Sunday, 20 May 2007

Expensive Hainanese Chicken Rice

Had the chance to have chicken rice at the Chatterbox Mandarin Singapore a few days ago. It costs almost Sing$30 after taxes now (I think, cos I didn't pay the bill).

Back in the 1970s when I had the privilege to be brought by a rich auntie to try this chicken rice, I remembered it costs above Sing$5.00 a plate, when ordinary chicken rice from the neighbourhood kopitiam would have cost a dollar at most.

Then I remembered one of the bankers, plus other investment bankers, selling the idea of investing in, say mutual funds, at 5% return net per year. I pulled out the spreadsheet from my computer and put in $5 as principal and 5% as rate of return. Guess what? The answer is about $21 after 30 years. So why are these bankers telling us to invest in funds which yield amounts which won't buy us a chicken rice in 20 or 30 years' time?

But if you look outside of Singapore, there are other investments and perfectly legal funds which yield much higher rates of return. I can still remember my early days visiting Hongkong, Taiwan and Indonesia. To the people there, a 5% return isn't even worth 5 minutes of their time. At that time, I thought it was the instability of their currencies, in the case of Taiwan and Indonesia at least, whose people were totally hung up on keeping their stash funds in the safe US dollar. Hongkong is a different story cos you can make a hundred percent return if you're brave enough to speculate on a new property launch. You can make at least 20 to 30 percent a year if you're daring and smart with stocks on the Hang Seng Index, basically buying low, selling high and buying again. In mahjong jargon, they call it "winning a game with small returns is the equivalent of winning one big game". Very unlike the Casino Royale you watched where everything is about winning with ONE good hand.

It was only recently that I realized that the smart investor can actually outdo others, if they care to look beyond their own country. In this day and age, with the powers of the internet, one can get their hands on equities anywhere in the world with online trading. I'm not advocating that one should do this recklessly, cos its like gambling in a casino in Vegas or Macau, or very soon Singapore. But if one sees the price of oil rising, its not unreasonable to invest in stocks of oil related companies or countries. I put some money on a Latin America fund cos Brazil has got coffee and Venezuela oil (forget the cocaine in Columbia as that's in the black market). This money wasn't put in one stock but in a mutual fund managed by a reputable global company. True enough, in less than 9 months, the return was 30 plus percent.

Sure the US dollar is a bit weak now, relative to global currencies. But who needs to liquidate? "Just hang on to the dollars even if I had to liquidate the Latin America fund", I thought. "I don't need to swap the greenback for any currency now. I can wait till I need, say Euros to buy a Merc or a Porsche, before I liquidate the greenbacks. But by then, its a time of my choice and for all you know the greenback would have recovered from their current low of 1.35 to the Euro.

Makes sense?

That's why my advice to my friends who ask for investment advice is that one must always spread one's investments and invest only what one can afford to. Don't invest your kids' education fund if you can't afford to "pull out" in time. I remember the times I got burnt in various stock exchanges I invested in. After pouring money in some rather promising stocks, I suddenly needed funds for another more promising investment. The stocks rose by a few percent, far short of the 10 or 20 percent they were supposed to rise. So I liquidated them to move the money into the "more promising" investments as I'd already made some profit. Then those stocks I liquidated rose to the target levels I originally had in mind, yet the "more promising" investment had yet to deliver on the expected returns. A bird in hand is worth two in the bush, perhaps?

A friend of mine once said to me that if you invest (by jumping on the bandwagon), you have to know when to "jump off the bandwagon". He relates it to the tramcars in Hongkong or elsewhere in the world for that matter. You get on the tram and fall asleep, you'll miss your stop and find that you have to spend double the time to get home.

There's a Chinese saying that you miss the "Su Chow" you won't get another boat. The same in English. But in investing, I feel that there's ALWAYS another boat waiting for you. It's a case of what your expected returns are.

I've been into so many property deals which soured; a bit of the Hongkonger attitude I picked up. There's always a good deal in Hongkong. And people jump on the bandwagon in trying to get rich quick, not unlike the stock exchanges in Shanghai and Guangzhou now. A Chinese friend of mine in Hongkong once told me that the Chinese have gambling in their blood. But if you look carefully, there's always another opportunity if ever you're in doubt about the current one - just like if you see a strong banker in the casino, you don't have to place your bets on his /her table as there's always another table waiting for your bets. Sure there'll be the ones who'll become a millionaire faster than you can, but if you make an easy million, you're likely to lose that just as easily. It's like in the casino. You win, you increase your bets, and then the banker kills you in one swipe.

So now, each time a good deal comes along, I'll trust my own judgement more than what others tell me. I never listen to one investment banker; rather, I listen to a few of them and balance out their views. I'm sure every investment analyst and banker will have their preferences. They have a job to do. Some are over conservative, others are over enthusiastic about what they believe will work.

I missed out on the European funds, specifically emerging Europe. They're Euro based funds and the US was 1.25 to the Euro when my investment banker offered them to me. I felt the Euro was over-valued and sat around to wait till the Euro hits the sub-1.20 region before I move. Russia and the new Eastern European economies prospered. Along with the gain on Euro versus US Dollars exchange rate, I would have made 30 percent at least. But I have no regrets cos the money which I didn't put into Europe ended up in China funds. That went up more than 40 percent in the same period!

Life is fair. With China over-heating now, it may be time I wait for a market correction to go back into emerging Europe.

Back to my chicken rice. It's as good as it used to be. It's also the condiments which add to the pleasure of that expensive plate of chicken rice. The pounced ginger and garlic mix, and the chilly sauce, of course.

So for those of you who're stuck in less than expected yields, I'd suggest you look beyond your geographic boundaries. If you had invested in something which yielded 10 percent return, the $5 you spent on the chicken rice 30 years ago should have cost you more than $80 now. So the $30 we paid for that plate of Chatterbox chicken rice isn't that bad after all.

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