It’s been a
while since a new blog was posted (sorry), and during that time some of the world’s
stock markets have hit a series of all-time highs.
The one to get
the biggest headlines is the most well-know one: the Dow Jones Industrial
Average, or DJIA. It’s been consistently used as a benchmark for how stock markets
are performing generally, and as its components (the companies whose stock
prices are followed by it) are all large multinationals, it’s also seen as a
barometer for the health (or perceived health) of the global economy.
So why the big
fuss? Well, the last all-time high was 9th October 2007 – with a value
of just over 14,000 - after which it dropped 25% in the following year BEFORE
Lehman Brothers collapsed, then continued falling to a low of around 6,650 – a
loss of about 52% in about a year and a half.
particularly as investing in this index would be considered as a “medium-risk”
(more risky than government bonds or corporate bonds, but not as risky as
shares in smaller companies or emerging market companies).
Of course the
flip-side of this is that those who invested just after the crash would have
seen a return on investment of over 100% - their investment is worth more than
double what they put in – in just 4 years. Very good indeed, for what is still
considered a “medium-risk” investment.
for most ordinary people, it didn’t work out that way. A lot of people got
scared after the crash, and either cashed in their investments or stopped
paying into their regular savings investments. This is a very silly thing to
do, because you lose out from the crash, but don’t benefit from the bounce back
– which invariably occurs.
just as many people cashed in their investments after the crash (when their
value was low), there will be many people who now choose to invest, now that
the price is at an all-time high. People will think that it is now less risky,
because things are “back to normal”.
But buying at
a high price, on its own, is just as silly as selling at a low price. As a
general rule, it is the incompetence (and easily predictable illogicality) of
amateur investors which make it possible for professional investors to make
precious few people (including professionals) who are able to tell you when the
best time to buy investments is – because nobody knows exactly what’s going to
happen tomorrow. You never know when the price is at the lowest point, just
like you never know when it’s at its highest point.
one group of people who have definitely made money over the last few years,
through its highs, lows, and highs again. They’re the people who planned ahead,
made a plan based on what they wanted and needed rather than what they thought the
markets would do, and stuck to it.
they put a little bit aside, as per their plan. Sometimes they were buying at
an equivalent price of 14,000. Sometimes at an equivalent price of 6,650. Most of
the time, it was at an equivalent price of somewhere in between, and it changed
every month – sometimes higher than the month before, sometimes lower.
The end result
is that after a few years, they’ve paid high prices and low prices and
everywhere in between, but all that matters is the average price. And whether
you look back 5 years, or 10 years, or 30 years: If you make a good plan, stick
to it, and carry on regardless of what all the amateurs are doing, you’ll make
money if you give yourself enough time.
Don’t try and
pick a starting point – start as soon as you can, regardless of market prices,
and put just a little bit away each month. That’s the most important bit. The
second most important bit is making sure that in the final few years of your plan,
you’re not risking the potential of another 50% drop in value – timing is very
important on the way out.
So if there’s
one key message from this post – don’t think that now is a good time to invest
all your money, just because the markets are at an all-time high! Similarly,
don’t think it’s a bad time either – you just don’t know.
One thing is
for certain – now is definitely a good time to start saving regularly, because
it’s always a good time to start saving regularly, as long as you’ve got a few
years ahead of you.
It may not
sound particularly exciting (because it isn’t really that exciting), but basic
long-term financial planning is just as important as regularly checking the
battery in your smoke alarm and remembering to wear a seatbelt (two other
slightly monotonous and repetitive tasks which I find rather boring, but can
have serious implications if you don’t do them).
If you’d like
to look at your investment options please just get in touch, and together we’ll
ensure that your wealth is at its all-time high when you need it to be, rather
than at some arbitrary point in time along the way.
It’s true –
AXA are giving away free money. Yes, of course there’s a catch – but for most
readers, it’ll be a “catch” that that they already have – and in most cases a “catch”
that is very good for them.
needs to save money – even billionaires. Spending it all would be most unwise. For
most people, money comes in monthly, which means saving monthly is the most
sensible thing to do – a little bit put aside from your salary as soon as you
get it won’t be noticed or missed too badly by most people.
And AXA (just
like every other company that offers these types of products & services)
would like you to save with them.
plenty of reasons to like AXA – they’ve been around for nearly 300 years, have
over 95million clients around the world, and are the world’s 25th
largest company based on revenues. We’ll forgive them for being French.
great news is that they’re so keen on growing their client base in Asia, they’re
giving away free money to attract your business. Here’s how it works:
1. You decide
how much money you want to save each month
2. You decide
how long you want to save for
3. You decide
what currency you want to save in
4. AXA pay you
up to 125% of what you pay in during your first year as a bonus
That’s 125% on
top of what you’re paying in – so if you’re saving $5,000 per month ($60,000
per year), they’ll add $75,000 to your account with them – which means that
your account will have $135,000 in it after one year. And you not only get that
money, you get the growth on that money too.
sound too good to be true?
It’s not. We’re
just very good at sourcing exceptional deals for clients. Of course there’s
more terms and conditions involved, but they’re available by clicking the “AXA”
link on the left, which takes you to their offer document.
This offer was
launched yesterday (26th Feb 2013) and closes on the 25th
of March 2013, so if you want your free money, you’ll have to act relatively quickly.
that this product is from AXA International, not AXA Indonesia, whose products
are structured significantly differently. You also won’t find this offer (or indeed
this product) available from any other companies in Indonesia, as it is a Hong
Kong regulated product, and AXA will only accept applications placed through companies
who are licensed to provide financial advice in Hong Kong.
This offer is
open to people of any nationality, and you can choose to save annually or
quarterly rather than monthly if you prefer.
If it sounds
good, get in touch to discuss it further.
the subject of great investment opportunities, the absolute final day for
investing into the Pilot Asia Capital bridging loan product is tomorrow
(Thursday 28th February). It’s not far off being fully subscribed, and
there’s a little bit available for anybody who wants to participate at the last
minutes. Full details on this are contained within previous blog entries.
to the blog, hope you’re having a great lunar new year if you’re celebrating it…
It’s less of a
blog and more of a notice this week – actually there are a couple of notices.
investment banking transaction referred to in the last blog post has crossed
the $5million threshold, which means that:
a) It will be going ahead as planned, the minimum
funding requirement of $3million has already been reached; and,
b) The bonus “early investor” rates are fully subscribed;
the returns available are now 17.5% for those who invest $250,000 or more and
15% for those who invest less than $250,000.
raising period will end on the 28th February, so anyone who wants to
invest needs to complete their application form and send the funds before this
date. At the time of writing, the remaining availability is just under
$4,000,000, and the minimum investment is still $10,000.
redemption date is still between 6-9 months from the closing date, and the
returns stated are a total return, not annualised – if redeemed in 6 months’
time, you’ll get the full 15% return on your money, not just half of it.
now regularly being approached by various companies and projects regarding
their financing requirements, which are generating a lot of opportunities for
investors interested in private equity and/or private debt placements.
in all sorts of shapes and sizes, various different business sectors, with
varying levels of risk and security – so if there’s something in particular
that you’re interested in, or looking for, just let me know – I can either try
and source a specific opportunity for you, or simply let you know personally
and quickly when an opportunity comes up.
speaking most of these opportunities are only available for those who have at
least $500,000 to invest in a project – and often only those who have several
$million - but I’m happy to keep you informed even if you’re not at that level.
So – if you’d
like to invest in the aforementioned transaction, send me an email – you’ll
have to move quickly. And if you’d like to know about private opportunities or
have something else finance-related you’d like to know more about, just get in
welcome back to the blog… I hope you had a great Christmas and New Year and are
looking forward to an exciting year ahead.
excited in our office – we’re very pleased to be able to offer old and new
clients the chance to participate in a one-off investment banking transaction which
comes with a minimum return of 15% in less than a year. Not the sort of thing
that comes along every day…
How is this
possible? Well, the full details are available online (also downloadable in PDF
format) by clicking the link on the left which says “minimum 15% return within one year”, but I’ll
summarise them here to give you a flavour.
banking transactions take a variety of forms, and in this case it relates to a financial
restructure at a large Indonesian corporation, which is being handled by Pilot
Asia Capital. As part of the deal, Pilot Asia Capital has the option to acquire
a large plot of land (19,683,860 square metres) in West Java (Indonesia), and is
seeking to raise $10,000,000 to complete the purchase.
The land is
valued at $18,000,000, and negotiations with two separate interested buyers
have already started – and there’s a good profit to be made from completing the
purchase and selling it on, even at a heavy discount to get a quick sale.
thing for potential investors is that in return for providing the bridging
finance for this transaction, they’ll be rewarded with a fixed return of at
least 15% (higher fixed returns are available to those who get in quickly
and/or invest larger amounts – the highest return is 20%), plus they’ll have
the full plot of land held as security on their behalf.
investors in this transaction become short term mortgage lenders, secured on
property with just a 55% loan-to-value ratio.
investment amount is just $10,000, and the offer will close on the 28th
February 2013 – or before if the full amount is raised before then, which I
think is quite likely in this instance.
If you happen
to have a transferred UK pension (known as a QROPS or a QNUPS), you can take
advantage of this offer using some of your pension fund as it’s been approved
as a qualifying investment.
So what are
you waiting for? Click the link on the left to read the full details, and of
course get in touch if you have any further questions or would like to discuss
it in more detail.
Finally, I wish you a
happy, healthy, fun and wealthy 2013 J
If you live in
Bali, this information is important and could save you a lot of money; if you
don’t live in Bali, it still could be relevant for you anyway!
It’s come to our
attention that a lot of Bali residents are having their Health/Medical
Insurance premiums raised significantly – in some cases more than doubled.
one insurance company – Expacare – appears to be raising premiums the most,
although I must stress that this is our findings based on the cases we’ve been
asked to review, and I obviously don’t have the data on every Expacare client
be taken as a negative indictment on the company itself, but it is indicative
of the insurance industry as a whole in terms of how it operates.
companies use a massive array of statistical data to assess their business, but
they don’t all use it in the same way. So when they are approached for a
quotation, they use the information at their disposal to calculate a figure
which they believe will result in a profit - including, crucially, information
relating to their own business.
prudent management of an investment portfolio requires a well-diversified
portfolio, prudent management of an insurance company requires strong
diversification amongst what it insures – in the case of a health insurance
company, this means people.
Similarly, if an
investment portfolio or an insurance company portfolio contains underperforming
assets, the manager will often want to dispose of them. Where an insurance
company differs, is when its business contains assets which it doesn’t want for
whatever reason (i.e. when it insures people that it doesn’t really want to
insure), it can simply raise the cost of cover – either to make it profitable
again, or encourage those people to seek insurance with another company.
to pinpoint exactly why premiums in Bali are increasing so much in some cases,
but safe to say it’s because the insurance company either feels that they’ve
previously priced it wrong, or more likely (with very high increases) that they’d
just not rather insure that person any more.
It might be
because they have too many customers in Bali, or too few, or that Bali appears to
be higher risk now on their statistical modelling, or that they (as a company)
were facing lots of claims from Bali residents.
In fact a few
months ago, one insurance company executive (not from Expacare) mused to me
that it seemed that “people who live in Bali will claim on their insurance to
be evacuated to Singapore for treatment of something as small as a broken
fingernail”. His words not mine!
Either way it’s
largely irrelevant why the costs are going up; the point of this post is simply
to advise people of what’s happening and let them know that there are
alternatives to simply paying whatever they get quoted – because different
companies have different statistical models and different customer bases.
Part of our
service offering is to find the best insurance cover for people, and we’ve been
able to do that for a lot of Bali residents recently.
For example, one
45-year-old European recently had his renewal documents arrive from Expacare –
last year his medical insurance cost him just over $3,500, but next year was
being quoted at just under $7,500 (more than double). We got him the same level
of cover for just under $2,700, which still just had a $250 annual excess on
A 42-year-old mother-of-three was already paying Expacare over
$7,600 per year for medical insurance for the whole family, we were able to
source slightly better cover, with travel insurance thrown in at no extra cost,
for just under $4,100.
worth checking and comparing prices – and levels of cover - for insurance, as
you might be surprised just how much of a better deal you can get. And as a
high-volume broker, we can usually get better prices than are available
elsewhere – without costing anything to you the client as we get paid
commission by the insurance companies.
So I’d strongly
suggest reviewing your medical insurance plan, particularly if you live in Bali
(even if it’s not with Expacare, because even though we’ve found them to be
dishing out the biggest increases, we’ve still saved people significant amounts
from other insurance companies recently too) – even if it’s not due for renewal
It costs you
nothing to find out, and could save you enough to pay for a decent holiday. If
you would like us to look at your insurance and see if you could save, just get
in touch; if you would like to meet someone face to face, one of my colleagues
regularly visits Bali and will be down again in the near future, and will be
available to meet you without any cost or obligation – just send me an email
and we’ll arrange something.
Of course if
you don’t live in Bali, that doesn’t mean you shouldn’t be just as vigilant
with your insurance premiums – it’s often easier to save money that to make it,
so don’t waste it! Just ask for a quote, we’ll do all the hard work on it.
It’s made big
news all across Indonesia – although notably none of the large international
news networks have bothered to report it – the new minimum wage for 2013 in
Jakarta will be increased by a whopping 44%.
I won’t go
into detail on all the basic repercussions of this move – which are both positive
and negative in some respects, regardless of which side you’re on – as they’ve
been fairly extensively commented on by local and national media here in
But there are
a couple of points – key points, in my opinion – which seemed to have been overlooked
so far in the general reporting of this news.
The first is
this: Individual decisions or policies are largely irrelevant; it’s how they
fit together that is the important thing.
consider a traffic intersection: really it makes very little difference which
line of traffic goes first. But if they all go first, you’re screwed. Jakarta
residents will undoubtedly be aware of this…
And so it is
with economic policy. Like balancing a set of scales, it doesn’t matter which individual
weights go on which side, the important thing is that the weights add up
equally. If they don’t, it crashes.
Govenor Jokowi has already instigated some other initiatives besides signing
the minimum wage increase, particularly in the public sector. If successful, things
like getting people to actually turn up to work, getting people to actually do
their job, and getting people to stop stealing money from government budgets
will have a far bigger impact on economic prosperity than any amount of
tinkering with wage levels.
Much has been
said about productivity levels generally – according to the UN, the average
Malaysian worker is 2.5 times more productive than the average Indonesian
worker (that’s 150% more). Whilst the main reason for this is simply “poor work
ethics” in Indonesia, another significant difference is the lack of good infrastructure
in Indonesia – both physical and bureaucratic. Some really basic improvements
in this area will improve productivity by a lot more than 44%.
So if changes
to the minimum wage level will be accompanied by positive changes in other
areas, Indonesia and its economy will be much stronger overall. If other stated
objectives fail to materialise, all that will happen as a result of the wage
increase will be further falls in the value of the Rupiah, and even higher
me on to the second key point. As widely reported by the media here, if you
simply just increase labour costs, it simply increases the cost of goods and
services, which is basically what inflation is – the same end product but at a
higher price than before.
But the key
point for investors (and in fact for everybody connected to the Indonesian
economy in some way) is not inflation itself; it’s the fact that the “official”
inflation figures are clearly a lot different than “real” inflation, felt by
in Indonesia is currently running at 4.6% - almost perfect apparently, when
compared to Bank Indonesia’s stated aim of between 3.5% and 5.5%.
calculated using a “basket of goods and services” – i.e. a selection of items,
and measuring their average prices. Generally speaking, over any particular
time frame some things will rise in price, and others will fall. The average
should, in theory, give a fairly accurate representation of how much more
expensive “things” are generally.
The key to
successful inflation tracking is not the maths itself, it’s in what goods and
services to select for tracking, and in what quantity. For example, tracking
the price of a new Ferrari in Indonesia is largely irrelevant. The price of
rice is very relevant.
But that’s all
largely academic – the key point is this: The purpose of calculating an
inflation rate is so you can use it to make other important decisions, such as
what interest rate to set. Bank Indonesia quotes this “low inflation rate”
often, when discussing the official Bank Rate.
to the “cost of living” have led to protests across Indonesia – from the recent
33% quoted by labour unions in Jakarta to the 35% quoted by labour unions in
Papua. And these protests have directly led to policy changes by both
government and businesses.
that some top-level decisions are being based on low inflation figures, and
others being based on high inflation figures. Obviously workers on the minimum
wage are not fully representative of the country as a whole, but they are the
ones most affected by price increases. And there are a lot more poor people in
Indonesia than rich people.
along the line, decisions are being made based on either inaccurate information
or irrelevant information, which is somewhat less than ideal.
So what does
this 44% increase in the minimum wage mean for the economy? Ultimately not very
much, on its own. But, bringing it full circle, how this policy fits with other
policies will shape the size and duration of the current “economic boom”, and
most probably the size and duration of the “economic bust” that will follow (I’m
not being pessimistic here, a boom is ALWAYS followed by a bust, the only
variables are the size and duration of each).
have emerged about the first of the litigation funds to collapse, Axiom, which
are relevant to anyone who has invested in this scheme, or another similar one.
Links to information sources are below, and I’ll summarise it here.
headline on the “Offshore Alert” website is this:
Financing Fund appears to be a Ponzi scheme”
It goes on to
detail some key points, including the news that the fund’s biggest borrower,
ATM Solicitors, has borrowed £50million (approximately $80million), but has no
cash to repay it; the managers of the Axiom litigation fund are also on the
payroll of ATM Solicitors; the company was named ATM Solicitors because the
directors joked about it being their cash machine; and the auditor, BDO Cayman –
which also “audits” a lot of the other litigation funds – published accounts
based on forged documents.
The editor of
Offshore Alert, David Marchant, has written an open letter to investors in the
scheme, which I’ll quote here in full:
“The bad news is that you have been defrauded of
your investment in Axiom Legal Financing Fund. Your money has been embezzled by
the Fund’s controlling person, Timothy Schools, and other insiders. The sooner
you accept this, the sooner you can start taking steps to recover some of your
losses. The worst thing you can do is hold out any hope that the Fund is going
to get back on its feet. Trust me, that’s not going to happen. It’s inevitable
that the Fund will go into liquidation.”
“The good news is that the level of incompetence,
unprofessionalism and negligence by the Fund's advisers and those entrusted
with looking after your interests is possibly the worst I have seen in 27 years
as a journalist. This means that Axiom's liquidators, when they are eventually
appointed, will almost certainly recover millions of dollars in damages from
them or their insurers in lawsuits that I expect to be slam-dunks.
Unfortunately, the liquidators and their own professional advisers will keep
much of this as fees and costs. The eventual liquidation dividend to
investors is likely to be much less than your losses. I'm sorry but
that's just the nature of the beast and the price you must pay for investing in
an overtly-ridiculous scheme that had red flags plastered all over it.”
“You, as investors, have no direct claims against
the Fund's professional advisers. It is up to the liquidators to bring such
actions on your behalf. If you do sue them, your actions will be stayed in
deference to lawsuits filed by the liquidators. So don't waste your time,
effort, or money pursuing this course of action.”
“You can, however, sue financial advisers and
others who directly induced you to invest in this fraudulent scheme. Frankly,
they are sitting ducks for successful litigation. Time is of the essence,
though, since there will be a statute of limitations on filing a claim.
For more details on suing a financial adviser for recommending a fraudulent
investment product that was exposed by Offshore Alert, I recommend that you
read this informative blog [the link is below] from 2005 by Bevans law
firm in England.”
“Good luck and learn this lesson: Before you
invest in another scheme, do some credible due diligence.”
I’d like to
elaborate on a couple of his points, and make an extra warning.
Firstly, “the worst thing you can do is hold out any
hope that the Fund is going to get back on its feet”. You will likely be
told, by everyone from the managers of the fund through to the people selling
it, that the money will be recovered, everything will be fine, nothing has been
proved etc. This is clearly untrue. You need to accept that you've lost the
money, and if you were relying on that money to fund something important, such
as your retirement or your children’s education, you need to start rebuilding
your wealth, NOW.
Secondly, “that’s… the price you must pay for
investing in an overtly-ridiculous scheme that had red flags plastered all over
it”. There’s not just one Litigation Fund out there, there are several. Whilst
many are simply “feeder funds” for this one that’s gone bust (branded
differently but the money ends up in the same place), some seem to be separate.
If you've invested in one of these other schemes, you will likely be told, by everyone
from the managers of the fund through to the people selling it, that everything
is fine, this isn't the one that’s gone bust, this one has nothing to do with
the Axiom one, and you have nothing to worry about. Are you being lied to?
Any legal financing
fund which purports to offer high, fixed returns, backed by an insurance
policy, with no downside risk, has exactly the same “red flags” as the one that
has gone bust first, and in my opinion is just as “overtly-ridiculous”. In my
opinion, LAWYERS DO NOT NEED TO BE PAID IN ADVANCE FOR CASES WHICH THEY WILL
EITHER WIN, OR RECEIVE AN INSURANCE PAYOUT ON IF THEY LOSE.
warning for what will happen next. The whole thing is unravelling and the race
is on to get as much money as possible before the inevitable collapse. Other
schemes, similar to the one that has gone bust, will go on the offensive. They
will shout from the rooftops how shocking it is that another company has acted
in this fashion. They will bemoan their “business model” being brought into
They will seek
to reassure investors that they are doing things properly, so properly that
they expect to make even more money than they previously thought! Maybe some
will even say how they are in a position to make money through this scheme’s
demise, by taking over some litigation cases or even suing this Fund
And of course,
to thank and support the loyal salespeople who are selling their fund, they’ll
increase commissions/bonuses to those who sell lots more of it – so expect to
be asked if you want to invest more money into this scheme.
In fact, why
not ask your financial adviser if you should invest more money into a
If they say
yes, re-read the above, some of my previous blogs, and the links below, and
decide if they really have your best interests at heart, and if they’re
competent enough to look after you.
If they say
no, ask them if their previous advice to invest into a litigation fund was good
advice or not, and decide if they really have your best interests at heart, and
if they’re competent enough to look after you.
Capital, we look into things in more detail. We chose not to be associated with
these schemes at all, and have done our best to dissuade people from getting
conned by them.
What we have
done however, is sourced a product which could be of real benefit to people who
have lost money as a result of these schemes. As our Group is authorised and
licensed in Hong Kong, we have access to some of the better products available
in this market, and can now exclusively offer these to clients in Indonesia and
One of the
best is a regular contribution product from AXA, the world’s largest insurance
company, which guarantees a fixed return over a set term, meaning that you are
guaranteed to make a profit. There are different variations available, depending
on your circumstances and whether your main requirement is higher protection for
your family or higher returns, (it combines life insurance with savings and
investments) but the bottom line is that whatever happens, AXA guarantee that
you will get back more than you put in.
If you need to
start rebuilding your wealth, this could be an excellent way to start.
If you’d like
to find out more about this AXA product, or check the riskiness of any of your
other investments, or simply get a second opinion on your own finances, please
just send me an email and we’ll take it from there.