Fixmarket sep 08

I wanted to clean this up last year...but did not. This has been fustrating me time and time again...and I want to end this stupid nightmare.

Now Mr. Jiang has run away. His greatforce website became a porn website. His company and personal handphone has been disconnected.

With me as a local director, I cannot run away. I went the seek Emmy's advice..

THis is what she told me... there are 3 scenarios now
1) force the company to close (strike off), this involve legal fees and lawyers and a potential wopping 10K
2) wait for 7 years before closing. In the meantime , every year has to hold/sign AGM as well as publish audit reports for ACRA. Since it is dormant, we will request next year not to publish audit reports to ACRA. This should save some fees
3) execute the following plan
- 1) email Mr. Jiang a few times and get his no reply
- 2) send a registered mail to resign as a local director and request him to contact me
- 3) send another registered mail saying that he has not contact me and I reference my resignation date, and stating I have discharge my duties as a director
- 4) Tell him that I will close the company if he does not get it touch with me in 4 weeks
- 5) Issue him an ultimatum that I will close his company in another 4 weeks.
- 6) Go to ACRA and plead ...most probably have to wait another 1-2 months.....

I have done 1-2....in mid November I will do 3, start Dec - 4, End Dec -5, Jan -6 go find ACRA.

Why we are doing this is because we do not want him (if he is ever able to) to have a potential court case against me, which I am closing the company against his wish. Emmy is right, in whatever we do, we must make sure there is no possible hold against me.

For Emmy's case, she made Amy sign in the contract that the "jewellery" case has nothing against the Emmy's account company and her personnel. This is to absolve her of any liability. Previously, Amy tried to involve Emmy and the company stating that she hid her gold in the company and Emmy was involve in the gold hiding,

Really have to protect oneselve against some of these illogical people who might harm you.

Portfolio Sep 08

with the massive roller coaster....I manage to clear out my shorts....maybe left the last big chunk of meat but too bad. The big movement out also went in too little....should just have wacked ....VIX was around 36, and 2-3 major bad news + already down 3-4 months......

What to look out for next ....3-4 months down + VIX above 33 + 2-3 major events already rally but failed....and blood on the street..... last 5 day downs 8%....

Portfolio down 5 %.
Longs 57 % + 5 % just added, cash 43 %. No shorts.

Short Term Plan
i) clear my short term investments
ii) start shorting
iii) clear my longs

With what the FED has done, it has prolong the downturn....so I see another 2 more years (total 3) of downturn till 2010...... Strategy....cover shorts in 2010...boost equity in 2010 100%..... and leverage if neccessary....and next year buy commodities.

Capitulation & Massive recovery Sep 08

Recounting Capitulation & Massive recovery

2 weeks ago

Freddie/Fannie Mae required a bailout, massive rally followed follow by dropping again and drop further

1 week ago,

Lehman brothers had some issues, they had the weekend to find a buyer, failing which they have to file for chapter 11. At that point of time, I felt that with the Fed digesting FN/FM, they would not have appetite for this.

Monday,

STI started dropping early in the morning. I covered 7 S&P futures which was down around -30 points at 1212. I quickly shorted SIMSCI at 7 lots 304. (went down 4 + points )

Monday Night, Lehman file for Chapter 11, Dow crashes 4 % to 1190

On Tuesday 16 sep, I covered at 6 lots 296.4. Made an order the same day sell 4 lots at 301 and got it as STI recovered. As you can see, my shorts was getting smaller and smaller..... cannot be too greedy.

As I know with STI dropping already 20+% since June to Sep (4 months) the odds are great that a rebound was coming. I know I am getting overwhelm with fear. I would probably have capitulated if not for my shorts shoring up my longs.

On Wednesday, Dow was flat the previous day. So STI recovered. I also covered back 301.6 at a small loss.I wanted to change to the DOW as Dow futures were up 18 points around 1220. I wanted to change to Dow shorts, but I put an order at 1222. So, I did not get it unfortunately.

Wednesday night, AIG ran into trouble.....they have 1 day to sort out to refinance their capital. Fed was unwilling to bail out AIG, and was pushing the banks to help bail them out. S&P crash 4.5% to 1155. I watch in unbelive as my potential profit of 37K vanished !

So how.... I was overwhelm with fear and pek chek..... so now... I have to buy from blood on the streets. I put in several orders... Hong Guo 0.18 (0.22), Beauty China 0.445 (50.5), Hi-P 35 (38), Swiber 1.03 (1.14), Celestial 0.485 (0.55) DBS & SGX (did not want to put as the minimum bid that can be placed is 10 points which is little). In the end DBS 15.50 (16.14) ...I wanted about 80 cents shortfall and it has a daily buyback in place.... and SGX 5.55 (6.04) one of the most shorted stocks.... SIMSCI 282.2 (297)

Thursday...as expected STI crashed 100+ pints or 3.8% in the noon.... a few things happened......unfortunately a friend was distracting me asking me for investment advice...this made me not monitor the SIMSCI closely...also I had to settle FixMarket stupid issue again....

In the morning, I got 100lots BC which dropped 13%, in the afternoon I saw STI climbing already...so I quickly bought 100 lots celestial. In the end only about 5 % bought ( 90K).

In the afternoon, with Central banks intervention pumping in 100 billions of money into the financial market, most Asian countries made an astonishing rebound !

Thursday night , AIG got bailed out and massive 400 point for the DOW. After Britain's Financial Services Authority (FSA) imposed a four-month ban (January 16 next year) on short-selling financial stocks on Thursday the U.S. Securities and Exchange Commission followed suit on Friday with an immediate 10-day ban (799 Financial stocks till Oct 2)

Friday STI went up an astonishing 135 points (5.4%). DOW also went up another 300 points. What a roller coasting week !

What is next...I expect something postive to happen over the weekend or next few days probably Morgan Stanley.... massive shorts covering and novice investors pouring in should boost market up another 2-3 % at least.

STI 2559 (SIMSCI 317.15), DOW (11388) S&P (1255)... SIMSCI 324.4 will look nice, S&P (1280)

DBS High Notes investors at risk Bank warns they may lose entire stake in Lehman-linked product

SOME local investors of a product linked to bankrupt investment giant Lehman Brothers have received late-night phone calls from DBS Bank warning them that their entire stake may be wiped out. The investors have their cash in a product called DBS High Notes 5 that the bank offered wealthier clients last year. It came with a promised annual return of about 5 per cent.

But Lehman's collapse on Monday means the product will be unwound and investors may only get a portion of their investment back - or none at all.

One 52-year-old customer told The Straits Times: 'I received a call from my relationship manager late Tuesday night. He told me that...my investment may amount to zero.' The man had invested $50,000 - savings he had earmarked for retirement.

A customer in her late 40s said: 'My relationship manager called and told me to be prepared to receive a letter from the bank...[it] would say something to the effect that my investments in products like High Notes 5 may be totally gone.' She invested $50,000 and US$30,000 (S$43,000) in two separate transactions.

Investors are mostly clients of DBS's priority banking unit, DBS Treasures.

The product - DBS High Notes 5 - is a 5-1/2 year structured product linked to eight underlying shares, including Goldman Sachs, Morgan Stanley, Merrill Lynch, Macquarie Bank and Lehman.

Customers who invested in Notes 5 said they were sold on the relatively high 5 per cent annual payout by DBS. But now they just want their money back. 'What we do not understand is: How can the fall of one bank cause our funds to just vanish when there are seven other stocks within the product that are still trading?' said a man whose elderly aunt invested $50,000 in DBS High Notes 5.

According to a person familiar with the matter, the largest single investment made on High Notes 5 was $2 million, although this could not be verified by DBS.

DBS confirmed that it took immediate action to notify customers once it learned of Lehman's chapter 11 bankruptcy filing.

'As soon as the news broke we immediately started communicating...to our retail investor customer base,' the bank said in an e-mail reply to The Straits Times. 'We are very concerned and understand the anxieties our customers face as they wonder what will become of their hard-earned money.'

DBS said the Lehman collapse has triggered a 'credit event' and the bank called for a redemption of the notes on Monday. It said unwinding of the product has begun and it will be at least 30 business days before clients learn of the final payout. But DBS also confirmed that investors in High Notes 5 may - 'in the worst-case scenario' - not get back their entire principal amount invested.

The product's prospectus also indicated that in a credit event such as bankruptcy, the notes 'will be terminated and the investor will receive zero payout'.

The bank said the product does not contain a guarantee that the principal will be protected. It also told The Straits Times it would 'fully investigate' claims by some customers that High Notes 5 was in fact sold on such a promise.

Meanwhile, UOB and OCBC Bank said that though some customers have invested in Lehman-linked products, the volume was 'modest' and 'negligible'. 'Since news of Lehman filing for Chapter 11 broke, we have taken a proactive approach in updating clients on the latest developments,' said UOB's spokesman.

My comments, ever since I lost almost 50% in a unit trust (albeit small around 5K invested) I never trusted bank products.

Always remind ourselves this rule : Your banker is not your friend

Something I found funny

Stock Market Definitions

Bull market: a random market movement causing an investor to mistake himself for a financial genius.

Bear market: a six- to eight-month period when the kids get no allowance, the wife gets no jewellery and the husband gets no sex.

Momentum investing: the fine art of buying high and selling low.

Value investing: the art of buying low and selling lower.

Broker: poorer than you were last year.

Stock analyst: idiot who just downgraded your stock

Stock split: when your former wife and her lawyer split all your assets equally between themselves.

Market correction: the day after you buy stocks

Cash flow: the movement your money makes as it disappears down the toilet.

EBITDA : earnings before I tricked the dumb auditor

EBIT: earnings before irregularities and tampering

CEO: chief embezzlement officer

CFO: chief fraud officer

EPS: eventual prison sentence

Investment/Sentiment Sep 08

STI crashes from 2600-2450 around 5 %. due to Lehman brothers collapse.... Now AIG is next....I see panic selling and blood on the streets...butDow is still very high at 11000 down 15% from 13000 YTD.

I have caution myself for buying shares, but somehow or rather I was seduced into buying...maybe overconfident

In a extreme bear market, PE 6 to PE 3 is a 50% loss..... so even PE 6 may not give you a sufficient margin.

Right now, every upday is followed by 2-3 days of crashing, so every upday is an opportunity to sell. People thinking of cashing into the upside have fallen flat.

Now, many people are anticipating the market to come down even further. When it does, people will think that they are lucky to have avoided the market.

When there is a mini rally, people will think that it is a bear rally.“It will fall further.”And usually, it really does fall further.

Again, it makes people feel that they are right not to buy.It will go up and down until a point where even the most bullish person turns bearish.“......this will repeat a few times till people believe..."Oh its another bear rally"......that is when the finally the bull will turn up.

Even me right now, my shorts have not been covering the longs.... Lately, my shorts were 40% and Longs 55%. And what I learnt,
1) don't trade shorting in a bear market. In a Bear market, sell and hold.
2) Consider the US market vs the Singapore Market. Eg, Lehman did not secure fundings over the weekend. US futures very negative, but STI not that negative yet....can cover US and short Singapore futures. As when US market open, STI may drop further.
Eg 2, US rally the previous day, and futures up the next day. It is better to cover and short the US futures.

Dear Mr. Buffett:

First off, I would like to thank you for meeting with me and my Lehman Brothers team earlier this week. The opportunity to outline our plan to you personally was the highlight of my professional career. I know that it has been a few years since you had an office in Manhattan, and we aren’t asking you to take a chair and a desk, but your steady hand at Salomon Brothers is an example of what all of us on Wall Street are so desperately seeking in these difficult times.

As I clearly outlined during our meeting, I firmly believe that an investment in Lehman Brothers by Berkshire Hathaway is a classic opportunity for your great company to, once again, buy a fabulous global franchise at a very fair price. This isn’t at all like the situation that John Gutfreund put you in, and I recognize that you are wary given your previous experience. Wall Street has changed dramatically since 1991, it is far more of a franchise business that relies on capital than the “people” business that you were once used to. As you mentioned, the $700 million Salomon deal was the single largest commitment of your career at that point; and I take your point that such sums are now just the bonus pool for the commodity division

But much has changed. Over the past year, our firm’s market capitalization has shrunk by more than $30 billion (about 75%). All of the shareholder wealth that we’ve created over the past 10 years has been completely erased in a matter of months, and yet our firm has never had brighter opportunities nor a stronger safety net. This is the investment opportunity that we see for you and the rest of the Berkshire family. You have the opportunity to invest in the brokerage industry at prices not seen for a decade.

Our firm is poised to return to greatness, and many of Bear”s clients are coming our way.

Just the other day, a survey of U.S. institutional investors by Greenwich Associates found that “among the largest players, [Lehman and JP Morgan] scored highest in providing their [fixed income] clients the best support and understanding during the market turmoil.” This survey, conducted between February and April, also found that while JPMorgan was found to have slightly more institutional trading relationships, Lehman Brothers had slightly more market share.
What this survey will confirm for you is that our trading desk has continued to serve our many international clients, even when other brokerage firms were pulling back. This bodes well for the next Bull Market.
I have spoken to both the Treasury Secretary and Chairman Bernanke, and they are prepared to assure you personally that Lehman will continue to have access to the Fed’s discount window for many years to come, if so required. As such, our firm cannot fail in the traditional sense. The federal government’s balance sheet is impregnable. This is an investment circumstance that rarely presents itself in the lifetime of any investor; even one as successful as your own.
We are very reluctant to raise capital at this juncture. Our recent $6 billion equity raise was intended to help us weather even the worst storm. I understand that some intermediaries reached out to you at that time, and that you rightly advised that your modus operandi was not to invest in a club format. I regret that anyone troubled you with the idea back in May, and recognize that by passing then, as you said in our meeting, you avoided suffering the 44% drop in our shares since that deal was announced on June 10th.
Your wisdom is clear. But this time it will be different.

As we discussed, approximately $145 billion of long-term debt is outstanding including current year maturities of $18.5 billion with $8 billion of commercial paper. We have a plan to deal with these debt tranches, but recognize that a partnership with you would be a tremendous asset when we return to the debt markets. My Treasury team advises that we could save in excess of 200 basis points on our medium term paper if Berkshire agreed to be our strategc investor prior to commencing our current year debt refinancing activities.

The investors who joined our shareholder group in June recognize that much of what has happened over the past 5 weeks was unforseen. But no one likes losses, paper or otherwise. That being said, they will be elated if you join their ranks, let me assure you of that. That old saying, “dilution is your friend”, rings all the more true when the name “Buffett” is involved in the dilution.

My partners and I are prepared to consider a $5 billion convertible preferred investment, paying an 8% annual cash yield, with redemption and retraction rights in, say, 20 years. Our stock rallied yesterday on the back of the positive news out of Wells Fargo. But, with a sensible discount to yesterday’s closing price of $16.65, your firm would own approximately 33% of our Company, at closing. Naturally, we would very much want you to consider joining our Board of Directors at the earliest opportunity. Other names would be welcome as well.

As we both know, an announcement that Berkshire had agreed to invest capital in our firm would propel both LEH shares and the broader bank index. If yesterday’s rally is any indication, you could earn a 25% return in a single day merely on the news of your financial commitment to me and our franchise.

I appreciate that you have been displeased with the role that you believe Wall Street has directly played in the credit crisis of the past 12 months. I noted that, during our meeting, you specifically named Lehman and Bear Stearns as two of the financial institutions that were at the forefront of the growth in the CDO, CLO, ABS, subprime and credit swap markets.

As you know, the job of an investment bank is to bring to market the products that the market wants to buy. Although we pride ourselves in our Top 5 ranking in the M&A tables, the fees generated on advisory assignments pale in comparison to the revenue that flows from the underwriting side of our industry, whether it be equity, structured products or debt. I took your point that Wall Street must play a “quality control” role in the process of selling products to our clients, and I strongly believe that we did our utmost on that front.

We were so convinced that these vehicles were money machines that we bought them for the accounts of our own captive hedge funds. We put our money where our mouths were.
I understand that you are also dubious about the long term capability of the hedge fund industry to produce returns that exceed your sense of market norms. I have two points to make on that front.

Hedge Funds are a key revenue driver on our trading desks, and excellent Prime Brokerage clients as well. Up to 40% of our daily block trades are done for hedge fund clients. Moreover, our ability to create our own hedge funds has generated substantial fees from institutional investors and pension funds around the world. Although the recent SEC push to curtail some of the more attractive trading strategies of hedge funds such as ours may hamper our ability to beat the index, the fee streams that our funds generate are extremely valuable. Particularly at times, such as now, when the underwriting and advisory revenues are weaker than we would like.

However, if you would like a commitment from me to exit the hedge fund business, I will certainly recommend such action to the Board should you agree to our investment proposal. Although I am the leader at Lehman, I am always open to well-reasoned perspectives.
In summary, let me again thank you for agreeing to meet with us. I believe that you’ve been presented with a unique investment opportunity, and one that is sure to be successful. Your hallmark is to invest in top notch management teams, and I humbly submit that we’ve demonstrated that we can navigate difficult waters.

With your financial commitment to our firm, the sailing will be smooth, and the entire U.S. financial services industry will benefit from the rising tide that would surely follow a commitment from Berkshire. The positive impact that would have on the economy is clear, which would directly beenfit the rest of the Berkshire Hathaway portfolio of companies. This is the way that America can exit the recession that you believe we are experiencing right now.

Thank you, in advance, for your time and consideration. As Senator McCain said himself, and I passed along to you, “the country needs you”, and we are honoured that you are considering this opportunity.

Yours Sincerely,
“signed”
Richard Fuld,Chairman and CEOLehman Brothers Inc.

My take - act of desparation.....with FED swallowing FN & FM have enough indigestion on their hand..... its bye bye to them