Three Big Brand Names in Singapore

In investment, it is critically important to stay with winners. Big winners often and should have big brands. I can recognize three such brand names:

• The Singapore Government: whether it is about foreign investment or infrastructure or city planning, the Singapore government is almost always way ahead of others in recognizing its importance. As manager of Singapore Inc., it has admirable track record of more than 40 years. So next time things look terrible (like Asian financial crisis or SARs crisis in the past), have faith in them. Singapore Inc. will bounce back.

• The Singapore Airline (SIA): those who have travelled SIA would like to stick with it; those who have not would like to try it in the future. Travel being so much part of the globalized world, demand for travel can only go up. SIA will be a key beneficiary of this big trend.

• The Tiger beer: it has a great name and a very desirable image (of having a good time). With a solid regional presence, it will go from strength to strength.

Three ways to benefit from the coming inflation

The world has been experiencing a lot of inflation in financial assets, in the form of higher price of shares and real estate. In normal circumstances, the price of other things in life would also have gone up sharply. This is clearly not as noticeable, mainly due to fact that the whole of China has been working pretty hard. Remember this is a huge country, and it takes a long time for overall costs to go up a notch, which is happening and only recently. From now on, you should expect other forms of inflation to show up, in more and more corners.
Fortunately there are things you can do to mitigate the effect, and even to benefit from it. Here are some of my thoughts.

• In inflationary times, interest rates will trend up. Those who lend money to others with fixed interest (like bonds) will suffer. Note that banks in Singapore lend out money with adjustable rates. So they are more or less protected from inflation, and it is ok to own their shares during times of inflation.

• Inflation will have different impact to different industries. Those which cater to essential needs of people will be able to pass price increases to the customers. Others which are unable to do so will be squeezed and will fall. So you should consider owning market leaders of those industries, which really matter to people.

• Everyone knows that the price of real estate in Singapore is already quite high. But since housing is such an essential item, the price may go even higher, hand in hand with inflation. So if you own real estate, it is a good idea to hold on to it.

Three secrets of investment success

The market has been going through some turmoil recently, due to the problem of sub-prime loans in the US. The first thing to recognize is that this is normal and in fact it is to be expected. After a long period of steady climb, many in the financial market are now engaged in speculative activities which they normally would not do, say a year ago. In order to stay healthy, the market needs a cleansing.

In order to answer the question “what should I do now”, I shall state three crucial ingredients for investment success: To make money,

• You need to have money;
• You need to have guts;
• You need to have patience.

If you do not have money now, you should immediately start to save money, somehow. Otherwise you are way behind most people in terms of financial discipline.

If you have money to invest, and next time you see panic selling like last Friday (Aug 17, 2007), you need not hesitate. Just buy some of the best companies in Singapore. People were scrambling to sell to you, for example, UOB shares at 18.80 or City Development at 12.40. If you bought them, you are already ahead of the majority of investors who habitually buy high and sell low. Of course you would have done a similar thing during all kinds of market setback previously.

After you have bought some great companies at a good price (you are assured of this during every market turmoil), you should congratulate yourself and reward yourself by being relaxed. All you have to do is to be patient: majority of the money is actually made in the sitting. For sure there will be a time when people will scramble to buy your valuable shares at a much higher price. It could even be from the same groups of people who did panic selling in the last round.