How Much Money Do You Need to Be Satisfied?

By Laura Rowley

Two new research papers argue that money can buy life satisfaction, but not happy feelings -- and that earnings beyond $75,000 a year don't buy a lot more happiness.


First, a Gallup survey of 136,000 people in 132 nations found higher income is strongly correlated with how people evaluate their lives, but only moderately with day-to-day positive feelings. The study appears in the July issue of the Journal of Personality and Social Psychology.

"Does money make people happy? We must say it increases the likelihood that they will be satisfied a lot," says study co-author and psychologist Ed Diener of the University of Illinois, Urbana-Champaign, in a statement. "In our study of richest people, there were a few very unhappy people."

Researchers crafted several ways to measure different types of well-being: First, they asked respondents to do big-picture assessment of their lives, ranking themselves on an imaginary ladder from zero to 10 (with 10 representing "the best possible life for you" and zero the worst possible life). They found that life satisfaction rises significantly with household income.

"Life satisfaction is a judgment about life -- one sits back and reflects," Diener explains. "People spend most of their time making and spending money, and it is one of the big long-range goals for most people, and so it affects life satisfaction." That link between money and satisfaction was consistent across different nations, age groups, economic classes, gender and both rural and urban dwellers.

The survey also measured happiness in another way: Respondents were asked about their experiences of the previous day: Did they have a lot of positive feelings (enjoyment and smiling/laughing) or negative feelings (anger, sadness, worry and depression)? Were they treated with respect? Did they have the opportunity to do what they do best, learn something new and choose how their time was spent?

Using the Ladder

These attributes -- what Diener calls "social capital and mastery" -- had a more significant impact on day-to-day positive feelings than income. "Social capital means having others one can count on, being respected, and so forth -- and this predicts positive feelings," Diener explains.

"Mastery means learning new things and using one's abilities -- again, this predicted positive feelings. Whereas life satisfaction reflects whether people are obtaining their values and goals in a long-term and big-picture sense, positive feelings seem to arise from momentary things that are prewired, since feeling good about the support of others and about using skills are both necessary for humans to thrive and survive."

In separate study, Nobel laureate Daniel Kahneman and Angus Deaton of Princeton University analyzed more than 450,000 responses to the Gallup-Healthways Well-Being Index, a daily survey of 1,000 U.S. residents from 2008 to 2009. This survey also used the "ladder" scale and asked questions about emotional experiences in the prior day.

The authors found that while hedonic well-being -- or happy feelings -- rises with income, it plateaus around $75,000 -- although life satisfaction ratings continue to improve. Moreover, lower income exacerbated the emotional pain associated with poor health, divorce and being alone.

"More money does not necessarily buy more happiness, but less money is associated with emotional pain," the authors write. "Perhaps $75,000 is a threshold beyond which further increases of income no longer improve people's ability to do what matters most to their emotional well-being: spending time with people they like, avoiding pain and disease and enjoying leisure. It is also likely that when income rises beyond this value the increased ability to purchase positive experiences is balanced, on average, by some negative effects.

"Our data ... do not imply that people will not be happy with a raise from $100,000 to $150,000, or that they will be indifferent to an equivalent drop of income," they continue. "Changes of income in the high range certainly have emotional consequences. What the data suggest is that above a certain level of stable income, people's emotional well-being is constrained by other factors in their temperament and their life circumstances."

Both studies raise an important question: What is it about income that makes people satisfied with their lives? Is it the stack of cash in the bank; the means to afford basic needs and luxuries; psychological intangibles that tend to come with money, such as status; or the ability to achieve important long-term values and goals -- such as funding a child's college education?

"I wonder if the 'strong' association between income and satisfaction is really a surrogate for something else, such as having a successful career, or having travel or experiential opportunities that you don't otherwise have," argues Kennon Sheldon, psychologist at the University of Missouri, Columbia. Researchers in the global study did examine some of those issues by asking households a range of other questions, including whether there were times in the past year when they did not have enough money for food or for shelter; whether they felt satisfied with their standard of living; and whether they had a television, computer and access to Internet.

Not surprisingly, the one-quarter of respondents who said basic needs were not met reported lower life satisfaction. But researchers were surprised to find that the satisfaction with standard of living and the overall evaluation of life were more highly correlated in wealthy than in economically underdeveloped nations.

This undermines the notion that money is most important when it helps meet basic needs -- and suggests that the connection between higher income and life evaluation rests on the ability to fulfill material aspirations.

Relatively Speaking

Part of the reason may be that people in developed consumer economies have been socialized to value both material achievements and competition, and so they feel satisfied if they have more than the Joneses.

The "ladder" scale invites relative comparisons, says Carol Graham, senior fellow at the Brookings Institution and author of the new book "Happiness Around the World: The Paradox of Happy Peasants and Miserable Millionaires."

"More framed questions -- such as the best possible life ladder -- put the whole thing in relative terms, and then it is not a surprise that people think more in income terms and their relative position," she explains. "More open-ended questions, like 'generally speaking how happy are you with your life' or even an even more pure measure of effect, such as 'how frequently did you smile yesterday' elicit other emotions/conceptions of happiness and correlate much less closely with income. The ladder question relates more to how people think about what they want to achieve in their life, the latter questions about how people feel about their lives, relationships and so on."

Graham tested these questions against each other in a survey of people in Afghanistan. "I found that people in Afghanistan were happier than the world average and smiled as often as Latin Americans did, but Afghans scored much lower than the world average when asked the framed best possible life question," she notes. "They know where they stand in relative terms, in other words, despite being naturally cheerful."
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Createwealth8888:

Earn $75K a year and then learn to overcome jealousy and live your own life; probably this is the secret to satifaction and happiness.

Learning to Overcome Jealousy and Live Your Own Life

When picking stocks, keep it simple?

"Investing is part science and part art, and going for a business you would like to own works best" - Gabriel Chen, small change, invest, July 11, 2010 thesundaytimes

Gabriel is talking about first-half of the World Cup Final, the second-half of the match comes from "part luck and part intuition"

"Stock picking is part science, part art, part luck, part intuition, and always uncertain - "not precisely knowing." - ???? (Forgotten)


Part Luck

When one works harder, one gets lucky. So to improve our luck in our investing, we may need to put in a  minimum of 10,000 hours hard work

Part Intuition

"The intuitive mind is a scared gift and the rational mind is a faithful servant. We have created a society that honors the servant and has forgotten the gift." - Albert Einstein

"Intuition will tell the thinking mind where to look next." - Jonas Salk

"The best purpose of gut intuition is to keep us from wasting time on wrong approach and to keep our conscious, rational mind focused on what is important." - Curtis Faith, the best legendary turtle


Intuition is the apparent ability to acquire knowledge without inference or the use of reason. “The word ‘intuition’ comes from the Latin word 'intueri', which is often roughly translated as meaning ‘to look inside’ or ‘to contemplate’." Intuition provides us with beliefs that we cannot necessarily justify.


When you develop your feel and intuition for the markets, you build your confidence. By doing that, you trust yourself more and you do not feel the urge to follow others including the gurus and naysayers. You are comfortable with your own conclusion even if it goes against the norm and even against the charts and analyst reports. You feel comfortable with the outcome even if it is unfavorable.

Knowing the difference between intuition and emotions is something that will come with experience. If you are making a trading decision and you find that your heart is beating fast or you have regretted after making the decision when the events turn unfavorable, you are probably making an emotional rather than an intuitive decision.
 
Fear Of Uncertainty
 
The ability to make decisions under conditions of uncertainty does not come naturally. For most people, making decisions under uncertainty is hard - very hard. Even for those TA practitioners, they will still wait for some confirmation signals before taking a leap.
 
Sometimes, we must stop analyzing further and use our intuition to make quick decisions with whatever imperfect information at hand and knowing that the outcome may be totally different than what is expected without losing our confidence to make similar decisions again.

Greed And Fear - Part 6

Read? Greed And Fear - Part 5

• 2009 was a year of less fear and more greed. It was the year for bulls and also a happy year for buy-and-hold.
• 2010 will be different. It will be a year of fear and greed playing out in the market. It will not be a good year for buy-and-hold. It will be a year for those who have greater guts win. If you don't have strong heart, it is better to avoid this roller-coaster ride in the market.

Greed And Fear - Part 5

Read? Greed And Fear - Part 4

Market trading volume has been low due to World Cup?

So World Cup is over tomorrow and earning reporting season will begin next week it may help to suck in more and more traders into the market to provide higher trading volume and liquidity.

Low market volume due to World Cup or More Fear in the Market? We shall see next week.

More lunch boxes arriving soon?

That Dividend Myth

From the book "Your First $1,000,000. Making It In Stocks" by Dr Michael Leong

Dividends give one a false sense of security, as we often associate dividends with guaranteed returns year after year. If I put money in the bank, I willl get interest on the capital and this is almost guaranteed (so long as the bank doesn't go bust, which is a rarity). My original capital will not grow but I am assured of a constant yearly payout.

One should not look at stocks as dividend plays because one's capital is never guaranteed. It could go up as well as down, and against the quantum by which it could move, the dividend payouts would pale in comparsion.

Investing in stocks is risky. We should not think otherwise by using dividend yields to make ourselves feel better.

If you invest in stocks, you are primarily looking for capital appreciation. If there are good dividend yields, this is just sweetener. You should not use sweeteners as the reason to invest in stocks because all stocks go up as well as down.

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Createwealth8888:

Unlike most dividend yield players using their capital I use a basket of pillow stocks to collect dividends so there is no hard earning money at risks at all.

Portfolio Management - Asset Allocation, Diversification, and Rebalancing

Minimum of 10,000 hours hard work

Read on Outlier

How many retail investors are willing to put in a minimum of 10,000 hours hard work into their investing journey to make it a success?

Most of them are just willing to save more and invest money instead of spending some more quality time into acquiring investing knowledge and skills to survive in the market.

I can't trade my dividend yield stocks?

YOU CAN’T HAVE YOUR CAKE AND EAT IT TOO

If I bought Stock A at 10% dividend yield; I will have to wait at least 10 years to reach 100% ROC.

What if I trade Stock A at 5% ROC per trade? Can I probably trade at least 20 times over 10 years to get at least 100% ROC? Do you think it is not possible?

If you are already spending lots of your quality time in analyzing the stock market and company fundamental, do you still think it is too difficult to find market opportunity for 20 profitable trades at 5% ROC per trade over 10 years?

STI Major Data Points Since 1990

Time the Market?

"Bulls climb up a wall of worry, bears slide down in a slope of hope ."

Gaint wall of worry for the bulls at 2982 - 3020

So are you becoming more fearful or getting more greedy?

Time the Market?

This will likely to happen to you if you are trying to time the market by becoming a bull or bear at anytime.

"Bulls climb up a wall of worry, bears slide down in a slope of hope ."

Timing the Market is difficult. Timing your own profit goal is easier.

Set your own profit target that you are happy with and then wait patiently for the time to come - can be in days, weeks, months or even years and wait for it to come! Don't worry and be happy!

Stock Gains Aren't Just 'Paper Profits': Greenspan

By: Michelle Lodge Digg


The stock market rally over the past few days has been encouraging and represent real profits, former Federal Reserve chairman Alan Greenspan told CNBC Thursday.

“A lot of people think of stock-market gains as paper profits. I think that’s the wrong slant,” said Greenspan.

Greenspan was interviewed live while attending the Aspen Institute Ideas Festival 2010 in Colorado, which is an event that draws leaders in the fields of business, science, the arts and politics. It concludes on Sunday.

“Stock prices tend to move with the economy, with some lead,” he added.

In a CNBC interview earlier in the week, Greenspan said stock market declines are "typical" of the recovery process.

In Thursday's interview, the former Fed chairman said that between March of 2009 and 2010, 401 (k) accounts had increased by $800 billion. “That’s a huge amount,” he added.

Greenspan also said:

Commercial banks and nonfinancial corporations are holding on to some $3 trillion in cash because “they’re scared.” And banks aren’t lending because “they are afraid they won’t get their money back.”

China is buying foreign currency, including the US dollar, because their leaders don’t acknowledge that their currency is undervalued.

BrasFELS yard in demand.

Nomura's Report on Kep Corp
8 Jul 10

Petrobras tender parties keen to use BrasFELS yard.


Keppel’s BrasFELS yard has been cited in three out of five contract tenders in a recent Petrobras contract award as the choice yard to build offshore rigs to meet the Brazilian oil major’s demand for homebuilt offshore fleet. There were three bids to build a total of four drillships and two semi-submersible rigs at Keppel’s BrasFELS yard submitted by both Brazilian and overseas offshore owner/operators.

These rigs will eventually be chartered to Petrobras by these rig operators/owner companies, which will own the rigs, according to current tender guidelines.


Tender participants bet on BrasFELS yard


Keppel’s BrasFELS offshore shipyard remained in demand in the second round of contract tenders for Petrobras’ 28 offshore rigs-building programme, underlining our view that the yard will secure a good share of Petrobras’ new contracts given its strong track record with Petrobras and building experience in Brazil.

There were three bids to build a total of four drillships and two semi-submersible rigs at Keppel's BrasFELS yard by both Brazilian and overseas offshore owner/operators.

These rigs will be chartered to Petrobras by these rig operators/owner companies that will own the rigs.

Keppel had also in the earlier first round submitted tenders to build two semi-submersibles and seven drillships, which will be owned by Petrobras.

Petrobras received bids from five companies offering to supply chartered deepwater rigs under this second part of its domestic offshore rig-building programme:

(1) Quieroz Galvao Oleo E Gas to build two drillships at Keppel’s BrasFELS yard;

(2) Petroserv to build two drillships at Keppel’s BrasFELS yard;

(3) Sau Paulo-based Etesco bid to build two drillships at a new yard to be built by Brazil’s OSX group, and to build two semi-submersibles at Keppel’s BrasFELS yard;

(4) Saipem’s tender offer to build four drillships at a proposed Estaleiro Ilha (EISA) yard in the Alagoas state;

(5) Norway’s Odfjell bid to build two drillships at another new shipyard proposed by Galvao Engenharia-Alusa.

Also, three parties have been disqualified on technical grounds in the first round of the 28-rig tender. These include South Korea’s STX and Brazilian shipyard Engevix from the 7 drillships tender, and Estaleiro Ilha (EISA) from the bidding for two semisubmersible units.

We believe Petrobras is keen to go ahead with the 28-rig tender with results likely to be announced before end-2010. The Brazilian state-owned oil group continues to draw attention in wake of its upwardly revised future developmental plans and decision to go ahead with its plans despite the recent deepwater disaster in the Gulf of Mexico.

While it has delayed its target date to sell shares from the end-July to September, the NOC appears to have no plans to hold back its deepwater projects. Indeed, the Brazilian senate’s approval of an oil-backed rights issue for Petrobras could only help hasten the process.

Noble regarding a potential transaction which would involve Gloucester acquiring certain of Noble's Australian coal assets

Reference is made to the article in today's Australian Financial Review stating that Gloucester Coal Ltd (Gloucester ASX: GCL) is among other things, seeking to raise up to $500 million, and to buy certain assets from Gloucester's parent, Noble Group Limited (Noble).


As previously advised and as set out in Gloucester's Target Statement dated 21 June 2010, Gloucester is in discussions with Noble regarding a potential transaction which would involve Gloucester acquiring certain of Noble's Australian coal assets. No agreement has been reached between Gloucester and Noble and no decision has been made in respect of any capital raising.
 
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Createwealth8888:
 
May be is a pretty good way of off loading its assets like dumping into a biz trust?

Semb Corp: Sold $4.25 ROC 5.0%

Hope to gather more feathers for a bigger pillow soon ... (Turkey is getting difficult to find)

This is the second time that I buy high and sell higher. Buying back lower sometime can be difficult.

Round 52: ROC 5.0%, 65 days, B $3.99 S $4.25 (Bought back higher)


Round 51: ROC 9.6%, 34 days, B $3.47 S $3.83 (Bought back higher)
Round 50: ROC 3.1%, 6 days, B $3.22 S $3.34
Round 49: ROC 7.9%, 91 day, B $3.14 S $3.41

SCI - Testing resistance tmr?

May be my lunch boxes will be arriving tmr?

Critical illness insurance pays you for living? A Wake Up Call!

Read more on Critical illness insurance pays you for living - Revisit

Read one man's Critical Illness claim


"We bought coverage for Critical Illnesses on good faiths and don't ever expect the insurance companies to pay on good faith as they are not your father or mother who helps to pour milk into your mouth as they exist to make money for their Management and their shareholders." - Createwealth8888

Insurance Companies Work for Shareholders, Not Customers

My Investment Marathon Race (2003 - 2011)

H1 2010 Quarterly Performance Report

With only 1.5 years left to the finishing line on 31 Dec 2011, what should I do with the rest of the race?

1. Take a steady walk to the finishing line and make it a half-race.

2. Jog all the way to the finishing line to make it a three-quarter race.

3. Run at double speed to complete it with full glory. What if next year got Scary Bear. How?

Thinking hard!

Getting bullish or worse is yet to come?

What did you hear?

Who do you follow?

SCI - Closing at day high

Will my lunch boxes arrive tmr?

World Cup and Stock Market

Ball is round so no one can really predict who will win the matches in World Cup!

Germany 4 Argentina 0 - Can anyone belive it can happen?

Men are mad in the Stock Market so Market can suddenly change gear either up or down.

SCI - Testing resistance. Can it break tmr?

Board of Cascal withdraw its recommendation to reject Sembcorp's offer

By Mok Fei Fei

Posted: 05 July 2010 1302 hrs

SINGAPORE: Conglomerate Sembcorp Industries said on Monday that the board of its takeover target, Cascal, has withdrawn its recommendation to reject its offer.

Previously, the board of US-listed Dutch water firm Cascal told shareholders to reject Sembcorp's offer and not tender their shares in the offer.

The board has now expressed no opinion in the matter and remains neutral about the offer.

It changed its recommendation given Sembcorp's intention to delist Cascal from the New York Stock Exchange.

Given that proposal, Cascal's board said there is a substantial likelihood that no active trading market will exist for the shares.

As such, shareholders may not be able to realise value for their shares, in the short term or long term that is comparable to the Sembcorp offer.

All of Cascal's directors and executive officers have indicated that they intend to tender all of their shares for purchase pursuant to the Offer.

Sembcorp adds that 25,722,459 Cascal shares have been tendered into and not withdrawn from its Offer.

This represents about 83.6 per cent of the outstanding Cascal shares.

Sembcorp first announced that it would be acquiring Cascal in April after negotiating a private deal with Britain's Biwater Investments to buy its entire 58.4 per cent stake in Cascal.

It then offered to buy all the remaining shares of Cascal that it does not own.

The offer and withdrawal rights are scheduled to expire at 5pm New York time on July 8. - CNA/vm

Do Hungry People Take Bigger Financial Risks? - Part 3

Do Hungry People Take Bigger Financial Risks? - Part 2

"CAGR is your Speed-O-Meter in your investment marathon race" - Createwealth8888


$200K to $1M - Full Marathon
$500K to $1M - Half Marathon
$750K to $1M - Quarter Marathon

$200K to $1M - Full Marathon

You can't walk a Full Marathon, you have to run most of the time; may be occasionally can jog or walk.

Even you can reach the finishing line by walking the Full Marathon; but you will find that all marathon officials and other runners are at home sleeping liao.

$500K to $1M - Half Marathon

You can run or jog.

$750K to $1M - Quarter Marathon

You can even walk.

The moral of the Story

Know your own marathon race and check your Speed-O-Meter. When you need to run most of the time then you better not walk for too long.

Four Simple Rules for his Turtles

The lessons Richard Dennis taught his Turtles in the class can be boiled down to four simple rules:

1. Trade with an edge - Make sure that you have a trading strategy that will make money.
2. Manage Risk - Don't trade with so much leverage that you risk losing everything.
3. Be consistent - Do this to reap the benefits of your trading strategy.
4. Keep it simple - Don't try to make trading more complicated than it actually is.

"The great irony of trading is that it is difficult precisely because it is so very simple." - Curtis Faith

STI ETF - Simple to buy but doesn't mean no emergency exit risk!

STI ETF is simple to buy at disciplined regular intervals i.e. no need to monitor and time the market; but it doesn't necessary mean no emergency exit risk!

Passive buy-and-hold long-term investors also must take note of your emergency exit risk if you ever need to liquidate huge sum of money from your STI ETF holding in a very bad market condition like the one in Q1 2009.

STI ETF has crashed to the low at $1.50 on 10 Mar 2009

Probably, STI ETF is a good investment strategy for long-term passive investors who want to buy slowly over a long time frame for wealth preservation and then liquidate the wealth slowly over long time frame or pass it as wealth to the next generation.

Read more 5 Myths About ETFs - Part 4

I listened to Ah Gong's wise words

Many years ago, Ah Gong said that Singapore has too many banks. I listened to him and bought Tat Lee Bank - one of the smallest banks and was affordable to me at that time.

The market listened to Ah Gong and soon Tat Lee Bank was eaten up Keppel Bank. I made some nice profits.

Some years later Ah Gong said four Banks in Singapore was more than enough.

Again I listened to Ah Gong's wise words and bought into Keppel Bank - the smallest bank.

Soon, the market listened to Ah Gong and Keppel Bank was eaten up. I made money again.

Again Ah Gong said four Banks in Singapore is too many. Big Four became Big Three but this time I got the wrong ball and didn't make any money.

Now Ah Gong said Two is enough.

I will listen to Ah Gong's wise words and get ready to buy.

UOB is a family-controlled board so it is harder to eat up and the likely prey by DBS is OCBC.

Will the market listen to Ah Gong's wise words? You bet.

Next Biz Trust - Semb Corp-Green?

Hyflux and Kep Corp have unlocked their shareholder's value by offloading their assets into Biz Trusts.

When will Semb Corp follow them and unlock its shareholder's value by offloading its assets into S-Green or Semb Green?

Mr Tang, please don't let us wait too long and anounce your plan at H1 2010 result briefing! LOL

Kep Corp - Big Pay Day. Thank you once again!

K- Green (KGT) - dividend in specie to Kep Corp's shareholder

An extra-ordinary good year; but I  don't think it would happen again.

So my 2009 full year dividend yield = 5.3% (interim $0.15) + 8.1% (final $0.23) + 8.1% (credited from KGT)
                                                      = 21.5%


Are you too looking for Market Gems?
 
Who says Blue Chips are not value stocks and dividend yield play?
 
In the next world crisis, take a good look at blue chips as some of them will be crashed into Blue Gems and don't forget to pick them up.
 
 

All work sucks? - Part 2

All work sucks? - Part 1

Rich Dad's Cashflow Quadrant

When you are an employee and didn't really make it in your job. At most you don't make money.

But you choose to invest and didn't make it. You may lose more money than expected and become poorer.

For those who are thinking of supplementing your earned income from the stock market and believing that it can be easily done. Yes, investing in stock market is fairly simple but never easy. Simple is not Easy. Simple may also means losing money is Easy.

There is no room for failure if you intend to supplement your earned income from the stock market.

"Do or Do not. There is no try" -

If you Do, look for your Master.

Do Hungry People Take Bigger Financial Risks? - Part 2

Do Hungry People Take Bigger Financial Risks?

Yes, if we wanted to reach there in less than 25 years.

The final destination can be the same for most of us; but the road travelled may be totally differently depending what we have at the start of our journey. Account size does matter!

SCI - Not too bad!

Do Hungry People Take Bigger Financial Risks?

The New York Times
On Tuesday June 29, 2010,

Do Hungry People Take Bigger Financial Risks?



Forget the Volcker Rule, a Tobin tax, bonus caps and other Washington proposals intended to make our financial system more stable. Maybe what Wall Street's risk-loving bankers really need is a better diet.

That is one possible implication of a fascinating new study, which finds that people who are hungry are more risk-seeking, and people who are sated are more risk-averse.

Researchers put study subjects on different diets to affect their metabolic states, and then week after week gave them with options to participate in different kinds of lotteries. Some of the lotteries were riskier than others, in terms of their expected and potential payouts. Generally speaking, when subjects were in hungrier states, they chose the riskier lottery options, and when they were full they choose safer lotteries.

The authors suggest that this means metabolic states, and the hormones associated with them, can affect our appetite for all sorts of risks. From the study:Changes in metabolic state systematically altered economic decision making...

A direct comparison can be made with Prospect Theory, where changes in wealth below a reference point induce risk-seeking behaviour, while earnings above a reference point promote risk-aversion. Similar reference-dependent change in risk attitude for food rewards has also been seen in animals.The study is based on a small sample -- about 20 students -- but seems destined to inspire further research on the evolutionary advantages of financial risk-taking.
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Createwealth8888:

Similarly for investing, when the account size is smaller one should take bigger risks to grow the wealth at faster rate and when the account size is bigger one should take smaller risks and moves more towards perservation of wealth.

Australia strikes deal with miners on super tax

SYDNEY: New Australian Prime Minister Julia Gillard on Friday announced a compromise deal with major mining companies over a 40 percent super tax on resource profits that helped topple her predecessor.


The tax headline rate was slashed to 30 percent for coal and iron ore profits from 40 percent, while the threshold at which the tax will kick in will be raised to 12 percent from the proposed five percent level, she said.

"I can now announce that we have reached agreement on the basic structure for minerals taxation for the future," Gillard told reporters in Canberra.


- AFP/de

STI - 2,820.35 -15.16 -0.53%

By JOANNAH PEREZ


SINGAPORE - Singapore shares closed lower on Thursday with the blue-chip Straits Times Index down 15.16 points to 2,820.35.

Volume was 1.02 billion shares worth $1.07 billion.

Losers led gainers 304 to 119.

Governments Moving to Cut Spending, in Echo of 1930s

By: David Leonhardt
The New York Times

The world’s rich countries are now conducting a dangerous experiment. They are repeating an economic policy out of the 1930s — starting to cut spending and raise taxes before a recovery is assured — and hoping today’s situation is different enough to assure a different outcome.

In effect, policy makers are betting that the private sector can make up for the withdrawal of stimulus over the next couple of years. If they’re right, they will have made a head start on closing their enormous budget deficits. If they’re wrong, they may set off a vicious new cycle, in which public spending cuts weaken the world economy and beget new private spending cuts.

On Tuesday, pessimism seemed the better bet. Stocks fell around the world, over worries about economic growth.

Longer term, though, it’s still impossible to know which prediction will turn out to be right. You can find good evidence to support either one.

The private sector in many rich countries has continued to grow at a fairly good clip in recent months. In the United States, wages, total hours worked, industrial production and corporate profits have all risen significantly. And unlike in the 1930s, developing countries are now big enough that their growth can lift other countries’ economies.

On the other hand, the most recent economic numbers have offered some reason for worry, and the coming fiscal tightening in this country won’t be much smaller than the 1930s version. From 1936 to 1938, when the Roosevelt administration believed that the Great Depression was largely over, tax increases and spending declines combined to equal 5 percent of gross domestic product.

Back then, however, European governments were raising their spending in the run-up to World War II. This time, almost the entire world will be withdrawing its stimulus at once. From 2009 to 2011, the tightening in the United States will equal 4.6 percent of G.D.P., according to the International Monetary Fund. In Britain, even before taking into account the recently announced budget cuts, it was set to equal 2.5 percent. Worldwide, it will equal a little more than 2 percent of total output.

Today, no wealthy country is an obvious candidate to be the world’s growth engine, and the simultaneous moves have the potential to unnerve consumers, businesses and investors, says Adam Posen, an American expert on financial crises now working for the Bank of England. “The world may be making a mistake, and it may turn out to make things worse rather than better,” Mr. Posen said.

But he added — after mentioning China, India and the relative health of the financial system, today versus the 1930s — that, “The chances we’re going to come out of this O.K. are still larger than the chances that we aren’t.”

The policy mistakes of the 1930s stemmed mostly from ignorance. John Maynard Keynes was still a practicing economist in those days, and his central insight about depressions — that governments need to spend when the private sector isn’t — was not widely understood. In the 1932 presidential campaign, Franklin D. Roosevelt vowed to outdo Herbert Hoover by balancing the budget. Much of Europe was also tightening at the time.

If anything, the initial stages of our own recent crisis were more severe than the Great Depression. Global trade, industrial production and stocks all dropped more in 2008-9 than in 1929-30, as a study by Barry Eichengreen and Kevin H. O’Rourke found.

In 2008, though, policy makers in most countries knew to act aggressively. The Federal Reserve and other central banks flooded the world with cheap money. The United States, China, Japan and, to a lesser extent, Europe, increased spending and cut taxes.

It worked. By early last year, within six months of the collapse of Lehman Brothers, economies were starting to recover.

The recovery has continued this year, and it has the potential to create a virtuous cycle. Higher profits and incomes can lead to more spending — and yet higher profits and incomes. Government stimulus, in that case, would no longer be necessary.

An internal memo from White House economists to other senior aides last week noted that policy makers “necessarily tend to focus on the impediments to recovery.” But, the memo argued, the economy’s strengths, like exports and manufacturing, “more than make up for continued areas of weakness, like housing and commercial real estate.”

That optimistic take, however, is more debatable today than it would have been a month or two ago.

As is often the case after a financial crisis, this recovery is turning out to be a choppy one. Companies kept increasing pay and hours last month, for example, but did little new hiring. On Tuesday, the Conference Board reported that consumer confidence fell sharply this month.

And just as households and businesses are becoming skittish, governments are getting ready to let stimulus programs expire, the equivalent of cutting spending and raising taxes. The Senate has so far refused to pass a bill that would extend unemployment insurance or send aid to ailing state governments. Goldman Sachs economists this week described the Senate’s inaction as “an increasingly important risk to growth.”

The parallels to 1937 are not reassuring. From 1933 to 1937, the United States economy expanded more than 40 percent, even surpassing its 1929 high. But the recovery was still not durable enough to survive Roosevelt’s spending cuts and new Social Security tax. In 1938, the economy shrank 3.4 percent, and unemployment spiked.

Given this history, why would policy makers want to put on another fiscal hair shirt today?

The reasons vary by country. Greece has no choice. It is out of money, and the markets will not lend to it at a reasonable rate. Several other countries are worried — not ludicrously — that financial markets may turn on them, too, if they delay deficit reduction. Spain falls into this category, and even Britain may.

Then there are the countries that still have the cash or borrowing ability to push for more growth, like the United States, Germany and China, which happen to be three of the world’s biggest economies. Yet they are also reluctant.

China, until recently at least, has been worried about its housing market overheating. Germany has long been afraid of stimulus, because of inflation’s role in the Nazis’ political rise. In responding to the recent financial crisis, Europe, led by Germany, was much more timid than the United States, which is one reason the European economy is in worse shape today.

The reasons for the new American austerity are subtler, but not shocking. Our economy remains in rough shape, by any measure. So it’s easy to confuse its condition (bad) with its direction (better) and to lose sight of how much worse it could be. The unyielding criticism from those who opposed stimulus from the get-go — laissez-faire economists, Congressional Republicans, German leaders — plays a role, too. They’re able to shout louder than the data.

Finally, the idea that the world’s rich countries need to cut spending and raise taxes has a lot of truth to it. The United States, Europe and Japan have all made promises they cannot afford. Eventually, something needs to change.

In an ideal world, countries would pair more short-term spending and tax cuts with long-term spending cuts and tax increases. But not a single big country has figured out, politically, how to do that.

Instead, we are left to hope that we have absorbed just enough of the 1930s lesson.

This story originally appeared in the The New York Times

Electricity tariffs to go up again

Other prices will soon follow this one - UP and inflation rate is going to be higher than 3.2% soon.

Low interests rate. Higher inflation rate. Lower pay rise. Hard times ahead!

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SINGAPORE: Households will pay more for their electricity tariffs from July to September.


SP Services says that the electricity tariffs for households will go up by 0.57 cents per Kilowatt-hour to 24.13 cents per kWh, an increase of 2.4 percent.

It is the fifth consecutive quarter of increase.

On average, families in four-room HDB flats will pay about S$2.33 more a month.

SP Services says the average fuel oil price over the last three months remained stable at about S$102 per barrel.

However, the non-fuel components of the tariff have increased due to higher capital and operating costs of power generation.

The tariff also includes an adjustment for under-collection in the previous quarter.

- CNA/ir

Swiber lodges prelim offer for subsea services

By ANGELA TAN


Swiber Holdings Limited, which plans to list its subsea services business on the Catalist board of the SGX, said on Wednesday that the preliminary offer document of Kreuz Holdings Pte Ltd has been lodged with the Monetary Authority of Singapore.

The engineering group said in May that it would seek a single listing for the business currently handled by its Kreuz Subsea and Kreuz Subsea Marine units.

DBS Bank Ltd is thesponsor appointed for the proposed listing.

H1 2010 Quarterly Performance Report

Year Goal Hit Rate

Year Goal Hit Rate improved by +8.7% from 26.8% in H1 2009 to 35.5% in H1 2010.

(In 2003, I set some bullish progressive year goals from 2003 to 2011.

2010 Year Goal is 74.9% of 2009 Total Salary including all CPF contributions. Quite a big goal!)

CAGR III

LP's CAGR II

A Carpenter and his Measuring Tape

A carpenter uses his measuring tape to measure twice before he cuts his wood; but a private tutor doesn't really need to measure and has no wood to cut and he will think that why does anybody in the world need a measuring tape?

CAGR is like a measuring tape to an investor.

Why you need to measure? Measure, measure, measure - Part 2

To ease measuring: Two Bank Accounts? No, You may need Four! - Part 2

LP's little problem with CAGR

"I think cagr can be used to find out one's investing returns per year, compounded annually. However, it doesn't work if you inject or withdraw cash, affecting the initial value. I have such problems because I never did fix a investing capital and see how much it'll grow from there. I continually invest more over the years."


Injecting cash
 
CAGR isn't the actual return in reality. It's an imaginary number that describes the rate at which an investment would have grown if it grew at a steady rate.
 
Simply use "Total Invested Capital" including those cash you have injected yesterday -  anything seriously wrong with it? Do you really need to boost your ego? When investing in the stock market, it is wise to hang your ego at the door.
 
Withdrawing cash
 
When withdrawing cash, you simply treat it capital reduction. When you reduce some capital in your portfolio, you will have to similarly reduce the pro-rated Realized Profits to minimize the positive distortion in CAGR (i.e to avoid better than actual)
 
For example,
 
This is what I did when I withdrew some cash in 2009 to fund my two kids Uni expenses.
 
Total Invested Capital = $100,000; Realized Profit is $50,000
 
Capital + Realized Profit = $100,000 + $50,000 = $150,000
 
I withdrew $10,000 cash from the Portfolio.
 
$10,000/$150,000 = 6.7%
 
So I deducted 6.7% off the Capital and 6.7% off the Realized Profit.
 
After the cash withdrawal:
 
Total Invested Capital = $93,333
Realized Profit = $46,667

Strong interest in Keppel's K-Green Trust

SINGAPORE - Shares of K-Green Trust made a strong debut on the Singapore stock market on Tuesday, rising as high as $1.33 (US$0.96) with over eight million shares traded.
Around 0243 GMT, K-Green was traded at $1.22, 5.2 per cent higher than its implied price of $1.16.

'Investors are keen on buying the stock mostly because of its good dividend yield and long-term prospects for the green business,' said a local trader.

K-Green, which owns waste-to-energy and water treatment plants, is 49 per cent-owned by rigbuilding, engineering and property conglomerate Keppel Corp.

It made its Singapore market debut after its parent distributed 51 per cent of K-Green shares to existing Keppel shareholders. -- REUTERS

SEMBCORP TO DEVELOP A NEW INTEGRATED WASTEWATER TREATMENT FACILITY IN JURONG ISLAND’S TEMBUSU DISTRICT

- Key customer for wastewater treatment in Tembusu secured


- New facility will more than double Sembcorp’s wastewater treatment capacity on Jurong Island

SINGAPORE, June 29, 2010 – Sembcorp is pleased to announce that its utilities business has secured its first wastewater treatment customer in the new Tembusu district of Singapore’s Jurong Island petrochemical cluster. Sembcorp will provide industrial wastewater treatment services to German specialty chemicals company LANXESS’ butyl rubber facility from a new integrated industrial wastewater treatment plant to be located in Tembusu. Expected to be completed by the second quarter of 2012 at an investment cost of approximately $40 million, the new facility will more than double Sembcorp’s current industrial wastewater treatment capacity on Jurong Island, and will be sufficient to serve LANXESS as well as further customers. The facility is expected to have an initial total capacity of 9,600 cubic metres per day to serve its customers.

Commented Sembcorp Group President & CEO Mr Tang Kin Fei, “This new contract from LANXESS is yet another vote of confidence in Sembcorp as a global leader in the provision of industrial wastewater treatment solutions to serve the specialised needs of chemical and petrochemical customers.

"With Sembcorp’s expertise and strong track record of over a decade on Jurong Island, we look forward to supporting LANXESS and other customers with our effective solutions. With this new facility, Sembcorp is well-positioned to meet growing customer needs on Jurong Island.”

Sembcorp is a well-established provider of third party outsourced utilities in the Sakra and Seraya districts of Jurong Island. The company has supplied a full range of energy, water and on-site logistics and services to chemical and petrochemical manufacturers on the island for over a decade, and has the technical and operational expertise to treat multiple streams of high concentration and complex industrial wastewater.

The contract is not expected to have a material impact on the earnings per share and net tangible assets per share of Sembcorp Industries for the current financial year.

SCI - May be it is time to move up!

CapitaLand rids stake in China co for S$117 mln, to make S$33 mln net gain

By BT

CapitaLand Limited said on Monday that its subsidiary, CapitaLand (Sichuan) Holdings Pte Ltd, has sold its entire 50 per cent stake in Sichuan Zhixin CapitaLand Co, Ltd (SZC) to Chengdu Zhixin Industrial (Group) Co, Ltd. (CZI) for RMB570 million (about S$117 million) in cash.

SZC is a property development company in China. It is a joint venture between CapitaLand and CZI, which holds the remaining 50 per cent.

'The sale is part of CapitaLand Group's ongoing strategy of capital productivity,' the company said.

The sale is expected to be completed in the third quarter of 2010.

SZC will cease to be an associated company of CapitaLand and CapitaLand will recognise in its Group consolidated financial statements a net gain of about S$33 million.

SEMBCORP SIGNS MEMORANDUM OF UNDERSTANDING TO EXPAND SEAWATER DESALINATION CAPACITY IN THE UAE

SINGAPORE, June 28, 2010 - Sembcorp Industries (Sembcorp) is pleased to announce that its wholly-owned subsidiary, Sembcorp Utilities, has signed a Memorandum of Understanding (MOU) with the Abu Dhabi Water and Electricity Authority (ADWEA) in the UAE to develop and build a new seawater reverse osmosis facility with potable water production capacity of around 30 million imperial gallons per day (MIGD). When developed, the new reverse osmosis plant will enhance Sembcorp’s total seawater desalination capacity in the UAE from 100 MIGD to 130 MIGD. The new seawater reverse osmosis facility is expected to be located on the same site as the Fujairah 1 Independent Water and Power Plant (IWPP), the largest operating hybrid desalination plant in the world, owned by Emirates Sembcorp Water & Power Company. Emirates Sembcorp Water & Power Company is a joint venture between Sembcorp Gulf Holding Co and Union Power Holding Company, subsidiaries of Sembcorp Utilities and ADWEA respectively.


Expected to cost approximately US$200 million and to be operational before end 2013, the water output of the new reverse osmosis facility is expected to be sold to the Abu Dhabi Water and Electricity Company (ADWEC) under a 20-year Water Purchase Agreement. This is in addition to the 22-year Power and Water Purchase Agreement for the current water and electricity output from the Fujairah 1 IWPP to ADWEC.

Mr Tang Kin Fei, Group President & CEO of Sembcorp, said, “We are pleased to take our strong relationship with our partner ADWEA a step further with the planned development of the new reverse osmosis plant. This new development will increase our water capacity and enable us to serve the growing needs for water in the UAE.”

Besides the Fujairah 1 IWPP, Sembcorp has also established a second beachhead in the Middle East with an investment to develop, build, own and operate a combined power and desalination plant in Salalah, Oman. The Salalah plant, with a gross power capacity of 490 megawatts and a seawater desalination capacity of 15 MIGD, is expected to begin full commercial operations in the first half of 2012.

How did you lose money in the stock market?

From my frequent visits to investment or trading blogs and forums, I have this understanding that some retail investors lost their money in the stock market due to either panic selling as they were worried that their stocks would crash to zero or they were "forced" to sell due to urgent need for money.

If you are really keen to play in the stock market, you better make sure that you will never be cornered by bad market conditions into panic or "forced" selling. Want to play, must be steady steady ones!

Property Investing - doing the Math - Part 4

Property Investing - doing the Math (Part 3)

Academician turned property millionaire

Dr Peter Yee: "My learning is that capital gain is mostly from the land. Building gives you the cash flow. Building is a deteriorated cost. It needs repair."


Yet in Singapore, some property investors are so excited over 99-year LH properties as good investment for capital gains.
 
If it is just for cash flow, is it really true that rental income is a better alternative to dividends from a well-diversified stock portfolio as passive income?
 
Passive Income - Rental vs Dividend Yield

5 Myths About ETFs - Part 4

5 Myths About ETFs - Part 3

If you look at the price volatility of STI ETF monthly chart, it can be damn scary depending when you bought it and when you need to liquidate it to meet unexpected cash expenses arising from life crisis.

It has plunged from monthly high at $3.30 in May 2008 to the monthly low at $1.60 in Feb 2009 and has since recovered to monthly close at $2.93 in Jun 2010

STI ETF is a low cost managed investment fund but it is traded like a stock.

It is volatile too!

It may cause you to lose heavily just like any individual stock when you need to liquidate it at the wrong market condition e.g. in Feb 2009.

Open your mind wide and think!

STI ETF is a low cost but not a low-risk investment and it may potentially cause you lose money when you desperately need the money.

Retirement Planning Review

Uncomfortable With Draw-down Method? - 2nd Visit

Totally no draw-down method may be harder to achieve unless I strike ToTo $5M on Monday. 

Another approach is to delay the draw-down as long as possible to reduce the need to achieve higher componding returns on Portfolio B to fight inflation.

Portfolio A : Non-volatile and less volatile stock dividends to provide sustainable retirement income
Portfolio B : Volatile stocks trading to fight inflation

So I will be shifting  towards Portfolio A and Portfolio B approach.

Uncomfortable With Draw-down Method? - 2nd Visit

http://createwealth8888.blogspot.com/2010/01/uncomfortable-with-draw-dowm-method.html

Doing the Maths for retirement without any draw-down method

For example:

We need retirement expenses of $10,000 at age 55.

Using dual portfolio strategy - Passive and Active income



Portfolio A to generate fixed passive income of $10,000 from 55 till 80 years old.

At 4% ROC, you will need 25 times the annual expenses i.e. $250,000

Portfolio B to generate active income to offset inflation from 55 till 80 years old.

See table for capital required for Portfolio B and its ROC.

Conclusion

1. With draw-down method, you can retire with 25 times your expected annual expenses at 55
2. With no draw-down method, you may need 30 - 32 times or even much more your expected annual expenses at 55 as compounding the portfolio returns at 8.7% - 7.2% through the next 25 years of Bull and Bear market cycle is not easy.
   
   

15 Insurance Policies You Don't Need

15 Insurance Policies You Don't Need

8. Life Insurance for Children


Life insurance is designed to provide a safety net for your heirs/dependents. Because children don't have heirs to worry about and, statistically speaking, most kids will grow up safe and healthy, most parents should not purchase life insurance for their kids. Instead, use the money that you would have spent on life insurance to fund an education plan or an individual retirement account (IRA).

Tips On Child Life Insurance - Part 4


14. Disease Insurance


Policies are available to cover cancer, heart disease and other maladies. Instead of trying to identify every possible disease that you may encounter, get a good medical coverage policy instead. This way, your medical bills will be covered regardless of the problem you face.


Critical illness insurance pays you for living - Revisit

MM Lee says S'pore banks may need to consolidate to expand overseas

DBS merges with OCBC? Since UOB is a family controlled bank so it is harder to eat up.

-----------------------------------------
By Imelda Saad

Posted: 25 June 2010 2256 hrs

SINGAPORE : Minister Mentor Lee Kuan Yew said Singapore's local banks may need to consolidate if they want to effectively expand overseas.

He said the three local lenders did not have the size to engage foreign markets in the same way that global leaders do.

Speaking at an event organised by the Association of Banks in Singapore on Friday, Mr Lee suggested that it might be better for the banks to consolidate to two, or even one entity to generate the mass required to break into foreign markets.

With opportunities in China and India opening up, and limited penetration in Southeast Asian markets, Mr Lee said local lenders needed scale.

He said: "We're in Indonesia in a small way, Malaysia in a small way, Thailand almost nothing. But the big future is in China and in India. And I don't see three banks as capable of making that foray as two banks… Just look at the capitalisation of the big banks in the US and in the UK."

So hard to sell!

Be Far Better At Selling Than At Buying? - Revisit

My colleague told me he has problem in selling. When Market is up no heart to sell and when market is down how to sell? After 10 years in the market, still like that.

I told him I have no problem in selling and the reason is so simple. I have yearly profit target to meet while he doesn't have one.  Profit can come from stock dividends or realized profit from selling stocks.

The profit target must be far above the total estimated stock dividends that can be collected in your portfolio to be effective in enforcing sell discipline.

So to be able to meet my yearly profit target, I will have to look hard at my portfolio and decide which ones to sell to realize profits and which ones to generate dividends. The unloved ones will be sold when market conditions still allow.

After selling some stocks, I will have to look again at the market to replenish the stock inventory for the next sell cycle. In this way, buy and sell cycles will come naturally as I need to meet profit target and sitting there doing nothing is not an option.

So when you really have problem in selling, try this cure - seriously set a yearly profit target for yourself and then make serious efforts to meet it.

Norit, PUB S'pore to sign water technology MOU

MOU not with Hyflux, Kep Corp and Semb Corp.  What will happen to Hyflux next week?

------------------------------------------
By ANGELA TAN


Netherland's Norit X-Flow and its local affiliate Norit Asia Pacific Pte Ltd (Norit), and PUB, Singapore's national water agency, will sign a memorandum of understanding (MOU) that outlines plans for cooperation on several water technologies.

The MOU explores possibilities for Norit Asia Pacific to develop a Norit Airlift™ Membrane BioReactor (MBR) Megablock validation plant at one of PUB's water reclamation plants. The validation plant will be the first of its kind in Asia, and only the second such system in the world.

The signing ceremony is scheduled for July 1, 2010 during the Singapore International Water week.

Hyflux - Sold $3.30, ROC 17.1%

I have finally decided to redeem my past sin in 2008 today.

Round 7: ROC 17.1%, 721 days, B $2.77 S $3.30

Keppel secures S$50 mln marine contracts

By ANGELA TAN


Keppel Offshore & Marine Ltd's (Keppel O&M) subsidiaries in the Philippines and Singapore have clinched contracts worth about S$50 million for the construction and upgrading of vessels.

Its yards in Subic and Batangas are each constructing a transshipment barge for PT Mitra Bahtera Segarasejati and PT Pelayaran Kartika Samudra Adijaya respectively. Both vessels are targeted for completion by end 2010.

In Singapore, Keppel Singmarine Ltd has also clinched a contract from PT Indo Straits to build a similar transshipment barge that is scheduled for delivery in the first quarter of 2011.

All three barges will be deployed in Indonesian waters to load and discharge coal between vessels during open sea transshipping operations.

In addition to the above contracts, Subic Shipyard has also been awarded a drillship upgrading job by Frontier Drilling.

Inflation in Singapore stood at 3.2%

Inflation in Singapore stood at 3.2% for the second month in a row - as the increase in prices of goods and services remained at a 14-month high.

--------------------------------------------------------------

This means that your compounded returns on all your saving and investment must be more than 3.2% for this year or else you will be having negative growth.
Personal Inflation Rate and Market Inflation Rate

One Big Thing We Don't Know About Stocks

The New York Times

Carl Richards is a certified financial planner and the founder of Prasada Capital.


The only reason we invest in stocks is to earn more than we would get from cash or bonds. The amount you are supposed to earn by taking the additional risk of owning stocks is called the risk premium. If you don't get paid more for taking the risk, you should put your money in bonds.

Over the last 207 years you got paid 2.5 percentage points more each year (on average) to invest in stocks than you did in bonds.

But you know what they say about statistics, right? In the real world, we have to deal with the fact that like all averages, this one has some serious problems. Sometimes the risk premium is higher than 2.5%, and sometimes it goes away or is hugely negative (say, in a bear market).

Until recently, most of us thought of bear markets as those three to five year periods where you grit you teeth and hang on. But recent experience is more painful than that.

In an article by Robert Arnott in the Journal of Indexes, he highlights multiple 20, 30 and even 40 year periods where we would have been better off in bonds. In other words, the risk premium did not exist.

This starts to get ugly when we admit that we have no idea when these types of prolonged bear (or sideways) markets are coming. Where are we right now in the cycle? I have no idea, and I wouldn't bet my life savings on anyone who claims to.

So earning this mythical risk premium of 2.5% is largely a function of timing, and it's not the kind of timing we can control. This is the purely random luck kind of timing: When you were born, when you sell your business, when you retire or receive a large lump sum to invest. And if the risk premium is a function of timing, and timing is a function of luck, it doesn't take much to realize that earning the mythical risk premium is a function of pure luck, too.

This is why so many of us who have been investing for 15 years feel like we are about back where we started, even if we did everything right ( assets allocated, properly diversified, didn't bail out at the bottom and so on).

Let me clear, I am not saying that the risk premium is dead, or that we should run out and sell everything. But I am suggesting that with the Dow bouncing around 10,000, it might be time to consider what you define as long term. Ask yourself if you can you live through a prolonged period where you earn no risk premium at all, and make adjustments accordingly.

Stocks by nature are risky!

"BP stock dropped 81 cents, or 2.7 percent, to $29.52, near a 14-year-old low for the company in U.S. trading. The stocks of other companies associated with the spill remained low despite Feldman's ruling."

Deepwater Horizon accident (Black Swan event)
 
You just need one really bad incident and BP tumbled down near a 14-year-old low for the company in U.S. trading.

Nick Leeson - One Bad Guy
 
"Barings Bank (1762 to 1995) was the oldest merchant bank in London[1] until its collapse in 1995 after one of the bank's employees, Nick Leeson, lost £827 million ($1.3 billion) speculating—primarily—on futures contracts."
 
You just need one really bad Guy and a 100+ years old bank gone!
 
----------------------------------------------------
 
One lesson from here - learn to recover your initial investing capital from the market sooner the better and be safe.

Judge lifts offshore drilling ban as `overbearing'

NEW ORLEANS (AP) -- A federal judge struck down the Obama administration's six-month ban on deepwater oil drilling in the Gulf of Mexico as rash and heavy-handed Tuesday, saying the government simply assumed that because one rig exploded, the others pose an imminent danger, too.


The White House promised an immediate appeal. The Interior Department had imposed the moratorium last month in the wake of the BP disaster, halting approval of any new permits for deepwater projects and suspending drilling on 33 exploratory wells.

White House spokesman Robert Gibbs said President Barack Obama believes that until investigations can determine why the spill happened, continued deepwater drilling exposes workers and the environment to "a danger that the president does not believe we can afford."

Several companies that ferry people and supplies and provide other services to offshore rigs argued that the moratorium was arbitrarily imposed after the April 20 explosion that killed 11 workers and blew out a well 5,000 feet underwater. It has spewed anywhere from 67 million to 127 million gallons of oil.

U.S. District Judge Martin Feldman, who was appointed by President Ronald Reagan and has owned stock in a number of petroleum-related companies, sided with the plaintiffs.

"If some drilling equipment parts are flawed, is it rational to say all are?" he asked. "Are all airplanes a danger because one was? All oil tankers like Exxon Valdez? All trains? All mines? That sort of thinking seems heavy-handed, and rather overbearing."

He also warned that the shutdown would have an "immeasurable effect" on the industry, the local economy and the U.S. energy supply.

Interior Secretary Ken Salazar said in a statement late Tuesday that within the next few days he will issue a new order imposing a moratorium that eliminates any doubt it is needed and appropriate.

Feldman's ruling was welcomed by the oil and gas industry and decried by environmentalists.

Feldman's financial disclosure report for 2008, the most recent available, shows holdings in at least eight petroleum companies or funds that invest in them, including Transocean Ltd., which owned the Deepwater Horizon drilling rig that blew up. The report shows that most of his holdings were valued at less than $15,000; it did not provide specific amounts.

It was not clear whether Feldman still has any of the energy industry stocks. Recent court filings indicate he may no longer have Transocean stock. The 2008 report showed that he did not own any individual shares in big companies such as BP, which leased the rig that exploded, or ExxonMobil.

Feldman did not immediately respond to a request for more information about his current holdings.

Josh Reichert, managing director of the Pew Environment Group, said the ruling should be rescinded if the judge still has investments in companies that could benefit. "If Judge Feldman has any investments in oil and gas operators in the Gulf, it represents a flagrant conflict of interest," Reichert said.

Feldman's ruling prohibits federal officials from enforcing the moratorium until a trial is held. At least two major oil companies, Shell and Marathon, said they would wait to see how the appeals play out before resuming drilling.

In his ruling, the judge called the spill "an unprecedented, sad, ugly and inhuman disaster," but said Salazar's rationale for the moratorium "does not seem to be fact-specific and refuses to take into measure the safety records of those others in the Gulf." Feldman said he was "unable to divine or fathom a relationship between the findings and the immense scope of the moratorium."

The judge said the blanket moratorium "seems to assume that because one rig failed and although no one yet fully knows why, all companies and rigs drilling new wells over 500 feet also universally present an imminent danger."

The lawsuit was filed by Hornbeck Offshore Services of Covington, La. CEO Todd Hornbeck said after the ruling that he is looking forward to getting back to work. "It's the right thing for not only the industry but the country," he said.

Earlier in the day, executives at a major oil conference in London warned that the moratorium would cripple world energy supplies. Steven Newman, president and CEO of Transocean, called it unnecessary and an overreaction.

"There are things the administration could implement today that would allow the industry to go back to work tomorrow without an arbitrary six-month time limit," Newman said.

BP CEO Tony Hayward skipped the event after coming under fire for attending a yacht race in England on Saturday rather than dealing with the spill.

BP stock dropped 81 cents, or 2.7 percent, to $29.52, near a 14-year-old low for the company in U.S. trading. The stocks of other companies associated with the spill remained low despite Feldman's ruling.

The drilling moratorium was declared May 6 and originally was to last only through the month. Obama announced May 27 that he was extending it for six months.

Rep. Edward Markey, D-Mass., chairman of the Select Committee on Energy Independence and Global Warming, slammed the ruling.

"This is another bad decision in a disaster riddled with bad decisions by the oil industry," said Markey, who was at the forefront of the effort to force BP to make underwater video of the spill public. "The only thing worse than one oil spill disaster in the Gulf of Mexico would be two oil spill disasters."

In Louisiana, Gov. Bobby Jindal and corporate leaders had complained that the moratorium would cost the region thousands of lucrative jobs, most paying more than $50,000 a year.

Feldman agreed, writing: "An invalid agency decision to suspend drilling of wells in depths over 500 feet simply cannot justify the immeasurable effect on the plaintiffs, the local economy, the Gulf region and the critical present-day aspect of the availability of domestic energy in this country."

He said Gulf drilling accounts for 31 percent of total domestic oil production and 11 percent of domestic natural gas production, and an estimated 150,000 jobs are directly related to offshore operations.

Tim Kerner, mayor of the fishing town of Lafitte, La., cheered the ruling. "I love it. I think it's great for the jobs here and the people who depend on them," he said.

The American Petroleum Institute, one of the industry's main lobbying groups, also welcomed the decision: "With this ruling, our industry and its people can get back to work to provide Americans with the energy they need, and do it safely and without harming the environment."

In its response to the lawsuit, the Interior Department had argued the moratorium was necessary while the effort to stop the leak and clean the Gulf continues and new safety standards are developed. "A second deepwater blowout could overwhelm the efforts to respond to the current disaster," the department said.

The government also challenged contentions that the moratorium would cause long-term economic harm. There are still 3,600 oil and natural gas production platforms in the Gulf.

As Feldman was issuing his ruling, the people in charge of a $20 billion fund to compensate those whose livelihoods have been ruined by the spill were on the coast Tuesday to talk with officials about the claims process.

Kenneth Feinberg, tapped by the White House to run the fund, has pledged to speed payments to fishermen, business owners and others. He was to meet with Alabama Gov. Bob Riley.

BP claims director Darryl Willis visited a claims center in a rundown strip mall in Bayou La Batre, Ala., and said the company has already cut 37,000 checks for $118 million. Claims totaling about $600 million have been filed so far.

"Anyone who feels like they have been damaged or hurt or harmed has every right to file a claim," Willis said. "These are complicated in some cases, and in some cases they're straightforward. But every person should file their claim, and they will be looked at fairly."

Associated Press Writers Pauline Arrillaga in Lafitte, La., and Jane Wardell and Robert Barr in London, and Mitch Stacy in Bayou La Batre, Ala., contributed to this report.