, his eyes, his ears open alright.

The only thing we dont know is whats THEY are thinking about.

Well, actually we know.

Anonymous said...

I am still waiting for PAP town councils to explain if they had invested minibonds with their eyes open.

Anonymous said...

Just remember to vote with your eyes open when the time comes ...

Anonymous said...

After reading all these, Obviously there are so many shrewd talkers in the government and the financial circles, but none can offer any concrete help to the poor investors who had been made suckers by the foreign banks. If this turns out to be the case, it will make ppl sad and insecure for the country. Just look at HK. Should peaceful citizens of singapore be made to suffer? Should we be proud of the results?

Anonymous said...

To anonymous at 12.58pm:

I fully agree with your call. I will do exactly that in the next available opportunity except I had no such chances for the last 3 rounds, all uncontested!

Anonymous said...

Then theres pretty good chance you are in for the 4th.

Anonymous said...

"Higher returns means higher risks. So when somebody tells you, ‘you get 1.5 per cent at the bank, I give you 5 per cent’, read the small print carefully." Shouldn't our dear Town Councils be aware of this, if so why did they still invest in it. Perhaps we need even more qualify people to prevent further loss of people's sweat and blood money, could have better gone to NKF!

Anonymous said...

There is a golden rule to investing:

-Do not come into the capital markets seeking no risk or 'capital guaranteed' products, but rather ask yourself, what amount of risks are you willing to undertake for a certain amount of return?

How did such a complex instrument which few fully understood be distributed to so many retail investors? Was it cheating & fraud on the part of banks? Was it the greed of the investors hankering after the 5.5%? Or both? Ppl will debate on for a long time but it boils down to 4 factors; bullish expectations, complacency, greed and to a certain extent 'legal deception'.

Bullish expectations - With the buoyant markets, everyone expected the prosperity to continue for many more years, banks included. Investors who made money in property/stocks looked to the CLNs, thinking it was a investment that gave lower returns on lower risks (because FD rates were low). Investment banks saw it as a cheap way to raise capital, local banks jumped on the opportunity to increase their fee income. Investors thought it was a safer alternative to FDs. Both banks and investors became complacent and greedy. Hence structured products which took on the default risks of large entities deemed 'too large to fail then' became proliferated. Just as investors, non of the local banks which distributed the CLNs expected these entities to go under. But if one truly understood the risks involved, one may have avoided them. But at the same time, how come one expect RMs who also did not understand these products to be tasked with advising on them?

Yes there must have been some cases of mis-selling (Greed on the part of RMs). Yes some investors must have taken it up with 'their eyes wide opened'. But it will be very diff to pinpoint one party as being solely at fault.

I have utmost respect for Mr. Tan who is fighting for those who have lost their hard earned money. In my eyes he is the people's champion.

But I have wrote my piece here today because I can't help but wonder; why are so many people so vocal and critical here, but they do not write directly to the forum or directly to the government or ministers? If Mr. Tan were to be criticised for politising this issue or be ridiculed as 'anti-PAP', 'anti-establishment', how many will come to his defence? How many who have rallied behind him, asking him to stand up and be their voice would suddenly turn meek, quiet and anonymous?

In pragmatic S'pore I say the answer would likely be disappointing.

I hope more will write responsibly on this blog space as Mr. Tan has encouraged.


Harold Lin

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