Let's start with some history ...
More than two thousand years ago, Qin Shi Huang unified China, and became the first emperor of China. In between 213 to 206 BCE, he ordered burning of books, except those from his chancellor Li Si's school of thoughts. Hundreds of scholars were also buried alive. This incident is probably one of the earliest illustrations of how important it is to manage and control information and knowledge.
Now come back to 2009. Google Inc has a wonderful idea to scan and digitize books around the world to build a e-library online. This is exactly the opposite of what Qin Shi Huang did. In my opinion, this project matches that of Qin Shi Huang in terms of its scale and impact to the world, of course more towards the benefit of mankind in this case. Could you imagine any books at your fingertips? Could you imagine all knowledge being properly stored and managed generation after generation?
But of course, Google is still a profit-seeking entity, it does this for its own benefit. Just imagine when reading a book, all sorts of Google advertisements related to the content line up readily for you. That must be a cash cow for Google.
There are still a lot of legal and copyright issue to be addressed for the project to be successful. As a consumer, I wish Google all the best.
Sunday, September 13, 2009
Saturday, September 12, 2009
Right issue - What you see is not what you get
In some restaurants, live fish or crabs are displayed. Customers can pick the ones they like. The staff will weigh the live seafood in front of you, quote you a price, before sending it to the kitchen. Everything seems reasonable and fair. But have you ever wonder what happens in the kitchen? I heard that some unscrupulous restaurants would replace your chosen one with a frozen one. Of course, the frozen one is far cheaper than the live one. In other words, you are charged at the 'live' price, but actually what you get is the 'frozen' one.
Now come back to the investment world. Recently there are quite a number of companies issuing rights to raise cash. While each of them has their own reasons and merits, what puzzles me is the way that they promote the rights. They all claim to provide the shareholders 'an opportunity to subscribe for new shares at a discount'. Now the question is, is the per share value the same before and after the right issue? The share value will be diluted with the right issue! While you get the new share at a lower price, the value of your existing shares will be eroded.
The values are no longer the same, so how can you claim that there is a discount of the right share price as benchmark to current price? Isn't this an outright misrepresentation?
It somehow reminds me of the restaurants' trick, what you see is not what you get. Unfortunately in this case, the authority does not seem to be concerned of this misrepresentation.
** Quote from Genting Singapore's press release **
The Rights Issue will provide Genting shareholders with an opportunity to subscribe for new shares at a discount of 32.8 per cent to the closing price of S$1.19 yesterday.
Full press release here http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_EA9853457589A4744825762D00138631/$file/GSPLC_PressRelease.pdf?openelement
Now come back to the investment world. Recently there are quite a number of companies issuing rights to raise cash. While each of them has their own reasons and merits, what puzzles me is the way that they promote the rights. They all claim to provide the shareholders 'an opportunity to subscribe for new shares at a discount'. Now the question is, is the per share value the same before and after the right issue? The share value will be diluted with the right issue! While you get the new share at a lower price, the value of your existing shares will be eroded.
The values are no longer the same, so how can you claim that there is a discount of the right share price as benchmark to current price? Isn't this an outright misrepresentation?
It somehow reminds me of the restaurants' trick, what you see is not what you get. Unfortunately in this case, the authority does not seem to be concerned of this misrepresentation.
** Quote from Genting Singapore's press release **
The Rights Issue will provide Genting shareholders with an opportunity to subscribe for new shares at a discount of 32.8 per cent to the closing price of S$1.19 yesterday.
Full press release here http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_EA9853457589A4744825762D00138631/$file/GSPLC_PressRelease.pdf?openelement
Friday, September 4, 2009
Extreme Ice
The documentary on Channel Okto the other night gave me a real impactful impression. It was actually a Discovery Channel documentary, titled 'Extreme Ice'. In the documentary, it showed ice on mountain, at polars, melting.
Well, we all heard about global warming for a long time. But seeing the iceberg melting is far more convincing than all the theories on paper. I, for one, really feel the shock watching it.
It said that the ice is melting faster than previously believed based on scientists' models. And that at this speed, the sea level will rise by 1 meter in 100 years time, and many areas on earth would be flooded.
Just how is this going to affect our life? If this is true, we should see significant impact in next decade, maybe. This would really be a disaster. Imagine lands being flooded, millions being replaced, how is this going to impact the economy, the social stability, and eventually the investment and asset value?
A rise of 1 meter in sea level would almost spell a doom for island countries like Singapore. Talking about this, maybe there is reason for 99 years lease hold afterall.
p/s: please spend a few minutes checking out this
http://www.extremeicesurvey.org/
Well, we all heard about global warming for a long time. But seeing the iceberg melting is far more convincing than all the theories on paper. I, for one, really feel the shock watching it.
It said that the ice is melting faster than previously believed based on scientists' models. And that at this speed, the sea level will rise by 1 meter in 100 years time, and many areas on earth would be flooded.
Just how is this going to affect our life? If this is true, we should see significant impact in next decade, maybe. This would really be a disaster. Imagine lands being flooded, millions being replaced, how is this going to impact the economy, the social stability, and eventually the investment and asset value?
A rise of 1 meter in sea level would almost spell a doom for island countries like Singapore. Talking about this, maybe there is reason for 99 years lease hold afterall.
p/s: please spend a few minutes checking out this
http://www.extremeicesurvey.org/
Thursday, September 3, 2009
Nonconsequentialist Reasoning
I am reading the book 'Irrational Exuberance' by Robert J. Shiller, and come across this interesting term 'Nonconsequentialist Reasoning', originated by psychologists Shafir and Tversky. I quoted the description here, people cannot decide until the events actually occur.
I believe this psychological effect is experienced by many investors. In fact, in my blog, I have recorded at 2 such events.
One was when FSL reduced its distribution, and the price held up for several days before going south. The investors could not decide until they see the next distribution in sight is reduced. On the other hand, when Rickmers cut its distribution immediately, you see that the price went south immediately.
The other one is on Chartered Semiconductor. With the latest player Globalfoundries into the competition space, bloodbathing is logically expected. But the investors seems like cannot decide what to do, they may want to wait till they see blood.
On a bigger picture, I think this also explains why Technical Analysis is working in many cases. If market is efficient, and any information is digested immediately and fully reflected on the price, there is no way TA will work.
So, as an investor, we must remind ourselves to make rational decision ... timely.
I believe this psychological effect is experienced by many investors. In fact, in my blog, I have recorded at 2 such events.
One was when FSL reduced its distribution, and the price held up for several days before going south. The investors could not decide until they see the next distribution in sight is reduced. On the other hand, when Rickmers cut its distribution immediately, you see that the price went south immediately.
The other one is on Chartered Semiconductor. With the latest player Globalfoundries into the competition space, bloodbathing is logically expected. But the investors seems like cannot decide what to do, they may want to wait till they see blood.
On a bigger picture, I think this also explains why Technical Analysis is working in many cases. If market is efficient, and any information is digested immediately and fully reflected on the price, there is no way TA will work.
So, as an investor, we must remind ourselves to make rational decision ... timely.
Tuesday, September 1, 2009
DBS - Apparent Mistake
First of all, let's be clear, I am neither pro nor anti DBS. In fact, I think investors should bear some risks and responsibility in making any investment decision.
However, the way the lawyer representing DBS defended the case amused me a lot. In essence, the lawyer argued that, as there was such an apparent error in the document, anyone who read it carefully would detect it, and therefore 'turn on its head'.
My first intuitive questions are:
1) If the error is so apparent, shouldn't DBS employees, who sold the products, detected it when they went through the document with the investors?
2) And if they detected it, why didn't they inform DBS to correct it?
3) Or did they go through the document with the customers at all? If they didn't, isn't this the best evidence of mis-selling?
There is mistake, but it is not so apparent to me who made the mistake.
** Partial quote **
An obvious clerical error, says DBS of "credit event" calculation
By Cheow Xin Yi, TODAY | Posted: 01 September 2009 0633 hrs
SINGAPORE: There was an error in the formula that investors were told would be used to calculate any remaining value in their investments should there be a "credit event".
But, DBS Bank is arguing, this was such "an obvious clerical mistake", that it would be apparent to any investor who had read his or her documents thoroughly.
The bank responded on Thursday to a suit by more than 200 investors who had bought into the now-worthless Lehman-linked DBS High Notes 5 (HN5).
More on
http://www.channelnewsasia.com/stories/singaporebusinessnews/view/1002036/1/.html
However, the way the lawyer representing DBS defended the case amused me a lot. In essence, the lawyer argued that, as there was such an apparent error in the document, anyone who read it carefully would detect it, and therefore 'turn on its head'.
My first intuitive questions are:
1) If the error is so apparent, shouldn't DBS employees, who sold the products, detected it when they went through the document with the investors?
2) And if they detected it, why didn't they inform DBS to correct it?
3) Or did they go through the document with the customers at all? If they didn't, isn't this the best evidence of mis-selling?
There is mistake, but it is not so apparent to me who made the mistake.
** Partial quote **
An obvious clerical error, says DBS of "credit event" calculation
By Cheow Xin Yi, TODAY | Posted: 01 September 2009 0633 hrs
SINGAPORE: There was an error in the formula that investors were told would be used to calculate any remaining value in their investments should there be a "credit event".
But, DBS Bank is arguing, this was such "an obvious clerical mistake", that it would be apparent to any investor who had read his or her documents thoroughly.
The bank responded on Thursday to a suit by more than 200 investors who had bought into the now-worthless Lehman-linked DBS High Notes 5 (HN5).
More on
http://www.channelnewsasia.com/stories/singaporebusinessnews/view/1002036/1/.html
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