Ignore the Noise:John Bogle on Market Fluctuations

John Bogle offered the following during this recent interview with Morningstar's Christine Benz:"Well, we have to get investors everywhere, and not just retirement plan investors, [onto] the idea that these daily leaps and plummets in the stock market are meaningless. As I've said in more occasions than I care to count, Christine, the stock market is a giant distraction to the business of investing. Because investing is owning corporations that provide goods and services, hopefully more and more efficiently to lower prices, and that's...

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Doing away with DIBS may not solve the problem

There have been much talk about Bank Negara outlawing DIBS or Developer Interest Bearing Scheme. You can basically read about DIBS here and here.DIBS are bad for the market as it is misleading especially to those whom are unaware of the risks that they are taking. Obviously, the S&P lawyers as well as the banks whom most of the time are representing the developers would not be warning the buyers of the risks, and even if they did, buyers whom have witnessed the emanating rise of the property sector would still be willing to take...

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Why Airasia X may not be an Airasia

For this article, I am not going to compare financial numbers but would look at in terms of size for each of the company. Airasia X (“AAX”) has just been provided a valuation of RM1.98 billion at RM1.25 per share, hence effectively valuing AAX at a post IPO valuation of RM2.9629 billion of its enlarged share capital. Now in comparison, let’s look at Airasia. At today’s price of RM3.07 Airasia has a valuation of RM8.5 billion. For the matter, Airasia is going to be 2.5x larger than AAX in terms of market valuation. Airasia has established operations...

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Risk and Reward Revisited

From the Implications and Conclusion section of this paper, co-written by Nardin Baker and Robert A. Haugen:"As a result of the mounting body of straightforward evidence produced by us and many serious practitioners, the basic pillar of finance, that greater risk can be expected to produce a greater reward, has fallen. It is now clear to a greater and greater number of researchers and practitioners that inside all of the stock (and even some bond) markets of the world the reward for bearing risk is negative."Paper: Low Risk...

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When Japan was an emerging country

Recent wild swings in Japan’s financial markets — stocks, bonds and the yen — make Japan look almost like an emerging country. Back in the 19th century, Japan was an emerging country, with its feudal society based largely on farming. According to a paper by U.S. based researchers Chiaki Moriguchi and Emmanuel Saez, Japan’s GDP per capita in 1890 was at the level of U.S. GDP per capita in 1790, or about $1,200 in 2004 dollars....

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