How MAS Lose Money, How To Save It

by Salvador Dali

It is not easy to lose so much money for such a long time, hence we should compile a list of why MAS keep losing money. Why beat around the bush? Either you want to save it or you don't ... 

a) Negative operating cash flow for three years – which means it is not generating enough cash to meet its day-to-day operating costs – and has had negative free cash flow, operating cash flow minus capital expenditure, for six years - MAS punya union leaders, please note that when your company is bleeding cash every year, things MUST change. When I say CHANGE, I mean everybody, not the unions asking for management to CHANGE saja!!! When I say CHANGE, everybody must be open to change, are the unions open to change? Or do you barricade yourselves with demands and untouchable issues??!!

b) Downsize - No other choice but to downsize. I do not think this is a situation where you can GROW yourself out of the problem, because when you are negativecashflow, you are already doing a lot of things wrong. Staying the same is a NO-NO, so is getting more bailout funds to be bigger. You have to get to a size where you can compete well, then grow from that successful blueprint.

c) Renegotiate all Unfair contracts with suppliers - MAS can probably solve one third of its problem here. Can I use the word cronyism contracts, maybe I should not, so let's just say unfair contracts. Many of these supplier contracts are not fair no matter how you cut it. I mean, RM25 for one nasi lemak, or RM3.50 for a stick ofsatay ... pretty hard to justify. I would like to put that contract up for open tender and see how much you save. Presently Brahim has a RM6.25 billion contract over 25 years @ RM250m a year. This was signed back in 2003, must haul up the management and directors for signing this contract. How to justify 25 year contract? Can we rescind, I think there are ample grounds that the contract may be signed on excessively unfair terms for one party, and that some people in management did not act in the best interest of MAS. Go to courts or go back into the room to renegotiate. Food is just one item, you can assume almost ALL supplier contracts need to be renegotiated, MAS is not supposed to be a charitable foundation for slicing off the fat to reward certain people. Go for fuel distribution contracts, maintenance and supply parts contracts.

d) Staffing - Like it or not 20,000 staff is too many for MAS to shoulder when AirAsia can operate profitably on just one-third. The union, please, do something that is best for everyone, sit down and come up with a viable, fair VSS program. Maybe we target 40% cuts via VSS, and no new hires, and mandatory retirement and attrition for 3 years. As staffing is the number two cost after fuel, you have to cut there. Staff must also agree that all units/departments must have KPIs to maintain, e.g. ontime arrival and departure, lost luggage, time to retrieve luggage, wait lines for check in, etc... things that really matter to the end customer.



e) Outsourcing - This is one area which MAS must do really well. I do not think they do this well at all. If they wanted to operate on-line sales, they would go and create a new department, etc... there are blocks of operations that can be managed via outsourcing without reduction in quality and branding. MAS on line site still looks terrible and hard to navigate. Compare that to AirAsia's site, try and count the number of clicks to get to a decision, the ease to navigate search functions, how much info detail you "unecessarily require" potential clients to key in, etc... there are metrics to ensure that the outsourced components can be met by outside parties. Other outsource contracts: cleaning, etc...

f) Brand positioning - MAS has no other edge but to fight against AirAsia and LionAir on pricing. So you are offering to behave like a budget carrier while your cost structure is full service ... anyone from primary school can tell you that it will not work. Because, maybe some will opt for MAS instead of AirAsia if price is almost thesame but that is for that ONE flight. At the end of the day travellers will opt for whichever has the better time schedule to suit themselves as long as cost is not that big a difference. Hence unless MAS has a flight at the same time as all AirAsia flights, it will never work out. The last 3 years have shown that that strategy will only result in AirAsia's profits rising and MAS fortunes continuing to dwindle (because competitive pricing is not the solution, and is only a minor part of the entire problem on MAS shoulders).

Unfortunately, I do not see a way out for MAS here. The only viable solution is to merge with AirAsiaX. MAS is on the same turf as the best managed low cost carrier IN THE WHOLE FUCKING WORLD (AirAsia). We are not talking of Malaysia vsSingapore type of comparison, we are talking of Malaysia vs (Singapore/HK, Norway, Germany, USA) kind of comparison. Unfortunately, it is not entirely MAS fault, even if you get Cathay Pacific to operate from KL as a base, Cathay Pacific will also die, but not as horribly as MAS as they do not have crony capitalism as a cornerstone in their business model, but Cathay Pacific will also die in KL if forced to compete on the same turf as AirAsia - THATS BECAUSE KL/Malaysia is not a hub for businesstravellers, it is the best hub for budget travellers, thanks to the fact that we have over 2mn foreign workers alone and probably another 2mn illegals.

MAS also needs to get into their head that the bulk of the travellers within their network are flying for less than 4 hour type destinations, which makes business travel not that necessary. Plus you do not have the critical mass for longer haul flights, a big problem that AirAsiaX also has at the moment.



g) Khazanah Baby - All that I have written, Khazanah knows it already. Khazanah, which owns 69% of MAS, backed the recent rights issue. In 2012, Khazanah had tried to cut its stake in the airline, but the powerful Malaysian Airline System Employee Union (MASEU), which represents the airline's 20,000 workforce, rejected a share swap deal with AirAsia. Khazanah has no choice but to put MAS into bankruptcy, only then will the unions come to their senses and only then can MAS renegotiate all the contracts (cause if they do not, they get nothing in the long line of claims against the company, not to mention the years it will take). 

As of end-December, MAS had total debt of 11.7 billion ringgit. Its next major debt repayments are due in mid-2022, when US$455.2 million worth of bonds mature. Bankruptcy need not be a bad thing, Japan Airlines' emergence from bankruptcy to become Asia's most profitable airline in 2012, but the carrier's union really need to play ball during the major restructuring.

h) One World - MAS joined the One World Alliance thinking that could act as a feeder and distributor to higher load factors for them. Unfortunately, we do not have that many global travellers that need reconnecting all the time. The loyalty programs that real travellers in this region RELY on are within their credit cards, they redeem flights, biz class tickets all within their credit cards.

Mr. Government,

You cannot expect MAS to do wonders when you "allow" MAS to shoulder so many burdens, unrelated costs, cronyism ... on a flawed business model, on a management that have their hands tied all the time .... AND EXPECT MAS TO COME OUT SMELLING LIKE ROSES!!! You can do that back in the 80s and 90s when competition was not that hot. Now, every single flight sector, biz class, first class, loyalty prgrams, etc...get enormous competition from all corners. You cannot protect MAS anymore. 

Like Russell Peters would say, "Be a man", come out and make the hard decisions, anyway the real election isn't till a few more years, you can lose the 20,000 voters (and 50,000 indirect voters) but you will gain some credibility. ... and learn from it, ensure all GLCs operate competitively and not laboured under unrelated costs and leakages by cronyism capitalism.

Remember, if you do not make the hard decisions WHILE you can, eventually somebody else will make it for you, and it will look a lot less pretty then (I know that is hard to picture).

Should MAS Went into Bankruptcy? (May 2014)

This is really a multi-billion ringgit question. Since MH370 flew to the great Indian ocean, the share price of MAS also went that deep down under. It has fallen to as low as RM0.15 on 19th May 2014, the lowest level in at least 10 years. It was the most actively traded penny stocks in Bursa Malaysia for past few days.

What should be the best solution for MAS ?

The plunge that day was due to reports saying that Prime Minister is exploring the possibility of letting MAS to file for bankruptcy. Would it be a wise move? Let's us look at a few more alternative ways to rescue MAS financially.

1. MAS to raise capital via private debts, be it issuing new shares or bonds.
   Easy to issue, but who is going to subscribe for it? In order to make it attractive enough, the bond paper must be backed by government and offering above than average yield. Higher yield means higher financing cost for MAS.
   
   
2. MAS to sold off its assets.
   After various rounds of turnaround plans, what assets still left other than those airplanes? Some more, were those assets have such significant value attached to it... still?
   
   
3. Borrow money from financial institutions.
   Here, I really have to pity those banks whom already borrowed money to MAS. If not because of this "government-linked company" status, I believe they won't borrow at all without a favorable interest charged.
   
   
4. MAS sold down its equity stakes, or being privatized.
   As a national carrier, partnering with another foreign carrier? You must be joking... Unless, it was being privatized and government ceased as shareholder. But, once government letting go his hands, would anyone interested to take over MAS?
   
   
5. Government continue pumping in money.
   Well, this is in fact the most common way seen in Malaysia. Being a GLC, MAS has this privilege since it was being incorporated. But, rakyat already started to voice their concern on how government spend money, especially on those consistent loss-making companies. It was like continue throwing money into Indian ocean once again.

Moreover, the business of MAS already dropped 60% since the missing of MH370. Coupled with a total net debt of around RM7 billion, how long can MAS survive? If government wants to preserved the national icon status, they must ready to pump in another few billion ringgit without money-back guaranteed.

In our opinion, filing for bankruptcy is indeed a wiser move for all parties (other than banks), sorry to say that. This is the only fastest way to clear all the current bad debts and start all over again for MAS. If Japanese airline JAL can done it successfully few years back and making profit now, why not MAS ?

Barclays to Credit Suisse Shrink Singapore Space: Southeast Asia

Barclays Plc (BARC) and Credit Suisse Group AG (CSGN) are among banks that have given up Singapore office space as lenders pare ambitions for growth in the Asian financial hub.

Global banks vacated about 500,000 square feet of leased space in the city since 2011, enough to seat 3,800 employees, according to estimates by Jones Lang LaSalle Property Consultants Pte. About 80 percent of that is in the central business district, data tracked by the real estate broker show.

Banks reduced staff and hired fewer people than initially planned after they scaled back operations following stricter global regulations on everything from capital to liquidity. Singapore’s four-year campaign to restrict the hiring of foreigners increased competition for local workers and made it more expensive to recruit them -- dissuading banks from adding back-office staff, said Jones Lang LaSalle’s Chris Archibold.

“The banking industry is undergoing a huge amount of change, especially around its capital-intensive businesses, which means there’s less jobs,” Archibold, the company’s Singapore head of markets, said by phone. “Globally and locally, there have been various bits and pieces put in place by various governments that have drastically affected the banks.”

The vacated space won’t have a “material effect” on rents because it’s a fraction of the 64 million square feet of office area available for leasing in Singapore, Archibold added.

Revenue and profitability have come under pressure amid the tighter banking rules that were implemented since the global financial crisis, forcing firms to cut costs and reduce payrolls. Banks worldwide have announced more than 500,000 job cuts in the past four years, data compiled by Bloomberg show.

Financial Hub

Singapore is Asia’s biggest wealth management hub and last year overtook Japan as the region’s largest foreign-exchange center. Banks such as Citigroup Inc. (C) and Standard Chartered Plc have their largest trading floors in Asia in the city-state.

Prime Minister Lee Hsien Loong’s government has been tightening the hiring of foreigners since at least 2010 amid voter discontent over infrastructure strains and increased competition for jobs, property and education. Last September, it said it will require companies to advertise jobs for professionals locally before seeking people from abroad.

“It’s now more of a struggle to find people at the required price points, given current government regulations around import of labor,” said Archibold, referring to the support-function jobs that banks had anticipated to fill when they leased space in 2010 and 2011.

Barclays Trimming

Barclays, the U.K.’s second-largest lender, recently exited 29,000 square feet of suburban office space in Singapore’s Changi Business Park and will leave 15,500 square feet in another eastern suburb by July. It also gave up two stories of prime office space in the financial district that has since been leased by LinkedIn Corp. (LNKD), the world’s biggest online professional-networking service, people familiar with the matter said this month.

Credit Suisse is planning a phased exit from its One Raffles Quay office space in the downtown area this year, according to a person with knowledge of the matter who asked not to be named, citing confidentiality. It’s also seeking replacement tenants at some of its leased office space in Changi, near the airport, the person said.
“Credit Suisse continually reviews its real estate strategy in line with the needs of its businesses,” Juliette Leong, a Singapore-based spokeswoman, said by e-mail on May 14. “Singapore is the largest regional hub for its business and back-office support and remains very committed to its presence in this market.”

Legal Costs

Lenders are also facing rising costs stemming from legal action. Credit Suisse this week agreed to pay a $2.6 billion fine after pleading guilty to U.S. charges that it helped Americans cheat on their taxes.

Banks now occupy 9.5 million square feet of leased office space in Singapore, down from 10 million square feet in 2011, figures from Jones Lang LaSalle Property Consultants show. The real estate firm is a unit of Chicago-based Jones Lang LaSalle Inc. (JLL) Its analysis was based on data for firms that have at least 30,000 square feet leased on the island.

HSBC Holdings Plc (HSBA), Europe’s largest bank, left two buildings in the city in 2011 and 2012, grouping its operations at one in the central business district and another about 7 kilometers (4 miles) from that, said Gareth Hewett, a Hong Kong-based spokesman.

‘Positive Move’

“The consolidation was a positive move for HSBC and its staff, improving efficiencies in a workplace with modern facilities and infrastructure,” he said by e-mail on May 14. As of May last year, London-based HSBC had eliminated more than $4 billion of annual expenses and 46,000 jobs since 2011.

At Barclays, the move from its suburban offices to the 290,000 square feet the bank occupies at Marina Bay Financial Centre will affect about 500 employees, people familiar with the matter said in April. The location is part of the 360-hectare (890-acre) Marina Bay development that Singapore started building in 2005 on reclaimed land as its new financial district. The bank has another 96,000 square feet at One Raffles Quay, also in Marina Bay, according to data provided by the bank in September 2012.

Barclays had 3,500 full-time employees in Singapore in October 2013, according to a press release marking 40 years in the country. That was down from 4,700 about a year earlier, bank data from September 2012 show.

John McGuinness, a Singapore-based spokesman at Barclays, declined to comment for this story.

Job Cuts

Chief Executive Officer Antony Jenkins said on May 8 that Barclays will eliminate 7,000 jobs from its investment bank. That will add to the 12,000 reductions across the group announced in February, bringing the number of positions to go by 2016 to 19,000.

“While some financial institutions have relocated some lower-end roles in their middle and back offices out of Singapore due to cost reasons, they are also retaining and growing higher value-added activities here,” the Ministry of Manpower and Monetary Authority of Singapore said in a joint statement in response to queries.

The Monetary Authority, or central bank, has been working with the financial community to raise the competencies of the local workforce because having a “critical pool” of qualified professionals is a key attraction for global banks to keep their operations in the city-state, according to the statement.

Most Affordable

Singapore remains the most affordable city for office rents among the top five major financial centers, including London, Hong Kong, Tokyo and New York, according to a Cushman & Wakefield Inc. report in February. The annual occupancy cost in Singapore’s central business district is 803 euros ($1,100) a square meter, compared with 1,432 euros in Hong Kong’s Central district and 2,122 euros in London’s West End, the report shows.

Not all banks are trimming space, with U.S. lenders among those expanding their footprint on the island.

While JPMorgan Chase & Co. (JPM) gave up about 50,000 square feet of the 200,000 square feet it occupied in downtown Singapore last year, it added 130,000 square feet in the eastern suburbs, according to a person with knowledge of the matter who asked not to be named as the information is confidential. Darrell Wright, a Singapore-based spokesman for JPMorgan, declined to comment.

Citigroup Inc., whose 10,000 employees on the island make it the largest employer among foreign banks, occupies more than 1 million square feet, up from 981,000 square feet at the end of 2006, Adam Abdur Rahman, a Singapore-based spokesman, said by e-mail on May 16.

For Goldman Sachs Group Inc., the largest prime broker in Asia, its Singapore real estate occupancy is the highest ever, Edward Naylor, a Hong Kong-based spokesman, said in an e-mailed response to questions. The bank is considering plans to occupy more space, he said, without elaborating.

“The regulatory environment for banks in Europe appears to be harsher than it is in the U.S.,” said Jim Antos, a Hong Kong-based analyst at Mizuho Securities Asia Ltd, citing pressure ranging from capital requirements to political debate on profits. “The U.S. banks are frankly just lucky.”

Outlook of China Market

source: http://robinhosmartrade.blogspot.sg/2014/04/outlook-of-china-market.html

Monday, April 28, 2014

Outlook of China Market

The China stock market has been declining for the past 5 years since it topped in 2008 during the peak of the global financial crisis. While the charts is showing that the technical could be bottoming investors are still concern about the structural challenges facing china. It is going to take some time before it becomes clear whether China is succeeding in its pursuit of reform, in the meantime China has to navigate the minefield of defaulting "trust" wealth product, excessive local government debts, shadow banking loans and the like. The key risk this year could be the weakening of the property market which will affect property developers with high financing leverage. Many are asking whether it is time to start investing in the current undervalued China stocks. I expect a big "flush" triggered by economic event that will take the China stock index close to the global financial crisis low before the China market bottom. It is important to watch the chart lines!

10 Tips For First-Time Entrepreneurs

         

Posted by Sarah McKinney on September 16, 2013 at 9:00 PM

          

I didn’t plan to be an entrepreneur. I’d just moved back to Los Angeles after spending two and a half years in San Francisco while attending Presidio Graduate School, an MBA program dedicated to a triple bottom line perspective (i.e., people + profit + planet), and was working for one of my dream companies as a consultant focused on social impact measurement. I’d received the offer letter the day I graduated, which I took as a sign that I was headed in the right direction. I enjoyed the work, but my thoughts kept drifting back to the business my team developed for our final project at Presidio—a Yelp for sustainability resources. I saw the problem all around me: people wasting time searching for the best information and resources related to social and environmental impact, and duplicating efforts because there was no central, open-access destination to share.
A starting point was needed, and it had to be crowdsourced because the space was too dynamic for any one person to keep track of. This belief continued to well up inside of me. I'd wake up at 5 a.m. excited by a fresh idea, I’d turn down social plans so I could work nights and weekends, and the chalkboard wall in my kitchen was starting to look like a scene fresh out of A Beautiful Mind. When the consulting job ended, the path forward was clear: I knew I had to follow my passion, and create a tech startup. In August, we released the beta version of Amp's platform.
The past year and a half has been an amazing ride filled with many lessons. If I could go back in time and give myself advice, here are 10 things I’d say:
1. Surround yourself with inspiring people—avoid naysayers.
People seek out the information that reinforces their decisions in life. When you commit to following your passion and taking a big risk it can feel threatening to those who have chosen a safer route. As you express your enthusiasm pay close attention to who’s trying to squash it, and remember that this most likely has nothing to do with you but is instead a projection of their own insecurities and fears. Be compassionate, but minimize time spent with these people – especially to start. Surround yourself with the ones who say, “Go for it!” and develop new friendships with other entrepreneurs. Go to events, ask them to coffee, learn how they’ve managed to stay inspired and solve problems. Doing this will permanently change your perspective on life, and alter your conception of what’s possible. I promise.
2. Ask questions—it’s the only way to learn.
You can’t worry about sounding stupid, and you most certainly shouldn’t try to figure everything out in isolation. Do your research. Know what you don’t know. Then find people who have the answers, and be direct with your questions. If you don’t know people who’ve had success doing what you’re trying to do, use your network and ask for intros. Time is of essence, and I’ve found this strategy to be the fastest way of getting from point A to point B. Schedule time to meet in-person or speak by phone—email isn’t good for exploratory learning. Don’t pretend like you understand things you don’t. Swallow your pride. People like to help, and you need to build your network of support. I can’t tell you how many “dumb” questions I continue to ask our developers. It’s a necessary requirement.
3.  Find a solid teammate ASAP—two brains are better than one.
Right around the time I decided to launch a crowdfunding campaign as a way to assess demand and raise enough money to build the beta version of Amp’s platform, an email that was sent out to the Presidio community by a previous classmate caught my eye. What began as a casual correspondence soon revealed a shared passion for Amp’s solution. His thinking consistently impressed me, and his experience managing IT projects from within startups and large enterprise complimented my market research background. His even-keel style grounded my enthusiastic and extroverted personality. I offered him equity, a co-founder title, and I feel very grateful for how well we’ve worked together. It’s led to higher quality work, and taught me a lot about myself.
4. Nail your mission and vision.
Amp’s mission is to organize the best information and resources available within the ever-growing sustainability sector, and be the starting point for individuals interested in harnessing the power of business to drive social and environmental progress. Our vision is to become the largest peer-reviewed sustainability resource directory in the world, dramatically increasing efficiencies and reducing duplicated efforts at a time when solutions are desperately needed. How was that? Let us know—and feel free to share yours!
5. View all feedback as a compliment—time spent is a gift.
When an individual stops what they’re doing to think about your company, regardless of what their specific feedback is, take it as a compliment. NEVER be defensive. Instead, take in what people have to say and let it marinate. In certain instances a thoughtful response is totally appropriate, but most of the time you’ll want to avoid immediately taking up more of their time. Thank them, no matter what they said. You don’t have to ask them for advice again if you don’t want to. There is a noticeable difference between people who give constructive criticism in an effort to be helpful, and those who act like know-it-alls in an attempt to build their own self-esteem. Watch for that, and avoid going back to the latter.
6. Look for patterns in advice—then filter, prioritize, and take action.
Do you keep hearing the same criticism, confusion or suggestion from multiple people? Pay attention. Mark it down. Consider making a massive pivot if you have to. Talk it through with your partner, and the small circle of people from whom you regularly seek advice. What actions need to be taken and what would the implications be? What are the risks associated with NOT doing this? You must be able to articulate your thinking in the areas investors will likely poke holes. Don’t be taken by surprise, or avoid the difficult thinking required to sort these issues through. Maybe you can’t solve them right away—that’s okay, and is why prioritizing is so important.
7.  Find the fun—in even the most menial tasks.
If I can’t get excited about what I’m doing, nobody else will. Knowing this doesn’t make it easy. Leading up to our beta release I spent weeks entering resources (i.e., links, media, documents). Hours and days passed—I felt like I was in some kind of data-entry time warp. But I streamed music to lift my mood, and picked up the phone when I thought I was going to lose it—laughing with friends always helps. Sometimes I’ll procrastinate until I can come from a place of enthusiasm. Revising pitch materials for the gazillionth time is like this for me. All of the sudden, I’ll wake up one day and want to get lost in PowerPoint slides. There’s an energetic thing at play, for sure. Invite the fun in, and it will eventually find you.
8. Build your personal brand—authenticity is key.
There are hugely varying opinions here, and I sought out a lot of advice because my online presence as a writer was growing alongside Amp—I was writing articles for Triple Pundit, GOOD and PandoDaily, and sharing my poetry via a blog called Intent. It felt wonderful to be following all of my passions, but I worried that I would confuse people or give the impression that I was less committed to Amp because I had other interests. I could see the common thread running through my pursuits, but would other people get it? I wasn’t sure. I created a personal site as a way to better manage my story (and Google-ability), but ultimately the growth has come from accepting my inability to control what other people think of me, committing to being true to myself, and accepting whatever happens as a result. Because if I don’t believe in myself, who else will? Put yourself out there in a way that feels authentic for you, and see what happens.
9. Stay in today—crazy shit happens you can’t predict.
I’m a big fan of founders creating a business plan, financial model, pitch deck and executive summary. While painful at times, doing this yourself—not outsourcing—forces you to know your business intimately. Having a detailed plan, however, cannot become an excuse for rigidity. Things never work out exactly as you planned (our developer sent me this, furthering this point, after I’d spent months hounding him for being behind schedule). Stay as present-time as possible. What happens today informs tomorrow, and you have to be open and flexible to keep moving down the right path. One of my advisors once told me, “The situation is less important than how you respond to it.” I’ve held onto that.
10. Celebrate the small wins—the next challenge is just around the corner.
Creating a business can be challenging which is why it’s so important to celebrate the small victories along the way. I was thrilled when Paul Hawken, one of the biggest names in the sustainability movement, replied to one of my emails. Finishing our pitch video, meeting our fundraising goal on Indiegogo, connecting with other entrepreneurs at Summit Outside, releasing the beta version of Amp’s platform—all are worthy of celebration. I am fully aware that in many ways our work has just begun—user engagement and marketplace transactions will be key to our success. But every once in awhile, if you are an entrepreneur, make sure to pause and acknowledge the road you’ve traveled. Many people quit before they make it to wherever you are. Right now.

6 Reasons Why You Should Buy The Index

1) Because Warren Buffett Says So! 

"The goal of the non-professional should not be to pick winners – neither he nor his “helpers” can do that – but should rather be to own a cross-section of businesses that in aggregate are bound to do well. A low-cost S&P 500 index fund will achieve this goal."

2) Because Indexs are Low Cost and Unit Trusts are High Cost

"My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors – whether pension funds, institutions or individuals – who employ high-fee managers."

If you purchase the STI ETF you are only paying 0.30 of a percent each year as compared to 1-3% for Unit Trusts.

3) Even Warren Buffett Himself Has a Hard Time Beating the Index

Take from his recent letter to shareholders, over the last 5 years the Index has outperformed him 4 times! However Warren Buffett is still a master that I respect, considering that his long term returns are twice of the index. Sadly I know I'm not him and I can never produce such amazing results.

4) The Index Provides a Decent Return

Over the period from 1965 to 2013 the S&P gave investors an average annual returns of about 9.8%, that's great! Looking at our local STI ETF, it gave about 7.89% annual returns since 2002 which is pretty decent too.

5) The STI is Cheaper than the S&P 500

The STI is only selling for 13 times earnings, which is cheaper than the S&P which is selling for over 17 times earnings. The dividend yield is getting close to 3% which is also higher than S&P's 2% yield.

6) Because its Easy to Invest in the Index

You don't have to spend a lot of time analyzing the business nor the economics, the time saved can be well spent doing the things you love.

Over the last 5 year the S&P 500 gained over 170%, that's about 25% compounded returns.

When will this bull end? I really don't know. But as long as the music keeps playing, we dance.