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Thread: Two town councils invested in Lehman and Morgan Stanley.

  1. #101

    Default Re: Two town councils invested in Lehman and Morgan Stanley.

    Quote Originally Posted by mattlock View Post
    I don't understand this post, can you simplify what you're saying?
    the situation where investments turn THAT bad doesn't happen everyday. whereas gamblers lose their money everyday.

    simple enough for you?

  2. #102

    Default Re: Two town councils invested in Lehman and Morgan Stanley.

    Quote Originally Posted by hongsien View Post
    With the higher risk mini bonds (such as high 5) there was written (perhaps in small letters) that if one of the 7 investment banks collapses, you would not get your principal. Since, the TC's are using not their own money (if this doesn't belong to the country, then to whom?????), they have the obligation to better understand the risks involved..........or perhaps they were not well informed by their investment managers?
    i suspect it is the last case - i.e. their investment managers just happily spread the money across the board and it just happens that a portion goes into those lor.

  3. #103
    Member TheQuestion's Avatar
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    Default Re: Two town councils invested in Lehman and Morgan Stanley.

    Quote Originally Posted by night86mare View Post
    i suspect it is the last case - i.e. their investment managers just happily spread the money across the board and it just happens that a portion goes into those lor.
    why speculate when you don't know for sure? also anyone seen this?
    http://www.todayonline.com/pdf_open.asp?id=1911HNR005
    Opinions are like A-holes. Everyone's got one.

  4. #104

    Default Re: Two town councils invested in Lehman and Morgan Stanley.

    You mean this?

    “They (residents) should thank the Town Council for
    working hard to come up with a diversified portfolio
    to generate income so that residents do not have
    to fork out more money.”


    I don't know if we should thank him now for "losing" millions of dollars?

    Quote Originally Posted by TheQuestion View Post
    why speculate when you don't know for sure? also anyone seen this?
    http://www.todayonline.com/pdf_open.asp?id=1911HNR005
    [ Flickr ]

  5. #105
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    Default Re: Two town councils invested in Lehman and Morgan Stanley.

    Quote Originally Posted by night86mare View Post
    i suspect it is the last case - i.e. their investment managers just happily spread the money across the board and it just happens that a portion goes into those lor.
    Investment managers only give advice, it is up to the board to follow it or not........

    Responsiblity still with the TC, they are not little kids

    HS

  6. #106
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    Default Re: Two town councils invested in Lehman and Morgan Stanley.

    Why in the first place TC wants to invest with residents money to catch up 2007/08 7% inflation or GST? And then MP arrogantly concluded that residents should be thankful to TC for diversifying the portfolio so residents no need to pay more money? What more money?


  7. #107

    Wink Re: Two town councils invested in Lehman and Morgan Stanley.

    Quote Originally Posted by jasonlcs View Post
    You mean this?

    “They (residents) should thank the Town Council for
    working hard to come up with a diversified portfolio
    to generate income so that residents do not have
    to fork out more money.”


    I don't know if we should thank him now for "losing" millions of dollars?
    This is called going on a pr offensive, ie why should I be sorry, you should be thanking me.

    I wonder if the same fate that befell Lee Bee Wah and Mrs Goh will also hit him.

  8. #108
    Senior Member azul123's Avatar
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    Default Re: Two town councils invested in Lehman and Morgan Stanley.

    Quote Originally Posted by waileong View Post
    This is called going on a pr offensive, ie why should I be sorry, you should be thanking me.

    I wonder if the same fate that befell Lee Bee Wah and Mrs Goh will also hit him.
    It just might... because in the same page 2 other MPs had said the same thing but in a much better tone.

    Maybe a slice of humble pie would do him some good.

    ../azul123

  9. #109

    Default Re: Two town councils invested in Lehman and Morgan Stanley.

    I don't feel that the TCs did anything wrong. Despite what most of us read on the forums or in the papers minibonds and high notes are not really considered high risk products. The TCs merely invested in a product that was considered lowrisk.

    If you put money in a high note say, the money is deposited in a SPV and used to buy a very safe asset (eg govt bonds). At the same time the SPV will sell a credit default swap to out side investors where the underlying is a basket of bonds.

    A credit default swap works like this. I sell a CDS with DBS bond as the underlying asset to Tommy. Tommy pays me 4% of the bond's par value for the CDS. Lets say that DBS bonds sell at $100 if the bond does not default. If the DBS bond defaults, the market price is only $30. If the bond defaults, Tommy has the right to sell the defaulted bond to me at $100. So you can think of CDS as bond insurance.

    So back to the high note example, if nothing goes wrong the investor will receive the return on the low risk asset (assume 3%) + the money received from selling the CDS (assume 4%) giving a total of 7% return (before minusing the company's expenses, commissions etc). If one of the underlying bonds of the CDS defaults, you stand to lose part or whole of your principle depending on the market price of the defaulted bond. In the case of High Note, Lehman bonds was one of the underlying bonds. When Lehman went bankrupt it's bonds were worthless causing the High Note investors to lose all their principle.

    So why do I say that these structured products are not high risk products? Well, the risk or losing your principle depends on how likely it is for one of the underlying bonds to default. When these structured products were sold Lehman has an S&P rating of AA- which means the chances of it going bankrupt is the same as DBS (also rated AA-). Do you trust DBS with your money? If you consider fixed deposits with DBS as risk free then why consider High Notes as high risk? Yeah the govt guarantees all our deposits in banks now but a few months ago that wasn't the case. The govt only guarantees X amount per account holder per bank.

  10. #110

    Default Re: Two town councils invested in Lehman and Morgan Stanley.

    Quote Originally Posted by azul123 View Post
    It just might... because in the same page 2 other MPs had said the same thing but in a much better tone.

    Maybe a slice of humble pie would do him some good.

    ../azul123
    Oh I can't wait for that guy to come in and say who is Lee Bee Wah and Mrs Goh, why are we talking about individuals, etc.

  11. #111
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    Default Re: Two town councils invested in Lehman and Morgan Stanley.

    the TCs should be thankful those investments that went up in flames still kept their jobs & they had so much $$$ in their pockets to play with!!

    ... & lastly dun need any form of accountablility for loosing coffers $$.

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