Mr Jim Rogers, Singapore-based American investor, author of A Bull In China: Investing Profitably In The World’s Greatest Market, and creator of the Rogers International Commodities Index
What was the best and worst thing that happened to you financially this year?
Best: Being short on Fannie Mae and the United States investment banks. These stocks collapsed, some by 100 per cent, so I made huge percentage gains on them in 2008.
Worst: Being long on anything at all.
How do you see 2009 panning out?
Most economies and financial markets will get worse as the year progresses.
We are in a historic period of forced liquidation which has happened only eight or nine times in the past 100 to 150 years. There is a forced reversal of positions with no regard to the fundamentals. One makes money in times like this by finding things with unimpaired fundamentals because they will become market leaders.
The only thing I know with unimpaired fundamentals are raw materials and commodities. In fact, their fundamentals are enhanced. Reserves and inventories of everything are declining while governments worldwide are printing huge amounts of money, which has always led to higher prices down the road.
So commodities are the best place to be.
Some parts of the Chinese economy will do well too.
What is one piece of financial advice you would give a person looking ahead in 2009?
Learn about real assets, raw materials and commodities as the fundamentals are improving there, while the fundamentals are deteriorating in most other sectors.
Would your answer be different for a) a single, working person; b) a married couple with school-going children; and c) a retiree?
No.
Is it a good time to buy a car or property?
I am not buying either.
One can get great deals on cars now so I guess it is a good time to buy a car, if one really needs one. Otherwise, I would wait. My view is that property will still be declining in much of the world for at least another year or two. There will be some special places in the world where property will be okay, but they will be few.
Mr Ben Fok, chief executive of Grandtag Financial Consultancy
What was the best and worst thing that happened to you financially this year?
Best: My equity portfolio was down by only less than 15 per cent. I had lightened the majority of my stock portfolio in September when the Fed was taking over Fannie Mae and Freddie Mac. I sold part of my equity portfolio bit by bit as the bad news was revealed one by one. Now I am very light in equities and heavy in cash. I also did not invest in, or advise my clients to invest in, any structured products.
Worst: I totally forgot about my Supplementary Retirement Scheme (SRS) account. I did nothing to it and it was down by at least 40 per cent.
How do you see 2009 panning out?
It will be an uneventful year for the financial markets. There will be bad news as the world slips deeper into recession and then tries to recover from it. Some people are calling a market bottom but I think, at best, the stock market will be in a tight trading range until there is strong evidence from macroeconomic indicators that growth is beginning to stabilise. But that does not mean ignoring the market at all. On the contrary, I believe it is time to take calculated risks as equities tend to react ahead of an improvement in the economy.
What is one piece of financial advice you would give a person looking ahead in 2009?
Proceed with caution when entering the stock market. While many stocks are heavily sold down and are looking very attractive, the world macroeconomic picture is not that bright.
Therefore, attractive valuations of certain stock markets must be weighed against the risks stemming from a global recession that will trigger a cyclical contraction in corporate earnings.
The world economy will take at least a year to recover from this financial shock and we cannot rule out further corrections in the coming months. Invest with what you can afford to lose and remember the stock market has no human emotions.
To protect yourself from downside risk, look to invest in undervalued stocks or stocks that are selling below net asset value. Look also at sectors with stable earnings.
Would your answer be different for a) a single, working person; b) a married couple with school-going children; and c) a retiree?
Given the financial situation, is it a good time to buy a car or property?
Certificate of entitlement (COE) prices are down substantially…and interest rates are at rock-bottom prices. However, bear in mind that a car is a depreciating asset and the benefits of convenience also come with price tags. So before you buy that car, ask yourself if you really need one.
If you are looking for a home or even an investment property, now is the best time to shop around and you may get it at bargain prices from a fire sale. Again, before you do that, review your financial situation, make sure you can afford the monthly instalments and remember that this is a big ticket item. Buying a car and a property requires a loan which adds to your financial burden.
Mr Mohamed Ismail, PropNex chief executive
What was the best and worst thing that happened to you financially this year?
Best: I did not suffer losses due to bonds, stocks and other financial instruments as I did not invest in any of those things.
Worst: I bought a second family car just before the prices dwindled. Weeks after I made the purchase, the prices dropped by about $10,000.
How do you see 2009 panning out?
It will be a year of recovery from the pits of 2008. It will be a challenging year without the exciting highs of 2007. I predict, cautiously, that there will be very slow growth in all areas of investment.
What is one piece of financial advice you would give a person looking ahead in 2009?
Invest within your means, with a view of holding on to your investment for the mid to long term. Property is still a safe ‘brick and mortar’ investment, with landed property being one’s safest bet. I would advise caution for investments in the higher-range private properties and suggest taking a wait-and-see approach unless there is an opportunity that presents itself at considerably below-value (at least 10 per cent less) prices.
Would your answer be different for a) a single, working person; b) a married couple with school-going children; and c) a retiree?
The advice is the same for younger people and married couples: Exercise prudence. For the retiree, cash is king so liquid assets may be best.
Is it a good time to buy a car or property?
With the cost of owning a vehicle here always escalating, a car is not a good investment option. It never has been, due to its depreciation over a 10-year period.
Property is certainly a good investment now in this buyer’s market, with many developers exercising sensitivity to price affordability. And many properties may be back in the market due to the high rate of buyers who are unable to commit to homes bought under the deferred payment scheme.
Mr Gabriel Yap, senior dealing director with DMG & Partners Securities
What was the best and worst thing that happened to you financially this year?
Best: My decision to liquidate practically all my trading portfolio when the market saw two price peaks in October2007 and broke its trend line after the second one – a strong indication that it was time to sell – in December 2007.
Worst: Despite liquidating almost all of my trading portfolio, I had only begun to trim my investment portfolio in August 2008 when the banks were reporting huge losses despite management’s assurances of a turnaround.
How do you see 2009 panning out?
Equities are on course for their largest losses since the Great Depression…and 2009 could exhibit the classic post-boom and bust sideways trading pattern in the first half of the year. (That is when) the upside is capped by consistent bad news from the economy, earnings and asset markets, but the downside is protected by already excessive pessimism and historically low valuations.
We will likely see a decline in global credit spreads (which have already happened), bottoming of companies’ earnings and a stop in the decline of United States housing prices.
What is one piece of financial advice you would give to a person looking ahead in 2009?
Based on fundamentals, the 60 to 70per cent collapse in global equities since October2007 has brought valuations to 40per cent below replacement values of their underlying assets. Thus, the downside, if any, from the current levels will be minimal.
Look for the market’s daily trading volume to rise. At the peak we were trading 9.4billion shares a day but right now we are seeing less than a billion a day. If you see volume moving up to three or four billion, that’s a very good indication that some of the smart money is coming back.
Would your answer be different for a) a single, working person b) a married couple with school-going children c) a retiree?
Is it a good time to buy a car or property?
Car and certificate of entitlement (COE) prices move in tandem with the economy, so it is not too timely to do so if it is not necessary.
Based on experience, property will be the last asset class to recover this time round, in view of the looming supply.
As with the past great equity bottoms of the Singapore market in 1985, 1998 and 2002, equities will bottom first before the economy, then will come companies’ earnings and lastly, the property market.
Mr Loh Hoon Sun, managing director of Phillip Securities
What was the best and worst thing that happened to you financially this year?
My assets are worth much less now than a year ago, but I am not alarmed. I have lived through many market cycles.
How do you see 2009 panning out?
It is going to be a very challenging year for the economy and stock market. There will be plenty of bad news coming out, bad economic indicators, order cancellations, project suspension, retrenchments, poor corporate results, companies going into liquidation, and so on. The market is expecting and has largely priced in the bad news.
I feel that the market has fallen enough and the downside below this low is limited, unless something drastic happens, which we cannot totally rule out either.
It is generally expected that the current recession will bottom out in the third quarter of 2009. It will then take some time to recover. The stock market usually reacts six months ahead of the economy. The property market traditionally lags behind the stock market in both the up and down cycles.
What is one piece of financial advice you would give to a person looking ahead in 2009?
No one knows exactly where will the bottom of the market be. The rational thing for an investor to do is to slowly accumulate good quality stocks when the market is down in the next few months. A time of crisis is also a time of opportunity. We should not fall into the trap of believing that a bull market is topless and a bear market is bottomless.
Would your answer be different for a) a single, working person b) a married couple with school-going children c) a retiree?
No.
Is it a good time to buy a car or property?
It is a good time to buy a car as the price of COEs is low. For property, there is still time to pick and choose.
Ms Sulian Tan-Wijaya, senior director of retail and lifestyle at Savills Singapore
What was the best and worst thing that happened to you financially this year?
Best: I was so busy at work that I missed out on opportunities to invest in creative investment funds, many of which turned out to be dodgy due to the bad underlying asset risks.
Worst: I didn’t take profit on my property and equity investments. My paper gains were not realised and now I have to hold and wait for the next bull run and property upswing.
How do you see 2009 panning out?
Many people I spoke to are actually quite liquid and are waiting for the ‘right time in 2009′ to invest in properties and equities. Unless there is more bad news of great magnitude, there should be more investment activities and buying opportunities next year.
I am generally positive because both properties and stocks are good long- term investments and 2009 will be a good year to start investing either in a dream home or blue-chip stocks. If share prices decline, then it’s an opportunity to average down.
What’s one piece of financial advice you’d give a person looking ahead in 2009?
One should not wait for the bottom to start investing as it’s impossible to be precise about it.
If you invest in blue chips or properties in prime locations, you will eventually make money if you have holding power.
Would your answer be different for a) a single, working person b) a married couple with school-going children c) a retiree?
My answer will be more or less the same for a single working person and married couple.
For retirees, they should opt for more liquid investments and avoid investing in products they do not understand. It’s better to read the fine print in any investment product.
Is it a good time to buy a car or property?
It’s a good time to buy a car if you’re looking to replace or upgrade as COE premiums are very attractively priced now.
For properties, it’s a good time to start looking for that dream house to live in.
I don’t really encourage speculating in properties when the market is volatile, especially if you need to leverage.
Mr Vasu Menon, vice- president of group wealth management at OCBC Bank
What was the best and worst thing that happened to you financially this year?
Financially, I’m lucky that the crisis in 2008 had a limited impact on me. I was holding largely cash and did not undertake any significant fresh investments during the year as I was not comfortable with the outlook for markets given the credit crunch and the substantial losses incurred by banks in the West.
How do you see 2009 panning out?
We recently polled 16 fund management companies to seek their views on the investment outlook for next year. The consensus is that a modest economic recovery will begin to happen only in late 2009 or 2010 at best.
There are good reasons for investors not to let their guard down just yet as economic and earnings prospects are still uncertain and could worsen significantly in the coming quarter.
More corporate failures are also likely and delinquencies are set to rise. Aggressive fiscal stimulus packages may not offer immediate relief either, as they will take time to implement and impact the economy.
Markets are likely to turn the corner when banks show willingness to resume lending and when the United States housing market shows signs of bottoming out.
Also, watch out for corporate credit spreads which are currently high. When these spreads start coming off significantly, it indicates that investors are getting more confident about business prospects, which augurs well for stock markets.
What’s one piece of financial advice you’d give a person looking ahead in 2009?
No doubt equity valuations appear cheap on a historical basis, but investors…looking to invest must be able to stomach high volatility and be prepared to take a long-term view of three years or more.
Even when markets turn the corner, the recovery is unlikely to be as phenomenal as it was in the past.
Would your answer be different for a) a single, working person b) a married couple with school-going children c) a retiree?
Irrespective of life-stage, an investor should assess his risk appetite and understand thoroughly the potential risks and returns of an investment before taking the plunge. Those who cannot stomach too much risk should be careful not to over-invest in equities.
Invest only the funds that you won’t need any time soon and which you can afford to set aside for at least three years.
Even if you can stomach the risk, it will be prudent to have a mix of investments in your portfolio to enjoy the benefits of diversification.
Retirees in particular should be extra careful about their exposure to equity investments and other risky assets.
Is it a good time to buy a car or property?
I don’t view buying a car as an investment. For those looking to invest in properties at this juncture, I would advise caution as the property market could deteriorate further.
If you can afford to wait, perhaps it’s best to postpone your purchases as the financial crisis may lead to better opportunities down the road.
Professor Annie Koh, associate dean, Lee Kong Chian School of Business, Singapore Management University
What was the best and worst thing that happened to you financially this year?
Best: I managed to escape the Minibonds and structured products debacle. As time is required to read the fine print of such products, it was a stroke of luck that I was just too busy to actively look for investment products.
Worst: Missed opportunities. I should have taken that offer from a broker to buy my house for over $4million at the height of the property market in the first quarter of this year. I called this the one that got away – in fishing analogy.
How do you see 2009 panning out?
I feel that this time round, the real sector has to lead and convince the market and investors that it is safe to go back into the waters. Trust has to be restored. There will be so much regulation and oversight coming into place in financial markets that I do not think the financial corrections will take place first.
My gut feel is that we must go back to microeconomics principles to build up the role of a firm, the role of consumers and then macro policies and the role of government – which also means rebuilding the economy and convincing savers to part with their savings to invest again in wealth-creating investments and ventures.
What is one piece of financial advice you would give to a person looking ahead in 2009?
My advice for 2009 is about wealth preservation in the first half and looking for value investment in the second half. But we need to go back to Finance and Investment 101: How are these companies to whom you have entrusted your money creating the value you could not create individually? Do they provide proper accounting? There will be a lot of scepticism if investment products look too complicated and cannot be explained.
Investors must also learn that one does not make a quick buck and cannot expect quick returns. If you expect such returns, you are trading and so must have the mindset of a trader and be willing to accept volatility.
Would your answer be different for a) a single, working person; b) a married couple with school-going children; and c) a retiree?
Is it a good time to buy a car or property?
Cars are never investments. They are depreciating assets. But if there is a good time to replace your car, it is now – COEs and oil prices are at an all-time low.
Property as an investible asset has, so far, not really seen the same correction witnessed in the United States and parts of Europe and Asia. I think if you are looking at this sector as an asset class, there is room for correction.
Rental yields are also going to see a slide, so maybe towards the end of next year, there will be scope for ‘bottom-fishing’ for property assets and other financial assets with long-term sustainability.
Mr Christopher Tan, chairman and chief executive of wealth management firm Providend
What was the best and worst thing that happened to you financially this year?
Best: A crisis always brings opportunity and I have the chance to invest in this time of great uncertainty.
Worst: Seeing my clients’ portfolios take hits from the crisis. Although I am very confident that they will recover, as we have a robust investment process in place, it still pains me to see them going through the emotional roller-coaster ride.
How do you see 2009 panning out?
The economy will be really bad and markets will remain volatile. But we are less concerned about 2009 than what is going to happen over the next five years, which will have a material impact on those planning to retire, or send their children to university in 10 years’ time. We are in the process of positioning our clients’ portfolios for various scenarios: a recovery, negative returns in the equities market for a prolonged period of time, and stagflation.
What is one piece of financial advice you would give to a person looking ahead in 2009?
Reduce debt, reduce expenses, build emergency funds, be the best in what you do, keep your job and invest excess cash. In short, do your financial planning.
Would your answer be different for a) a single, working person; b) a married couple with school-going children; and c) a retiree?
The principles remain the same for all, except for the retiree without a job. I think the important thing is not to jump into the market simply because there are opportunities. He has to ask himself whether he needs to take the risk involved and whether he can stomach it. Just because the market affords you great opportunities, it does not mean you have to take them.
Is it a good time to buy a car or property?
If you do not need either, it would be better to delay the purchase, as it is a bad year to stretch your budget. Find an alternative and avoid getting into debt. But if you have that need, have been prudent all this while, and have a good cash position, this is a good time to buy as there will be bargains. Just remember that every cent spent means less left for you to invest in the current market where opportunities are hard to come by.
Mr Shaun Meadows, chief executive of Aviva Singapore, Hong Kong and the Middle East
What was the best and worst thing that happened to you financially this year?
Best: The reduction in interest rates on mortgages in Britain has lowered my monthly outgoings quite substantially.
Worst: The substantial drop in Britain’s house prices, as it means the valuations of my assets have fallen considerably. However, I am not too worried as these are long-term investments. Also, I have focused my finances this year on my core activities, such as saving for the long term.
How do you see 2009 panning out?
It is set to be a challenging year for both individuals and businesses. The Ministry of Trade and Industry has forecast that the economic downturn will last well into next year.
Singapore’s economy is expected to face a broad-based slowdown, with full year growth projection ranging from -1 to 2per cent. There is also a lot of uncertainty, with the International Monetary Fund describing the outlook ahead as ‘exceptionally’ uncertain in its latest World Economic Outlook report.
What is one piece of financial advice you would give to a person looking ahead in 2009?
I would urge Singaporeans to think beyond the immediate term and plan for their mid- to long-term future.
According to Aviva’s recent global Consumer Attitudes To Saving study, about two-thirds of Singaporean respondents said their most important financial timescale was within the next five years, while six in 10 are still worried they will not have enough retirement funds.
It is therefore imperative that Singaporeans not neglect their long-term savings and investment needs when faced with the current short-term economic challenges.
Would your answer be different for a) a single, working person; b) a married couple with school-going children; and c) a retiree?
A retiree for example will have a shorter time horizon than a single working person. However, the need to plan ahead remains the same for all cases.
Is it a good time to buy a car or property?
Property investment is sound if one is confident it will generate positive returns over time and one is not overly stretched financially in making the purchase.
While a car is a cost, it can also be a legitimate lifestyle need. One may purchase a car as long as one can afford it, and its purchase does not compromise one’s long-term savings and investment needs.
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