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  #41 (permalink)  
Old 09-08-2013, 05:06 PM
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Originally Posted by 38andlifetogo View Post
Don't quite understand this? What u mean by pb make money off ladders? They make the same right? I construct my own ladder of individual bonds expiring in various years and pay them the normal spread and commission. What I do to make sure they don't make too much is to get 2 pb to quote and buy from cheaper one. I usually pay 0.2 commission for each bond bought. Have about 30+ individual bonds now with about 4-5 maturing per year.
I suppose you have enough money to construct your own ladder of individual bonds. I would have to put too much of my portfolio into fixed income to do so. The products I've been offered are bond fund ladders, which can be constructed in smaller sums, but the bank earns a lot of fees. Still for a 38 year old in this region, this seems like an unusually conservative strategy. Reminds me of what I might do when I'm retired and too feeble to manage my own money.

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  #42 (permalink)  
Old 09-08-2013, 09:08 PM
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Yeah, thanks for your post. That is also my understanding of how perps work for the banks too. However, under Basle III, the old perp structures as we know it would not qualify as Tier I capital anymore. Thus, I am attracted to pick up some of the old structures, with short durations before they disappear from the market. The new ones (called BCCS or something similar) are much more equity-like and less bond-like. They are quite different animals. Some are already in the market. Not good for investors unless they pay substantially higher yields for the risks the investors are taking.

That is why I specifically chose the earlier perps issued by
(1) investment grade Asian banks;
(2) which generally have higher loan-to-deposit ratios ("LDRs"); and
(3) which are also systemically important institutions in their own countries.

In any case, the Asian banks are generally not so adventurous in terms of their trading books so the main issue you have to look out for in assessing an Asian bank's risk is mainly the credit risk of its loan portfolio, regulatory risks of their home regulators and liquidity risks (alleviated by their low LDRs).
Wow! i certainly don't need to explain bank perps to you. I wasn't familiar with the new Basle III rules on Tier-1 capital, so I looked it up. MAS has a Notice 637 on it. The main differences are a possible conversion to common equity in difficult times and less probability of redemption on call date, unless as you said earlier, the banks would be reluctant to spoil the market.

To me, this makes them more like ELNs. Those high yield instruments will convert to equity on certain conditions such as a single stock or multiple stocks going below a trigger price. Except that for Singapore banks, it is much less likely that they will hit trigger events such as having to be recapitalized by the Singapore Govt. Not only is the MAS quite careful about them, but some like OCBC have not failed to pay a dividend since they were founded. As you said, they don't tend to do complicated things like the western banks.

I'm comfortable with holding local banks' common equity, so I don't think I would have a problem holding their Basle III prefs if the yields are high enough. I was actually surprised by UOB's high coupon of 4.9%. Now I understand why.

On your conditions 2 & 3, it wouldn't always agree. Banks with low LDRs can still go under if it engages in risky practices not related to loans, while a bank with high LDR could simply indicate that it is wholesale funded but may have a low risk model.

I think some of the actions in the US and Europe have shown that banks that are systematically important are rescued in ways where the common equity holders have been wiped out through dilution and even some of the pref owners have been forced to take haircuts.

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  #43 (permalink)  
Old 09-08-2013, 10:04 PM
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Wah, you are spoiling the market! Don't worry about them not showing you attractive opportunities. As long as you make clear your investment objectives and show them your dry gun powder, they will continue to tempt you with goodies!

Remember, they only make when they sell you something. Whenever you buy any securities, they also charge you custody fees.

I think dealing with them politely and portraying yourself as a humble person plus develop a good rapport should be adequate.
I can only lead a horse to water, but if it won't drink....

If you and I have the same banker and he has 20 people to call. He calls me first and I grab. Before he gets to you, the product is all gone, sold out. I talk to my favourite every other day so I'm quite close to everything that is going on. He knows when I am overseas, where I am Friday night (haha) and my secretary always puts him through wherever I am in the world. How often do you talk to your banker? Only when he calls with product?

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  #44 (permalink)  
Old 12-08-2013, 10:23 PM
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Wow! i certainly don't need to explain bank perps to you. I wasn't familiar with the new Basle III rules on Tier-1 capital, so I looked it up. MAS has a Notice 637 on it. The main differences are a possible conversion to common equity in difficult times and less probability of redemption on call date, unless as you said earlier, the banks would be reluctant to spoil the market.
Dear Millionaires, I can't help but want to point out that it actually spells Basel, not Basle.
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  #45 (permalink)  
Old 13-08-2013, 12:18 AM
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Dear Millionaires, I can't help but want to point out that it actually spells Basel, not Basle.
Thanks for pointing out. You are right!

I don't know about the rest but, a lot of us at the forum are just trying to get by as comfortably as we can in life and find this forum a good venue to share ideas, views and experiences.

Frankly, having a million today in Singapore is radically different from the yester-years. Cost of living in Singapore is very high these days and being more travelled and worldly-wise doesn't help keep the costs down too. So, having networth of a million (or more), would not necessarily confer on anyone the connotation that he/she be considered a millionaire, in my humble opinion.

In the past, when a person has a million, wow, he can live it up. These days, it's hardly enough to buy even a shoebox condo in district 9. In order to define a millionaire by today's terms, and this is only my own personal view, I think that person has to earn at least a million a year. Think about it, only with at least a million of income a year can one afford the basic luxuries in life without having to think twice about how he spends (within reasonable bounds - if one needs to buy a Lamborghini every year then that's going overboard and clearly insufficient) or fear depleting his networth.

I wanted to touch on this point lest we lull ourselves into the trap that by having a million or two we can consider ourselves a millionaire, which I think is clearly not the case.

Any thoughts or views on what today's definition of a millionaire ought to be?

Last edited by whizzard; 13-08-2013 at 12:21 AM.
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  #46 (permalink)  
Old 13-08-2013, 06:48 AM
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RE appreciates at approximately 7% p.a. So, a million dollar RE was previously worth,

$500k 10 years ago,
$260k 20 years ago,
$131k 30 years ago.
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  #47 (permalink)  
Old 13-08-2013, 07:16 AM
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Dear Millionaires, I can't help but want to point out that it actually spells Basel, not Basle.
It's both. In Switzerland, they use French and German. Basel is the French Spelling, while Basle is the German spelling.

BTW, It was explained to me by the head of BIS that the capital adequacy ratios are not set by BIS. BIS is simply the location that the finance ministers meet.


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  #48 (permalink)  
Old 13-08-2013, 10:01 AM
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some people here really hypocritical.

want to show off then be upfront about it, want to humble then dun mention u are a millionaire at all. sounds dam fake when you keep dropping hints u r a millionaire then followed by the humble act of "oh btw thats nothing in sg lah"

this sound just like the typical trick conmen like kishore, kiyosaki, adam khoo use during their get rich quick courses
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  #49 (permalink)  
Old 13-08-2013, 01:24 PM
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Originally Posted by whizzard View Post
In order to define a millionaire by today's terms, and this is only my own personal view, I think that person has to earn at least a million a year. Think about it, only with at least a million of income a year can one afford the basic luxuries in life without having to think twice about how he spends (within reasonable bounds - if one needs to buy a Lamborghini every year then that's going overboard and clearly insufficient) or fear depleting his networth.
Has it to be a million every year? I have earned a million before, but not every year. So, in those years that I earn $900K, I'm not a millionaire?

Do you count dividend and rental income? rise in equities and real estate? or just salary & bonus? If you count any of the former, then it has been quite easy the last few years.

Even if you change your Lamborghini every year, the depreciation over the 1st year is probably around $200K, so it's clearly affordable if you "only" earn a million a year.
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  #50 (permalink)  
Old 13-08-2013, 01:34 PM
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Originally Posted by Unregistered View Post
some people here really hypocritical.

want to show off then be upfront about it, want to humble then dun mention u are a millionaire at all. sounds dam fake when you keep dropping hints u r a millionaire then followed by the humble act of "oh btw thats nothing in sg lah"

this sound just like the typical trick conmen like kishore, kiyosaki, adam khoo use during their get rich quick courses
I don't think they are necessarily hypocritical, just that they are feeling lonely at the top, without many high net-worth bros to talk to. Some of them are salary men, who work so hard for their millions that they (1) don't have time to attend Ferrari & Lambo owners events or (2) became rich from being skinflint, and don't have a Ferrari or Lambo, and hence can't attend the events.

They are already showing off indirectly. They should show off directly.


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