Worst Year For Warren Buffett As Recession Bites

A new month, but it did not bring new hopes. This week’s stock market opening wasn’t any different as it continues to test new low. Asian bourses were jolted by bleak data while Wall Street fell to fresh 12-year lows on heightened fears about the murky financial sector.

AIG announced $62 billion losses (a cool $460,000 per minute) and a third bailout package was injected which brought the insurance giant closer to becoming absolutely owned by the US government.

Read the full article here.

Protectionism Will Cost Investors Dearly

The US government revealed on Friday that payrolls tumbled by 598,000 in January (the biggest one-month drop in 34 years) and the unemployment rate is now at a 16-year high of 7.6%. In a month of brutal layoffs, I guess the only bright spark was Obama’s inauguration but even that seems to have fizzled out.

One cannot fault the Obama’s administration for lacking enthusiasm; however, implementation of economic policies has been anything but smooth. Hurling accussations at China for manipulating its currrency disrupts the delicate balance between both countries.

Read the full article here.

It Feels Great To Be A Sloth Investor

Warren Buffett once remarked that successful investing consists of long periods of inactivity, bordering on sloth. That pretty much describes my attitude towards investing coming into the new year. If we are going to have more of the October massacre, then we should at least seek cover and conserve cash. 

The losses from Citigroup and Bank of America were staggering and confirmed that the worst of the financial mess is far from over. Analysing when the good days will arrive seem to be a futile exercise now. In any case, I am less worried about the economic recovery which will definitely happen with so much money being dumped into the system. 

Read the full article here.

Is South Korea Desperate Already?

On Thursday, South Korea announced the arrest of a financial blogger accused of undermining the country’s financial markets with his doom-mongering. “Minerva,” as the blogger is known, gained instant fame for uncannily accurate forecasts on the fall of Lehman Brothers and the crash of the Korean won, which plunged 26 per cent against the dollar last year.

Instead of focusing on getting the economy on track, Korea has chosen to crack down on freedom of speech and civil rights. And we will have thought China will be the first to start rounding up bloggers, not just due to its deplorable human rights record, but because its economy is facing the sternest test in decades.

Read the full article here.

Coming To Grips With A Harsh Year In 2009

I wish all readers of Jeflin’s Investment Blog a Happy New Year in 2009.

The past year has been sobering for taxpayers, retail investors and fund managers, what with severe declines in housing, mortgages, banking, stock markets, commodities, retail, automotive, shipping industry, etc. The extreme volatility in 2008 may be over but more of the same challenges await us.

Personally, I have made a new year’s resolution to be a more careful reader of financial reports, and by that, I mean reading with an inquisitive mind. Of course, if a management wants to get creative with their financial statements and the auditors are in a collusive mood (remember, the person who pays the piper calls the tune), our money is fair game for the predators.

Read the full article here.

Tips To Be A More Likable Employee

During Singapore’s last recession in 2001-2002, the Government and union leaders push through several proposals to help companies and employees. One of the key proposals was the implementation of the “monthly variable component” (MVC) and the “annual variable component” (AVC).

This was basically a flexible salary arrangement that employers could build into their wage systems during good times, and which could be adjusted during unexpected business downturns.

The concept is good as companies will first cut workers’ salaries by up to 10 to 30 per cent to cut costs, instead of taking the more painful step of retrenching staff.

In this global recession of 2008, companies are aiming to cut cost to survive and while MVC/AVC are again emphasized as a measure of first resort, downsizing is still inevitable for many businesses.

Becoming a more likable employee may save you from the axe. Here are some tips which were recommended by Salary.com.

1. Know Your Role

A great place to start is a detailed list of job duties or, if it is available, an official job description, from your manager or human resources department.

2. Be “Engaged” in the Process

Be an active participant in establishing your goals from the start. Focus on key objectives and define a plan that makes sense for you and your employer.

3. Set Goals that are Reasonable and Relevant

When establishing goals, make sure they are meaningful.

4. View goals as a project plan

Make your goals your mission for the year. Keep goals current, track progress and contributions, and update goals as appropriate to reflect any changes in your role or responsibilities.

5. Document your accomplishments

Document your accomplishments along the way and let your boss know when you have reached established milestones. If you reach a stumbling block along the way, seek advice on how to best resolve the issue.

6. Show an interest in additional training

Your employer will see that you want to improve the quality of your work and are interested in professional growth.

7. Check-in

Have an open dialogue with your boss throughout the year so you have a better sense of where you stand and how your progress is being perceived.

8. Share positive feedback

Feedback from colleagues and/or customers is also valuable when you are preparing for a review.

9. Demonstrate a Positive Attitude

Try to be “likeable” in a business sense by being pleasant, respectful and courteous to colleagues.

10. Utilize Performance Review Feedback

When you get constructive feedback during a performance review, listen to it carefully and objectively.

Will The Automotive Deadlock Be Broken Next Week?

Over $7 trillion dollars have been made available by the US government to rescue the financial sector and the economy. That’s about $23,000 for every American, and more than half of US GDP. However, not much has been allocated to the beleaguered auto industry and Detroit’s Big Three yearns for a larger piece of the pie to save their hides.

Read the full article here.

Invest Only What You Can Afford To Lose

Every day we open up the newspapers, we are hit by depressing news – what with retrenchments (DBS axes 900, NOL ships out 1000, Citigroup eliminates 52000 worldwide, etc) and pay cuts (Temasek staff and Cabinet ministers). Taken together, the “contributions” from DBS and NOL are close to surpassing the retrenchment figures for third quarter.

Read the full article here.

One Way Traffic: Dow Plunges Below 8000

It is one way traffic: Dow Jones plunged below 8000, a first since 2003. There was a bear rally on Tuesday but it is a folly to be tempted by profits in all these technical rebounds. For those who are drawn in and end up selling in a panic, you risk doubling your losses. You are doing just fine having the bulk of your money in the bank. If you want to go long (very long), then just nibble at the stocks.

Read the fulll article here.

Citigroup Layoffs 10000 Employees

The tangible effects of recession has hit home. According to the Wall Street Journal, Citigroup will begin distributing 10,000 pink slips to its employees (not only in the United States, but worldwide). The large scale Citigroup layoffs underscore that it is not just Americans who are suffering from large scale job losses.

I am not surprised with these layoffs as troubles rocking the financial sector have not ended yet. After the mortgage mess, financial institutions still need to purge their credit card and auto loans as part of the deleveraging process and it will be a while before we see healthy balance sheets.

The economy is also in a recession with lower consumption and production, so banks can expect lower interest earnings.

For those who are not employees of Citigroup, you may be less perturbed by the retrenchments. However, if you are a Citigroup credit card holder, you have to beware that your credit card interest rate may take a hike.

Up to 20% of Citigroup customers could face a rate hike of up to 3 percentage points. I think it is really poor timing for retailers as these people may just need to use credit cards for gift buying during the upcoming holiday season. Now they could change their mind with the rate hike.