Stay Desperate, Stay Angry

Foreword from ShareInvestor

This article “Stay Desperate, Stay Angry?” by Cai HaoXiang was first published in The Business Times on 12 Feb 2018 and is reproduced in this blog in its entirety.

Action springs from determined desire. How deep is yours?

This is the last Monday Multiple column from me, for now.

I first started working on this at the end of 2012, with the intention of improving financial literacy among young adults. Through the years, this space has covered a range of topics, including the fascinating world of stock analysis and investing.

At the core of this column burns a desperate fire, the same fire which has inspired a thousand self-help and you-can-be-rich books.

How can the hopeless and the underdogs make it in life? How do you go from nothing to a million dollars?

Of course, this column has dwelt on the importance of frugality, of living the simple life, of relationships, of perspective, and of being careful not just with your money but with your time.

Yet, I have never felt we should be embarrassed about our deep desire for money. The pursuit of wealth, after all, is one of the driving forces of human endeavour.

However, I’d be the first to say that rampant greed doesn’t do anyone much good.

My fire was lit when my family, like many others, fell victim to the mis-selling of financial products in the run-up to the global financial crisis.

In 2007, a saleswoman at a local bank, noticing my mother had money in joint accounts with her children, convinced her to invest the relatively meagre sum in a unit trust.

She knew we had little bandwidth for losses. The money, comprising our Chinese New Year hongbao savings from birth till adulthood, was sacrosanct, painstakingly accumulated through years of financial hardship.

The saleswoman was persuasive; she called my mother on her cellphone, and set up meetings at the bank’s heartland branch. “I’ll take care of the money for you,” she assured my mum.

After deducting a 5 per cent sales charge, the remainder was invested in top analyst-ranked stocks from the US, Europe and Asia. The fund also sold call options to generate income, and bought put options to protect against a drop in prices.

All this was impossible for my mum, a housewife, to digest. Meanwhile, I was busy studying overseas, and had no clue about stocks in any case.

In hindsight, we now know this kind of fund offered a sure win only to the fund manager charging a 1.5 per cent annual management fee; the banks reaping hefty sales charges distributing the funds; and the institutions trading options with the fund.

What I didn’t expect was that it was a sure loss for investors. Analysts, dividends and put options were all useless in a severe market crash.

“I am aware your mother is a conservative investor, hence I recommended a product that aims to pay her potential quarterly payouts,” the saleswoman wrote to me when I e-mailed her in 2008, expressing my deep concern with the product.

“I did emphasise that the fund is not principal guaranteed and she has to stay invested for at least three years and above, so in the meantime she can enjoy the potential quarterly payouts,” she said.

I, however, couldn’t wait. Increasingly despondent as the fund declined, I withdrew what was left of my share of the money when I started working in July 2009. I stomached a hefty double-digit percentage loss on my invested capital after dividends.

After I sold, the net asset value of the misbegotten fund continued to tank. Dividends dwindled. It was clear investors weren’t going to make back their money. The problem might have been depreciating developed world currencies, tepid markets, and simply too many cooks. In the second half of 2012, the fund closed shop.
We didn’t pursue the case. We didn’t want to harm a career. The fault, too, lay with us for not understanding what we were getting into. And we did buy at the top.

But the seed of a desire was planted. I gradually, and then badly, wanted to understand everything about financial markets, so that I would never again be taken advantage of. More than anything, I wanted to be responsible for managing my own money.

By end-2012, I had gained some battle scars, and was keen to share some insights around investing and money. Desire met opportunity, and this column was born.

I never trusted the bank again. But I did invest in its stock, along with that of other companies. I can’t say I did well; financial markets have a way of humbling their participants.

But I have since more than recovered my losses.

The personal finance lesson to be gleaned here is that we can crystallise our distress at the indignities of life, and harness the power of desire to take action.

You can read all the investment advice out there, talk about making all the money you want, and make unrealistic plans to win the lottery.

But if you don’t want something badly enough, you will never take the first step, be it consciously limiting an expense, finding a side job, or buying your first stock.

You might be feeling down due to financial constraints. But negative emotions – fear, jealousy, disappointment and anger – can be calmly processed and transformed into a powerful motivating force.

Desperation also works wonders.

From deep desire springs discipline, the other key factor for success in personal finance. But there has to be desire first.

So I want to thank my editors, colleagues, friends from the industry, and you, dear reader, for supporting me through the years.

Writing this column has been a true privilege and a joy.