Sunday, February 21, 2016

Random thoughts: Weekend conversations

I have to correct my previous post, my sister is not an insurance agent but an financial advisor. Last year, I saw the book "The Intelligent Investor" in her room and is pleasantly surprised. I thought it is for her private consumption.

A few weeks ago, I had the luxury of time to chit chat with my sister. She told me she is rather stressed with the unit trusts' performance and is wondering if she should close the funds to cut loss for her clients. I asked "your client angry with you?" She told me that her client is cool and a nice guy, just that she is worried the fund might continue to under perform, and feel that she is letting her client down. She had checked with her seniors who also advised her to keep to the funds and not "cut loss" I asked if her client is savvy and does his own investment too, or that he might be in need of money soon. Both questions has a negative answer.

I told her since the purpose of the fund is for the quarterly payouts and for retirement cash flow, it is still fulfilling its purpose. I asked what fund is that. She told me bond fund. I had this sinking feeling. I said "If US interest rate normalize, and everything equal, bond funds should continue to under perform, and that problem with funds is there is no maturity date"

When I told her the risk and returns after costs do not tally, she asked me what to buy. I am tongue struck. But I told her there are some blue chip bonds doing 3-4% and the only cost is commission during purchase and sale.

She also told me about investment in Japanese Market, I am not familiar with  Japanese market, but I do not think she know more than me, and I wondered if she know about the lost decade of deflation.

I see 3 folds problem in outsourcing your investment to others.

1) Timing. When you visit that representative, and the market is at the bottom, you are in luck. Or the representative has global or deep knowledge to know where is the sector for growth, you are in luck. Otherwise, no representative is going to say: Hold on to your money first, there might be better opportunity later.

2) How much more does the representative know than you? Plain insurance like H&S or even endowments are straight forward, there is seldom a problem of capital loss if you hold to near maturity or maturity. Go deeper...

3) Companies need to eat, and they need to keep pushing out the products to sell, regardless whether they are over, fairly or under valued.

 If you do not have enough knowledge, how do you ascertain someone is "Peterlynch" or "Peter Pan"? Does he/ she appear in fairy tale and say "buy this and it will go up?"

My sister told me all her investments products which she sell are unsolicited, meaning the clients ask for it, since she is stressed over the performance of these products. I say keep to selling insurance, it is simpler.


Today, my wife told me that our neighbor gave her a hot tip, a counter that goes from 50 cents to $5. I told her I never heard of that China Counter in SGX (can't remembered now, even I heard it just a while ago), anyway, I cannot remember any counter going 1000%, it would be in the headlines definitely, I told her it is some underground money lending instrument packaged as an investment la, don't bother.

She insisted it is listed in Singapore. I told her forget it, even if it goes to $10, I will have no regrets, because the chances of it going to Zero is higher, it might be a ponzai scheme.

Didn't think my wife will fall into the "hot tip" trap. SO it is that easy??


Also, when I went to a mall, I saw an atrium area full of insurance agents selling products to passer-by. Wow, how come it's so packed? Usually it is rather "pia tan" with passerby shuning these agents. That I realised why. There are 2 boxes of free gifts (not sure what it is) and an animal shaped balloon.  

While, they keep saying no obligations. Guess if u want free gifts, you can listen and take them without buying.

But the sale pitch is already a good start.

Maybe I not "gan" enough, I rather not spend time listening for the gifts.

I considered the gifts a "trap" too.


  1. no offence. quite sad financial advisers are allowed to advise on things they do not know.
    but really, I believe their license only allows them to explain the underlying investments they are advising on and NOT on the direction of the markets so it is a given they cannot know what is good or not. (of course, who will know? that one who knows can probably earn better as a soothsayer for the well heeled instead!)

    bond funds are not necessarily bad. some global bonds did a rally late last year 2015, surprising me because I had a little of the same thinking as you. (didn't surprise jeff gundlach though) singapore bonds didn't do bad too. bond funds are not necessarily bad, because bond prices move too but at this point in history, I would personally stay away from any funds that do payouts.

    1. Hi SMK,

      Cool. Why not those with payouts??? No worry, it's a rather worrying state.

      Those super good ones, guess they dun do mass market ...

      Maybe insurance companies shouldn't go into investment sphere.

    2. there are no super good ones, not even vanguard index funds.
      only cheap ones, diversified ones, narrow ones, gold ones, oily ones, leveraged ones, expensive ones, hedged ones, loan ones, growth ones, angmoh ones, cina ones ...etc

      no super good ones.

      I approve of insurance companies in investment sphere. if not, less exposure for kiasi investors. where do you think they will park their money? in fixed deposits? in the current interest rate cycle, a lot will very jia lat.

      of course, insurance companies in investment sphere have their own problems. (case in point in your blog post. one of the examples)

      I couldn't find the blogpost on dividends that I commented on. prepared quite a bit but I couldn't find. so I summarised in 1 sentence for you here: The best cat is the best cat when it catches the most mice but sometimes, you prefer one cat over the best cat but the best cat is still the best cat, no matter what colour it is.

  2. For most people, the insurance plans they need are H&S like you mentioned and perhaps a savings plan (if they are not disciplined to do a DIY savings plan).

    Unfortunately, insurance companies always churn out new products that are not really new. They are actually just iterations of a typical savings plan. If you look properly at the benefits illustration, every policy assumes the same return of 4.75% pa.

    The myriad products confuse the average person, and combined with insurance agents with conflicting interests, they give a bad impression of insurance. This leads to a person either getting overinsured (bought too many unnecessary products) or underinsured (did not buy the relevant coverage). Unfortunately I do not see any viable solution to this.

    1. Plain vanilla products only problem is low yield / returns, but at least the capital and some return ( better than FD at least ) is assured.

      Even those who DIY, may not get the returns they want

  3. Well, its still comforting to know that your sis cares about the performance her client's portfolio. Most agents will probably just sell & forget; at least that's what I've seen & heard so far.

    1. Sell and forget ... Yeah I heard.

      Maybe that's why my sister doing rather well ...

      My property agent also very good, will follow up with the management of the unit ... Although not paid, tags why every year we returned to her . And recommended ppl to her.

      I heard many clinch the deal and never to be seen

  4. Silyinvestor,

    You sis is an insurance agent lah.

    A rose by any other name is still a rose.

    Psst. Have you checked the global bond markets recently? Japan negative rates. ECB "promises" to ease more this coming March. US Fed Funds Rates not reflecting the US Fed will raise rates this year...

    Have you entertained the thought the client of your sister could be more savvy than both you and your sister?

    When everyone thinks interest rates will rise, he is betting it will fall instead?

    Just saying.

    1. SMOL,

      The first question I asked my sis is if he does his own investment, like equities or etc.

      What I want to say was if he is savvy, don't worry too much about him.

      But my sis told me now, she handled most of all of her savings and investments

  5. Hi SI,

    Lucky you sis is a "sis" not a bro to his male client! Otherwise maybe kena scold till "smelly head" liao! come you never impart your expertise here to your sis?

    I remember years ago, there was this scheme called Swiss Cash appeared to be in Switzerland but actually operated by a bunch of scammers in Msia/SG. A friend of mine, who is very calculative about money and very smart guy, tell me how good it is to invest in it. He and his friends already started collecting lots of money.

    I smile. Later it was a ponzi scheme! Tell your wifey just to share! ☺

    1. What expertise I have?

      I can't even hold my port above waters lol

      Investing is a hobby and interest to me. Of course, I want to make money but my track records like that, Bette shut up. Lol

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