The year 2023 sure is full of events. Let’s start with…
Trust
How do
those banks lose the public’s trust, I am not very clear on the actual details.
I believe it is related to crypto and FTX. Regardless, the bank run happened so
fast that three US banks bit the dust over five days.
Interestingly
enough, other banks benefitted especially the big four US banks. People trust
them, open accounts, and deposit money with them.
Those banks
that collapsed aren’t the only one who has trust issues.
The crypto poster
boy, Sam Bankman-Fried (SBF) gained a lot of trust at first and lost it when
FTX struggled to meet the demands of customers’ withdrawal of funds. I wouldn’t
go through their operational mistakes. But the informant tipped off, rumors
spread, and then things spiral down on its own.
Trust is important, yet no
way to quantify it.
The funny
thing is… when I research companies, especially overseas companies. It is very
hard to assess the public trust in the companies. Till a crisis like this
happens. Trust is so fragile yet tip the scale to the one that has it or
otherwise.
Yet, there
is little or no way to tell.
This
expands beyond banks. How do we trust our smartphones that safeguard our data?
How do we trust the companies who produce food are safe for consumption?
Yet, if we
question everything, we will be losing a lot of time. If we don’t, we are
vulnerable.
Therefore,
to ensure the economy runs smoothly, the government has to step up. Most
likely, US banking will face tougher requirements in the future.
Dune warned about charismatic
leaders
Adam
Neumann and SBF managed to attract people to invest in their business.
I did watch
some of their interviews. Both of their styles are different.
Despite
their difference, I do note that people liked them a lot, at least before their
respective companies went bankrupt.
These
cult-like leaders most likely come with several problems. In my opinion, the
biggest problem is that they lack accountability and corporate controls.
Can the government
step in to stop this? I don’t think so. I am afraid the company’s stakeholders
have to step up. However, this isn’t easy to achieve.
I don’t
have an easy solution to these. So far, my only way to handle this is a careful
portfolio management.
For glory's sake...
For vengeance's sake...
War! (Xerxes, 300: Rise of the Empire)
As if the Ukraine
war isn’t enough, Israel and Hamas started their quarrel with each other this
October. I never understand their enmity and I don’t think I will ever find the
truth about what happened.
Nevertheless,
war it is…
The warring
nations supply commodity resources to the global economy, most notably, oil and
gas.
Naturally,
exporting their nations' goods will be affected, and Ukraine may not have its
infrastructure at full capacity to transport its goods. Russia may able to
deliver its goods to its allied countries, but have to sell at steep discounts.
Meanwhile
companies in countries that in peacetime, they suffered raw materials shortages
or inflation. To add on, the Fed has to increase the interest rates to deal
with inflation.
Naturally,
this rolled the wheel of fortune, oil and gas companies, banks that survived
the bank run, and to my surprise, luxury watches benefitted from these
quarrels. They enjoyed the Peace Dividend.
Speaking of
Dividend…
Dividend War
If you are
into the Singapore Finance blogosphere, or social media or joined some
Singapore Telegram Finance groups, you should be aware that there is another
quarrel, luckily with just words, about dividends.
One side
claims that dividend investing is dangerous, another side champions that dividend
investing is wonderful.
Even among
the supporters of dividend investing, there is a heated debate on which method
of dividend investing is better too.
While I enjoyed
reading the messages and comments of those exchanges like a Korean drama. I
noticed a certain behavior in these discussions. While each side believes their
method is effective, they prefer to ask questions about the other side’s
methodology and try to poke holes into them.
While I am
entertained, I am aware of both ends’ pros and cons… I think…
Each
methodology will have its pros and cons. There isn’t a perfect strategy.
Everyone’s life is different.
Everyone is going through a different phase in life.
Last but
not least, whatever the strategy is, there is no guarantee.
Intangibles
There are
things in this world that money can’t buy.
Trust takes
years to build up. Rumors can ruin it.
Foresight to build up the business in a way that it has recession resilient, and
back up the supply chain to ensure the company still can be operational.
Enmity between neighbors can’t be diminished just by spending cash…
While
financial statements are important to analyzing a company. I must not forget
that businesses, countries, and also market are driven by people. Not everyone
uses financial statements to determine their investment decision.
There might
be other intangibles that may make and break a business.
But how can
I identify and access them?
