We pity the fool who has to listen to this garbage

Courtesy of the Motley Fool, here’s a useful glossary of terms your financial advisors will use on you in the attempt to a) sound financially hip, b) blame someone else for losing your money, and c) get you to churn.

“They don’t have any debt except for a mortgage and student loans.”

OK. And I’m vegan except for bacon-wrapped steak.

“Earnings were positive before one-time charges.”

This is Wall Street’s equivalent of, “Other than that Mrs. Lincoln, how was the play?”

“Earnings missed estimates.”

No. Earnings don’t miss estimates; estimates miss earnings. No one ever says “the weather missed estimates.” They blame the weatherman for getting it wrong. Finance is the only industry where people blame their poor forecasting skills on reality.

“Earnings met expectations, but analysts were looking for a beat.”

If you’re expecting earnings to beat expectations, you don’t know what the word “expectations” means.

“It’s a Ponzi scheme.”

The number of things called Ponzi schemes that are actually Ponzi schemes rounds to zero. It’s become a synonym for “thing I disagree with.”

“The [thing not going perfectly] crisis.”

Boy who cried wolf, meet analyst who called crisis.

“He predicted the market crash in 2008.”

He also predicted a crash in 2006, 2004, 2003, 2001, 1998, 1997, 1995, 1992, 1989, 1984, 1971…

“More buyers than sellers.”

This is the equivalent of saying someone has more mothers than fathers. There’s one buyer and one seller for every trade. Every single one.

“Stocks suffer their biggest drop since September.”

You know September was only six weeks ago, right?

“We’re cautiously optimistic.”

You’re also an oxymoron.

[Guy on TV]: “It’s time to [buy/sell] stocks.”

Who is this advice for? A 20-year-old with 60 years of investing in front of him, or a 82-year-old widow who needs money for a nursing home? Doesn’t that make a difference?

“We’re neutral on this stock.”

Stop it. You don’t deserve a paycheck for that.

“There’s minimal downside on this stock.”

Some lessons have to be learned the hard way.

“We’re trying to maximize returns and minimize risks.”

Unlike everyone else, who are just dying to set their money ablaze.

“Shares fell after the company lowered guidance.”

Guys, they just proved their guidance can be wrong. Why are you taking this new one seriously?

“Our bullish case is conservative.”

Then it’s not a bullish case. It’s a conservative case. Those words mean opposite things.

“We look where others don’t.”

This is said by so many investors that it has to be untrue most of the time.

“Is [X] the next black swan?”

Nassim Taleb’s blood pressure rises every time someone says this. You can’t predict black swans. That’s what makes them dangerous.

“We’re waiting for more certainty.”

Good call. Like in 1929, 1999 and 2007, when everyone knew exactly what the future looked like. Can’t wait!

“The Dow is down 50 points as investors react to news of [X].”

Stop it, you’re just making stuff up. “Stocks are down and no one knows why” is the only honest headline in this category.

“Investment guru [insert name] says stocks are [insert forecast].”

Go to Morningstar.com. Look up that guru’s track record against their benchmark. More often than not, their career performance lags an index fund. Stop calling them gurus.

“We’re constructive on the market.”

I have no idea what that means. I don’t think you do, either.

“[Noun] [verb] bubble.”

(That’s a sarcastic observation from investor Eddy Elfenbein.)

“Investors are fleeing the market.”

Every stock is owned by someone all the time.

“We expect more volatility.”

There has never been a time when this was not the case. Let me guess, you also expect more winters?

“This is a strong buy.”

What do I do with this? Click the mouse harder when placing the order in my brokerage account?

“He was tired of throwing his money away renting, so he bought a house.”

He knows a mortgage is renting money from a bank, right?

“This is a cyclical bull market in a secular bear.”

Vapid nonsense.

SGX: It’s ok to ramp up a scam stock, but not ok to short it. (Except if you’re an institution)

The recent news that “Singapore bourse probes short-selling in Blumont, Asiasons” shows up the addled priorities of SGX yet again.

According to actions of the professional barn door closers at SGX (for the uninformed, a profit-making listed firm that also pretends to act as a market regulator for its own clients in Singapore) – it’s fine and dandy for syndicates to ramp up Blumont by 3980% in a year; to goose Asiasons’ price by 197% in just nineteen days; and to pump LionGold by 50% in a month; never mind that Blumont and Asiasons was going for 500 times and 600 times earnings before last Friday’s clusterfuck, while LionGold didn’t even have profits to speak of in last fiscal year, yet justified a market value of S$1.42b on last Thursday. (And yes, dear auntie, Asiasons and Blumont qualify for CPFIS – so your retirement money is in good hands, just not yours).

Being fashionably late to the action as usual, SGX suspended the stocks on Friday, basically waving the “GANG BANG OPPORTUNITY” flag to the punters on our local virtual equivalent of Geylang Lorong 20. And shock and awe, said gang bang did actually occur, though some of the gang-banging – most likely by institutional sellers, since we’d like to see retail aunties try shorting any stock in SGX via POEMS - may have happened during the period which our regulator had designated as “no rape allowed” period. So we will wait to see if anyone – anyone at all – will be hauled up to answer for first blood. We’re not holding our breath.

UPDATE: Liongold says no deal with Minera after all. Nothing to see here.

US government shuts down. Perhaps there will be world peace for a while.

“Shut happens”. Says it all really. govtshutdown

Shorting India – the smart money play for 2014?

Watching an EM enthusiast like Stephen Roach suddenly short one of his old favourite plays, India, is a little bit unsettling. To sum up his feelings:

This government has done very little in the way of meaningful economic reforms… it’s still a rigid, bureaucratic society with inadequate infrastructure, insufficient savings and I think this crisis is a real wake up call for India optimists like myself…[Recession is] definitely possible . I hope that’s not the case and it’s not my forecast, but I wouldn’t rule it out with a plunging currency creating the need for monetary tightening that would take a toll on the real economy.

Then we have yet another old EM enthusiast, Jimmy Rogers himself, saying:

Look at India. India is hopelessly managed and finally the wolf is now at the door. I do not know what Indian politicians are going to do, as they keep trying to blame everybody in sight except admitting their problems.

Apparently, “fundamentals” are the problem, never mind that – during the great talking-up of India’s potential by the bankers in the early 2000s – the same problems have plagued the country for decades, perhaps generations. We only hear what we want to hear – and since all the megaphones at that time were shouting “Buy EM”.

Quite a lot is expected of Raghuram Rajan, the person who was appointed to single-handedly fix the problem caused by several generations of economic mismanagement. Rajan shoulders Obama-esque expectations coming into the job, and will be expected to be thrown under the bus within half a year, since in India, politics tend to triumph economic policy.

We will await the next turn in the cycle when the sell-siders start talking up India’s potential – probably immediately after the street riots over onion prices have died down.


QE to Infinity and Beyond

With yet another apt demonstration that the Bernank is the ONLY game in town (ex-fundamentalists and technicalists are practically on food stamps), Ben’s recent decision to not taper has gotten many sell-side analysts and bankers hot under the collar. Since they’ve spent the last couple of months prepping their clients on the taper play, they’ve gotten pretty badly flat-footed. We’ve now seen a flurry of upward revisions for everything from precious metals to property. (caveat: as long as that particular piece of property doesn’t happen to be JEM – one wonders if the non-Capitaland holdout in the Jurong Gateway region can expect more incidents before they get the picture).


Why Herbalife is a pyramid scheme: awesome presentation from Bill Ackman

Awesome. Basic summary of the MLM business model for those who are time-challenged (though we highly recommend at least one quick pass through so that you can piss off your friends or relatives who are trying to recruit you)

  1. Herbalife (like many MLMs cough NuSkin cough) sells dreams, not products. Its main revenue model is recruitment of distributors, especially from demographics who are in financial need, and forcing these distributors to buy products to either consume themselves, or sell retail.
  2. 93% of all distributors fail to make ANY gross money (in fact, many of these lose because of running costs that need to be spent simply to be part of the Herbalife family. Any distributor returning products are required to resign from Herbalife)
  3. Markets become saturated within 3 years of entry, resulting in the classic “pop and drop” situation. Already, Herbalife is running out of countries to enter in order to make up for the drop in saturated markets.
  4. Herbalife ticks all the boxes for a pyramid scheme.

But don’t just take it from us, since we obviously have an agenda against grinning psychopathic cultists who keep waving Kiyosaki bibles in our faces, and telling us how stupid and unfulfilled we are compared to their BMW-driving and Rolex-wearing lives. Read Ackman’s magnum opus below.



CAD investigates Genneva, new CEO says “You can’t take your money out”

The Genneva scam continues to unravel. As CAD detains the poor saps who were left behind in the company’s essentially defunct operations in Singapore (now that most of the money has been shifted elsewhere), investors are drawing up a tally of the number of time-delaying tactics in which the company can actually put up in lieu of actually paying investors what they are owed. How can we name thee?
  1. “It wasn’t our fault, it was some previous unnamed employee-gone-wild. We’ve made police reports, and we’ve started internal investigations” – buys about 1 to 2 months
  2. “We’re in the midst of talking to a white knight” – buys about 1 month (2 if some big names are leaked to the press or the blogosphere, e.g. more relatives of Malaysian royalty)
  3. “Dialogue sessions with customers and agents” – buys about 10 days
  4. “Setting aside legal judgement from customer and filing defense, even when there really is no defense to be filed because we don’t have money to pay back our obligations” – buys about 2 months

So far, we’ve counted about 5 months. QE3 may have come in just too little, too late for our friends at Genneva.

From BT (sub required): “CAD probes troubled gold trader Genneva”
Staff questioned as firm promises to honour obligations

[SINGAPORE] Genneva Pte Ltd, the gold trading company that has been the subject of a literal run by its customers, is under investigation by the Commercial Affairs Department (CAD) for alleged “financial improprieties”.

Its Orchard Tower offices were raided by CAD yesterday. The office is closed and its website is frozen. A number of employees were taken in for questioning. The police has confirmed that investigations are ongoing.

Matthew Kurian of Regent Law, who is retained by Genneva as its legal counsel, said that the firm is conducting its own internal investigation and has appointed forensic accountants. “The company intends to honour all its obligations. They are coming up with a plan.”

A letter by Lim Kieng Justin, who has just taken over as Genneva general manager, said that the discovery of financial improprieties “some time back” has led to a delay in the payment of discounts, commissions and fulfilment of buy-back guarantees. The letter, dated Sept 28, was posted on the Web.

Mr Lim is a director of an apparently related company, Genneva World Pte Ltd, which was registered for business in March this year. He is not a director of Genneva.

Mr Lim wrote that the directors have lodged the necessary police reports and put in place new management staff. “. . . the directors are in the midst of negotiations with an external party who is prepared to assist the company and see it through this financial crisis. The objective of the directors is to ensure that all obligations to the company’s customers and consultants are met.”

He also wrote that the company would organise dialogue sessions with customers and agents in 7-10 working days. He urged customers and agents to remain calm and “help us work out (an) amicable solution for everyone”.

Genneva is understood to have received several letters of demand from aggrieved customers who have entrusted gold to the firm or are owed the fulfilment of Genneva’s buyback undertaking.

BT reported last week that at least two customers have filed suits in the Subordinate Court for Genneva to fulfil the terms of its buyback. At least one has secured an interlocutory judgement pending an assessment of costs. Prior to the judgement, Genneva did not respond nor contest the suit. Mr Kurian said that Genneva was looking into making an application to the courts for the judgement to be set aside and to file a defence.

Goh Kok Yeow of De Souza Lim & Goh, who represents the plaintiff Lee Bee Ghok in the case, said: “We will not agree and will vigorously oppose the application because they have no legal reason to do so.”

Genneva operates under a police licence that allows it to deal in second-hand gold. Its model is to sell gold to customers at a hefty premium to the market. As at August, it listed a price of $96 per gram on its website. The indicative retail gold price at UOB yesterday was about $70.15 per gram or $70,149 per kilobar.

Genneva customers buy gold at a 1.5 or 2 per cent so-called discount off its list price. Genneva undertakes to buy back the gold in one or three months, at the list price, and customers pocket the 1.5 or 2 per cent discount. Assuming a monthly rollover, they stand to earn as much as 24 per cent year. Lately, some customers have been offered a discount of as much as 2.5 per cent.

The last few weeks have seen Genneva grapple with its worst case market scenario – that of a rush among customers for the exit. In that time, it has imposed a limit on the daily buyback of gold that it can do – reportedly five kilobars a day. Agents are also reportedly owed commissions for more than six months.

Three Genneva directors – Marcus Yee Yuen Seng, Ng Poh Weng and Chin Wai Leong, who are also directors of Genneva Sdn Bhd – are being sued by Bank Negara in Malaysia for alleged illegal deposit taking and alleged offences under anti-money laundering laws. The case is ongoing.

Genneva is in the Monetary Authority of Singapore’s Investor Alert list, which tells investors to be on guard against unlicensed entities. Other gold companies such as The Gold Guarantee and Asia Pacific Bullion are also on the list.