Kep Corp: Catching falling knife. Not fun. Right?

Round 95: Fell -17% to $8


Round 94 fell even more @ -28% to $7.10

Does it mean more pain coming?

Next time, Uncle8888 bought; you go ahead and short it! Okay?

Don't Smoke. Don't Drink. Don't Drive. Don't Casino. Don't Gamble 4D. Don't Call Chicken???

Uncle8888 has already saved so much by reducing high expenses!

Crude Oil WTI and US Net Import

Crude oil futures tumbled Friday after a new government report suggested energy company could increase production in 2015 over current levels despite the 40% decline for West Texas Intermediate since its June peak. Crude oil for January delivery settled $2.14 lower at $57.81 per barrel but January natural gas got a boost today following several days of below-average cold in the northeast U.S., rising 16 cents to $3.80 per 1 million BTU.

Here Is A Simple Way Of Seeing Who Gets Screwed Most As Oil Tumbles

Read? Here Is A Simple Way Of Seeing Who Gets Screwed Most As Oil Tumbles

Oil is crashing. On Thursday, WTI crude oil was falling again, moving back below $61 a barrel. 

Much has been made of the "breakeven" oil price for the world's drilling projects. This is the level at which the price of oil covers the cost of extracting the oil.

A simpler way to look at when the biggest oil players will start feeling the squeeze from lower prices is the "cash cost."

"Without OPEC action, an outage, or other response, cash cost is the only true floor," Morgan Stanley analyst Adam Longson said.

Cash cost is basically what it takes to keep oil production going, not what it takes to make oil production profitable or for a government to hit its budget projection. If you drop below your cash cost on a project, you've got to turn out the lights.

As you can see on the far right, the Canadian oil sands and the US shale basins are very expensive to tap. Meanwhile in the Middle East, the Saudis, the Iraqis, and the Iranians basically stick a straw in the ground, and oil comes out.

Morgan Stanley 

The recent story in the market has been that a supply glut has pressured oil prices, and in response some expected OPEC to announce a production cut at its Thanksgiving meeting. That didn't happen, and  Longson notes that it isn't as simple as slashing production to combat low prices.

"Simply slowing supply growth is usually not enough to balance an oversupplied market in the short run," Longson writes. "In commodities without a cartel, existing production must be shut-in. If true, marginal cost of investment is not the relevant metrics, it's variable operating cost, which is closer to $35-$40/bbl on the high end."

Longson's mention of a commodity without a cartel also comes as Saudi oil minister Ali Al-Naimi said on Wednesday that the market — not the OPEC cartel – was in control of the oil market.

And these comments imply that this chart from Morgan Stanley, showing cash costs for oil projects around the world, might be the place to find out when things will really ugly in the oil market.

Book : The Top Five Regrets of the Dying by Bronnie Ware

Uncle8888 saw this book on New Arrival shelf this morning at Cheng San NLB.


Grab it without even thinking or browsing!

Why?

He didn't know she actually proceeded to write a book on it.

Read? Top Five Regrets of the Dying


In his Retirement Income For Life sharing session for some of his closer colleagues and friends ....

Slide No 5:



 

Refining Wealth Formula (2)

Read? Refining Wealth Formula

To add more conclusion to the definition of net worth and its component parts to compute net worth that most people already know.

Uncle8888 got the idea from Rich Dad. Poor Dad i.e. Assets and Cash Flow.


Wealth = Asset value + Cash flow!

Where Cash flow = Active Income + Investment Income



Asset value is NOT within our control and likely to be volatile when we are holding risky asset class like stocks which are marked to market value on daily basis. 

It will affect our emotions. So it is for us to find our own ways and means to reduce our tension and pressure over future financial, economic and market cycles.

For ordinary employees with no great or special talents to climb corporate ladder to reach the top few levels, investing in risky asset class like stocks is potentially the single biggest way of building wealth over the long run. 

Uncle8888 has personally witnessed several retired senior ex-colleagues in his office achieved their retirement goals. He realized and strongly believe that one way he will be like one of them but not the one at the high office.


Our senior colleagues who are currently in the same office with us is mostly likely to be our Future Me when we are unable to climb up in the corporate ladder.


 
Asset Value

Uncle8888's Asset Value is NOT within his control; but he still have to find his own way and mean to reduce tension and pressure to survive future financial, economic and market cycles.

He did survive the past cycles and strongly believe he will survive again!

Cash Flow (Investment Income)


It is a fact that Uncle8888 can still manage the level of expected investment income from risky asset class like stocks in form of expected dividend incomes and/or by part selling of stocks to realize cash flow (asset draw down). The way of deploying our limited War Chest is the tool for us to manage our own expected or desired level of investment income. 


The good news is that our level of investment income from stocks is NOT directly affected by the volatility of the stock market but most likely to be determined by the way we manage our portfolio and deploy our limited war chest. 


How many of us who are average or above average employees with kids have huge war chest?


2014 is ending soon and Uncle8888 is going to miss his yearly goal for the third time.

Year 1: - 2.9%

Year 2: - 1.5%

Year 3: - 2.7%

In fact, it is not difficult for him to meet his third year goal with his current level of War Chest but he has decided not. Probably, the mind of fisherman is at work. 


Be patient!

Low tide. No big fish!




 

Panadols not good enough. Need morphine???

Uncle8888's Top 3 holding in his portfolio:

Kep Corp, Semb Corp and DBS.

It is all about pain if he thinks about it.


Want to escape pain?

Don't play in the market or be better at market timing.

 

Portfolio Stress Test: What is the worst that can possibly happen?

If you have a worry problem, do these three things: 

1. Ask yourself: “What is the worst that can possibly happen?” 

2. Prepare to accept it if you have to. 

3. Then calmly proceed to improve on the worst.” 

(Carnegie 49)

Sun Tzu said:

Much computation brings triumph.

Little computation brings defeat.
How much more so with no computation.

The general who wins the battle makes many calculations in his temple before the battle is fought.

 

Those who understand these fundamentals will win.

Those who don't will be defeated.

Some of you may laugh at him now. Planning got use meh?

Let see who laughs last when the War is over.

Dow drops 300 points as US stocks tumble

NEW YORK: The Dow tumbled more than 300 points on Friday (Dec 12) as US stocks took cues from a rout in European equities following another big drop in oil prices.

The Dow Jones Industrial Average tumbled 315.51 points (1.79 per cent) to 17,280.83. The broad-based S&P 500 sank 33.00 points (1.62 per cent) to 2,002.33 in its worst week since May 2012. The tech-rich Nasdaq Composite Index slumped 54.57 points (1.16 per cent) to 4,653.60.

Losses in European markets were even deeper. Britain's FTSE 100 index fell about 2.5 per cent and equity markets in France and Germany each lost more than 2.7 per cent.

US equities were in the red all day, but the selling accelerated near the end of the session. The S&P 500 racked up more than half its losses in the final 60 minutes of trade. US oil prices fell to a fresh five-year low of US$57.81 a barrel after the International Energy Agency cut its oil-demand forecast for 2015.

Michael James, managing director of Wedbush Securities, said lower oil prices benefit consumers, but traders have been unnerved by the speed of the free-fall in crude prices. "Projects might be put on hold in the oil sector and there are questions for the companies that bring financing," he said. "That creates uncertainty and that creates selling."

But Alan Skrainka, chief investment officer at Cornerstone Wealth Management, dismissed the worries. "Falling oil prices is an enormous stimulus to the global economy," said Skrainka, who believes this week's market carnage is due to selling by investors who had to quickly raise funds to cover bad bets on the oil market.

Most oil-related equities continued to sink, including Dow member ExxonMobil (-2.9 per cent), oil-services giant Schlumberger (-3.6 per cent) and pipeline company Williams (-3.1 per cent).

Banking stocks also suffered, including Dow members JPMorgan Chase (-1.8 per cent) and Goldman Sachs (-2.4 per cent) and Bank of America (-2.0 per cent).

But many retail stocks outperformed the broader market on expectations that lower gasoline prices will boost sales during the critical holiday shopping season.

Macy's gained 1.9 per cent and Best Buy rose 0.6 per cent. Wal-Mart Stores, Gap and TJX, which owns Marshall's and other chains, were all flat. Williams-Sonoma slipped 0.6 per cent.

Bond prices rose. The yield on the 10-year US Treasury fell to 2.10 per cent from 2.18 per cent on Thursday, while the 30-year declined to 2.77 per cent from 2.83 per cent. Bond yields and prices move inversely.

- AFP/de

I can save, invest and retire with $1M

Ah Boi's best friend is going to Hong Kong Disneyland.

Ah Boi: Pa pa, can we go to Hong Kong Disneyland?

Ah Pa: Ah Boi, listen here!

Ah Pa: Papa needs to save 70% of this year bonus to invest and retire as millionaire. We can go to JB Legoland. Same same. When Papa becomes millionaire we can go to Disney World with my passive income. Actually, Hong Kong Disneyland is small. Legoland is bigger and more fun. Okay?



Ah Boi 






 

Greatest Investing Mistake!!!

Read? Multi-baggers (2)

Uncle8888's greatest investing mistake is NOT picking up two ZERO baggers and 18 Bleeding Hearts!


It is NOT having enough cash to see him through the few last months of 2009 Bear.


Four scary words in Investing.

"This Time is Different!"

 

DBS : Bulls are pushing it to the next box???

Mortgagee sales surged sevenfold as lenders strive to recoup losses

Singapore Business Review 


Blame it on higher bankruptcies.

Mortgagees turned to property auction in a bid to recoup losses in a weak market. According to data released today by Colliers, the Singapore property auction market through 2014 saw a total of 529 properties being put up for sale. One-third of this figure, or 159 homes, were put up by mortgagees.

Not only is this 5 times the 32 properties put up by mortgagees in 2013, it is also the highest number in 5 years since 2010. Meanwhile, the proportion of properties put up by owners in 2014 remains high at close to 69.9%.

“The higher number of mortgagee listings this year was on the back of the stricter regulatory and financing environment, in which borrowers in default are finding it challenging to sell their properties on their own, as buyers generally remain cautious.” said Annie Chan, Director of Auction & Sales at Colliers International.

In addition to buyers having to fork out a higher cash outlay with measures such as Additional Buyers’ Stamp Duty and Total Debt Servicing Ratio in place, there are also concerns of a mounting supply of residential units and an impending increase in interest rates.

The high number of bankruptcies could have also contributed to the increase in the number of properties put up for mortgagee sale.”

Ms Chan continues, “However, there is little cause for anxiety, as the 159 properties put up by mortgagees this year are still fewer than the mortgagee listings during the 2008 global financial crisis, the 1998 Asian financial crisis, as well as the last market downturn in 2004.”

US crude settles below $60 a barrel for the first time in 5 years

Reuters with CNBC.com staff

U.S. crude fell below $60 a barrel on Thursday, the first time in five years that it breached the psychologically-important support level, as oil markets extended this week's losses on oversupply concerns.
 
New York Mercantile Exchange's front-month West Texas Intermediate contract for U.S. crude settled down 99 cents, or 1.6 percent lower, at $59.95 per barrel, its lowest close since July 14, 2009. WTI crude continued to slide in after-hours trading and was last down nearly 3 percent to $59.20 in electronic trading.

The contract has lost almost 9 percent this week and roughly 45 percent from a June high above $107 a barrel.
 
Traders warned that a bottom for crude remained elusive after a six-month selloff.
 
U.S. consumer spending advanced at a brisk clip in November, Commerce Department data showed, as lower gasoline prices gave the holiday shopping season a boost.

<p>All about oil: Pro</p> <p>Craig Columbus, First Allied Asset Management, and Jamie Cox, Harris Financial Group, dissect current market conditions and what oil means for the economy.</p>

U.S. crude fell below $60 a barrel on Thursday, the first time in five years that it breached the psychologically-important support level, as oil markets extended this week's losses on oversupply concerns.
New York Mercantile Exchange's front-month West Texas Intermediate contract for U.S. crude settled down 99 cents, or 1.6 percent lower, at $59.95 per barrel, its lowest close since July 14, 2009. WTI crude continued to slide in after-hours trading and was last down nearly 3 percent to $59.20 in electronic trading.
The contract has lost almost 9 percent this week and roughly 45 percent from a June high above $107 a barrel.
Traders warned that a bottom for crude remained elusive after a six-month selloff.
U.S. consumer spending advanced at a brisk clip in November, Commerce Department data showed, as lower gasoline prices gave the holiday shopping season a boost.

 

 

 

Norway's rate cut and speculation of more European stimulus helped steady the crude market after Wednesday's 5 percent price drop, as did talk that some oil drillers were moving to cut exploration and production.


 

<p>All about oil: Pro</p> <p>Craig Columbus, First Allied Asset Management, and Jamie Cox, Harris Financial Group, dissect current market conditions and what oil means for the economy.</p>

U.S. crude fell below $60 a barrel on Thursday, the first time in five years that it breached the psychologically-important support level, as oil markets extended this week's losses on oversupply concerns.
New York Mercantile Exchange's front-month West Texas Intermediate contract for U.S. crude settled down 99 cents, or 1.6 percent lower, at $59.95 per barrel, its lowest close since July 14, 2009. WTI crude continued to slide in after-hours trading and was last down nearly 3 percent to $59.20 in electronic trading.
The contract has lost almost 9 percent this week and roughly 45 percent from a June high above $107 a barrel.
Traders warned that a bottom for crude remained elusive after a six-month selloff.
U.S. consumer spending advanced at a brisk clip in November, Commerce Department data showed, as lower gasoline prices gave the holiday shopping season a boost.

 

 

 

Norway's rate cut and speculation of more European stimulus helped steady the crude market after Wednesday's 5 percent price drop, as did talk that some oil drillers were moving to cut exploration and production.

Read MoreSaudi Oil Minister Naimi: 'Why should we cut production?'


"For the moment at least, we're focused on the positives of this oil drop rather than the negatives like deflation and freeze on investments in energy spending," said Phil Flynn, analyst at the Price Futures Group in Chicago. "That said, we're not getting much of a bounce, considering how hard it has been sold off."

On Wednesday, prices collapsed after U.S. crude inventories rose unexpectedly and OPEC's most influential voice, Saudi Arabia's oil minister, again shrugged off the idea of cutting output.



Some traders said prices could churn as market players speculate about possible OPEC output cuts if Algeria and Venezuela convince the group to hold an emergency meeting early next year. Some doubt the Saudis would agree to cut output even then.

"There's nothing the rest of OPEC or the world could do to pressure the Saudis," said Tariq Zahir, managing member at Tyche Capital Advisors in New York.

While low prices will discourage exploration and drilling in some places, he said, other producers who could still profit at lower prices may ramp up output to boost revenues through higher volume. 

"If prices were to hit the low fifties, (some) non-OPEC members are likely to raise production, because the only way they can get more revenue is to sell more oil at such prices." 

Refining Wealth Formula

Read? The most important chart in CW8888's blog to remember on Wealth Formula!!!


Wealth = Asset value + Cash flow!


Where Cash flow = Active Income + Investment Income

Wealthy = Annual Investment Income is greater than living expenses

Wealthy financial independence person has Asset value greater than his lifetime total liabilities and living expenses with annual Investment Income greater than living expenses.



Clearer?


Any more what if. LOL!

Texas drilling frenzy made oil crash inevitable: Kemp

By John Kemp

Dec 9 (Reuters) - If prices had not crashed over the past five months, the oil market would have moved into a substantial surplus in the first half of 2015, according to a review of drilling and production statistics from major shale plays in the United States.

The pace of drilling and production growth in the Eagle Ford and Permian Basin shale plays in Texas, which together with North Dakota's Bakken account for most of the increase in U.S. output since 2008, was accelerating in the first eight months of 2014.

The combined crude output from the Eagle Ford and Permian Basin surged by 400,000 barrels per day (b/d) in the eight months, compared with an increase of 288,000 b/d in the previous eight-month period, according to records published by the Railroad Commission of Texas, which regulates the industry.

In August 2014, total production of crude and condensates from the two plays topped 2.5 million b/d, up from 1.1 million just three years earlier. Combined output was higher than some members of OPEC.

And the industry was preparing to increase output even further. Exploration and production companies were adding more drilling rigs, especially in the Permian Basin, where the number of rigs in operation exceeded 460 throughout the summer, up from less than 400 in 2013, according to Baker Hughes, the oilfield services company.

Record numbers of applications for permission to drill new wells were being filed with the Railroad Commission. In September 2014, regulators issued almost 2,000 new permits for oil or combined oil and gas wells, up from less than 1,000 in the same month a year earlier.

A Reuters' chartbook "Spotlight on Eagle Ford and Permian Basin" can be downloaded here: link.reuters.com/xeh63w

In explaining the sudden drop in prices, analysts have tended to focus on the resumption of Libyan oil exports, which added an extra 700,000 b/d to the crude market between June and September.

But the acceleration in output from the Texas fields played a critical role too in pushing the market toward incipient oversupply.



With so much extra oil hitting the market, a sharp drop in prices had become inevitable as the only way to enforce a slowdown in drilling. (editing by Jane Baird)

US oil settles at $60.94, a new 5-year low

Reuters with CNBC

Benchmark oil prices fell to new five-year lows after OPEC cut its demand outlook for global oil consumption and U.S. data showed a surprise jump in oil inventories.
 
In a monthly report, the Organization of the Petroleum Exporting Countries forecast demand for the group's oil will drop to 28.92 million barrels per day in 2015, down 280,000 bpd from its previous expectation.


U.S. crude futures for January settled 4.5 percent lower at $60.94 per barrel, the lowest since July 2009.

Brent futures fell by nearly $3 to $64 a barrel, having earlier touched $60.63, a level not seen since July 16, 2009. 

The U.S. government's Energy Information Administration showed U.S. commercial crude inventories climbed 1.5 million barrels last week. Analysts had anticipated a draw down of 2.2 million barrels. 

Stockpiles of U.S. crude stood at 380.8 million through the week ending Dec. 5. 
 
Gasoline stocks also rose by 8.2 million barrels, compared with analysts' expectations in a Reuters poll for a 2.5 million-barrel build.

The price of the North Sea oil benchmark has fallen more than 40 percent since June as new supplies of high-quality crude from North America have fed a glut of fuel in many parts of the world.

"There is a growing realization that the first half of next year is going to look very weak," said Gareth Lewis-Davies, strategist at BNP Paribas. "You start to price that in now."


Read MoreDon't look for oil glut to end any time soon
 
The U.S. Energy Information Administration cut its global oil demand growth estimate for 2015 by 240,000 barrels per day to 880,000 bpd. It forecast oil demand growth this year would be around 960,000 bpd.
Global oil demand has been capped by slowing economic growth in China as well as stagnation in many more-developed economies, particularly in Europe.

"The fundamental picture hasn't really changed, and that is one of supply outstripping demand growth for most of the year," said Phin Ziebell, a senior analyst at National Australia Bank.

"It's an incessant march downwards, and it would be interesting to see where it bottoms out, but there doesn't seem to be any sign of it so far."

Read MoreWill oil's drop hurt renewable energy?.


Members of OPEC are divided on how to respond to the global surplus and falling prices. The cartel may still hold an emergency meeting before its June gathering, Algeria's energy minister said on Tuesday.

Italian oil and energy group Eni said OPEC may cut output in the spring and that oil prices will remain between $66 and $75 per barrel next year.
 
Top oil producer Saudi Arabia blocked production cuts at the last meeting in November and has taken steps to shore up its market share
 
—CNBC.com contributed to this report.
  

P-66 hull heads to integration

P-66 hull: Vessel due to arrive at Brasfels in December

Petrobras

Kathrine Schmidt 09 December 2014 19:52 GMT 

Petrobras has wrapped major construction on the initial stage of the P-66 floating production storage and offloading unit, the first such hull built entirely in Brazil.

Don't look for oil glut to end any time soon

 

Patti Domm


he global oil glut is expected to get much bigger before it's over, keeping pressure on oil prices well into next year.

Companies like ConocoPhillips and Chevron are reducing spending on new projects, but the impact of already planned increases in U.S. production into the first half of the year is likely to keep the world well supplied before the flow of new supply starts to slow in the second half of the year.

Besides shale production, U.S. Gulf of Mexico production is also expected to increase with new projects coming on line. Within a year, the projects will take U.S. Gulf production from 1.3 million barrels to roughly 1.6 million barrels a day.

"It's not like the supply reaction is instantaneous. It takes time to wind these things down," said John Kilduff of Again Capital. "I wouldn't expect a decrease in the rate of (production) growth until next year at the earliest."

The U.S. Energy Information Administration on Tuesday cut its forecast for daily U.S. production by another 100,000 barrels, to 9.3 million. That follows a reduction in its forecast of 100,000 barrels per day last month. The U.S. produced 9.08 million barrels a day in the week of Nov. 28 and has been producing over 9 million barrels a day for the past month.

The government's forecast for 2015 is now below some private analysts' assumptions that oil production can continue to grow at a higher rate of anywhere from 500,000 to more than 1 million barrels per day next year, depending on oil prices.
 
The EIA on Monday issued a new report on U.S. oil production showing the increase in production in the three main shale plays—Bakken, Permian and Eagle Ford—is growing by more than 100,000 barrels a day in December over November, and is expected to increase at about the same rate in January. 

West Texas Intermediate was trading slightly above $63 per barrel Tuesday, after a steep selloff Monday, and Brent was trading at $66.07 per barrel.

Read MoreU.S. energy is growing - and so is U.S. 'power'


"It's (WTI) going to continue to slide on down to $60," said Andrew Lipow, president of Lipow Oil Associates. "There's just simply lots of oil out there, and all these lower prices make all these OPEC members want to produce their maximum rates to get more revenue. I think as Russia slides into recession, we're going to see them reduce their domestic consumption and put more on the world market."


Kilduff said production growth won't begin to slow until the second quarter at the earliest and prices could get very low, falling more with lower demand expected at the end of winter.

"Next year, we could see the low $50s (for WTI) in the late first quarter, second quarter time period., with the slack demand and the beginning of the supply response," he said.

Morgan Stanley this week put a target of $70 a barrel on Brent for next year. It also warned that Brent could sink in a worst-case scenario to $43 per barrel in the second quarter before recovering to only $48 in the third quarter. 

Read MoreOPEC is broken: Dennis Gartman
 
Kuwait said it sees oil at $65 a barrel for the next six to seven months, and Saudi Arabia has reportedly said it expects a floor of $60 per barrel in Brent.


Analysts say the lower oil prices go, the harder it will be to recover if producers keep pumping. But ultimately, they say it should stabilize and in two years, the world may well be somewhat short of oil due to the projects that are now being shut down and delayed.


The EIA data also showed a clear trend of efficiency and enhanced production in individual shale wells. For instance, the EIA showed new well oil production per rig in the Bakken is expected to rise to 550 barrels per day next year. "As recently as June, they were only producing 500 barrels a day," Kilduff said.


Read MoreOil war is sticky, but OPEC may be forced to act
 
Bakken rigs tell a similar story to other major shale plays. The industry is deploying technology to improve production, a key factor in the surprising rise in U.S. production. New well oil production in the Bakken was just 300 barrels a day in early 2013, according to EIA.


 

CPF returns attractive versus risk: Institute of Policy Studies

 

By Cai Haoxiang

20-year returns of 5.7% per annum similar to portfolio of 60% equities and 40% bonds, but with lower risk

 

A NEWLY published Institute of Policy Studies (IPS) paper lays out what financial planners and insurers have been saying: that the Central Provident Fund (CPF) provides an attractive return relative to its risk, when compared to other asset classes.


The CPF has similar returns, over 20 years, when compared to a typical balanced portfolio of 60 per cent equities and 40 per cent bonds, the paper said. But these returns of 5.7 per cent a year come with a standard deviation of just 1.4 per cent due to various guarantees in the system. By contrast, the standard deviation for the 60:40 portfolio is 12.3 per cent, with expected returns a tad higher at 5.9 per cent.

"Every time I come back to this, I think it's a pretty good deal," said Peter Ryan-Kane, one of the paper's authors. Mr Ryan-Kane is Asia-Pacific head of portfolio advisory at consultancy Towers Watson.

The standard deviation is a measure of risk, and describes the extent to which fluctuations around an expected average will take place.

An expected return of 5.7 per cent and a standard deviation of 1.4 per cent for the CPF means that there is roughly a two-third statistical chance that annual returns will fall between 4.3 per cent and 7.1 per cent.
An investor with S$100 in the CPF today will see that sum compound into S$303 in 20 years' time. A balanced portfolio yields S$315.

There is a 5 per cent chance that the CPF account holder will see his S$100 grow to just S$241 or below after 20 years. But if he is in the balanced portfolio, the 5th percentile return is much lower at S$140.
An all-bond portfolio offers markedly worse results. Equities offer higher expected returns, but these returns come with significantly higher volatility of 20 percentage points around the expected return.

An all-equities portfolio might lead to S$100 compounding to S$373 in 20 years' time. While there is a 5 per cent chance that the portfolio will have S$1,300 or more, there is also a 5 per cent chance of it being S$102 or below.

The downside risks of holding an equities portfolio outweigh the benefits, the authors argue.
They discussed two other scenarios by which CPF monies can be invested, concluding that maintaining the status quo works best.

A CPF member could move into a 60 per cent global equities portfolio to enjoy the potential upside, the authors said. But if he needs the money within say, five or 10 years, there is a wide range within which his returns could fall into, making him potentially worse off.

"Unlike the government, the CPF member does not have the resources to keep extending the time horizon following a downside event. Therefore, the ability for the member to withstand a downside event is less."

CW8888: Same for us as retail investors, we have to be very sure we have the resources to keep extending the time horizon following a downside event. This is the dividing line separating the winners and losers after the bear market.

The authors considered using a straight put option to hedge the downside risk in a 60 per cent global equities portfolio. But they concluded that at a cost of 2.9 percentage points a year, hedging was not worth it.

The paper noted that through a combination of floor rates and an extra one per cent interest rate applied to certain balances, the government also adds some 140 basis points (1.4 percentage points) of value.

Asked if he has any suggestions to improve the CPF system, Mr Ryan-Kane said that the amount of CPF savings in the housing market needs to be examined. The authors point out that entering or exiting the housing market at different parts of the property cycle can substantially affect returns. The use of leverage can magnify returns as well as risks.

In times of market stress, there is liquidity risk, meaning the asset cannot be sold without incurring substantial losses. There are also concentration risks, given how a property is typically the single largest investment a Singaporean household would make.

The authors also say inflation risk needs to be looked into. However, there are not many obvious hedges.

The Canadian government once changed the return objective of their pension fund to include a real rate of return, said Mr Ryan-Kane. But in practice, their portfolios did not look very much different, he noted.

"Even if you build a real return objective, you will inevitably invest in nominal assets . . . Available market instruments to create a portfolio to achieve real returns don't exist," he said.

How To Make $1M From $200K By Investing in the Stock Market???

Simple!

Uncle8888 shows this chart on How to do it by compounding

























Now, you may like to check with your parents, grand-parents, relatives, friends, colleagues, or your fellow cyber retail white hair or dyed hair folks and then do a count on the percentage of those folks you have polled have made it to $1M from $200K capital through compounding return.

Uncle8888 also believe many serious retail investors will have at least $200K capital over time.

US oil settles at $63.05, lowest since July 2009

World oil prices slid another 4 percent to new five-year lows on Monday, as expectations of a deeper slump next year and a prediction by a core OPEC member that crude will remain at $65 for several months triggered another round of selling.
 
U.S. crude oil settled 4.2 percent lower at $63.05 per barrel, at a new five-year low, its third worst drop of of the year. Brent crude for January fell was last down 4 percent at $66 a barrel, after slipping to a session low of $65.93—its lowest since October 2009. 


The chief executive of Kuwait's national oil company said oil prices were likely to remain around $65 a barrel for the next six to seven months, the latest indication that Gulf producers were content to ride out the latest rout.

The pessimistic outlook deepened the decline in a market that many traders now see as having little chance of rebounding.

"When these things go lower, they tend to go much farther than people anticipated," said Tariq Zahir at Tyche Capital. "I definitely think we're going to keep heading lower, everyone is trying to pick a bottom."


  
Late on Friday, Morgan Stanley set a new bar for bearishness on Wall Street, slashing its average 2015 Brent base-case outlook by $28 to $70 per barrel and warning that prices could drop as low as $43 a barrel next year.

"Without OPEC intervention, markets risk becoming unbalanced, with peak oversupply likely in the second quarter of 2015," Morgan Stanley analyst Adam Longson said.

Thus far, there appears little sign of intervention, even after oil prices dropped 15 percent, or nearly $12 a barrel, since the Organization of the Petroleum Exporting Countries opted not to cut production at its Nov. 27 meeting.

Top exporter Saudi Arabia has resisted calls from poorer members to curb output and shore up prices which have slumped more than 40 percent since June.

Libya's state oil company said on Sunday the country was producing 800,000 barrels a day, though its El Sharara oilfield was closed due to a pipeline blockade.

It is unclear how soon the price slump will slow the U.S. shale boom. While the number of onshore rigs drilling for crude oil remains relatively high, companies are making deeper cuts to spending for next year. On Monday, Conoco said it would slash spending by 20 percent, or $3 billion, the biggest reduction thus far announced by U.S. drillers.

Oil prices tumble further after Morgan Stanley cuts forecast

Oil prices fell to a five-year low on Monday, after Morgan Stanley cut its 2015 forecast for Brent crude, citing oversupply. 

The bank said crude prices could average as little as $53 per barrel in 2015, although its base case scenario was for $70. This was down from an earlier estimate of $98. 

"Without OPEC intervention, markets risk becoming unbalanced, with peak oversupply likely in the second quarter of 2015. Prices are set up to fall in the first half of 2015," said analysts Adam Longson and Elizabeth Volynsky in a report out late on Friday. 

The price of crude has declined by around 40 percent since June, with Brent futures hitting $67.52 on Monday – its lowest level since October 2009. 


The Organization of the Petroleum Exporting Countries (OPEC) fueled the decline further last month, when it resisted calls to reduce production in order to boost prices. 

Now, Morgan Stanley has cut its Brent forecast for all of 2015, 2016, 2017 and 2018. In the worst case scenario, the bank said oil could fall as low as $43 in the second quarter of next year, recovering to only $48 in the third quarter. 

"With OPEC on the sidelines, oil prices face their greatest threat since 2009," said Longson and Volynsky. "Without intervention, physical markets and prices will face serious pressure, with the second quarter of 2015 likely marking the peak period of dislocation." 

 Light crude oil prices also fell by over a dollar on Morgan Stanley's report, to $64.77 from $65.84. 

Longer-term, the decline in prices could prove to be self-limiting however. 

"Lower prices will curtail investment, increase the risk of OPEC intervention or an outage, or even shut in wells. Based on our forecasts, activity should slow sharply, and if intervention is large and swift, price recovery in 2H15 (second half of 2015) could be swift as well," the analysts said. 

Saudi Arabia—the top producer in OPEC—sees oil prices stabilizing at $60, Dow Jones reported last week. 

STI ETF Historical Chart & Dividends

Our salary increases by 4% per year???

Salary increases by 4% per year??? (based on MOM’s statistics on the average wage increase over the past 10 years)

Do workers or employees receive salary increase @ x% year after year until they retire at 65 (current official Singapore retirement age)?

Our current job may NOT be secured till our official retirement age.

Once we got retrenched; our salary may suffer deep cut and we start over again at much lower level?


We can still compound our salary @ X% growth as projected???




You got white hair or dyed hair?

If no, you want to check with your parents, grandparents; old uncles or aunties or your old uncles or aunties sitting in your office.


Uncle8888 took Statistics as one of his modules for his Uni study and knows it better.


Statistical data can be used for reference or BS by the presenter!



Read? The Myth Of The Bell Curve: Look For The Hyper-Performers

Market Cycles of What??? (2)

STI is still high at 3,324!

But, what happen to Uncle8888's Hard Truth Portfolio?

It dips below 2007 Peak level last Friday. 

It is more likely to dip down further as crude oil is still in the downtrend with no sign of price stability.

In 2007, the banks took the lead to the Bear Market so Uncle8888 did the "right" thing to cut his exposure to DBS, sold all OCBC and UOB and switched to other horses to ride the recovery.

It is common sense in long-term investing. Cut the rotting and smelly ones. Right?



Read? Market Cycles of What???


This time, will he cut his exposure to these smelly and oily men as they are currently leading him to Hell?


Mr Market will Give and Take! It is sector rotation at work!


It is up to us to see what we can do with our investment portfolio to re-balance and to achieve better investment performance result than the last market cycle.


Looking back at his own History in the market.




What happened in 2007?

Lacking of planning for War Chest as he was thinking that the Party was not going to end so soon.

Small war chest at 5%. Staying invested is the way to go!

Collecting dividends couldn't be bad thing to do. Right?

What happened in 2008/2009?

At the lowest, Mr Market took back 38.3% of his paper profit from his portfolio at Oct 2007 Portfolio Peak Value.



With a small war chest of just 5% at 2007 Peak Bull, he couldn't do much and probably missed once upon his lifetime chance to make it much bigger!

In 2008/2009, he was just busy cutting losses and switching horses.

Is this productive in the market?

Cutting losses and locking in negative returns to achieve better investment performance?


The Outcome of lack of Planning?


"The general who wins a battle makes many calculations in his temple before the battle is fought. The general who loses a battle makes but few calculations beforehand. Thus do many calculations lead to victory, and few calculations to defeat; how much more no calculation at all! It is by attention to this point that I can foresee who is likely to win or lose."  - Sun Tze




On 5 Dec 2014,

 

1. Paper profit lost back to Mr. Market: - 9.8% from the Portfolio Peak Value on 31 Jul 2014. It can easily lose back another 10 - 15% if Mr. Bankers decide to join the Crash.

2. Too much planning for building up War Chest as we tend to live with the nightmares from past bad nights?

3. Who is right over market cycles? 

Staying invested for dividend income 


or 

Seize potential opportunities to grow much bigger.






 

Sheikhs v shale

Read? Sheikhs v shale


Just how positive will depend on how long the price stays low. That is the subject of a continuing tussle between OPEC and the shale-drillers. Several members of the cartel want it to cut its output, in the hope of pushing the price back up again. But Saudi Arabia, in particular, seems mindful of the experience of the 1970s, when a big leap in the price prompted huge investments in new fields, leading to a decade-long glut.

Instead, the Saudis seem to be pushing a different tactic: let the price fall and put high-cost producers out of business. That should soon crimp supply, causing prices to rise.

There are signs that such a shake-out is already under way. The share prices of firms that specialise in shale oil have been swooning. Many of them are up to their derricks in debt. Even before the oil price started falling, most were investing more in new wells than they were making from their existing ones. With their revenues now dropping fast, they will find themselves overstretched. A rash of bankruptcies is likely. That, in turn, would bespatter shale oil’s reputation among investors. Even survivors may find the markets closed for some time, forcing them to rein in their expenditure to match the cash they generate from selling oil. Since shale-oil wells are short-lived (output can fall by 60-70% in the first year), any slowdown in investment will quickly translate into falling production.

This shake-out will be painful. But in the long run the shale industry’s future seems assured. Fracking, in which a mixture of water, sand and chemicals is injected into shale formations to release oil, is a relatively young technology, and it is still making big gains in efficiency. IHS, a research firm, reckons the cost of a typical project has fallen from $70 per barrel produced to $57 in the past year, as oilmen have learned how to drill wells faster and to extract more oil from each one.


CW8888: US$50 - 60?



The firms that weather the current storm will have masses more shale to exploit. Drilling is just beginning (and may now be cut back) in the Niobrara formation in Colorado, for example, and the Mississippian Lime along the border between Oklahoma and Kansas. Nor need shale oil be a uniquely American phenomenon: there is similar geology all around the world, from China to the Czech Republic. Although no other country has quite the same combination of eager investors, experienced oilmen and pliable bureaucrats, the riches on offer must eventually induce shale-oil exploration elsewhere.

Most important of all, investments in shale oil come in conveniently small increments. The big conventional oilfields that have not yet been tapped tend to be in inaccessible spots, deep below the ocean, high in the Arctic, or both. America’s Exxon Mobil and Russia’s Rosneft recently spent two months and $700m drilling a single well in the Kara Sea, north of Siberia. Although they found oil, developing it will take years and cost billions. By contrast, a shale-oil well can be drilled in as little as a week, at a cost of $1.5m. The shale firms know where the shale deposits are and it is pretty easy to hire new rigs; the only question is how many wells to drill. The whole business becomes a bit more like manufacturing drinks: whenever the world is thirsty, you crank up the bottling plant.

Sheikh out

So the economics of oil have changed. The market will still be subject to political shocks: war in the Middle East or the overdue implosion of Vladimir Putin’s kleptocracy would send the price soaring. But, absent such an event, the oil price should be less vulnerable to shocks or manipulation. Even if the 3m extra b/d that the United States now pumps out is a tiny fraction of the 90m the world consumes, America’s shale is a genuine rival to Saudi Arabia as the world’s marginal producer. That should reduce the volatility not just of the oil price but also of the world economy. Oil and finance have proved themselves the only two industries able to tip the world into recession. At least one of them should in future be a bit more stable.