The Power of Miscommunication

At the height of the Cold War, Berlin, for capital of the German Republic and the Reich, was the gauge of how hot or cold it was.  However, by 1989, the Communist bloc was failing.  At first, this was economic malaise, but it was beginning to spread elsewhere.  There was no work, and not enough bread.  Due to a legal loophole, thousands of East Germans fled into Hungary, nominally part of the Communist bloc, and from there, cross into West Germany.  To stem this, the East German government decided to issue temporary permits through the “Anti-Fascist Wall” what they officially called the Berlin Wall,  This was meant to appease any would-be defectors.  The idea was that these were intended to be temporary visas for a later, unspecified date, with no real intent to implement it.  They hoped the people would be placated while they figured out what to do to stem the exodus. 

Unfortunately, the German Democratic Republic, as East Germany was called, forgot to brief the man who was supposed to deliver the news on live television.  Günter Schabowski was an East German politician who served as an official of the Socialist Unity Party of Germany, the ruling party during most of the existence of the German Democratic Republic.  Starting out as a journalist, in 1981, he became a member of the SED Central Committee.  In 1985, after leaving Neues Deutschland, the newspaper he founded, he became the First Secretary of the East Berlin chapter of the SED and a member of the SED Politburo.  He also served as member of the Volkskammer from 1981 to 1990.  He was a hardline Communist, and a brutal man. 

In October 1989, Schabowski, along with several other members of the Politburo, ousted SED leader, Erich Ernst Paul Honecker.  Honecker was the prime  mover for the creation of the Berlin Wall, and the architect of the border guard’s shoot to kill policy.  Egon Rudi Ernst Krenz, Honecker’s long-time deputy, took over, Schabowski became his deputy.  As part of the effort to change the regime’s image, Schabowski, as a former journalist, was named the regime’s unofficial spokesman, and he held several daily press conferences to announce changes.  He had already been in charge of media affairs for the Politburo.  Because Schabowski had spent most of his career in communist-style journalism, where reporters were told what to write after events had already happened, he found it difficult to get used to Western-style media practice of answering questions in an open setting. 

On the 09^th November 1989, shortly before that day’s press conference, Krenz handed Schabowski a text containing the new, temporary travel regulations.  The text stipulated that East German citizens could apply for permission to travel abroad without having to meet the previous requirements for those trips, and it allowed for permanent emigration across all border crossings, including those between East and West Berlin.  The text was supposed to be embargoed until the next morning.  It was also about a future policy that may not be implemented. 

This was the first time Schabowski had read the text, because he was not at earlier meetings, when it was drafted and discussed before the full committee.  However, he felt comfortable discussing it at the press conference.  He said that all one needed to do to conduct a press conference was to be able to speak German, and read a text without mistakes.  How wrong he was.  When he read the note aloud at the end of the press conference, one of the reporters asked when the regulations would come into effect.  Schabowski assumed, wrongly, that it would be the same day based on the wording of the note, and he replied after a few seconds’ pause, with uncertainty, “Das tritt nach meiner Kenntnis ... ist das sofort ... unverzüglich”, “As far as I know ... effective immediately … without delay.” 

The next questions was whether the new regulations also applied to travel between East and West Berlin,  Schabowski looked at the text again and discovered that they did.  When cornered in subsequent interviews, he reiterated what he said earlier.  The news was broadcast on West German public national television channels.  They showed parts of Schabowski’s press conference in their main evening news reports.  This meant that the news was broadcast to nearly all of East Germany as well, where West German television was widely watched.  The news then spread like wildfire with news reports continuing to repeat the news throughout the night. 

As the night progressed, thousands of East Berliners began proceeding to the six border crossings along the Berlin Wall and demanded to be let through.  Live television reported on the gathering people which only increased the numbers of East Berliners coming to the gates.  The crowds vastly outnumbered the border guards, who tried initially to stall for time.  No one was willing to order deadly force, especially with the news and such a vast crowd.  Finally, at 1130h, Stasi Officer Harald Jäger disobeyed orders from his superiors, and opened the Bornholmer Straße border crossing of the Berlin Wall. 

The fall of the Berlin Wall was the key event leading to the end of the East German regime, a state that had been crumbling for many weeks as citizens had been fleeing through intermediate countries surrounding East Germany.  When the gates were opened, for all intents and purposes, East Germany ceased to exist.  The Berlin Wall stood from 1961 to 19989.  It was a monumental physical and ideological barrier between the Capitalist West and Communist East.  What treaties, the threat of nuclear war, and revolution could not tear down, one man who did not attend a meeting and read a brief managed to do so.  We should never underestimate the power of incompetence in communication.

The Civil Servant

In 2003, a story was published in “The Lancet”, about an unnamed French citizen.  He was a married man, with two kids, who worked as a civil servant in Marseille.  One day, his left leg felt rather weak, so he visited a local hospital.  As the doctors ran through his medical history, they learned that when this man was a baby, he had suffered from hydrocephalus, which is a buildup of liquid inside the brain.  The liquid had long been drained away, but the doctors decided to take a few scans and see if this problem was neurological in nature.  What they found astonished them.  The majority of this man’s head was filled with fluid. 

Normally, the human brain is protected by lateral ventricles, which are structures filled with cerebrospinal fluid that act as a cushion for our gray cells.  Liquid flows through these chambers all the time, but in the man’s case, the fluids were not draining.  Over time, the buildup caused his lateral ventricles to swell so much that his brain had been flattened to a thin sheet.  Doctors estimated that his brain mass had been reduced by 50 to 70%, affecting the areas in charge of motion, language, emotion, amongst other things. 

The interesting part about this all was that while his IQ was only 75, he was not mentally challenged.  He held a steady job, raised a family, and did not have trouble interacting with others.  Over time, his brain had adapted to all that pressure, and even though he had fewer neurons than most, the man was, for all intents, a fully functioning member of society.  And his leg was fine.  Once doctors inserted a shunt and drained the fluid, his limb returned to normal.  However, his brain is still pretty small, showing that it does not take much brains to work in the civil service.

Quora Answer: What are the Reasons People Do Not Take Out Insurance?

The following is my answer to a Quora question: “What are the reasons people do not take out insurance?” 

Insurance is part of risk management.  It has a role in estate planning, in risk mitigation for specific activities, and in covering unplanned expenses.  People who do not take up insurance do so for three main reasons. 

The first is that they do not understand the role of the different types of insurance coverage, and minimise its importance.  They do not prioritise it, since it is viewed as an expenditure.  If they do take it up, it is the first item to be dropped in the event of a cashflow challenge. 

The second is that they are sceptical about the role of insurance, or shun it for ideological or religious reasons.  Perhaps they believe that it is against religion, such as some Muslims with their quaint notions of what is shari’ah compliant.  Perhaps they had a bad claim experience, and imagine that this is all a scam. 

The third is because insurance is not a viable option for them.  This could be denial of hospitalisation coverage due to pre-existing condition, or denial of general insurance coverage due to a poor claim history, or they could be somewhere insurance is not well regulated, and the industry has a poor reputation.  This is most likely in developing nations, fraud by insurers or their representatives is not uncommon.

Quora Answer: Can a Foreigner Retire in Singapore?

The following is my answer to a Quora question: “Can a foreigner retire in Singapore?” 

Conceivably, yes.  To stay in Singapore, they need to acquire permanent residence, which is a challenge, or have some form of visit pass, which may be complicated for others.  The real question is why would they want to do so?  Singapore is not the sort of place to spend your sunset years unless you are invested in the nation, with family and friends.  We are not a retirement village. 

This only makes sense if that foreigner has sufficient assets to set up a family office, and manage those investments here.  That amount of investment would entitle him to a specific type of visa, as a global investor.  From there, acquiring permanent residency is an option, provided they manage to buy property, take up insurance coverage, and have above $2.5 million AUM (and that number is an estimate), and that is a start.  With that money, the cost of living is not a factor, and he could have a good life.

Quora Answer: What Do Singapore Police & Citizens Feel about the U.S. Capitol Riots?

The following is my answer to a Quora question: “What do Singapore police and citizens feel about the tens of thousands of Trump supporters, and their unauthorised occupation of the U.S. Capitol during the riots?” 

As a Singaporean, I watched it with a sense of schadenfreude.  This is the United States of America, self-proclaimed shining city on a hill, land of the free and home of the brave, unmasked as a dysfunctional democracy run by a ruling kleptocracy.  What we are witnessing is history, the moral and intellectual demise of a superpower.  This was that watershed moment. 

On one hand, it was expected that years of polarising propaganda masquerading as news and a dishonest media, afflicted upon a disenfranchised and under-educated electorate, would have an effect.  On the other hand, no one expected it to be so spectacular, and so entertaining. 

The President that caused it is still agitating his followers.  The party he nominally belongs to still cleaves to him.  The rioters will be prosecuted, but the problem is still unsolved.  This is not mere corruption, but absolute moral bankruptcy in the political process.  There is no coming back from this.

Quora Answer: Is Toastmasters Worth Joining in 2021?

The following is my answer to a Quora question: “Is Toastmasters worth joining in 2021?” 

The world moves through communication.  If you want your voice to be heard, then you need to be able to speak effectively.  Although we are amidst a pandemic, and many places have varying levels of lockdown, we still need to communicate.  For many of us, that means virtual meetings, and video calls. 

Whether in person, or across any medium, we need to get our point across, and master the art of communication.  This applies across any medium, and is a life skill.  Toastmasters who only see the worth of public speaking in a physical setting have yet to fully grasp the possibilities of speaking to a wider audience beyond our immediate environments.

Quora Answer: How Do the Australian & Singapore Militaries Compare?

The following is my answer to a Quora question: “How do the Australian and Singapore militaries compare?” 

There is very little basis to compare them, since they have different mission parameters.  The Singapore Armed Forces is set up as an offensive force, because Singapore does not have strategic depth.  In the event of armed conflict, the SAF is expected to project power over the region, and seize territory to create that strategic depth.  Singapore also practices conscription.  National Service is part of national education, as well as creating a reserve pool that is well in excess of a million potential personnel. 

The Australian military is called the Australian Defence Force, because that is its mandate – the defence of Australian territory.  Australia is a vast nation, and its environment creates two major natural barriers between their population centres and any potential aggressor – the ocean and the hostile interior.  Paradoxically, this means Australia does not actually require a large military relative to the size of the country.  The ADF is a volunteer force. 

The ADF has a larger budget than the SAF, $44 billion to $15 billion.  Their currencies are almost on parity.  However, much of that budget is invested in maintaining infrastructure and human resource needs.  The SAF budget is more focused on acquisition and deployment of new technologies, because Singapore’s immediate neighbourhood has more potential threats. 

The SAF is also much larger than the ADF, in part due to their differing threat environment.  The SAF also invests more in life capability and forward deployment, so it has a larger air force and a more lethal navy.  This is because Australia is an island continent, while Singapore is a tiny island in the centre of the busiest shipping lane in the world. 

In terms of capability, both nations have deployed elements of their military in conflict zones as observers, or part of international coalitions to gain combat experience.  Both nations have also clandestinely deployed units to aid neighbouring countries in low intensity conflicts.  Australia has a higher profile in the international arena because the government is eager to be seen as the United States’ sheriff in the region.  Singapore is officially non-aligned, and cannot be seen to be overtly on any side.

Quora Answer: Who Does the Singapore Government Side With in the Israeli-Palestinian Conflict?

The following is my answer to a Quora question: “Who does the government of Singapore side with in the Israeli-Palestinian conflict?” 

The Singapore government does not take sides.  On one hand, Singapore has close relations with the State of Israel.  However, that does not make Singapore party to the policies of the current government.  In fact, Singapore’s Ministry of Foreign Affairs has issued official statements calling for calm and restraint, and Singapore officially supports a two-state solution to the conflict. 

Unlike Israel, Palestine does not have official relationship with Singapore, since they do not have a government that represents all of the Palestinians due to their challenges, and internal politics.  However, the Palestinian cause resonates with a large segment of the population, and with Singapore’s Muslim-majority neighbours. 

Singapore is part of the Non-Aligned Movement, and is officially neutral.  Based on this, and the above factors, it would not make sense for the country to take one side over the other, when the belief is that dialogue with all sides is ultimately more constructive than belligerence.

Quora Answer: What Skills Do I Need to be a Good Public Speaker?

The following is my answer to a Quora question: “What skills do I need to be a good public speaker?” 

The primary skill you require is rhetoric.  Rhetoric is the ability to put forward a cogent, coherent argument, for or against a position, and convince people of it.  Without mastery of the skills of rhetoric, you can never be a good public speaker.  One of the places that you can acquire this skill is the Toastmasters programme. 

The secondary skill is the ability to command the space, which is related to rhetoric.  This refers to how you stand, the manner in which you speak, and your gestures.  There is no point in being able to speak beautifully if you your body language undermines your credibility. 

Finally, you actually need to have an educated and informed opinion about the subject matter you want to speak on.  Otherwise, have no real credibility to advance your position beyond the immediate fan base.

Quora Answer: Are Capital Gains Taxable in Singapore?

The following is my answer to a Quora question: “Are capital gains taxable in Singapore?” 

Singapore does not have a capital gains tax.  As such, any form of capital gains is not taxable.  This includes revenue realised from the sale of fixed assets, incidental foreign exchange gains on those capital transactions, any foreign-sourced dividends, branch profits and service income received by the Singapore resident company; and gains on disposal of equity investments. 

Even if the company is in the business of trading, such as the trading of shares, and related instruments, realised revenue is still capital gains.  The exemption is the buying and selling of property as a business.

Quora Answer: Why Would a Company Prefer to Raise Capital by Issuing Debt Instead of New Equity?

The following is my answer to a Quora question: “Why would a company prefer to raise capital by issuing debt instead of issuing new equity?” 

If a company is confident of its cashflow, and has an established revenue stream, issuing debt is always preferable to issuing new equity, and is a lot cheaper.  Debt has a fixed cost, which is amortised over an extended period, and can be planned for. 

New equity, on the other hand, not only means giving up some control of the company, but may also be more expensive in that same period, with the issuance of dividends per share.  There is also the consideration that the business might want to buy back some of those shares eventually, which is a lot more expensive than simply paying off the yield on a bond.

Building for Retirement Amid a Pandemic

One of the primary lessons about planning for retirement is that we are never too young to plan.  Between now and eventual retirement, a lot of things can happen, and very little of that is good.  The very first step towards retirement planning is actually engaging the services of a good financial consultant to put forward a proposal, considering existing assets, investment horizon, and financial targets.  Without one, all the points in the article are actually moot.

Personal Accident Plans Balance Out an Insurance Portfolio

Personal accident plans are an important part of a balanced risk management portfolio.  They are multi-claim policies for injuries and worse.  Relative to the payout, they also tend to be cheap.  While a hospitalisation plan means the insurer pays the hospital, an accident plan is where the insurer compensates you for injury and loss – the money goes into your pocket.

Medical Insurance: Looking beyond Premiums

Medical insurance has seen double digit growth in the last few years.  While there have been measures to mitigate this, it will take time for it to take effect.  With an ageing population, costs will continue to rise, and someone has to pay for it. 

With premiums between providers largely the same, it is important to see beyond the premium to what is on offer besides the treatments on the schedule.  AIA has Medix medical concierge, and WhiteCoat telemedicine, in addition to a higher annual limit.  Coupled with the Vitality programme, the focus is on managing a healthy life so that many medical conditions do not develop, and to mitigate the cost of those that do.

Focus on the Long-Term

One of the key principles for success in investing is to have an extended investment horizon.  Whilst the market may be volatile in the short-term, a well formulated portfolio should have an upward trend over that extended horizon.  What we want is an average annual growth that exceeds real inflation.

Faith-Based Investing Should be Treated with Scepticism

Faith-based investing is a form of ethical investing.  Ethical investing is the practice of using ethical principles as the primary filter making investment decision.  These parameters are wholly dependent on the views of the investor, and can be quite arbitrary.  Faith-based investing is a gimmick, meant to cater to specific groups who use religion as a crutch, and eschew some of the fundamental principles of investing in favour of specific notions of jurisprudence.  Even from a religious perspective, these may be fringe ideas. 

Christian faith-based investing comes in a broad spectrum.  For example, many American “Christian” faith-based investing firms are Evangelical in nature.  The American Evangelical movement is a largely fringe Christian movement with unique theological and jurisprudential ideas that distinguish them from mainstream Protestantism, let alone mainstream Christianity.  That means, aside from the usual prohibitions of investing in gambling or companies known for unfair practices, there is a broad category of “anti-family” prohibitions.  This include not investing in pharmaceutical companies or healthcare companies because of they facilitate abortion, or certain companies because of their equality policy on appointing women, because this would be “contrary to the Bible”.  Whilst prohibitions against pornography is reasonable, many such companies have a broader definition of pornography which extends to certain expressions of dress in media, for example. 

Funds are also used as a weapon to advance a specific Evangelical agenda, including support for the Christian Zionist movement.  This includes support of policies to the Right of the political spectrum, and the State of Israel, regardless of its policies.  There is a certain irony in supporting an apartheid nationalist entity that is persecuting Palestinian Christians in the land where Christianity was born, and then claim that their ethics are Christian. 

Jewish faith-based investing firms are centred around the concept of “tikkun olam”, “restore the world”.  Because of the wide spectrum of beliefs, these firms are either niche, or funds under larger entities such as Morgan Stanley.  Since many of them are based in the United States or Israel, the majority of them channel their investments through a political prism that includes an invariable support of the State of Israel.  This calls into question whether their tikkun olam is a universal concept, or part of a zero sum equation. 

The largest number of faith-based investing is found in the Muslim world, where it is better known as part of “Islamic” finance.  These companies adhere to a concept of shari’ah compliance that is ostensibly in adherence to the Qur’an and the sunnah, the ways of the Prophet (s.a.w.).  As a Muslim myself, I think “Islamic” finance is largely a scam.  Most of the scholars who sit on these shari’ah compliance boards are themselves paid for by the very institutions whose products they are supposed to regulate.  This is an unacceptable conflict of influence. 

The primary bogeyman of shari’ah compliance products is riba’, usury.  This definition of riba’ varies widely, but us largely taken to be any form of interest, or capital gain “without basis”.  There is a prohibition against any form of debt-based financing or debt instruments.  All this, however, is largely cosmetic.  “Islamic” finance uses semantics and convoluted thinking to come up with the “shari’ah compliant” versions of normal financial instruments or transactions which underperform in comparison. 

In summary, I remain greatly sceptical about any form of faith-based investing.  I do not discount that we should have ethical values as a consideration in where we put our money, but there has to be a stronger basis for common sense and a deeper understanding of finance.  Ethics must grounded in a wider framework of humanitarian values, such as concern about justice, equality, human rights, and environmental protection.  Faith-based investing tends to give little regard to this.  Religion is used as an excuse to actively discriminate and oppress.  Faith-based investing is predatory.

Red Sycamore: Structuring for Focus

There is a certain philosophy behind how we structure companies, and why we silo different projects and operations.  There are times when the same company can be the vehicle for a series of products and services, but more often than not, it is better to start another. 

A company is a vehicle for an idea, nothing more.  It works best when the resources, the team, and the focus, is on one idea.  There are times, where it may be a second idea, which is closely related to the first one.  Beyond this, it becomes impossible to achieve market leadership because there are too many distracting ideas and directions.  As more ideas are added to the company, not only are efforts split among the different teams working on these ideas, but they start to actively impede each other as they have different priorities, directions, and needs.  They compete for resources, and time is one of those resources. 

We have to consider that at the earliest stage, the company needs to seize market share and maintain market leadership.  Resources are tight, especially for startups.  As such, having more than one idea or project is a dilution of scarce resources, and that increases risk.  The problem with risk is that the exposure curve is not linear but quadratic.  Risk multiplies.  As such, it is  better for a company to be focused on one idea, one market niche, at a time. 

At Red Sycamore, the entity is solely meant to be a holding company.  It raises funds for the project, it manages the overall strategic direction for the verticals, and it negotiates directly with major equity partners.  But there are individual verticals for each major project, eleven in all, and each with its own management team.  This ensures that each vertical is its own profit centre, siloing risk, and ensuring that there is focus.  These verticals are not meant to compete with each other because they have different products.  Rather, they complement each other.  Each vertical has its own team purpose built for it.  The concept of parachute management is not efficient.

EV Investment Opportunity Webinar, 20th May 2021

Red Sycamore Pte. Ltd., in collaboration with Ashirel Business Solutions Pte. Ltd., is proud to have presented on an investment opportunity in Southeast Asia with electric vehicles.  The response was very good, and we look forward to following up with interested parties.

Maribel Colmenares Martinez, Chief Executive Officer, Ashirel Business Solutions was the driving force behind the event, and she moderated.  Our Chief Executive Officer for Red Sycamore, Ng Kin Foong presented the deck, and I gave the pitch.  Gerald Yong Kim Heong, our Chief Financial Officer, explained the numbers, and Leonard Melvin Fernando, who is the President of Quantum Age Holdings Corporation (Asia-Pacific), explained the technology.  Also in attendance were the rest of the team: Eric Tan Shi Wei, Margrette Lo Foong Quan, and Zhuo Shu Zhen.