Financial Monkeys Throwing Darts

Billionaire Warren Buffett gave his "annual meeting" earlier this week, which has become legendary in personal finance circles for spawning talking points that podcasters will use for years as the basis for their content.

This year, Buffett, who is now 91 and worth more than $125 billion, explained that he would rather give his money to “monkeys throwing darts” to pick stocks and investments than financial advisers. Buffett’s point, which he’s been making for many years, is that it’s very difficult to pick winning stocks, and financial advisers take fees from clients that often eat a sizable portion of any investment gains.

“It’s a good thing to own American business,” Buffett said, suggesting people should simply put money into the American economy and forget about it. "We haven't ever timed anything," he added, which means that when he buys stocks, he holds them rather than trying to buy low and sell high.

“It’s amazing how hard people make what a simple game this is,” Buffett said. “It’s too much to expect of human nature for people to explain that they aren’t really adding any value to what you can do by yourself. I hate to use the example, but you can have monkeys throwing darts at the page and, you know, take away the management fees and everything, I’ll bet on the monkeys.”

This is notable mostly because Buffett is right but also because Buffett is seen as a kind of deity among a huge swath of the financial media, especially personal finance podcasters, who use much of what he says as the basis for the advice that they then give to millions of people.

Buffett famously bet $1 million that the S&P 500 index fund of the top 500 companies in the United States would outperform a hedge fund’s active trading strategy over the course of 10 years. Active stock trading is when people actively buy and trade single stocks or groups of stocks, and try to "time" the market, meaning buy low and sell high. It is famously difficult to do, as many Redditors are currently learning on WallStreetBets.

Buffett won his bet with the hedge fund, which has been used by financial podcasters to popularize passive index fund investing—in which people buy large collections of stocks and sit on them for years—as the preferred investing strategy of the Financial Independence Retire Early (FIRE) movement that’s popular online. Buy-and-hold is also the preferred strategy of Bitcoin maximalists, though they are putting all their eggs in a single basket.

Who Is Soh Chee Wen

Many Malaysian may not know the man behind John Soh Chee Wen except perhaps his conviction alongside his girlfriend Quah Su-Ling as masterminds of Singapore’s most serious case of market manipulation-cum-deception that wiped out more than S$8 bil from the Singapore Exchange (SGX) in October 2013.

Yesterday (May 5), Singapore High Court judge Hoo Sheau Peng found Soh, 63, guilty of 180 charges of the 188 while Quah – his “long-term partner in both business and personal affairs” – was convicted on 169 of 177 charges she faced. Their sentencing will take place at a later date. Both Soh and Singaporean Quah, 58, are currently staring at a jail term of up to seven years, a fine of up to S$250,000 or both for each charge under the Securities and Futures Act.

They further face an imprisonment of up to 10 years and a fine for each charge under section 420 of the Penal Code as well as jail of up to seven years, a fine or both for each charge under section 204A of the Penal Code. Additionally, both Soh and Quah also face imprisonment of up to two years, a fine of up to S$10,000 or both for each charge under section 148 of the Companies Act.

What is intriguing about this case is not so much about the guilty verdict as this is already very much expected but the persona of the Batu Pahat (Johor)-born Soh whom friends described as a person with integrity – an individual who achieved success due to hard work and tenacity.

Soh’s background - Those who knew him back in the day remember him as an over-achiever. Having attended Batu Pahat High School – the alma mater of tycoon Tan Sri Vincent Tan Chee Yioun and now-retired DAP supremo Lim Kit Siang – Soh was an all-rounder in school.

He was president of the English and debating clubs, and active in badminton, softball and athletics. In 1979, he furthered his studies in economics in Universiti Malaya but dropped out after three days. This prompted the enterprising Soh to venture into sales where he made his first million at the age of 21 with his first direct sales company.

He was declared a bankrupt in 1984 following a credit crunch but he eventually found his true calling – turning around unprofitable listed companies using ‘unconventional’ methods till he was touted a “high profile deal maker” and much later “a fugitive businessman”.

At his peak, he controlled listed counters such as Autoways Holdings Bhd, Promet Bhd, Kelanamas Industries Bhd, Uniphoenix Corp Bhd and Kuantan Flour Mills Bhd.

Politically, Soh became an MCA member at 21. He was later elected as Petaling Jaya MCA division chief and often credited with establishing a service centre with its own staff – a first in the party’s history. This is where he caught the eyes of former party president Tun Dr Ling Liong Sik and even embarked on a business venture with Dr Ling’s eldest son, Ling Hee Liong.

In 1995, Soh was appointed to the party’s presidential council and was tasked by MCA bigwigs ‘to court’ Datuk Seri Anwar Ibrahim Anwar as he was then regarded as a Prime Minister-in-waiting material.

Soh and Anwar ended up becoming good friends while Soh’s ties with Dr Ling ended as Soh chose to march alongside Anwar in the Sept 20 reformasi rally soon after Anwar was sacked as Deputy Prime Minister in 1998.

Corporate trouble - In 1997, Soh courted major trouble with the Securities Commission (SC) after the stock market regulator launched an investigation into Soh for using nominees to gain control of brokerage firm Omega Securities Sdn Bhd.

In 1999, he was charged by the SC with two offences to defraud the now defunct stockbroking firm Omega Securities Sdn Bhd of over RM400 mil.

Soh was deemed to have violated the Malaysian law that forbids anyone from owning more than one brokerage without government approval. Soh controlled at least one other brokerage firm at the time.

In April that year, he fled the country and went into hiding. Subsequently, the SC issued a warrant of arrest against him on April 19, 2000 and sought help from the Interpol through the Home Ministry. Interpol later put Soh on their list of wanted persons.

In 2002, he returned to Malaysia and was eventually charged at the Shah Alam Sessions Court. Soh was later fined RM6 mil by the Sessions Court when he pleaded guilty to a charge of abetting former TA Securities Holdings Bhd executive chairman Datuk Tiah Thee Kian by providing false statements to the Kuala Lumpur Stock Exchange (now Bursa Malaysia) involving shares in Omega Securities.

In light of the recent Serba Dinamik Holdings Bhd’s “let-off with a slap on the wrist”, perhaps the Malaysian authorities should perform self-reflection or emulate the rigidness of their Singaporean counterparts in upholding the notion that fraud has no place in the capital markets for it can severely tarnish a country’s reputation in the eyes of potential investors. – May 6, 2022

Who Is Sam Bankman-Fried

Sam Bankman-Fried, the 30-year-old billionaire founder of crypto exchange FTX, has plans to give away the vast majority of his wealth - 99% - thanks to the philosophy of "effective altruism," which he learned in college.

Despite running a multibillion-dollar global crypto exchange, the 30-year-old drives a Toyota Corolla, lives like a college student, and has a goal of making as much money as possible so that he will have more to give away. 

Even with his massive wealth, he says he'll keep only about 1% of his earnings each year, or about $100,000.

"You pretty quickly run out of really effective ways to make yourself happier by spending money," Bankman-Fried said. "I don't want a yacht."

The MIT-grad learned of effective altruism in 2012, his junior year of college. The philosophy uses mathematical calculations to determine how people could do the most good with their money and time.

In particular, Bankman-Fried took to the notion of "earning to give." In line with that approach, he worked on Wall Street for three years after college and gave away 50% of his salary every year to donate to animal welfare

These days, he can be found sleeping on a bean bag, playing video games while giving talks on Zoom at conferences, and living with groups of friends. Nonetheless, his blasé attitude doesn't distract him from what he sees as doing the right thing.

In February after Russia invaded Ukraine, the FTX founder said his crypto exchange gave cash to all of its  Ukraine user. He also personally donated $250,000 in tether to Ukraine. 

He doesn't second-guess his decision to give most of his money away. "It's not a decision that I constantly reevaluate, because I think it just doesn't do me any good to be constantly reevaluating anything," he said. "It doesn't, minute to minute, feel to me like a decision anymore."

Businessman Insurance

As a sole proprietor - you probably got a lot on your plate. You're likely responsible for creating a business plan, running day-to-day operations, strategizing growth, assisting customers, and doing many other tasks. Running a business usually requires long hours and a lot of focused work.

If you weren't around to spin all those plates, your loved ones and business could suffer significant financial hardships. We'll review five reasons you need life insurance  to protect your business and family and the types and amounts to consider.

Types of life insurance for sole proprietor
There are two main types of life insurance: term and permanent. Term policies cost less than permanent but only last for a set period. For instance, you could buy a 10- or 20-year term life policy.

You could purchase an additional term policy or transition to a permanent policy in the future. Permanent policies are more expensive but protect you for your entire life.

Why business owners need life insurance
Here are five reasons you likely need life insurance when you work for yourself.

1. Protecting your family finances. If you have children, a spouse, partner, or aging parents who depend on your income, their finances could suffer significantly without a life insurance benefit. The lump-sum payment to one or more of your beneficiaries would allow them to pay any expenses, such as your funeral, everyday bills, and future goals like going to college or buying a home.

2. Qualifying for a business loan. In many cases, you must have life insurance to qualify for a business loan from a private lender. You typically need a term policy that would cover your loan repayment period. Your lender has significantly less risk when you have a life insurance policy to safeguard your liability.

3. Serving as collateral for a business loan. Life insurance can also serve as collateral for a small business loan. The policy pays off your loan if you die, and the remaining benefit goes to your beneficiaries. You typically need a permanent policy with a cash value that could get assigned to your liability.

4. Protecting your business partner or key man. Life insurance should be a critical part of succession planning if you want your business to continue operating after you're gone. Whether you're a solopreneur or have  key people in your business, such as partners or employees, life insurance helps keep your business running until a successor can take over or your heirs sell the venture.

5. Selling your business share. If you own a business with partners or have key employees, life insurance can be an essential tool for allowing them to buy out your heirs. Instead of your family taking over your business, they could sell your share to one or more successors. The company could continue running without you, and your family would receive a lump sum or structured payout.

How much life insurance is needed
There's no one-size-fits-all answer for the right amount of life insurance you need as an entrepreneur. However, a general rule is to have at least five to ten times your annual income.

If you're using life insurance solely to protect loved ones, consider how much savings you have and what their future expenses may be. For instance, add up costs such as your funeral, mortgages, car loans, childcare, elder care, and the cost of college. Also, consider any business liabilities your estate could be responsible for, including outstanding loans, payments to employees or contractors, lease or mortgage payments, and taxes.

If you purchase life insurance to qualify for a business loan, the coverage amount typically must equal the loan amount. So, if you're taking out a $200,000 loan, your life insurance policy needs to have at least $200,000 worth of coverage.

Also note that you can have multiple life policies. For instance, as your income increases you might purchase additional term policies to layer on extra coverage for your family. You could have a separate permanent policy for your business needs.

ZhongAn Buys Into Bank Aladin

China's online insurer ZhongAn Online P&C is buying a stake in Indonesian tech-based syariah lender Bank Aladin. ZhongAn was co-founded by the chairmen of Alibaba Group, Tencent Holdings and Ping An. The firm is interested in capturing the potential market in South-east Asia's largest economy that still has low insurance penetration. Indonesia's syariah banking is also an underpenetrated market, despite the country being home to the world's largest Muslim population.

Bank Aladin - A joint press statement issued in the afternoon says that ZA Tech, a ZhongAn unit in which Softbank also has a stake, has become Bank Aladin’s strategic partner that will act as an investor and a business partner, and will strengthen the Jakarta-based bank’s ecosystem.

ZhongAn's reported investment plan comes as Indonesia becomes one of the hottest investment destinations in the region. It witnessed record deal value last year, with fresh foreign capital pouring into the country in a wide range of tech-based sectors.

Companies in Indonesia raised a total of US$8.56 billion (S$11.64 billion) through initial public offerings and rights issues in 2021, beating pre-pandemic figures. Indonesia ranked third last year in South-east Asia, trailing behind only Singapore (US$18.48 billion) and Thailand (US$13.61 billion. These figures do not include deals done outside the Indonesia Stock Exchange.

Ribbit Capital - in October last year (2021), US venture capital firm Ribbit Capital, a fintech solution partner of the world's largest retailer Walmart, bought a stake in Jakarta-based Bank Jago  that also counts Singapore sovereign wealth fund GIC as an investor. In March last year, GIC acquired an approximatel 9% stake in the bank for about three trillion rupiah (S$284 million).

ZhongAn  - was established in late 2013, initially catering to Alibaba's online shoppers. It has since expanded to offer other services on various platforms, giving comfort to shoppers who buy merchandise at an unfamiliar store.

In early 2019, ZhongAn and Singapore-based Gab formed a joint venture (JV) to enter the digital insurance distribution market in South-east Asia. The JV created a digital insurance marketplace that offers insurance products through Grab's mobile app.

Syariah Banking - Newly established tech-based lenders in Indonesia are enthusiastically tapping syariah banking in the country, vying for a potential customer base of 45 million. Syariah banking assets in Indonesia represent a mere 6.5 per cent of total banking assets, dwarfed by Malaysia's 29 per cent and Saudi Arabia's 65 per cent.

Syariah banking assets in Indonesia were recorded at 631.58 trillion rupiah at the end of July 2021, according to data from the Indonesian financial service authority.

Bankers say growth has been stymied because syariah banks, unlike conventional banks, are not ubiquitous, with hardly any physical branches or automated teller machines. In a country with more than 100 banks, attention has been focused on conventional banking, with few syariah products and services available.

South-east Asia's largest economy currently has only two tech-based syariah banks, Bank Aladin and Jakarta-based Bank Jago. The latter launched its syariah mobile banking app in February. 

GOpinjam

Touch 'n Go Group (TNG Group) launched micro-loan product, GOpinjam, which charges borrowers interest rates of between 8% and 36% per year. With this addition to its suite of services offered via its Touch 'n Go eWallet, the group is looking more like a digital bank even though it did not put in an application for a digital banking license.

TNG Group does not need to transform into a bank and emphasized that it is comfortable with its position in the e-wallet industry, being the “intermediary” between users and financial institutions.

The rates are designed to cover the cost of the products, which are high risk. Miicro-loans offered via GOpinjam address a market segment which typically relies on unlicensed money lenders, and provide a safer and better alternative to these borrowers.

GoTo IPO

Tokopedia the online-shopping startup that merged with ride-hailing company Gojek to create GoTo, is one of the junior Li’s first major bets in Southeast Asia, a region he’s been targeting to diversify his empire.

Li, 55, started backing the firm in 2017 and sat on its board until 2020. He unsuccessfully tried to combine Tokopedia with one of his blank-check companies before the deal with Gojek came along, giving rise to Indonesia’s biggest tech firm.

Now GoTo has raised US$1.1 billion in one of the world’s largest initial public offerings this year. Based on its pricing, Li’s stake — owned via three vehicles — is worth US$900 million. That would take his net worth to about US$5 billion.

In 2019, his Hong Kong insurer, FWD Group Holdings Ltd, bought a Thai peer for US$3 billion and set up a 15-year life insurance distribution agreement with Vietnam’s largest lender. The following year, he agreed to acquire a 30% minority stake in PT Bank Rakyat Indonesia’s life insurer.

He then teamed up with PayPal Holdings Inc co-founder Peter Thiel to establish a special-purpose acquisition company scouring opportunities in Southeast Asia. The Hong Kong billionaire has since backed three SPACs focusing on the region, two of which have listed. One of them merged with Singaporean online real estate platform PropertyGuru Pte and started trading last month.

Li also owns Southeast Asia’s second-largest streaming service. Viu had more paid subscribers than Netflix Inc in the region last year, trailing only Disney Plus.

By backing GoTo, the Hongkonger joined investors including Softbank Group Corp’s Vision Fund, Alibaba Group Holding Ltd’s Taobao China and Sequoia Capital India. He’s getting one of the biggest individual windfalls from the listing: His stake will be worth more than those of the company’s chief executive officer or its co-founders.

But with the dot-com bubble burst, shares of PCCW Ltd, now its telecom and media business, began to slump. By 2009, the company had lost 99% of its market value, and when Li tried to buy it out a court ruled the plan had been manipulated. In 2005, he sold 20% of it to a state-owned firm now part of the China Unicom Group to cut down on debt after borrowing US$12 billion to fund PCCW’s purchase of Hong Kong’s then dominant phone company, Cable & Wireless HKT Ltd.

The billionaire’s comeback started when he decided to get into the insurance business. He bought some of ING Groep NV’s Asian insurance units in 2012, later creating FWD. The firm is now vying for one of the most anticipated Hong Kong listings this year.