By Alvin Chow
Swiber filed for bankruptcy.
Now what, for shareholders, and even bondholders?
Are you going to get anything back?
There is a hierarchy of claims. It can be simplified to this:
- Secured Debt Holders (assets are collaterized for the loans)
- Unsecured Debt Holders (IOU without any assets collaterized)
In such bankruptcy cases, bondholders should be in a better position than shareholders to make a claim. But it isn’t necessarily so if the Company does not have enough assets to distribute. Hence, bondholders can still be left with nothing.
The disclaimer is that I am not a corporate lawyer and the purpose of this article is a curious pursuit to figure out if bondholders and shareholders are likely to get their capital back. It is not, in any way, to be regarded as a document to prove your claims, nor to be treated as an advice.
Secured Debt Holders
Let us determine the secured debt holders of Swiber who have the first claim on the assets. We can refer to the latest annual report (31 Dec 2015) released by the Company.
Swiber owed the banks a total amount of US$332m and it was mentioned the following assets were collaterized for these borrowings (note 16).
- First legal mortgage over certain vessels and equipment;
- Assignment of …read more
If you are a panda or koala bear (single asset investor), it doesn’t matter. Move along now, there’s nothing to see here.
But for those of you who practice portfolio management with asset allocation; or have engaged financial advisors advocating the merits of diversification into different asset classes… How now?
In the “old normal” before 2009, one of the simplest asset allocation strategy was to have our assets in both equities and bonds. And we do periodic rebalancing between these 2 asset classes from time to time to seek risk-adjusted return in line with our temperament and risk profile.
Other variants would include the Permanent Portfolio where we split our assets into 4 or more asset classes – with or without rebalancing.
In this “new normal”, both the US equities and bond market are both in near all time high bull market territory.
Both of these asset classes can’t be right?
If both equities and bonds can go up together at the same time, does it mean both equities and bonds can go down together too!?
Those of you taking Business Finance currently, you may want to “ki chiu” and ask your lecturer on this anomaly?
And for those with financial advisors, maybe schedule a …read more
Most of us truly believe we have awesome listening skills. Even the most humble in our midst would modestly claim that we are above average listeners. I have yet to meet anyone who is honest enough to fess up that he or she is but a lousy listener.
When asked what being a good listener entails, we bring up superficial stuff like making eye contact, not interrupting the speaker, or even repeating and paraphrasing what the speaker is saying.
Granted these are important points. They are pre-requisites to good listening even. But saying that making eye contact makes you a good listener is like saying you can hold a mike hence you are a good singer. #hardlythecase.
In a Harvard Business Review article titled What Great Listeners Actually Do, Jack Zenger and Joseph Folkman studied thousands of participants in a program for developing managers. They identified the most effective listeners and dived deeper to study what exactly is it that makes them stand out.
They discovered four main findings. For a start, good listening is much more than being silent and not interrupting. They best listeners ask questions constructively to challenge assumptions and promote discovery and insights. They understood enough of what they …read more
By Lionel Yeo
I watched the play HOTEL by W!ld Rice last weekend.
It was easily one of the best plays I’d seen in a while: Awesome storyline, witty script, superb acting, and loads of deep concepts about Singapore’s identity/history to think about.
Not just that, but the actors spoke in nine languages. Nine! They flawlessly switched between English, Mandarin, Malay, Japanese, Urdu, Cantonese, Hokkien, Tamil and Tagalog – many of which they had to learn from scratch.
Now, as someone who’s shamefully terrible at his own Mother Tongue, it got me wondering: How did these actors get so good at learning a completely new language? (The dialogue-heavy play spanned 5 hours, so they had a looooot of lines to memorise).
In fact, it spans beyond just languages alone. Think about areas like getting fit, waking up early, presentation skills, sales, video editing, programming… and investing. So many things in life that we want to get better at.
But how do we do it?
Skills vs. Habits
How many times have you heard someone say:
- I’ll do my best to start waking up early from tomorrow!
- I really have to start eating less and working out more
- I plan play tennis every Saturday to improve my game!
I call this the “Try …read more
By Alvin Chow
My car’s Certificate Of Entitlement (COE) is ending in Dec this year. It is common that car owners at this stage would start scrolling through sgcarmart.com for the possible next ride.
New Or Used
The first question on my mind was, to buy a new or an used car?
The prevailing COE at the time of writing was S$52,301. This amount is much higher than the total car price that I have paid for my current cheapo Korean car. I have an anchoring bias and it is difficult to pay for something that cost me much cheaper before. Somehow, I just can’t bear to buy a new car now solely based on the COE price.
So the answer is to look for an used car.
It would be confusing if we merely look at car price alone, because they have different makes and models, and registration dates. The most consistent way is to look at the depreciation rate. If you got no clue, head on to this article which explained it simply.
I have a strategy which was to look for cars with COEs with about a year remaining. There are multiple advantages. First, the car price would be low such that I can make …read more
By Yen Yee
These investing rules have been around for uttered so many times by so many influential people that they are almost sacrosanct. But, it might be in your best interests to break them if you want to get ahead in the market.
Don’tPut all your eggs into one basket
When you first ventured into the world of investing, one of the most common investing rules given to you would probably have been to diversify your portfolio.
“Don’t put all your eggs into one basket. Invest in a variety of stocks from different industries.”
The reasoning behind this adage is logical and simple.
Putting your entire financial war chest into one stock is foolhardy. If your choice suffers an unexpected black swan event, your investment is decimated.
Besides idiosyncratic risk, or risk that is specific to a certain company, there is also sectoral risk. For example, if you had ploughed your money into real estate stocks that have the bulk of their business in Iskandar, the cooling measures announced by the Malaysian government would have affected your portfolio badly.
There are also other risks involving geopolitical, currency, and even asset class – if your portfolio only consists of stocks spread across different industries, you would …read more
By Lionel Yeo
I bought a TV a couple of weeks ago.
Now, I don’t actually watch that much TV, but it’s just one of those things you get for your new house, right? (How else would you distract your relatives when they visit and ask awkward questions?)
You’d think that buying a TV should be relatively simple: Search the internet, narrow down a couple of options, pick the one with the best price, and boom! You’re done.
Nooooooo. It was one of the most harrowing, confusing experiences of my life. I mean, NO ONE TEACHES YOU THIS STUFF. There wasn’t a “How to choose a TV” module back in school – we had to learn it through our own slow, painful experience.
So allow me to walk you through mine, and hopefully you’ll take away a few lessons for your own TV hunt (or even apply it to learning investing too – Heyyyyy what a coincidence!)
Part 1: The Research Phase
1. The Crazy Number Of Options
The first thing you notice when you check out TVs online is the craaaaaazzzyy number of options available. It completely throws you off. For example, checking out TVs on Lazada shows you six hundred and thirty-nine options.
Should you get LED? LCD? …read more
See if you can relate to this video:
Psst. Did you notice who stayed behind? And what was this person doing?
I remember it very clearly even today.
I was in primary 3 and was in the school band. We had practice on Saturdays.
One Saturday afternoon after practice, it rained cats and dogs after training.
Instead of waiting for the rain to stop, I and 2 other classmates, who lived near each other in the same Queenstown neighbourhood, decided to run through the rain home!
From Margaret Drive to Stirling Road it takes about 20 minutes by walking.
I think we took more than 45 minutes to reach home 🙂
We took some interesting “detour” in the rain…
Ah… The innocence of youth! Not knowing what cannot be done 😉
That’s why it’s so memorable!!!
Got similar memories of your yesterday where you just “ran through the rain” instead of waiting for the rain to stop?
(Hello, running through the rain is just a metaphor)
By Yen Yee
Would you choose S$1,000 today or S$1,000 in three years?
You would instinctively go for S$1,000 today rather than receiving the same amount of cash three years later. But, is there any argument for why you would prefer to receive the cash today other than because you want to beat inflation?
This concept is called the time value of money.
The idea is that the money available today is worth more than the same amount of money at a later date due to the earning power of the money today. This concept is applicable not just for calculating loans but can be used in a wide spectrum of financial decisions such as insurance plans, investments, etc.
Time Value of Money
Back to the S$1,000 example. When you deposit the money into a savings account, you earn interest on your deposit. By the time three years has passed, you would have earned three years’ worth of year-on-year interest on your initial deposit.
So, how much would S$1,000 in three years be worth today?
Let’s say you want to know how much you have to invest today in a savings account to have exactly S$1,000 in three years given a certain interest rate. For the …read more