Doh liao loh~

Just like the stock market today, MOS (sg) doh-ed today.

I guess it must have made no difference. Most crubs here are short-lived, with the exception of a few which are still around. The then MOS was so high-profiled, with different rooms offering different genre. For the usual crubs, the genre is determined by the day of the week. Then it was starting to get rather werid. Anyway, it isn't as fun as it was supposed to be.

Then the market doh-ed today, creating a new low of 2.1k+. It was almost on its way to 4k just last july. A zero sum game, the transfer of wealth must be great. Most likely, the rich got richer, the poor got poorer. As usual. But the stock market is supposed to be 'risky', to some extent, like a online casino with a in-house loanshark. You can always 'contra' even if you don't have the cash needed, and some time before the ban of naked shorting, opportunity to short shares even if you don't own the shares. Yes, very risky indeed. Even more risky is the trading in warrants (they got expiry date). I once saw a percentage gain/loss of 300% (in a day, and you can gain/lose the same % in that period of time).

Bonds are perceived as a lower risked investment (in at least of investment grade bonds) of coz offered lower rate of return of about 3-5%p.a.. and most likely, the bond is contracted to about 5 years. However however however.. the lehman bros that doh-ed made it all so much different. At least with the stock market (and also the sg insurance co.that attracted people to go there drink coffee), you still can choose to preemp by running first with the money. Lehman lei? No chance. You think people so free to check out on every entities linked to the product meh? If so, i might as well lend the money to the borrower directly and bypass the the FIs. FIs do delegate monitoring? pi ar~ Simi is value add? Value add is after people doh liao then call you say your money all gone?

But given the status of the bros when get involved in these bonds, sales staff will most likely to say/think, "will doh one meh?". Perhaps those willing to invest thought so too. Maybe investor didn't bothered to find out that if one doh, the bond is considered as default. Maybe they didn't even know got such thing.. coz what they see is how much interest income it offered in the next 5-7 years. And with some of the very strong local bank and one of the largest US commercial bank on the list, who cannot be assured? Can you blame the investors? No. Coz they don't really know what thing triggered what, and how will lehman be so involved and affected by the sub-prime toxic. And can you blame the sales for pushing sales? No either. Because nobody can forsee. And if they don't push sales, they won't get the pah pah bonus and all can go eat grass le. Perhaps you can only say they don't know how to sell through emphasizing on the downside enough. But who would sell like that?

I sell bedlinen also never really go tell the whole word that it is made in somewhere else, different from where is company is.. that is unless customers ask. If i go around telling people 'where it is made' instead of 'where it is from' (they are really different) i can go eat grass also le. But made in where is a commonsense question... but financial products are complex. Not commonsense. And it was made even more complicated with the multitude of FIs getting in the picture like forex and i/r swaps, underwriting, guaranteeing and all those fee services. If one link is broken, the product fails.. Cost nobody will want to tah the rubbish for free. Anyway, the money lost isn't theirs.. so the most they can do is say, "sorry".

I didn't say they sell financial products without telling the truth or misleading investors (if they do, most likely people will complain to the central bank le).. i'm just saying that some of them don't emphasize the risk enough. EMPHASIZE on the EMPHASIZE. By enough, maybe keep emphasizing on the entities and their role in the product.. and what will happen to the contract if there is any disruptions to the functions of each of them. No need to explain what is 5% pa. This is confirm commonsense (and most likely they will bold it in the pamphlets). Unless it is written return of 25% in five years, and principal amount not guaranteed. Then they need to emphasize the fine print le.

Maybe coz the sales staff (or 'relationship manager' as they like to call themselves and investors just as the rest of the depositors like to call themselves) didn't go into details that's why so many investors are unhappy. Unhappy that they want to go honglim park this saturday to protest. But.. protest against what? Against the FIs for saying the return is 5%pa, principal is not guaranteed, the risk that you can lose everything should anything under the 'defult section' of the prospectus occurs to any one of the entities? It sounds direct enough. But how many of investors know lehman well enough at that point in time to question the product? I guess that even some of the staff don't even know. At least for the pillowcase, the "made in *****" can be found inside the pillowcase.. and there is even a full refund policy within 30 days. So if anyone is so unhappy seeing the "made in" tag, they can always return the goods. For a full refund somemore. Where to find this feature in financial products? Early bird terminations means they will return less than what you put in.

It won't be a suprise to see how irritated the investors are at honglim park this weekend... coz some of them put their life savings (i've heard a case of one investor putting sgd200k) into these products. It's like suddenly losing your only house overnight. Remember they say don't put all your eggs in one basket? Diversification only works when disaster strikes. And in this case, one of the worse financial disaster of the century.

With that, i think the "equity premium puzzle" (that is why people still go for bonds even though the returns on equity is much higher after risk adjustment) should change to "bond default puzzle" (that is why people want to go for bonds given that you can lose everything overnight even though the risk is so much lower).

Well.. whatever works for those investors this coming sat.. hopefully they will feel better after that. If not, the corner can also go eat grass le.