Sunday, 28 June 2020

My Company Will Be Undergoing Restructuring. What is My Backup Plan?

For most of us, the economic downturn is not doing the world well as far as our financial stability is concerned. In the coming months, I am expecting more jobs to be shed, and household income to either shrink or will not grow as fast as from the previous years.


As for the company I am with for the past seven to eight years, our financial woes started last year. The good news is after months of discussions, our Group has finally been bailed-out of troubles with new owners and investors, with the backing of the government. While the financial situation is stable now, restructuring is imminent. It has already been announced that, in order to return to profitability, many jobs will be lost. I expect at least 20-30% of the workforce will be cut, after the summer holidays.

While Asia Pacific business is still coping reasonably well, I do not expect we will be excluded in the retrenchment process. With my "prepare for the worst mindset", in fact, I expect that Singapore office will face the “axing reality” sooner, because we have no unions here to protect our “rice bowls” unlike in Europe where laying off process is more complicated and will take a longer time. Hence, my job together with my colleagues' jobs here is not guaranteed. And with my wife already resigned, we anticipate tougher times ahead. That said, we are all ready to weather this storm and have faith that we will come out of the storm unscathed. 


Despite the possible career calamity, I had my backup plans. Those who know me, will know that I will always prepare way ahead of a calamity. As a matter of fact, I had already anticipated for this type of crisis to happen since five years ago or even way before that. Thanks to the 2015 oil crisis giving me the head start warning.

To back up my thinking, I had built up a relatively sound finances over the years. Aside from my investments in shares and precious metals, just the cash alone, should be able to last my current expenses for more than two years without income from employment. Our rental income, dividends and interest received should provide some minimal help also, but definitely not sufficient in view of my huge household expenses.


I am also all ready to cut expenses by at least 30-40 percent in the worst case scenario. This is already proven viable from the experience of lower expenses as a consequence of staying at home in the past months. For instance, I will cater less extra income to my mother-in-law whom I already paid her handsomely in the last ten years. We will eat more simply and will have less outside meals and less personal entertainments. If that is still not enough, then my child will have to sacrifice some of their enrichment and sports lessons. I can also lower my charitable expenses. We had also successfully apply to withhold mortgage repayments which can help for at least half a year. I am driving a COE car which has already been fully paid and still can drive for another 8 to 9 years. 


That said, I cannot plan my BACKUP PLAN based on the fact that we are without household income and just living on dividends and savings and keep on cutting my expenses. THIS IS NOT WISE. This is the worst scenario but it should not be the immediate backup solution. Imagine you are running a business, and all you think is cutting cost and using your cash balances to pay salary and fixed costs. It will be disastrous. Instead you should always be thinking how to grow your revenue or have diversify forms of revenue from different segments, in case one segment collapse.  

My backup plan mentioned here is to start my own on a partnership early next year with a close friend. This friend is very entrepreneur and already have a stable and sustainable business. Furthermore, this friend has a heart of gold and is so unselfish in helping people around him. He had also gone through many difficult times in life, but each time overcome it to become stronger. I have utmost respect for him as a friend, as a father of a four kids, a good husband and as a boss of more than hundred staffs.

I believe that God helped me out of nowhere to know this friend years back, and led us into a very close relationships through His ways. In a way, we started discussing about business collaboration sometime back, when my current company’s financial woes were announced. This fortifies my belief that it is God’s plan due to the perfect timing.

Of course, in order for heaven and earth to help me, I knew I have to keep on walking on the righteous path, even if it means sufferings for myself and my family in the short term. According to my friend and potential partner, aside from my supplementary work expertise and experiences, it is really my righteous attitude as a genuine and loyal friend, plus my courage to speak the truth, that most appeal to him. Hence, the invitation to partner.

What is even more exciting for me is that it will be a totally different business endeavour. It will no longer be in the manufacturing sector, nor have focus in the maritime or oil energy industries. Instead, the new endeavour will focus on business related to technology and essential services. For example, Internet of Things (IOT), Data analytics, Food and other essential services etc. I can say that if this discussion is successful, it will be the start of my second career, something I had not plan for at all, yet, had often times think about it.  I am excited for it. 


Nonetheless, while all seems positive now, there is always a chance of agreement not going through up to the last stage. I cannot discount that. In addition to that, while my friend agrees to pay me sufficient salary before this business becoming profitable, I expect pay adjustment downwards to be significant.

To start my own, I also carry huge risk of giving up my MNC experiences to enter into a smaller business venture. This will mean giving up a job with good income at a senior position, and forgoing all the good relationships with colleagues and all the respect I had in the current company, which I had painstakingly built for the past many years.

Furthermore, I may need to give up many contacts in my current industry which I had conscientiously built for almost the past two decades. To alleviate this regret, the truth is, many contacts has already left the industry during the oil crisis. What also bode well for me is that a lot of contacts will still be useful in the new business venture in terms of regional coverage as well as their companies’ technological needs.


It is without doubt, that there can easily be a chance that the new business ventures will not take off or will not be successful. Or both my partner and myself does not agree eye to eye and eventually go on separate ways. I already plan that If this career back up plan does not work, I can always go back to being an employee. With my experience, age and humble eloquence in interviews, I do not think it is that difficult. Frankly, I had received and declined similar or higher career position interview invitations lately, even when I am not actively looking for any opportunities. Also, perhaps in the midst of the failure, I will learn new things to be able to start my own venture in a more successful manner. Or at least with my current finances, I am still able to work out something viable after the failure. I definitely hope that big failure will not be the case here though.

Humbly speaking, I am not saying I will be successful, but at least I have gather the skills, calmness, patience, experiences and more wisdom, which I felt I am more ready now to start this new business venture. Also, I feel that you can have a higher and faster success rate in your own venture when you have relevant work or life experience track records to speak of with at least good backing in financial ability. This is aside from the drive and hunger which are all important.

My current job began with me as the first Asian employee seven to eight years ago setting up the office from scratch here. Furthermore, I also had prior experiences holding P&L responsibilities in MNC and public listed company. Hopefully these past experiences will help. To top that up, my involvement in all functions of a business, from sales, marketing, finance, HR to project, engineering, commissioning, and after-sales services should come in handy in running my own venture.

It is in my opinion that you will never know what is going to happen in the road ahead until you dare to take a step out of your comfort zone TO START! After trying, you may fail, but you can also review and improve and eventually to better it more and more.

I know most readers and writers here are looking at successful investments plus dividends to achieve your FIRE (Financially Independent, Retire Early). But frankly, if you are always an average middle income earner, it is not that easy to build a portfolio big enough to have dividends that can sustain your living expenses including unexpected expenses that may crop up in your life. 

Unless, you have a rich enough parents supporting or leave behind money or properties for you, and you prefer to really live on minimal expenses and prefer to be single or at most married with no kids, it is not easy to be FIRE in Singapore in your 30s. I am not throwing wet blanket but this is the truth. Many of you readers may argue to me that many bloggers here are able to FIRE young, but the truth is you simply do not know the real situation behind the portfolio posted.

For now, let’s assume you are middle income earner, want to get married and have kids, so my question in this article to you is,

Have you already drawn up your career back up plan? If not, you should have at least some backup plan aside from the finances set aside during your wife or your unfortunate retrenchments. 

Thursday, 25 June 2020

How Much Does It Cost in Detail to Raise a Child in Singapore for Low, Middle and High Income Households

Singapore is one of the most expensive countries in the world to raise a child. Even my foreign expat friends who stay here in Singapore complain about the high living costs. I have several children myself, aside from those I supported in overseas.

Recently I became curious on the cost of raising a child in Singapore, starting from the day of pregnancy until when the child finishes his or her Tertiary education. I conducted my research online and some mentioned SGD285K while others said 650 to 700K. I am not very convinced with the figures which I felt it is either too low or too high for middle income household. So I did my own detail calculations.

In the following, you can find tables showing detail figures of raising a child in Singapore in different stages. I have also provided comparison of costs for both the lower and higher cost range, as well as the expenses for general middle income Singaporean household. Lastly, I have also included actual or expected cost of raising my own child based on experiences.



Middle Income
  • This depicts the middle income Singaporeans of typically household income SGD 10 to 15K per month. 
  • Assume pregnancy and delivery in private hospital.
  • Buy reasonable quality products and eat decently with good food once awhile.
  • Employs foreign domestic worker or at least pay grandparent allowance to take care of child.
  • Spends average amount for enrichment and sports or personal developments.
  • Child attends junior college and local university.
  • Adequate health insurance coverage. 
Lower Range
  • Bare minimum expenses.
  • Very smooth pregnancy and delivery with no extra tests or treatments costs.
  • Does not employs foreign domestic worker and does not need to pay grandparents to take care of child.
  • No or minimum enrichment and development classes.
  • Very little entertainment and toys for kids. Minimum pocket money.
  • Includes lower end health insurance policy. 

Higher Range
  • Includes  local polytechnic school fees and overseas university tuition fees and expenses for four years costing approximately SGD 200K.
  • Delivery in private hospital and single ward with post-delivery treatments.
  • Spent significantly more on enrichment and sports or personal developments.
  • Higher food, entertainment and product expenses with more generous child allowance.
  • Good health insurance coverage.

  • Heavy expenses spent on foreign domestic worker and grandparent assume amounting to more than SGD 2K per month, excluding food and lodging expenses. However, expenses are shared among several kids, hence the  average cost is lower as tabulated. 
  • Spent significantly more on enrichment and sports developments. Especially in sports development amounting to SGD 120K per child in his/her lifetime, because I believe that that sports not only provide health benefit, but also mental and social benefits. 
  • Spends on quality products, but costs were shared among siblings, lowering average cost per child. For e.g. the same stroller can be used all the siblings.
  • If I only have one child, the total expenses per child then can be at least SGD 700K because the expenses on care-giver foreign domestic helper and grandparent will not be able to spread among different children.


Also refer to my earlier article:



So it  generally takes between 300K to a Million SGD to raise a child in Singapore. The average cost to raise a child with a decent growing up environment in Singapore is probably in the range of SGD 500 to 600K.

This means that if you have three or four children, you will have to prepare at least SGD 2 to 3 Million (including inflation) to raise them until they finished tertiary studies. Of course, the university school fees which form the big bulk of the costs can be loaned ninety-percent and be paid by the child themselves. But do bear in mind of the huge monthly repayment and interest burdens on the child straight after graduation.

In a highly competitive society like Singapore, which I personally loathes, enrichment and personal development lessons are almost becoming a norm. Those who cannot afford will inevitably feel the peer pressure of their child is lacking behind his or her peers. This is unless the parents themselves are either very good in parenting their own child or have the extra time and patience to teach. Not many in Singapore are in that situation, considering most parents have to work or perhaps not meant to be good a "teacher" especially with their own child.

If you are not a parent yourself yet, you may be of the opinion that extra classes are not important in order to save more money. That is easier said than done.  It is better that you are a parent yourself before you should pass on the judgement too early.

In general, for middle income household with reasonable expectation of raising your child, you will probably spend a lot of money during the child’s pre-school and primary school period. School fees in pre-school are more expensive and you are likely to spend a lot more on childcare, or foreign domestic helper or paying your grandparent to take care of the child. There will also always be ad-hoc expenses in schools.

During your child’s secondary school days onwards, you will also start to experience your child asking you for more than their pocket money on frequent basis. This is because the costs in restaurants, cafes, movies or other forms of entertainment with friends will only be increasing over time. Besides, you will also need to have your own family weekend outings or dinners where you will spend on your child expenses, equivalent to an adult cost from his or her secondary school days onwards. 

Furthermore, I know that most Singaporeans love going on tour every year. Imagine you have two children, and you go on an annual tour at least once, or at times twice annually, your expenses will simply balloon more than what I calculated earlier. FYI, last year I brought all my family including my helper to Australia together with my siblings’ families in order to fulfil my mum wish that all of us can be together. The total expenses for me is SGD 20K for a ten day trip, which is approximately SGD 3K per child. A check with two or three of my friends who toured in Australia or Japan, spend approximately the same amount of SGD 3K per child for a seven to ten days trip. 

Over time, university tuition fees will also increase with inflation. I expect every ten years, university fees to rise close to 50%. That is, it doubles every 20 years. Imagine you are a young parent now, do not be surprised that by the time your child attends university, the local subsidised tuition fees will be already close to SGD 100K for a four year course.

In a nutshell, it is not cheap to raise a child in Singapore, let alone two or more. In general,  if you are single or do not have kids, it is so much easier talking about a large investment portfolio or how much you are going to save per month, or how early you are going to be FIRE i.e. Financial Independent, Retire Early.

It is always a trade-off nonetheless. This is because for all the money you save for yourself or your wife for not having a child, you are definitely going to miss out on the love and the joy of seeing your child grow up day by day.

Sunday, 21 June 2020

My Humble Career Experiences and Advices in the Midst of Current Job Turbulence

For almost the last two decades of my career, I had experienced many ups and downs. Guess it will be no different for most of us in our careers. Twenty years is not that long yet, but sufficient for me to  see and learn so many things.

My career experience started during my army days where politics were prevalent and disgustful. This followed by the 2003 SARs crisis where job seeking was extremely difficult, having just graduated and needed to repay the huge tuition fee and study loan I undertook during my university days.

In situation when there are very little office politics, I experienced severe health issues due to my work nature of being offshore, and frequent the hospitals. Then came the 2008-09 Great Financial Crisis that caught everyone by surprise, and I learnt that there is no surety in our jobs.  

At the very peak of my career, with copious amount of drive, passion and at times arrogance, I took on a bigger role in another company. I fell. It was painful, but it was the best experience in my life and I become a better person. Not necessary richer and authoritative higher career position, but genuinely a better natured person with greater humility.

Then as when I thought things are getting better, came the unexpected 2015-2016 Oil crisis, where everyone in my office was laid off, and I was the lone survivor with a superior from overseas who is adamant to get me fired. I survived the pain, and a year later, this superior was asked to leave instead by our CEO.

The sea was calm for a few years until now. But with this pandemic, our group is undergoing major restructuring. Hence, no jobs are certain, including mine. 

Today, I am no longer worry or being oppressed by my things happening in my jobs. This is thanks to my past experiences teaching me to mentally and financially prepared. Health, Family, Friends and my Hobbies are of equal if not more important as with my Financial. 

For the past years as a blogger, I had written many career related posts. And perhaps its relevant to share of few of them here again in the midst of jobs uncertainty. 

Reasons Why You Should Stay in Your Current Job - Real Life Examples

Reasons Why You Should Resign Your Current Job - Real Life Examples (Part 2)


Are you in a stressful “Dog eat Dog” work environment? How to deal with it?


Crisis and retrenchment – What if it is me? (Part 2)

Crisis and retrenchment – How sentiment change in one year and how I am staying resilient to weather any storms ahead.

Anyway, today is Father’s day and please stay positive. As long as we stay righteous and faithful, and prioritise on the truly important things in life, we will see the light in the Tunnel.

Blessed is the Father who shares his heart, lives his faith, gives his time and love his family!

Saturday, 20 June 2020

Rolf’s Portfolio, Stocks Mix and Investment Strategy


In the past few months, I continued to increase the percentage of my shares in my overall portfolio. In April, I wrote in my blog post Rolf's Updates - My Priorities in Life - Health, Finance, Family, Friends & Hobbies – 2020 1Q , that excluding properties and CPF and jewelleries; I had 51% Cash, 28% metals, 15% shares, 5% bonds, 1% crypto.  Currently, my portfolio as follows.

Basically 3 categories:
·       Cash + Bond – 37%
·       Shares – 36%
·       Gold, Silver and Crypto – 27%

The strategy of these 3 categories is to have flexibility to withstand all periods of the market situation. For e.g. if there is stock market crash, I assume the precious metals pricing will rise. I can then profit from the sale precious metals and use the proceeds to buy the cheaper stocks. If the stock market peak, precious metals will be unloved and I will sell my shares to accumulate more of it. I also have sufficient cash to keep on accumulating cheaper shares or other assets if relevant. Also, I am a believer of cryptocurrency but I keep the percentage low to minimize risk. If prices of crypto crash, I will accumulate more of it too.

I keep a huge percentage of cash and easily liquid-able bonds. It sounds really silly as cash gives very low or no returns. But frankly, it is not the case for me, as I derive say two or more percentage of return. My OCBC365 savings account provides more than 2% return of interest with my salary, bills, spending tagging to it. My bonds are all more than 2.5% return on average.

But the bigger factor of my larger cash holdings is due my individual household situation. I have a huge household of 4 studying children with huge expenses. Aside from my own family, every month we also support my parents-in-law, my domestic helper, 4 adopted World Vision children and pastoral families in poorer countries.

My relative base is huge, and there are lots of commitments in weddings and events which requires “red packet”. My aunties, uncles and cousins are generally less financially sound too, and each time when there are gatherings, I will slot money into their pockets. Now, with my wife resigned, the burden each month for me is even bigger.

Lastly, my accumulated cash can also be use to pay down my lumpsum of my mortgage every two years when I re-financed my loan.  


During the next one year or so, I will continue to accumulate shares regularly. If there is another crash, I am also well-positioned utilize the sale proceeds of my precious metals and cash to take advantage of the cheaper shares.

Long Term
My strategy for shares is to hold for long term for now. In my earlier years of investments and even recently, I always took profit too early even when the company fundamental is still sound. I had learnt my lesson and will not do that anymore.

Invest in US and HK stocks
In the past, I am only fixated to Singapore stocks. This pandemic opened my eyes that I need to buy growth stocks in USA and HK. I also explained in my earlier article : Why STI Index investing is not as lucrative, and long term future is not bright?

Categories of Stocks
Growth Stocks – I am bullish on Tech and Data stocks and China. I firmly believed they are the future. Despite their high prices now, I think they have more room for further growth. Will continue to add.

Unloved Stocks – I bought Tripadvisor for this reason and will continue to find and put other stocks in this category.

Dividends Stocks – Will continue to accumulate SG REITs or dividend stocks into my basket.

Energy Stocks – I think that they are cheap now, and will continue to add, when relevant.  

Thursday, 18 June 2020

Will Silver Explodes in Price?

Silver is at its all-time low price compares to gold. The gold-silver-ratio which is the price of gold over the price of silver per oz is close to 100 now. Gold price is USD1720 and silver at USD17.3 per oz currently. 


And if you look at historical chart below, gold-silver-ratio at the end 1979 to 1980 is as low as 15 to 20. This means that if one day, the situation goes back to be the same in 1980s, and assuming gold price is at current level of >1700USD per oz, then silver price will actually rise more than 5 times to >USD85 per oz.

Refer to Mike Maloney (founder of recent youtube video, and with charts and screens extracted as below, then silver now represents only 0.011% of global wealth compared to 0.268% of global wealth in 1980.

And government inventories of silver are also at all time low for the past 15 years below 50 million oz.

Can there be a chance that one day silver may explodes in pricing?

Perhaps chances may be low but nothing is impossible, consider that no one did predict that the world will shut down for months due to the pandemic!

What do you think?


Wednesday, 17 June 2020

Will Keppel Corp and DBS support the defunct KrisEnergy’s fund raising?

Keppel is a major shareholder of KrisEnergy holding close to 40% of its shares. KrisEnergy is an upstream oil and gas company with 11 assets in Bangladesh, Cambodia, Indonesia, Thailand and Vietnam. The company is in serious financial trouble, with this week creditor Rubicon Vantage presented a winding-up petition.  

Unfortunately, I am also a shareholder of KrisEnergy since 2014, one of my worst investments. I bought the shares at SGD0.764 and it tanked to SGD0.030 last year August and trading suspended.

Fortunately, I only own 2000 shares translating to SGD1,528, and I am all ready to accept total losses.

NOW, the company is asking for another USD87 millions of loan subject to restructuring completion and shareholder approval.

Separately, KrisEnergy, which is in the process of restructuring its debt, will hold a virtual informal investor meeting for security holders this Friday at 6.30pm.

QUESTIONS? Will Keppel, DBS or rest of the shareholders save the company?

Finding a white knight during this distressed times of low oil price coupled with Covid-19 is an onerous task.

Let us look at this distress company’s financial information brief.

From 2019 Annual Report
KrisEnergy incurred a loss after tax in 2019 of US$168.9 million. Material non-cash charges to the profit and loss statement in 2019 remained at significantly high levels and amounted to US$158.2 million comprising US$46.9 million for DD&A expenses excluding DD&A on right-of-use assets in relation to the bareboat charters, US$65.2 million in write-offs for exploration and evaluation assets (Udan Emas production sharing contract (“PSC”), Sakti PSC and Block 115/09), US$22.1 million for impairment of oil and gas properties, primarily G10/48 due to lower oil prices and well performance, and US$24.0 million related to the non-cash accretion of bond discount, lease liability and decommissioning provision. The loss after tax resulted in a net capital deficiency position of the Group of US$145.9 million and net current liabilities of US$531.7 million as at 31 December 2019. In 2018, losses was USD137 millions.


Incredibly this loss-making companies for many years has many management members and directors. Coming from the Oil and Gas industry for close to 20 years, I can understand that an upstream oil and gas company will definitely be loss making in the initial years with high CAPEX until the oil assets start producing. But to have that many management as reported by End of 2019 with such high salary is ultimate ridiculous!

See below extracted from 2019 Annual Report:


Should Keppel Corp a major shareholder or DBS who is also the provider of credit facility more than USD150 to 200 millions save the company by giving KrisEnergy more loans? There are also many notes collectively, namely 2022 Notes, 2023 Notes, 2024 ZCNs, issued as at 31 Dec 2019 amounted to USD276 millions.

As a small shareholder of 2000 shares worth nothing today, I just split out my saliva… PUI PUI PUI!

Tuesday, 16 June 2020

Wall Street Vs Main Street – The Unstoppable US Large Cap Stocks Supported by Fed’s Dovish Promise

Refer to part 1 here, a post I written close to 2 months ago to show the disconnect between Wall Street and Main Street. To a large extent, this disconnect means that the stock market is no longer directly proportional to the economy. Despite the ailing economic situation in the US economy entering into a recession with record high unemployment, the stock market continues to rise. The 3 major indices of NASDAQ, S&P and Dow Jones are only a few percent lower than its all-time high seen in February. All indices had stormed upwards >30 percent since hitting the low in March. In spite of more recent bad news such as, the continual rising number of corona-cases, the protest of George Floyd’s death and souring US trade tensions with China, the stock market seemed impervious to bad news.


In Part 1, I mentioned that one key reason of the disconnect between Wall Street and Main Street is irrational exuberance of the stock market. This stems from the emotional-led overconfidence and greed of human traits that fail to consider appropriately the upside reward and downside risk. Other reasons include the ignorance of retail investors, fooled by short term randomness, low bond yield etc. For all that was said, I did highlight back then that nobody can foretell the future of stock market. Hence, for investors who have the financial capacity and knowledge to be a by-stander are also not wise. Rather, they should be able to pick up good stocks which will bring good long-term returns, and yet, be patient and spread out the investments over time.

The irrational exuberance was recently reflected by the share prices of Hertz. The car rental company filed for Chapter 11 Bankruptcy on May 22, and soon after the filling, Hertz share price free-fall from February peak of USD20 to a trough of USD0.40. But who will have thought that less than two weeks later, the share price surge higher than USD5.00 (>10x) and closed at USD2.83 last week. i.e. 700 percent increase since the bottom. Most financial experts attributed this exuberance to Robinhood traders.

Notwithstanding the craziness of Hertz share price exuberance,
most financial analysis so that there is no clear relationships between the Robinhood traders and the recent general rise of the US stock market indices. 

In Part 2 here, I will share my alternative beliefs for the huge disparity between the stock market and the economy.


The wall street of today is heavily weighted towards a few number of companies, such as “FAANG” stocks which refers to Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX); and Alphabet (GOOG) (formerly Google). The combined market cap of these 5 stocks are slightly over USD4 trillions in Jan this year. Half a year later today, while the global economy is suffering from the damages caused by the corona-virus, the FAANG stocks are oblivious to the global pandemic and rose another close to USD500 billions in market cap. i.e. FB ~650B; Apple 1.5T; Amazon 1.3T; Google ~950B and Netflix ~200B. For comparison sake, Singapore entire stock market capitalisation today is over USD500B, pale comparison to even just Apple or Amazon who each has trillion of market cap. Aside from FAANG stocks, the general indices in US are dominated by many other Large Cap companies in the tech-space of digital and cloud, pharmaceutical, energy and established essential services. The stronger and bigger companies are seem destined not just to survive but also to prosper over long term.


The sector of the economy that are hardest hit are the medium and smaller companies who are not significantly represented in the major US stock indices. Analogous to the virus killing statistically more older people and those with inherent medical conditions, the economy is annihilating the smaller, weaker and outdated companies. 

To a large extent, the wealthiest people are those who have the largest stake in the stock market or own companies that are large cap listed publicly. These individuals will only become richer and will be the least hurt by the poor economy. They will be in a much better position to ride out the crisis and emerge stronger. The poor will become poorer losing their jobs and struggling with means to survive even in their daily life. If there are bad news causing a depressed stock market, the wealthy investors with their huge cash war-chest will be able to seize the opportunity to profit from the low stock prices. The poor employees who are in need of cash in a stock market crisis will be left not only licking their wounds on their depressed portfolio, but having to sell stocks at losses to raise cash for daily survival, after facing imminent job losses. Bill Ackman, the billionaire founder of Pershing Square Capital Management turned a USD27 million position into USD2.6B during the corona-sell down in March through defensive hedge bets.


The wealthiest are also usually immensely long in the market, meaning holding on to their fundamentally sound large cap stocks over a long period of time. Legendary investor Warren Buffett amassed a huge part of his fortunes through the buy-and-hold approach. Carl Icahn, another billionaire investor said in a recent interview that his most profitable bets are often those stocks where he has kept for a much longer period.  

And while Warren Buffett use to avoid Tech Stocks but nowadays He loved it. Buffett’s Berkshire own 250 millions shares of Apple Inc worth USD78 Billions today. It is Berkshire’s largest shareholdings with overall average pricing of ~USD140 per shares. Buffett also increasingly bought more than 500,000 Amazon shares last year. Amazon stock is up about close to 500% in the past 5 years. Buffett discussed the investment in a CNBC interview, explaining that though Buffett himself didn't execute the buy, he said: "I'm a fan, and I've been an idiot for not buying." Warren Buffett and his partner Charlie Munger also cited that one of their biggest regrets was not buying shares of Google owner Alphabet Inc.

Both Buffett and Ichan made huge profits out of Apple shares they owned. It was reported that Carl Icahn sold all his Apple shares to realise a USD2B profits in Apr 2016 with Apple stocks trading under USD100. If he will have keep his Apple shares until now, he will not have lose out additional several billions more of profits. Apple is trading at more than USD300 per share today.


The stock market price of today is determined by expectations of the future earnings of corporations and individual consumers. Investors estimate prices of stocks based on earnings forward, say 6 months, 1 or 2 year or beyond. If there is any unexpected news good or bad, happen along the way, prices will be discounted accordingly. On that basis of forward looking, investors will have think that by that point in the future, the virus would probably have been brought under control. Whether it is V or U-shaped recovery, it does not matter anymore, because the market will be at the upper end of the curve with investors making good returns.

On the contrary, the economy looks backward using historical data to provide measurements of economic health. For e.g. it took at least one month or more (for revised forecast) after the covid-19 became a global pandemic before economist gave their forecast or figures with certainty of a global recession. When the corona virus started in December in Wuhan, IMF in January projected global growth to be 2.9 to 3.3 percent. In March, after the epidemic become pandemic, IMF then revised growth forecast of 2020 in April to -3 percent. The latest report expects that IMF is set to further cut global growth outlook for 2020, announcing by end June.

Therefore, consider  the bear market has a duration of one year, by the time economists announce recession, the bear market will already had started for 2 to 3 months or more, and by then the forward looking investors will already been buying back stocks progressively or significantly. Hence it is certain to see the disconnect of higher stock market and bad economy data.


Last but not least, the biggest reason in my opinion for the market to be so confident is undoubtedly the US Federal Reserve (Fed) promise of “infinite” support of the market at all cost. How? The answer is simply via more and more money printing through purchasing of debts.

By end of April, the US Federal Reserve (Fed) had already pumped USD2.3 trillions into the economy throughout a six weeks period. US debt has already reached more than 26 trillions today and still rising. Note that the US has not only increased debts of US but also debts of the world. By end March, Fed announced that it will allow foreign central banks to temporarily swap holdings of US Treasury debt for US dollars. This means that for example, Singapore central bank owns US Treasury Bonds that has not reach redeemable date and is trading at a discount due to the crisis. And if Singapore is in desperate need of dollars, instead of selling the Treasury bonds at a bargain, the Fed allows Singapore to exchange the Treasury debt for cash without discount. Essentially it is more printing and lending of more US dollars to foreign nations from US.

The recent June Fed’s message also showed long-term commitment of zero interest rates through to 2022. Fed chairman Powell said “We’re not thinking about raising rates….we’re not even thinking about thinking about raising rates.” This he said is to support the economy and to keep unemployment below 5.5% and, inflation in check below the 2% target.  The Fed also announced that it would continue to buy Treasury and mortgage securities of not less than USD80 and USD40 billions a month respectively.


It is a sad reality, but it is almost poised that in the world of today, the rich and strong will become richer and stronger and the poor and weak is destined to become poorer and weaker. Wall Street is almost the place for the wealthy and knowledgeable to become wealthier. In contrast, the poor economic conditions will inflict more sufferings for the underprivileged.

That said, it is not all-win for the rich and strong of today if you are proud and arrogant and merely think about your own interest, without lending a helping hand to the community who are deprived. I believe the wicked will eventually suffer in the long term if not for wealth, but also in relationships and health.

Similarly it is not all doomsday for the poor and oppressed. Be righteous at all times, review your mistakes and repent, and do not give up learning and improving yourself. Your justice and blessings will eventually come. And by that time, do not be led-astray and be proud, but be humble at all times, and help those who are poor and oppressed.

Sunday, 14 June 2020

My Wife's Company Ask Her to Take 50% Paycut – What is My Advice?

My wife is working in the MICE industry with mostly international traveling customers. With the pandemic restricting travel, the company is in dire situation since the Covid19 ordeal. Workforce has been cut by more than 50 percent since March. With cash extremely tight, the company is barely keeping afloat by Singapore government’s budget aid. There is a high likelihood that survival may only last a few more months.


Most recently, her company requested all the staffs to work part time and take 50 per cent pay cut. In doing so, all the employees have to sign a new letter of offer. The letter is simple and vague and is to be signed urgently by all employees on 31 May, giving only a few days to consider. Thereafter, employees are also not allowed to take their annual leave for at least the next two months. This is because as told by her company, they are still very busy running backlog businesses with much reduced workforce and reduced workhours.


My wife consulted me on this matter. I told her to resign without much thought. To me, it is a trick by the company to con employees into signing an unfair deal.

The rationale is as follows:

Let’s hypothetically say her gross salary is SGD8,000 a month, with 2 months-notice period.
Her balance of leave is 10 days after pro-rated.

Assuming the company closed down in August,

If she accepted the new offer
Her salary in June and July will be SGD8,000. Her leave of 10 days will be forfeited.
Even if miracle take place, and her company survives until early October, her part time salary in June, July, Aug, and Sep will be SGD16,000.

And also, let’s assume in mid-June she manages to find a new full-time job to start in 1 Aug. Then she will require to give 2 months’ notice to her company. Her new offer letter did not state whether the 2 months’ notice is full time workday or part time workday. Due to the new letter of offer is in 50 percent part time work day mode, the 2 months’ notice period can effectively be a 4 months period. This means if she resigns on 15 June, her last day is until 14 Sep. In the current employers’ job market, how many companies out there will wait 4 months for you to be available.

And to think that her company intentionally only give her a few days to consider without much time to think properly and to clarify all the details before putting ink to paper.

If she resigns 1 June
Base on her original letter of offer, she will serve 2 months’ notice period, and her last day is 31 July. She is still able to utilise her 10 days of leave, which effectively means last working day is 17 July.  This means working for 1.5 months for two full months of salary of SGD16,000.

Therefore, for the same income of SGD16,000,

If she resigns,
·       She just needs to work from 1 June until 17 July (1.5 months)
·       Furthermore, her workload is not so high considering all her colleagues are working part-time
·       She can find a new job with a firm start date 1 Aug.

If she accepts the new offer,
·       She needs to work from 1 June until 30 Sep (4 months). Even if it is part-time but a long dreadful period.
·       It will be very difficult for her to find new job in the next 1 to 2 months and may have to work until Sep, despite taking the painful 50 percent pay cut.
·       What is even worse is that the company is likely to run out of cash and decide to close in August or September, her leave will be forfeited with a much-reduced monthly salary in June and July.


Anyway, my wife has resigned under my influence. This is despite her company and her superior calling her many times to reconsider her decision. She was almost moved and tempted to sign the new offer letter.


I can understand that she soft-hearted by her company’s persuasion. She is also a bit reluctant having worked more than 12 years in the company. But to me, her company is trying to take advantage of the situation. Furthermore, in my opinion, her company and her superior whom I also know are never that good of a career choice.

In the past, I have encouraged her, in her own decision to leave the company. Her role is not very niche and quite versatile in several other industries. Hence, I feel it is not very difficult to find a new job. Anyway, just less than a few days of updating her resume online, she already received several calls for interviews. And these are much bigger and better companies at least on the surface for now.

Even if she cannot find a new job, I will rather her be a house-wife for my many kids. I am pretty confident that my financial is able to support the big household for a long time. I humbly give thanks to my prudence and financial planning in the past 10 years. Above all, I attribute it to my always “prepare for the worst” mindset.


We agree that this is unprecedented times where many people are going to lose their jobs. And to preserve job is top priority. Still, there are company out there who are going to take advantage of you. My advice is NOT to simply sign a new offer of letter accepting reduced benefits without much thought and clarifications.