Thursday, June 28, 2012

Doug Kass : A delicate Balance

Great summation by Doug Kass on the intricacies of managing money. Think for yourself what if you are wrong. Don't be brainwashed by advertisment telling you to invest 80% of your money into equities and what nots, if you are young and you can afford to make mistakes. It's not the way to run your money management.
We should aim for more balance and consistency in our portfolios. This means if, in a normal market environment a 60%/40% stock/bond fix is in line with your investment objectives and risk appetite, then a more uncertain investment backdrop (such as we face today) should have a stock/bond guideline of some lesser amount with a cushion of cash -- perhaps 45% stocks, 30% bonds and 25% cash.

Monday, June 4, 2012

Thinking about the safety of your money

MF Global Trustee Can Transfer $520 Million to Customers
Some of MF Global Inc.’s commodity customers can get an immediate distribution of $520 million, or about 60 percent of their cash collateral, a judge ruled.
U.S. Bankruptcy Judge Martin Glenn yesterday approved a request to transfer the funds from James Giddens, the trustee overseeing the liquidation of the brokerage. The distributions may begin by Nov. 24, said Kent Jarrell, a spokesman for Giddens. The parent, MF Global Holdings Inc., filed for bankruptcy to apportion returns to creditors. Nov. 24 is Thanksgiving Day in the U.S.

At least 22,000 customers who only had cash in their MF Global accounts as of the time of its bankruptcy on Oct. 31 will get 60 percent of their $869 million on deposit. The transfers will now include investments considered ‘‘cash equivalents,’’ such as Treasury bills. Glenn urged the trustee to seek a similar solution for customers who have a mix of cash and open positions in their accounts.

The cash distribution approved yesterday follows a first transfer of around $1.5 billion in 14,500 customer accounts to other commodities futures merchants, and the total number of commodity customer accounts is around 38,000, according to Jarrell.
About $593 million of MF Global customer funds, or 11 percent, are unaccounted for, according to a person with knowledge of probes of the firm’s collapse. Some customers had objected to yesterday’s motion, saying they should get closer to 80 percent distributions given the alleged 11 percent shortfall.

Separately, Scott D. O’Malia, a CFTC commissioner, said MF Global’s frozen funds have affected confidence in the markets and customers in Australia, Canada, Germany,Singapore, the U.K. and other countries. Although the trustee has been working to return funds faster, it still hasn’t happened quickly enough, he said.
‘‘The livelihood of market participants has been dangling by a thread for over two weeks,” O’Malia said, according to a speech posted on the CFTC’s website.
The brokerage case is Securities Investor Protection Corp. v. MF Global Inc., 11-02790, U.S. District Court, Southern District of New York (Manhattan). The parent’s bankruptcy case is MF Global Holdings Ltd., 11-bk-15059, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
For more, click here.

This was the news that has set me thinking about the safety of your money in nominee accounts or trustee accounts in global banks. If there is a crisis, you never know which one of the banks did something stupid. If not supported by the government, the financial institution will declare bankrupt and returned you a pro-rated amount of your CASH. Strange... but you are individuals helpless against the might of the financial regulators and institutions. 
The current europe crisis has made me even more jittery about the safety of my money in the wealth managers like UBS and CS. They are very close to the epicenter of europe and although I am "re-assured" of their strong credit ratings. When it comes to the crunch, I think I can only bail myself out to the safety of the Singapore banks. Though, it is just transferring the counterparty risk from a foreign bank to a local one. 
It's no wonder people are buying properties. You get the title deed(if fully paid), if not, a caveat is lodged against your deed. But it's alright, you still control the property. Maybe it's time to rethink the strategy of placing so much faith in the financial system and move more towards the real assets. Unfortunately, the timing might not be the best now.. lol.. 
Thinking ..thinking... thinking...