Saturday, September 20, 2014

Will you buy a chair for 1.6k?

I read a very interesting article about the comfort principle this morning. It's about optimising your spending in such a way so that you maximise your comfort level. If not taken to the extreme, this provides a very good guide on spending on things that are of value to you, not merely to catch up with or impress others.

Similar to the author in the article, I also spent A LOT of money on a chair. When I renovated my current home, I knew I will be spending a lot of time at home. I'm constantly having back aches from sitting in ill adjusted chairs and because of the long amount of time spent sitting down, the chair gets hot very easily. It's very frustrating when you know you have to do work but you're suffering from back aches and hot butts. Hence, when I saw this awesome chair with mesh netting (to allow ventilation) with lots of adjustments to fit the chair on you, instead of the other way round, I wanted to get it immediately. But the price tag of 1.6k is what held me back.

This is the exact chair that I bought

That was when my wife came in and reasoned with me. This chair will probably last 6 years, probably longer. My previous chairs lasted about that amount of time too (imagine the aches I've to suffer!!). If I spend 8 hours sitting on it per day, it'll be a good 17,500 hours of usage, which works out to be about $0.10 cents per hour. Considering that this is the 3rd year of usage and it's still running strong, I think it can probably last a lot longer than 6 yrs, bringing down the usage cost per hour. Knowing myself, I will probably not buy another chair if this one can last that long.

And so I bought a super duper chair with a price tag of $1.6k. Sounds like a splurge, but I think it's one of the best buy because it's something I use every single day, bringing me a comfort level that I might not have if I've to get a chair which is way cheaper.

This principle is not a good excuse to buy anything because you only live once. The article mentioned that you must also combine it with knowing what is 'good enough'. Also, what is expensive need not necessary be the best, so don't go judging the quality of items with the price tag.

I think to balance this article, I must also mention that while I can spend so much on a chair, I'm loathe to spend on a watch. A watch is functional to me and it must have 3 things - lights, stopwatch, digital time. I can't wear metal watches (It'll be too heavy for me) and the weather is too hot for leather straps (it'll stink when sweat soaks in). That totally leaves me out of luxury watches, which is perfectly fine for me. I recently got a watch for $30 and I'm so very happy with it. So before you say it, I'm not asking everyone to buy everything that your money can afford.

This watch I got it from qoo10 for about $30

Spend crazily on the things that matter, and frugally on the things that don't.

Sunday, September 14, 2014

Hedging both sides of the bet on life

We usually hedge against a long life by planning for our retirement. We save up. We make sure we have enough passive income to last 20-30 years after our retirement. But we also have to hedge against the possibility of having a short life.

Nobody knows when we're going to pass away. While it's never good to live in the present and forget about the future, it's also equally bad to concentrate solely on the future and skim on the present. I know myself  - I tend to over-worry too much. I worry whether I have enough income and enough savings to last me the next month. It took me quite a while before I can willingly spend part of my savings on myself. I've to thank my enlightened friends to knock some sense into me when I'm obsessed about savings at the neglect of my present self.

So hedge against long life. Go save up for your future self. But do hedge against the possibility of a short life - go spend time with your closed ones, spend money on things that brings you happiness. Different advice works for different people. For people who are tighter on money, advice them to spend more on themselves. It's going to be okay. For people who are looser on their money, advice them to spend less on their present and more on their future. Save up for rainy day.

In the uncertainty of the duration of your life span, we have to hedge both sides of the bet. Live for the moment. Spend impulsively. Live like there's no tomorrow. Then, like a person with split personality, save up for tomorrow. Build up a passive income stream for retirement. Delay gratification.

Is it contradictory? No, I don't think so. The two opposite poles are just swings of the same pendulum. There's no duality. The cup is empty and full at the same time. But if you can't see that the cup is empty and full simultaneously, then practice seeing it as one or the other first. For me, I see that the cup is empty first, so I save up for it. Only recently do I see that the cup is also full, so I must spend to keep it from overflowing.

Friday, September 12, 2014

$10k a month as a tutor? Think again.

I think by now you should have read this post about a tutor who earns $10k a month. Most of what is mentioned in the article is quite true and I can vouch for its accuracy. Some comments on it though, before you quit your job to become one:

1. There's no CPF contribution by employer, leave, benefits, company dinners, health insurance sponsored by company. There's no company benefits at all.

You must learn to take care of your own affairs. Being a tutor is not just about the teaching part. You have to learn to manage your own affairs, save up for your own retirement and do your own accounts and tax. If you really hate these kind of admin stuff and do not want to pick up stuff like accounting, investment, insurance and a million other things that normally people take for granted, then you should seriously consider another job. It's essentially a one man show.

2. Learn marketing

If you're so good at teaching, it doesn't mean that students will naturally come to you. You have to learn how to sell yourself so that you have a constant stream of students every year. Besides learning your craft, the next biggest thing to ensure longevity of your business is to learn how to sell yourself and market yourself well enough so that through word-of-mouth, you'll get constant referrals.

3. Love what you're doing

If you're in this just for the money, I can assure you that you're going to hate this job. In certain months, there's no life at all. You practically work from Monday to Monday. You'll hate public holidays and weekends. You'll no longer have friends who will ask you out for dinner because you're working. You'll get messages throughout the day from panicky students asking you for help to solve this question and answer that query. Your work is weaved so intricately with your life that you cannot differentiate when work stops.

And so, you had better enjoy what you're doing. Do this for the money? You're not going to last long. Students are also not stupid. They can tell quickly if you really care about them or not.

4. Have a support group

It can be a lonely journey. But fortunately, my wife is also working odd hours just like me. We enjoy shopping when people are working and working through the night when others are relaxing. I can't imagine if one of us is working normal hours and the other odd hours. The conflict and schedule clashes should be quite hard to manage. It's good to have someone walking the journey with me.

5. Learn to be a counselor and a mentor, rather than a mere tutor

 You'll be surprised how often I've to settle issues other than those related to studies. Not everyone comes in all motivated to learn. More often than not, I'll have to find my way to reach out to the person. Sometimes, I failed and sometimes I succeed. That's what makes the job so interesting, once you're past the stage of knowing what to teach or how to teach. It's a combination of listening, observing and motivating that makes a person want to do well for his studies. To me, it's never about the exams. It's a way to touch the inner fire within each person, igniting it strongly enough so that it can glow and touch others too. It's a magical feeling that makes you want to experience it again and again.

That's what keeps me going.

6. Be comfortable with the seasons of work and play

You're never going to have a stable pay. Face it and accept it and plan for it. Each year, your income might drop by 50% or more and you'll have to work hard to recruit new students just to match up to the previous year income. This makes a fixed monthly pay such a luxury. Face it, accept it and plan for it. If you're not ready for such a drastic change in your pay schedule, you're going to feel very jittery in the dry season from November to January.

Ten years playing this game, I've learnt to look forward to my dry months when I'm busy with work and looking forward to work in the busy months when I've had enough play. Worry also no use. Learn to flow along and learn to let go. Bad times don't stay forever, so do good times.

You think it's so easy to earn $10k? Try it and see if you can handle the downsides first.

Related post:
1. Self analysis of tuition business
2. Unstable income stream from tutoring
3. The other side of being a tutor

Friday, September 05, 2014

Retirement thoughts

I was thinking about retirement income recently, especially after reading a click bait post from a magical blog. I felt cheated because I was baited into it, so that set me thinking. It's not the same topic however, but certainly in the same general area of personal finance.

To get a retirement income, we have to settle a few variables. Once those variables are thought of, we can perhaps (roughly) solve this question of getting the monthly retirement income. The factors are:

1. When are you going to retire?

2. How much income do you need when you retire?

3. What is your life's expectancy?

Your solution to this question is going to be as good as your inputs and hence your assumptions involved. We might not be able to know all the answers to the 3 questions exactly, but a rough idea is better than none.

Let's apply it to myself. Let's say I'm 35 this yr and I'm going to retire by age 60. Assuming life expectancy of 85 yrs old, I'll still have another 25 yrs to work and another 25 yrs after retirement to ration my money so that I'll have enough for money to last my life. Let's assume that all the medical bills are taken care of by insurance to make the situation cleaner and less cumbersome, so that the retirement income is purely for spending and consumption.

My expenditure is about 3.5k per month, but that includes my mortgage of 1k (split between wife and myself) which no longer needs to be paid by age 60. There are things that no longer need to be paid when I'm 60, like my limited whole life plan and the mortgage insurance. But let's just take it conservatively (in fact, very conservatively) that my expenses is going to be 3.5k.

3.5k per month over 25 yrs after I retired at 60 works out to be $1,050,000. That's on today's terms, inflation of about 3% not inclusive.  How long do I have to save up that amount?

I've 25 yrs of years after retirement and 25 yrs of work years to save up, so that means I've to save 3.5k per month, every month of my working year, in order to retire with enough income to have 3.5k when I retire till I'm 85 yrs old.  Wow, that means I've to earn 7k per month from now till age 60 in order to get that amount. The 7k is split up into 3.5k for living expenses now and 3.5k for living expenses for my future self.

Of course, that's just pure savings alone. It'll be a lot better with some investment returns, so I can accumulate more with lesser savings per month. But the problem is made worse by the fact that we begin with -3% 'investment return' to begin with. That's because of inflation. Just to break even, we need to get 3% per year AND save that much to get 3.5k per month upon retirement.

Not exactly easy eh? So what can be done?

Firstly, lead a simple life and reduce your expenses. If you can live with 2.5k per month, you just need to save 2.5k per month for every working month. The idea is simple. If you want $500 per month in the future, save $500 per month while working. If you want $1k per month, save $1 k per month for every working month.

Secondly, start earning money and start saving early. The good thing is that if you live a simple life now, you probably will be leading a simple life in your retirement too. If you don't reduce your expenditure and spend the exact amount during your retirement years, you'll need a savings ratio of 50% to reach there (3.5k to save for retirement on an income of 7k means 50% savings), based on my 25 yrs of working years and 25 yrs of life after retirement.  I think if you are a conscious spender, and include your CPF contribution in your retirement plan, saving 50% is not a problem unless you are earning below 2k. If that's the case, you really need to find ways to boost up your income first. Unfortunately, you'll have more pressing issues at present to think about than to think about retirement in the future, I believe.

If you start work earlier, you can save for your retirement earlier. Think of it this way. For my situation, I've 25 yrs to work to earn 25 yrs of retirement income. If I start working towards this goal earlier, I might have 35 yrs to work to earn 25 yrs of retirement income. It'll be much much easier and less stressful. Conversely, if you started late and you have 10 yrs of work to earn 25 yrs of retirement income, I seriously don't know how it's going to be done without suffering a drop in standard of living.

Thirdly, retire later. If you push back the retirement age, you boost your chances of retiring better. How so? Pushing back your retirement age shortens the amount of funds needed for retirement because you have lesser years to plan for. At the same time, you increase the number of working years to save up more. This is like a Krav Maga move where you counter and attack simultaneously. If the Israeli martial arts can be used surviving in real life situations, this move of pushing your retirement age certainly increases your chances of surviving retirement, so to speak.

Fourthly, you have to keep on working and be employed. To do that, you need to keep yourself updated and retrained if necessary in order to stay employable. If that's not possible, you'll have to engage in some small business or become self employed. Nobody owes you a living, so start planning for your own business or self employment when still at your prime, while you can.

Lastly, it's taboo but it still must be said. Just live a shorter life. Shorter life, less retirement funding needed. Period. But we can't really control that without resorting to the final solution, can we?

Monday, September 01, 2014

Is it a "waste of yourself" to be caught up in investing?

I think financial education is a must in this world. It's not even an option. Everything (almost) transacts in monetary terms, so without a working knowledge of money, you'll be severely disadvantaged in this world that you're currently living in.

But even though it's a necessity, it doesn't mean everyone needs to be an expert in it. There are different levels of involvement. Essentially, if you're not interested in financial stuff, you just need to know enough not to make big mistakes. If you're more interested in dollars and cents, then you get more involved in perhaps actively choosing your insurance or managing your funds to reap a better return.

That's my new CASIO calculator, by the way.

There are a few components of financial education that we should all know a little about:

1. Personal finance - credit cards, savings, needs and wants, budgeting, tax etc

2. Insurance - the difference types like whole, term, endowment, ILP, accident, H&S, disability income, annuity, mortgage and car insurance

3. Investments - bonds, stocks, retirement funds like CPF, commodities etc

As mentioned, you really don't need to know everything in detailed, because at best, these are just chapter topics. Take for example - stocks. There are huge write ups about the different methods of valuating stocks, from technical analysis to fundamental analysis. If you delve into fundamental analysis, you also need a crash course on accounts to know what is happening. Then you need to read into sector/industry analysis and many reports on the individual companies and their competitors. If you're into technical analysis, there are various time frames you need to learn, the different indicators and their respective signals and whether they are lagging or forward looking. No wonder it's so daunting for beginners to pick up. Where do you start? What do you need to know?

Imagine a person with zero working knowledge of these stuff. They will be at the mercy of someone who knows better and acts in his own self interest. You can't blame regulatory board only for making huge financial mistakes because you trust others. You must also shine the light of blame on yourself for not taking the time and effort to find out more. I made a huge mistake when I bought a huge chunk of whole life very early in my twenties. It sucked up a lot of my cash, possibly not even giving me enough coverage. But it's that very act of stupidity on my part that made me want to learn more about financial stuff. This lead to that, and soon, I began to learn more about insurance because it's really another aspect of financial education. It's a costly mistake on my part (I've since reduced the coverage of that whole life and thus reduced the premium) but in a way, my lack of knowledge made me a susceptible victim to any one who is more knowledgeable and wants to earn my money.

So when a student from the sociology department asked a panel of speakers in the first Young and Savvy seminar on Aug 22nd this year, about whether it's a "waste of yourself" to be caught up with the idea of investing just because everyone else seems to say it's important, I thought that he hit a very important question.

The Young and Savvy series of talks is organised by The Straits Times with presenting sponsor, Frank by OCBC. Note the sponsor is a credit card by a bank.

Just because you're not interested in something doesn't make that something less important to life. I think investing, which is but a component of financial education, is as important to life as swimming. You might not need to swim for your life everyday, but when you do, you'd better know how. It's a shame that our education system does not have a major component of financial education even though it's so important to life. Things might be a little better now though, I must admit. At least this gap is recognised and steps are taken to incorporate more of these life skills into their curriculum, albeit in the form of extra curricular seminars or workshops. It'll be great joy to tutor someone in financial education in the future, I must confess.

But learning need not be formal. Most of us learn though informal channels anyway. Educational institutions should just be a place where we learn how to learn. Engineering, the course I major in, is really a good place to learn how to learn because you learn enough about everything so that you can pick it up yourself. In my 4 years, apart from the heavy stuff in engineering itself, I've learnt a little about accounting, sociology, communication skills, microbiology, economics and computing. No small feat. If you want to find out more, you can just pick up a book, or google it and learn. I'm sure there are more formal courses online, free or otherwise, that enables you to pick enough stuff so that you won't feel so daunted learning them yourself.

So start now. Read some blogs. Read some books. Enroll into some courses and learn the skill that is so essential for modern life now and reap the benefits far into the future.

Wednesday, August 27, 2014

Have you grabbed POSB's low hanging fruits?

I thought I'll just share this again, in case you missed my informative story "It would have to do".

It's about the POSB national day celebration, where they will give you an extra 1.5% per annum for 3 months if you register after you've deposited in a sum (up to 10k max) in your savings account and not touch it till 30th November 2014. Do remember to register here after you've put in your money.

The dateline for this exercise is till 31st Aug 2014, which is this coming Monday. As long as the funds are new, as in it's transferred from outside of POSB/DBS, through cheques, cashier's order, demand drafts, cash, FAST or MEPS receipt, it'll be okay. I'm not too sure what they mean by not touching your registered new funds. Let's say I've 5k inside, I put in 10k, but spend 3k, does it still qualify? I'm not too sure, but I put it in my dormant bank account just in case. I don't really do anything with that account, so I should be safe.

I know it's not much. It's $37.40 is all that you'll get. True, but it's also not much effort to get this extra money, so I'll do it. Low hanging fruits... I like.

Saturday, August 23, 2014

The girl who picks up snail

He was just 22, when he met a beautiful girl
bending over a pavement, while it pours like pearl
With her brown and beady eyes, she pointed to a snail
crawling along the pavement, leaving a moist and slimy trail.
With slow and gentle hands, she plucked it off the ground
and placed it just beside, a soft and grassy mound.
Puzzled, he asked the girl, "Why change the snail's locale?"
Beaming, she answered back, "This is my rationale,"

"This snail moves too slow, you see
It is quietly plodding by,
Its shell is just too frail, you know
A foot, a crush, it'll say goodbye
So please stay strong, let me pick you up,
Be safe and sound, you little pup,
See you again on the other side,
May our paths again, meet and collide."

Before long he was married to her,
a joyous occasion, with fanfare and liqueur.
At age 32, they had a child:
A sweet little girl with her mother's smile.
But the babe was born with a hole in her heart
Is this child's life going wrong from the start?
Worried, he asked her,  "Can our child make it?"
"Surely," she said, "though she's a little unfit"

"This snail moves too slow, you see
It is quietly plodding by,
Its shell is just too frail, you know
A foot, a crush, it'll say goodbye
So please stay strong, let me pick you up,
Be safe and sound, you little pup,
I'll be here to watch you grow,
And march down the aisle with your Romeo."

40 years flew by just like that
Together, he and she grew old and fat
But in his eyes, she's still the beautiful girl
whom he met last week while it rains like pearl
One day, hands together, they were having a stroll
Her grip loosened, she fell, no longer in control
A moment later they were at a hospital bed
He sat beside her, his face full of dread.
His daughter came in, with her own kids,
and saw his worry, his sorrow, roll down his lids.
Sadly, he asked her, "Will ma be alright?"
"If ma can speak, she'll say this," she cried.

"This snail moves too slow, you see
It is quietly plodding by,
Its shell is just too frail, you know
A foot, a crush, it'll say goodbye
So please stay strong, let me pick you up,
Be safe and sound, you little pup,
See you again on the other side,
May our paths again, meet and collide."

Here's an old post to accompany this lyrics/poem : The Little Things

Tuesday, August 19, 2014

OCBC rights issue (Part 2)

I was thinking whether there's a way to make the best out of this rights issue...seems bleak.

For those who haven't read, do read my first post on this rights exercise: OCBC rights issue (Part 1) first.

I thought of a few ways. Let's just assume that the buy in price is $10.20, just to make a comparison. Commission is not included in all calculations, unless otherwise stated. Theoretical ex rights price (TERP) based on $10.20 is $9.92

1. Buy in at 1 lot at $10.20. You'll be entitled 125 rights shares. You'll have a total of 1125 shares. Apply for 875 excess right shares at $7.65 to round up to 1 full lot.

Average price per share: $8.93

Advantages: You reap the maximum number of odd lots need to top up to 1 round lot, just by buying 1 lot of mother shares before XR.

Disadvantages: A lot of people will have odd lots, and I guess not a lot will have a portfolio consisting of multiples of 8 lots of OCBC shares, since it's such a big cap. The pool of unsubscribed rights will be very low. I just don't think they'll be so good to round up your 1125 shares to 2000 shares, giving you a super huge discount due to the $7.65 rights price. Chances are not good that you'll have all your excess rights allocated, if at all.

2. Buy in 8 shares from the unit share market at $10.20. The unit share market is available to a few brokerage. I know of two - poems and standard chartered bank (sort of). You'll be entitled 1 share of rights. You'll have a total of 9 shares. Apply for 991 excess right shares at $7.65 to round up to 1 full lot.

Average price per share: $7.59

Advantages: You can't get any lower than this in terms of average price per share after the rights exercise.

Disadvantages: You wish! From what I know, the total number of excess rights allocated to you will not exceed the number of total shares you own. This rule is a good guide to follow for any rights exercise: If you have 4 lots, you don't need to apply more than 4 lots of excess rights. I guess for poorly subscribed rights exercise, there's a possibility that you'll be dumped so much excess rights that you'll be scared. I don't think this particular one is going to be a poorly subscribed rights exercise. It's a good rule to follow, nevertheless.

3. Buy in 800 shares from the unit share price market at $10.20. You'll be entitled 100 rights shares. You'll have a total of 900 shares. Apply for another 100 excess right shares to round up to 1 full lot.

Average price: $9.69

Advantages: In the near future, fingers crossed, SGX is going to implement board lot trading size of 100 shares, instead of the current 1000 shares per lot. If that's the case, whether you get the excess rights allocated to you or not, you'll still have round board lot size. Let's say you are not allocated any excess rights, you'll have 900 shares in total. In the near future, this 900 shares will be 9 lots (based on 100 shares/lot). Let's say you're allocated the total of 100 excess rights shares, you'll have 1000 shares, so you'll still have 1 round lot for easy trading. This case is more likely too...getting 100 excess rights to round up to the current board lot of 1000 shares/lot seems to be more possible than the scenario painted in case 1.

Disadvantages: It might not be worth it, especially if you can't get any excess rights. But you won't know until you do it ya? Do take note of commission also, since I didn't include it in my calculations. If you have standard chartered bank, it might be worth a shot. Who knows?

4. Buy nil paid rights during the trading period from 1st Sept 9am to 9th Sept 5pm

Disadvantages: You'll not maximizing the $7.65 issued price of the rights shares if you buy off the market during the nil paid rights trading period. I don't see why anyone would not subscribe to their rights I don't think it'll be seriously undervalued compared to the mother shares to be worth a shot at this.

5. Buy in after the whole rights issue is over

Advantages: Based on the scenario I've seen in all the rights issue, the price will go down after the rights. This might happen for OCBC too, but who knows right? If that's the case, you'll enter with all the complications settled. No need to queue at ATMs and so on. The main advantage is clarity.

Disadvantages: OCBC will CA on this coming Fri. CA = Cum All, so they will also XD on the same day. You'll lose out a bit on the interim dividend of 14 cts per shares. This can be an advantage of sorts, since the price after XR and XD (in combination, it's CA) will push the price down naturally. So when you buy in after all the she-bang is over, you'll not be entitled to the dividend of 18 cts per share (Thks cy for the correction!) That's $180 per lot, not something to thumb your nose at.

So there! All your options I thought of are laid out in front of you. I'm leaning towards (3) and (5). There's also always a last option - not to act at all.

Monday, August 18, 2014

OCBC rights issue (Part 1)

I'm always very interested in rights issue.

There's a new kid on the block just announced today. That's for OCBC. They bought into WingHang bank listed in HK, maybe even over paying for it. The big idea is that they can raise the funds for the purchase by doing private placements (Boo!), borrow money and increasing their debts (not too good, in the light of ever increasing capital requirements by central banks worldwide), and issuing rights. I think they are doing a combination of both rights and debt, which is quite a good move.

The terms of the rights issue is as follows:

1. One rights share for every 8 existing ordinary shares. That is, if you own 1000 shares or 1 lot of OCBC shares before XR, you'll be entitled 125 rights shares.

2. Each right shares is at an issue price of $7.65. The price as of 18th Aug 2014 is about $10.20, thus it's being issued at a discount of 25% at $7.65.

3. Based on pre rights price of $10.20, the theoretical ex rights price (TERP) is $9.92. For those interested on how you get it, this is the calculation:

TERP (based on $10.20) = (10.20*8 + 7.65*1) / (8+1) = 9.9167... = $9.92

Again, the TERP is not a price fixed in stone. It's just an estimation of what the price would be after the rights issue, assuming everything (including price) remains the same. So take it as a rough guide that it is, nothing more.

4. A lot of details are not out yet. In fact, the rights exercise haven't even been approved by SGX yet. Most likely it'll go through, but here's the indicative timetable of key events:

Shares XR date: 25th Aug 2014, 9am 

(that means 22nd Aug, THIS Fri 5pm is the last trading day before the shares goes XR on the following Mon!)

Dispatch of Offer Information Statement (OIS) : 1st Sept 2014

Period of trading for nil paid rights: 1st Sept, 9am to 9th Sept, 5pm

Last date for acceptance and payment for excess rights: 15th Sept 2014 (930 pm for ATM applications)

Expected date of issuance of rights shares: 26th Sept 2014

Trading of rights shares as ordinary shares: 29th Sept 2014

The full document is here, for those who want more details other than the salient points mentioned in this post.

Okay, so how to make the best out of the rights issue? Again, I'm assuming the viewpoint of someone who doesn't have any OCBC shares to begin with, and trying to arbitrage on the price difference of the shares before and after rights issue. The rights exercise is quite friendly, because for every 8 shares you own, you'll be entitled to 1 rights shares. And since 1000 shares in one lot is actually divisible by 8, you won't have to resort of funny tricks to avoid getting odd lots.

The problem about capitalising on this particular rights issue is this:

1) we have the trading lot size for SGX reduced from 1000 shares per lot to 100 shares per lot. It's coming soon, so they say. But it's been delayed again and again. It's supposed to come in first quarter of 2014, by look where we are now. If it's reduced to 100 shares per lot, the usual method of maximizing the number of odd lots you get will be rubbished. Firstly, there's less incentives for shareholders to avoid odd lots (those not in multiples of 1000 shares), so there's less chance to arbitrage on it. Secondly, the number of excess rights to round up to round lots will be reduced drastically.

2) 1 for 8 rights exercise is too friendly. You won't get fractional rights shares which are usually discarded. I think the pool of excess rights shares that are not subscribed will be reduced drastically.

3) OCBC is a big cap. 1 lot at current price is a freaking $10,200. I suppose not many people will have more than 1 lot of OCBC shares, don't even talk about multiples of 8 lots. So assuming that a big part of the population owns less than 8 lots of OCBC mother shares, then you always end up with odd lots. Let's say you have 1 lot of OCBC shares, after rights, you'll get 1125 shares of OCBC shares. That's odd lots right? So, if we want to apply for excess rights shares to round to 2000 shares, what's the chances of succeeding when almost everyone out there is doing the same?

It's not going to be high, that's for sure.

Perhaps there's still a way to capitalise on this...but let me clarify my thoughts first.

(Update: Here's the second part of the post - OCBC rights issue (Part 2))

Friday, August 15, 2014

A Great Loss

"A Great Loss"

I knew I was unimportant. In the hustle and bustle of everyday life I am invisible to her eyes. Nah – she nary cast a glance at me, and even if she did, I must say the look is never affirmative. Usually it ranges from glowering distaste to say the least, and glaring disgust at the worst.

“Why are you here? Why don’t you go away?” She mutters maliciously.

But I did stay. I did not go. Despite the lack of cordiality and the constant contempt I hang on. I persisted because I know that she needs me. I am there in her lowest moments – to share her sorrow and to bear the burden of her binges. I am there to sustain her purges, when she pounded madly on the machine and work herself to frenzy. I’m by her side always, supporting her every move, even at my own expense – waxing and waning at her whim and wishes.

But today I received terrible news – that she is going to get rid of me once and for all. Apparently, after all I’ve done for her, it is still inadequate. The last thing I am supposed to do for her, is to be a scapegoat and be sacrificed for her sins. She had found the ‘Final Solution’, and is all set to sever the ties that bound us. That a swift, slick, slice is going to put asunder what God had joined together.  I shudder to think of the cold sharp blade coming between us. Why doesn’t she want me? Why make me go away? Am I that dispensible?

Perhaps because I’m really unimportant.

I’m just a fat cell.


Sometimes, when you start off something, you've no idea what sort of paths it'll lead you to. In my case, I recently started a rebel-ution to the rationality and factual way of presentation that is pervasive in the financial blogosphere. I'm not saying that it's wrong, it's just that we need a balance between the proverbial rationality of the mind and emotions of the heart. Stories always tug at your heartstrings, while numbers and facts appeal to your minds. I'm thinking that the pull of the heart is more important.

These two are not necessary mutually exclusive too. In fact, Warren Buffet is known for his folksy ways of presenting normally hard cold financial facts into likable stories. It's his way of marrying story telling and factual presentation that makes so many people want to attend the annual Berkshire shareholder meeting in Omaha.

To those who think that reading fiction is a great waste of time, I empathize with you. I used to think that way too and it's only very recently ('s been about 7 years now) that I picked up a novel to read. And after reading stories upon stories, I came to the realization that the setting of the novel isn't as important as the message that is sent across. The message is masked in between the dialogue and descriptions of scenes, but it's there if you put effort to reflect after reading. The message you get is all the more etched into your mind simply because it's not handed out like a spoon to your gaping mouth. You have to work for it. And the messages changes all the time depending on the moods and circumstances when you read the same book! What sorcery is this?!

You know, in Bullythebear, I never had a guest post. But this is going to be the first. The author of this guest post is infected with the story telling bug too, after reading a few of my short stories:

1. An Empty House 
2. It Would Have To Do
3. The secrets of the millionaire dwarfs
4. My Father

She's none other than my wife.

Her post might not have much to do with the themes that I normally blog about. But it'll give a different perspective and world views in the pretty male dominated financial blogosphere. Diversity of views is always a good thing.