Saturday, May 26, 2012

Fair value of a stock

Investors who wish to buy stocks at IPO should take a lesson from the recent IPO of Facebook. If the stock is over-priced, it is likely to fall, and to fall badly. Read my article in FISCA website, (available only to members).

FISCA AGM, 26 May 2012

About 20 members attended the Annual General Meeting. Before the meeting, Wilfred Ling gave a talk on the Consumer Knowledge Assessment that is required by consumers to invest in Special Investment Products.

There was an active discussion on how to expand the activities of FISCA, recruit more members and encourage more members to attend the educational talks.

Air bags in cars

There is a call for air bags to be made a standard feature in all cars. I wonder if we are chasing the wrong solution? Article.

I have driven a car for many years and have not seen any incident where the air bag has been triggered. Recently, I was involved in a moderate collision and the air bag did not activate. When my car was repaired, I was told that the air bags had been replaced at a great cost. I am puzzled why the air bags did not activate at the time of the accident.

If you have seen an air bag being activated in Singapore and had saved lives and injury, please share your story here.

Illegal fund raising

In China, the punishment for illegal fund-raising is severe. A tycoon raised money promising a high rate of return and was sentenced to life imprisonment. Article.

We have several similar incidents in Singapore, where high returns are being promoted. It may be possible that the promoters are operating a ponzi scheme, where the investments of the latter investors are being used to pay the high return promised to earlier investors. All ponzi schemes will fail, and will cause big financial losses to the unsuspecting investors.

It appears that no government agency is investigating some of these operations, in spite of complaints being made. The complainant is usually asked to report to another agency, which in turns points to another agency. This type of behavior appears to be quite common in Singapore.

I am writing this blog, so that the Government will be aware about the danger of allowing these possible ponzi schemes from growing too big. At least, they should make an investigation, so that the perpetuaters know that they are possibly breaking the law.

Thursday, May 24, 2012

Politician or civil servant

Dear Mr. Tan

I understand you are keeping a close eye on the BE in Hougang.
I find it a little strange and wonder whether you can clear my doubt or share your view on this. Our DPM is a civil servant. He is also the Minister in charge of the Civil Service of Singapore including the Election Department. For him to openly endorse and campaign for a candidate and party even if it is permissable, does not seem good or right. There will no doubt be a clear conflict of interest issue to grapple with. This is a not a GE (whereby Parliament is dissolved) but a BE. And in this case he seem to be campaigning and working harder than the candidate.
What is your view?

He is a politician and not a civil servant. He is the minister (political appointment) in charge of the civil service.

Unethical electioneering practices

It is so sad to see our leaders display examples of bad behavior that will destroy the fabric of Singapore

Wednesday, May 23, 2012

Unfair allegation of dishonesty

Will Hougang voters be fooled by this unfair allegation of dishonesty?

Will out leaders and media continue to set a bad example by distorting the truth?

10 worst bits of advice

Hi Tan,

We would love to share with you an article that we just posted on our own blog! 10 WORST BITS OF ADVICE THAT BOOMERS GAVE US is linked below and could be a fun way to share this announcement with your readers.(

It has been a sincere pleasure to read your great content.

Jasmine Hall

Currency trading is like gambling

20 May 2012
Editor, Forum Page
Straits Times

Some educated people who lost their jobs want to trade in currencies to make
a living. They have heard stories from friends who claimed to have made money
through trading.

They should realize that currency trading is like gambling and that they can
make a profit or a loss. Like gambling in a casino, it is likely that they will
lose money in the long run.

Some have paid fees of $3,000 to attend a 3 day training course, in the hope
of learning the techniques to trade profitably. A few people that I knew had
attended these expensive courses and were disappointed that the techniques
did not work and they have lost their capital. The experts in forex trading
have told me that it is not possible for a novice to learn the
trading techniques through a training course.

 A friend who had attended such a course told me that that he could learn
more reliable techniques from the free online courses.

For people who insist on giving forex trading a try, I suggest that they enrol and
open a demo account in an online trading platform, learn the techniques from the
online courses and try trading with the demo account for three months.

If they found that they are able to trade profitably at the end of three months,
they can then convert to a live account and trade with real money.

Most of them will probably find that trading is stressful and difficult,
and it is more likely that they will make a loss on trading.

If they wish to find a better way to invest their savings to produce a decent income
over the long term, they should attend the educational talk conducted by
consumer based organisations, such as the Financial Services
Consumer Association (

Tan Kin Lian
Financial Services Consumer Association

How to evaluate a life insurance policy

This article shows how you can evaluate a life insurance policy, by taking a few relevant figures from the benefit illustration.

If you want a better way to invest your savings, read this article.

Risk of trading forex

Cheaper and better to learn
forex trading online -
but it's still hard

Tan Kin Lian
President, Financial Services
Consumer Association

Tuesday, May 22, 2012

Facebook IPO - and how its price fared

Facebook was issued to the public at $38 per share, represents a PE ratio of 100 times. It went up to $42 (10% gain) but closed at near the IPO price. The following trading day, it dropped to $34 (drop of 10%) and opened lower on the third day. Read tis report.

What is happening to the price of Facebook?

At 100 X of earnings, Facebook was clearly over-priced. Apple Computers trade at only 10 X of earnings. On this benchmark, Facebook should be $4 and not $38!

Why did Facebook get issued at such a high price? It is the work of the investment bankers and underwriters. They set a high price and tried to prop up the share at that price. They could not prop up the shares for long, so they started to unload them. Watch the share come down to $20 (my guess)!

Hougang by-election - importance of the vote

It is important for the Government policies to be changed, rather than for the MP to find piecemeal solutions to the problems caused by these policies.

Act against car racing

17 May 2012

Editor, Forum Page
Straits Times

The recent fatal accident involving the Ferrari car and taxi at Bugis was caused
by speeding and reckless driving.

I call on the Police and Land Transport Authority to increase enforcement against
speeding and car racing. I recall that several complaints were made about
car racing in the early mornings, but no action was taken.

Many drivers may not be aware about the speed limit on our roads. The
One Motoring website stated that, unless otherwise indicated,
the speed limit on our roads is 50 km. This may not be widely known, as it is
quite common to see many vehicles be driven at a faster speed on our roads.

I suggest that more publicity should be given on the speed limit, especially as
many foreigners are now allowed to drive on our Singapore roads.

There should also be exhortation on the need for defensive driving. Even if
a vehicle has the right of way, a prudent driver should be ready to stop a vehicle
in time to prevent a collision.

Many drivers are impatient and in a rush. They are unwilling to give way to a
vehicle in front that signals an intent to change lane.

Singapore is a small place and our roads are getting more congested. There is
no need for cars to be driven at a fast speed.

Tan Kin Lian

Monday, May 21, 2012

Lessons from college dropouts

Dear Tan,
 We have recently published an article that deals with “Business Lessons”, so we thought you might want to share it with your readers. It's called “Business Lessons From The World's Top College Dropouts”, and you can find it here:
Thanks for your time!

Importance of compound interest

If you regard "compound interest" to be just mathematics and theory and you do not like mathematics, you may be giving away a lot of money, say $200,000, without realizing it. So, please, for your own sake, pay attention to this article, and read it a few times, and talk to someone who can explain it to you. And take the right steps now to secure you own financial future!


This is how democracy is supposed to work. Link.

Who spoke these words?
"If you believe in democracy, you must believe in it unconditionally. If you believe that men should be free, then, they should have the right of free association, of free speech, of free publication. Then, no law should permit those democratic processes to be set at nought, and no excuse, whether of security, inconvenience to traffic, or inconvenience to police officers, should allow a government to be deterred from doing what it knows to be right, and what is must know to be right."

Sunday, May 20, 2012

Perpetual bonds

A long term investor should not worry unduly about a possible fall in the market value of the bonds, so long as the return is higher than the rate of inflation. However, they should look at the credit risk and apply the principle of diversification. Link

Professional services for FISCA members

FISCA (Financial Services Consumer Association) wishes to list down some lawyers and property agents who are interested to provide the following services to our members - writing a standard will, get the grant of letter of administration, prepare a tenancy agreement and handover of occupancy.

If you are interested to provide this service, visit FISCA in the Corporate Portal and provide details in the online form. 

Lease document for tenancy

FISCA has contacted a few property agents who are willing to assist owners to prepare the lease document and handover checks for owners who rent out the property directly to tenants. The property agents charge a fee of $500. FISCA members can find the particulars of these agents at the website, (require login by members).

TKL Blog in Chinese

TKL Blog in Bahasa

CPF Life - a small "participating" feature

Dear Mr Tan, 
I am a student and I am researching on annuities in Singapore. It appears to me that the CPF LIFE plan is a combination of various features from different types of annuities. I would like to know, in your opinion, is the annuity portion of the CPF LIFE plan more like (A) a variable annuity but the underlying asset is a portfolio of Special Singapore Government Securities and its return is quite stable so its benefit payouts are quite stable too, or is it (B) more like a participating annuity but there is no explicit guaranteed minimum benefit, but there is a guaranteed minimum of 2.5% rate of return from the underlying asset? 

CPF Life fits more closely to (A) as the underlying assets are government securities that give a yield of 4% per annum. There is some "participating" feature, as the mortality experience of the annuitants will affect the eventual payout, e.g. if people live longer than the actuarial estimate, the payout may be reduced in the future, or if they live shorter, the payout may be increased. However, the decision on adjusting the payout depends on CPF Life and is not transparent to the annuitants.

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