Sad to say, but have to admit that in last one year, yield-play stock is one of the most poisonous and dangerous investment.

The market is volatile and spiral downward for the last one year. Even though there is no one sector being spare in this downturn, however, the temptation of high dividend yield has attract sizeable group of passive investor to join the massacre.

This is very true to REIT and shipping trusts in Singapore.

The minibond investors have risked full invested amount for potential 5% return.
The REIT and business trust is looking at the potential payout of 30.8% (MI-REIT) and 45% (FSL Trust) among the highest.

If the return is commeasurable with the risk, and vice versa, then, we may be waiting for another round of saga.

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The idea is belong to my friend. NOT MINE. But you can make it yours.

This is a little bit ‘immoral’ but totally legal approach to exploit the system, or the lack of it.

There are plenty of risky but potentially high return investment products offered in market now. Of course, the risk of losing entire investment sum is huge and real. The strategic is: there is a parachute escape plan as last recourse if something screwed up.

Since the financial institutions are ready to compensate full sum for lost investment for those above 62 years old and with primary education only, the strategic is to purchase the product with the parents’ name if they fall into these category.

If the product makes money, profit earned.

If the product loss money, principle guaranteed.

Can this work?

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Today Business Times has an article to remind us on Jade take-over story 6 months ago.

Other then Jade, I do remember how Uni-Asia share price climb up almost everyday and suddenly dropped to bottom. Today, Uni-Asia is just another penny stock among full basket of SGX penny stocks. Some has promised to investigate but I can’t recall reading any result until today.

Uni-Asia case happen much earlier then Jade, do you know the outcome?

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Don't sell out, hold on in there
By Christopher Tan
CEO, Providend
The writer can be contacted at chris_tan@providend.com
http://www.providend.com

The lesson is this: even in the worst crises, markets still recover with a respectable return. But if you want to shorten the time of your recovery, don't sell out. Keep investing but invest in the right things. If you sell, you are out of the game with no hope of recovery at all.

My trip to the past has taught me that all crises stem from the same cause - greed. Today's crisis is not new. It's just that we have forgotten our lessons. Don't try to time the markets. Michael J Mauboussin, chief investment strategist at Legg Mason Capital Management, found out that if you are able to accurately avoid the worst 50 days of the market, your returns jump to 18.2 per cent per annum. But if you miss the best 50 days, your returns dropped to a mere 1 per cent per annum.

Investors, be strong and courageous. You may be fearful. I am too. But history is behind us and for us. If you stop investing, you will perish. The crisis will surely pass. Don't ever give up.

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What’s a technical recession? – From The Straits Times

A Technical Recession is defined as two consecutive quarters in which the economy has shrunk compared to the previous quarter.

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If you are tired of bad news, then read good news here:

The House rejected the plan by a vote of 228 to 205, that means the plan need only another 12 votes to cross over to get through.

Obama called for calm after the House vote, saying the plan ``will get done.'' Republican John McCain urged lawmakers to ``go back to the drawing board'' and come up with legislation that will pass.

P/S: Those lend the hand when market need help-the-most time will be rewarded handsomely. It work!

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Published September 27, 2008
Source: Businesstimes.com

Some of the yield figures have been inflated by exceptional dividend payouts last year by many smaller companies. Several small firms had dished out dividends to use up their tax credits, which expired at the end of December last year.



'Investors should look at bigger companies with a dividend policy, strong earnings over the past few years,' said one analyst from a local bank.

Profits are tied to the dividend payout as the latter is dished out from the company's retained earnings. Firms which are more established typically do not need to reinvest their profits for expansion purposes and hence choose to pay them out to shareholders.

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If this is a wayang, then they all deserve a Oscar award for their thrilling show.

1. Treasury secretary knelt before the House speaker and appealed for her support.

2. "If money isn’t loosened up, this sucker could go down,” President Bush declared Thursday as he watched the $700 billion bailout package fall apart before his eyes

3. It was an implosion that spilled out from behind closed doors into public view in a way rarely seen in Washington.

4. The talks broke up in angry recriminations

5. Followed by dueling news conferences and interviews rife with partisan finger-pointing.

6. Treasury secretary, Henry M. Paulson Jr., literally bent down on one knee as he pleaded with Nancy Pelosi, the House Speaker, not to “blow it up” by withdrawing her party’s support for the package over what Ms. Pelosi derided as a Republican betrayal.

7. Denounced the session as “a rescue plan for John McCain,” and proclaimed it a waste of precious hours

8. Bush: Our country could experience a long and painful recession

9. Another late-night meeting with Mr. Paulson and many other lawmakers to see whether they could restart the negotiations — and ward off a Friday morning bloodbath in the markets.

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Your generals are fighting a war which the whole country cannot afford to lose and they are requesting bullets from you now.

The message is loud and clear: Give me bullet, we will fight. No bullet, prepare to die.

Delays the deliveries of ammo will just expediting the down fall.

The enemy is town now. In my personal view, the plan will eventually get through no matter how the Congress playing difference ‘patterns’.

The market seems has not priced in the rescue now.

The question now is: When?

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When the market dump bank preference shares here last week, we should know that the market is in great panic mode.

Bank preference shares are considered to be one of the ‘safest fixed income deposits’ comparable to bank’s fixed deposit. How could a person just bank in $100 into a local bank account willing to settle with just getting back $94.40? And this is what happened to OCBC Cap Corp preference shares which suppose to pay 5.1% annual coupon or interest.

Despite the great rebound yesterday, the shares still languish at $96.50 in an illiquid market.

The confident level is low, not only on the particular bank, but the world banking systems now.

The immediate victim: Preference Share, get a bad name which it does not deserve. This pain may take many years to cure.

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Published September 17, 2008
MONEY MATTERS
Based on both fundamentals and technicals, US financials are likely to retest and break below July lows
Source: Businesstimes.com
By LIM SAY BOON
The writer is the chief investment strategist for Standard Chartered Bank's Group Wealth Management and Private Bank.

Small note: Always find the concept of capitulation very interesting: the feeling is like meeting the end of universe!

The snippet of the article:

Against this dismal backdrop, capitulation has started for US equities. Technically, the charts had been signalling loss of momentum by the S&P500 from the August highs.

The irony of all this is that US equities - at the epicentre of the global financial markets crisis - have been relatively resilient compared with the emerging markets.

That extreme divergence between the losses in the US and emerging markets is unlikely to be sustained. In the emerging markets, Chinese stocks have seen the destruction of some 70 per cent of their value from their cyclical peak. Shanghai Composite was down 66 per cent as of Monday's close with losses mounting through the course of yesterday.

But it is too late to be selling. Warren Buffett famously urged investors to be 'fearful when others are greedy' and to be 'greedy when others are fearful'. There is now real fear in the markets. And while we are not tempted to be greedy just yet, we would caution against selling into what could be the final stages of capitulation.

A final word: stay disciplined and avoid following the herd. Nothing lasts forever - neither bull markets nor bear markets. Typically, fund flows into stock markets tend to be at their strongest when markets are peaking and deeply negative when markets are near their lowest points. This is what causes the common agony of the retail investor - the 'buy high/sell low' syndrome. Avoid running with the herd as it is jumping off the cliff.

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Bio-Trick have outstanding convertible bonds of about 909.5 million renminbi and these bond holders have exercised their bond’s put option since January 2008.

Bio-Trick has to sort out the refinancing of its convertible bonds as soon as possible. The share price has slide from over one dollar mark to as low as 15 cents today.

It is interesting to observe how creative financial engineering can rescue once the market darling in the good times.

Share placement/ Right Issue/Warrant Issue
- Highly dilutive in today’s share price. How many share they have to issue to raise that amount? If Bio-Trick still trading at $1 mark, all problems shall have been resolved long ago with this method.

Setup public-listed business trust
- The management claimed that there are ‘some enquires from pension funds in Europe and the US’ who are looking for long-term and consistent returns. These sound fantastic but why Bio-Trick? Why not Hyflux with similar business trust, proven track record, strong parent backing, large capitalization and idol CEO ?

White Knight
- Not heard of after the death of the white knight from Hong Kong. Lehman Brothers also looking for one now.

Bridging loan
- Will you loan to a stranger deeply in debt? While, no way, not even you are running a charitable fund. Even if the loan deal is on, Bio-Trick is expected to service the interest for many years to come.

Asset Sale
- Strip the asset for fire sale one by one.

In my guess, the combination of asset sale with bridging loan is the most likely outcome. Of course, we will see the gloom face of many shareholders.

This article is not means to advise or encourage you to buy/sell or to do whatsoever. Caveat emptor!

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An excerpt of newsletter from Investment U which I subscribed through their advertisement in Google Ads is quite interesting.

They have highlight 4 high risks of investing world as follow. What really attracts my attention is a sentence read: Investing can be one of the most frustrating experiences in life.

When UBS Investment Research yesterday described this as the 'Toughest Market in 35 Years', I pledge everyone to open their eyes to observe how this naughty market unrolls the next chapter. There are plenty to learn from here then book.


The Four High Risks of Investing

What are the four dangers? In his new book, Alex identifies the following.

1. Being too conservative, so that your hard-earned savings don't keep up with inflation.

2. Being too aggressive, so that you end up losing your shirt or blowing up part of your portfolio.

3. Trying to time the market. Study after study has shown that no one can consistently time the market.

4. Unwisely turning your money over to a money manager who loses your wealth, slowly or quickly.

Investing can be one of the most frustrating experiences in life.

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