MAS had introduced new car loan curb to raise financial awareness of aspiring car owners.
The new car loan curbs will allow aspiring car owners to weigh the pros & cons of buying and having a car.
Although COE had limit the amount of cars on the roads but it had lost it's effectivness due to current credit market,loans could be easily obtained at a low interest rate which fuel the demand for cars.The result is ever increasing COE price which show no sign of receding demand for car ownership.
From individual point of view,car ownership have become a luxury that only the cash rich or well to do people could possess it.
However from national interest point of view,it will benefit the country in the long run in terms of productivity.
The number of cars on the road will determine how congested the roads will be during peak hours and which in turn affect the productivity of a Nation.For example the new NSE(North-South Expressway ) will be build to reduce travel time from Yishun to city approx 10 minutes.Let do the math for a year.Assuming a person drive a car and commute to & fro from Yishun to city .
One Day : Save 20 min
One Year: Save 5000min (250 days x 20min)
That will translate into 83 hours of time that can be use for more productive usage;spending more time with familiy,more personal time,more innovate ideas to generate or more time to rest instead wasting it on road congestion.
Let say 50,000 people use the NSE to commute to & fro .
One Day :Save 1000000 min (20 min x 50000)
One Year:Save 250000000 min(1000000 x 250 days )
The mutiple effect is astonishing.Imagine for 10 years,the amount of time we can save is converted into more meaningful purposes.This will no doubt benefit our country in terms of real productivity.
The chart for STX OSV look promising;it broke above the trend line and move above the 10d MA with decent voulme.
This break through seems to coincide with the 3 new orders that STX OSV had announced on the late night of 14 Feb 2013.
For traders,it will be a long punt for intra day trading.However for investors who intend to hold long for this stock should start to evalute this stock due to several reasons:
-The Oz parties who have 12% of STX OSV had gradually reduce it's holding to approx 8%
-The 3 new orders are meant for 2014 to 2015 order book.The order book from 2014 seem to lag behind the previous 3 year
The Government had introduced the latest property cooling measure few days ago and is the 7th measure since 2009.
The intention is not to crash the property market but to stablise and normalise the current situation.
The governement approach is obvious:using needle to deflate the hot air ballon instead of shooting it down.
We are in a similar situation as America,the collapse of housing price is one of the main factor that triggered the Sub Prime crisis and in the first place no one will ever believe housing price in America will drop, just like in Singapore.No one will believe housing prices for Singapore will drop too.Many people believe when the interest rate start to rise,we can start to see correction in property prices,however i believe when the prices of the property start to decline and stop raising ,that will be the start of the nightmare.
When the property price start to decline, people will be force to sell thier property away because when the market price of the property drop below the outstanding loan amount, the banks will do a margin call, requesting you to top up cash as collateral.If you cant pay,the banks will seize the property.Coupled with huge supply of property,the falling price can be fast and furious.
This time the cooling measure had included industrial property,we refer to the chart and the price index for industrial property had spike up from 2009,whereas the remaining year from 2000 to 2009 the prices is relatively stable.Obviously speculation is at work,this concide with the Governement measure to curb housing property price since 2009 and forced investors & speculators to move into industrial segment.Please refer to property price index chart.
I strongly support the government move in curbing the property price and in a greater context,this will benefit our whole economy as the destablising factor will be remove thus bringing stability to our economy.
Normally we will consider 2 important areas when investing in a particular asset :The Risk & Returns of the asset.
When caculating returns,it will be much more straight forward.However when come to risk assumption between 2 different asset ,we have a method which require more work is by caculating the Standard Deviation of a particular asset
The Standard deviation of a asset shows how risky the asset is in terms of price variations and by comparing the standard deviation of 2 different asset ,it will enable us as an investors to make informed decisions.
Here, i will compare 2 stocks;SPH & M1.
Using current price of SPH at $4.01 & M1 at $2.75 ,we will caculate the returns of these stocks in terms of dividend yield.
Now,to caculate the Standard deviation of SPH, we can use excel to do the job for us .
I pluck out SPH & M1 closing price for the whole year of 2011from Yahoo finance (Historical Price) and paste it to the excel sheet
First,we find the price gain in percentage of each day by using the done price on 4 Jan minus the price on 3rd Jan and divided by the price on 3rd Jan.
From there we obtained the Daily Standard deviation by applying STDEV formula for all percentage gain from Jan to Dec.
Then caculate the Daily Variance by squaring the result from Daily Standard Deviation. And mutiply Daily Variance by the number of trading days which will get the Annualized Variance.
Square root the result of Annualized Variance and we will get the Standard Deviation of SPH at 13.07% & M1 at 16.50%.
The above result show M1 is more voalite than SPH in terms of price fluctuation and if we compare the returns of these 2 stocks ,i will chose to invest SPH over M1 because not only the returns of SPH is higher than M1,it is less voalite than M1 in terms of price variance. But this does not means we have to chose SPH over M1, if you have the capital it will be wise to split your investment between these 2 stocks.
We can also compare Standard Deviation between any 2 asset class( Gold or bond or a portfoilo of an asset).And by including Gold /Bonds into our investment portfolio ,it will significantly lower the overall risks of our investments as each asset class have different correlation between each other in different economic cycles.
Recently my friend and i had a conversation on investment and he lamented to me how he had lost his hard earned money through investing in stocks which caused him to give up investing in equities.
At the same time ,he shared with me how he got into a property investment club which invest in overseas property market and getting steady returns between 14% to 33%.
I was skeptical and told him that this type of investment is too good to be true and he agreed but he believe in taking risks.
He shared how the club roughly work;
-Investors will join the club and pool the money together.
-They will scoop up properties in countries such as; London, Germany, USA, M'sia and India.
-Due to their large/bulk purchase, they will be quoted a 30% mark down in the asking price.
-They will refurnish the properties and rent it out .
-From there, they can start getting their returns of 2%~3% per month from 6th month onwards by renting out the properties.
-The founder or CEO of the club has close connection with the top politicians in their respective countries they are investing in, hence the club creditability have been very good.
Since he is a seasoned property agent, i believe he had done his risk calculation before diving in. However,the worrying part is that he had invested almost all his saving into this investment which i advised him to get out .
The path of investing is treacherous but filled with reward and self-satisfaction. Prudence is needed as a single wrong decision can destroy our wealth that have been built up over the years.