Quora Answer: Why Does Sweden Have a Higher Percentage of Millionaires Than Singapore?

The following is my answer to a Quora question: “Why does Sweden have a higher percentage of millionaires than Singapore?” 

The population of Singapore is around 5.5 million.  Of these, the wealth management industry broadly estimates that there are between 270,000 to 300,000 millionaires.  That means around 5.5% of the people in Singapore are at least millionaires.  That wealth is expected to grow by 62% by 2025.  The population of Sweden is 10.3 million.  Sweden has 570,000 millionaires, which means around 7.3% of the population are at least millionaires.  That number is expected to grow by around 13% to 15%.  These numbers do not tell the whole story.  Sweden’s CPI compared to Singapore means that it is a lot more expensive to live there.  That means a millionaire in Singapore would have his money go further.  This is tied to the nature of government. 

Sweden has been a nation state with contiguous territory for over a thousand years.  It has been a major European power for several hundred of those years.  Modern Sweden was established in 1523, with the crowning of Gustav I, born Gustav Eriksson; and the dissolution of union with Denmark.  In contrast, Singapore gained independence in 1965.  It took six decades for Singapore to catch up in wealth, despite the smaller population, and lack of resources.  This can be seen in the nature of the wealth.  Much of Sweden’s high net worth have their wealth tied to real estate and land.  In contrast, a larger proportion of Singapore’s wealthy, while they do own land, actually gained their wealth through entrepreneurship.  The market fundamentals are different. 

That being said, while the number of wealthy is expected to grow as a percentage of the population, it pales in comparison to Asia in general.  Western Europe is a place of developed economies, meaning the GDP growth has slowed.  Asia is a place of growing economies, meaning that GDP growth is higher.  That means the percentage of wealthy will continue to outstrip that of Europe in the near future.

Quora Answer: Do Financial Planners Play a Role in Helping Clients Prepare Wills?

The following is my answer to a Quora question: “Do financial planners play a role in helping clients prepare wills?” 

The financial consultant does not prepare the will per se.  He advises the client on estate planning, and that goes beyond the will.  This depends on the assets and their ownership structure, since some assets are owned directly, and some are owner through vehicles such as companies and trusts. 

Insurance policies can be nominated.  This bypasses the probate process, and the proceeds go directly to the beneficiaries.  Assets that are jointly owned, such as the bank account and property would revert to the surviving owner.  An exception is when there is a successful creditor claim.  Assets in companies become part of the estate, and are covered under the will.  Assets in testamentary trusts are subject to the terms of the trust document, and distributed to the beneficiaries accordingly, or as amended by the trustees, within their discretionary powers detailed in that trust document.  All other assets are part of the estate. 

The role of the financial consultant is to work with the lawyer, the relationship manager, and perhaps, the tax consultant, to identify gaps in the estate, and what the client wishes to leave to specific beneficiaries, and propose insurance policies or other means to address them.  Depending on where the assets are in the world, there are considerations such as local taxes, currency exposure, political exposure and other forms of risk to be mitigated.

Market Sentiment: Buy or Sell

Market sentiment is not based on analysis or logic, but the emotions of the crowd.  It is essentially meaningless.  It is a beast to be ridden to advantage at times, or a distraction to be avoided.  Investment should be treated as a science, and not a lottery.  There is a clear difference between an investor, and a gambler.

04th Quarter 2021: Market Outlook

The following is my market assessment for the quarter.  I have tried to simplify it as much as possible.  However, market conditions are unprecedented in our era, and there is much to consider when balancing your portfolio.  This report has been pit together based on information provided by our own fund managers. 

The key points of note pertain to the effects of the pandemic on the global economy.  The Delta variant now makes up most of new cases globally.  Since the start of July, the global effective reproduction number has been north of the 1.0 threshold and climbing steadily upward, indicating the spread of COVID-19 is back to exponential growth.  Regardless, current economic recovery remains highly policy driven, especially with Delta infections likely to extend the progress of reopening and the uncertainty around the variant continues to weigh on market sentiment.  At the moment, relative valuation continues to favour equities over bonds and debt instruments, and the gap has widened given lower Treasury yields and improving earnings.  I expect this to ease as the Federal Reserve becomes hawkish on inflation, and raise interest rates.  At the moment, inflation in the US is 4.2%, which is well above their 2% threshold.  In the last quarter, all funds underperformed the benchmark due to the volatile market.  The market rotated from growth to value stocks in that period, and will take time to catch up.  However, since inception, all the funds have outperformed their respective benchmarks due to a higher asset allocation towards equities. 

The Delta variant now makes up most of the new cases globally.  While the spread of COVID-19 is back to exponential growth, both hospitalisation and fatality rates appear to be manageable compared to previous waves, for countries with high vaccination rate.  As such, there is no reason to expect the global economy to return to the tight lockdowns we saw back in March and April 2020.  Governments are incentivised to accept gradual lifting of restrictions even though cases continue to climb. 

Economic recovery remains on track in major economies despite market expectations are adjusting from elevated levels.  The service sector is recovering strongly at a global level thanks to the combined efforts of easing social distancing measures, active policy support, and vaccine rollout globally.  Additionally, with solid manufacturing activity, this should lead to strong economic growth in the remainder of the year, supporting the prospects of risk assets.  Inventories will be restocked when supply-chain disruptions are eased, providing additional tailwind to activity.  China is expected to be an exception among the major economies due to strict lockdown of provinces where there are cases.  The same applies to Hong Kong.  With China’s growth slowdown, its first mover advantage is fading when the cycle matures.  Recent policy actions should alleviate some of the concerns.  Overall, since vaccines are still highly effective in reducing severe COVID-19 illness and fatalities, countries with high vaccination rates should see a clear divergence in economic performance and inflation trajectory compared to those with low vaccination rates.  Vaccinations remain key to the broader reopening process. 

Inflationary concerns have receded over the past couple of months.  Inflation is elevated only in a few countries, and in the case of the US, it is mostly concentrated in goods and services sensitive to COVID-19 and the subsequent reopening of the economy.  In China, producer price inflation has likely peaked on the back of stabilising commodity prices, while consumer prices remain benign.  Therefore, anticipated rapid rise in inflation prints is likely transitory in nature. 

On company fundamentals, Q1 earnings season ended on a high note with over 85% of S&P 500 constituents reported earnings surprise.  The strong momentum looks to be carried on into Q2/  Out of the companies reported earnings so far, the magnitude of surprise is also stellar at near 20% on average.  Additionally, we can reasonably anticipate strong share repurchase activities for this year, with the announced share buyback so far beating the last 3-year average in the US markets.  These factors would provide additional tailwinds to developed market equities going forward under this ample liquidity environment. 

The outlook for Asian equities is less rosy for the moment.  Chinese equities continue to soften on the back of rising uncertainty from the regulatory scrutiny over key sectors.  Additionally, there is a fear of cascading corporate debt default lead by the impending collapse of Evergrande Group.  Although the ongoing structural reforms of capital markets could be positive to the markets in the long run, investors are pricing in a higher risk premium in the near term.  Outside of China, in major ASEAN markets barring Singapore, sentiments are largely weighed by the renewed COVID-19 infections from Delta combined with relatively low vaccination rates in these economies.  Meanwhile, momentum in Taiwanese and Korean equities is receding as the upcycle in electronics and chips manufacturing is gradually priced in. 

The current recovery remains highly policy driven, especially with Delta infections likely to extend the progress of reopening and the uncertainty around the variant continues to weigh on sentiment.  Policymakers will have to keep accommodative policies for some more time.  Managing the transition between ultra-loose economic policies and a sustainable setting continues to be the focus of the markets.  The Federal Reserve continues to maintain its accommodative stance.  Jerome Hayden Powell, 16^th chair of the Federal Reserve, reiterated the view that recent inflationary pressures are likely to prove transitory and acknowledged that the Fed will continue its discussions about tapering in coming meetings with “advance notice” on any tapering decision.  Similarly, the European Central Bank (ECB) remains its dovish stance with no sign of moderation in Pandemic Emergency Purchase Programme (PEPP) purchases and expects interest rates to remain at their present or lower levels until inflation reaching 2% well ahead in their forecast horizon of 2 to 3 years. 

In Asia Pacific, there have been some notable changes to central banks’ stance.  Notably, the Peoples Bank of China (PBoC) surprised the markets with an unexpected cut in reserve requirement ratio (RRR) in July, and future policy guidance is expected to be on the dovish side as the recovery continues.  Apart from the Delta infections and the idiosyncratic risks in Asia and China as briefly mentioned above, I am cognisant of the other risks in the system.  These risks should not derail the overall direction of relative performance between equities and fixed incomes, and within equities, developed markets versus East Asia and emerging markets. 

For this quarter, fixed income allocation has the following focus.  Treasury yields declined recently on the back of reduced inflation compensation.  The eventual path tapering of asset purchases should put a dampener on Treasury performance.  With US investment-grade default rates below historical averages, downside risk remains low.  However, limited upside for US investment-grade credit is expected, given the tight spread range and its higher sensitivity to interest rate movements.  Comparatively, Asian credit remains more attractive as spreads widened while default risks appear to remain stable.  Spillover risks from certain distressed Chinese corporates remain contained. 

Equities to continue to perform reasonably well against bonds.  More specifically global equities should continue their run relative to fixed income, likely driven by developed markets.  Major central banks remain accommodative for the time being, with any tapering discussion appearing to be well communicated with the markets.  In the US, reported earnings and sales continue to surprise on the upside with magnitude trending upward.  Strong buyback activities likely provide additional tailwinds.  Within equities, I am cautiously neutral on Asian equities given the region-specific headwinds including China’s regulatory scrutiny and low vaccination rates in ASEAN countries, except Singapore. 

Concerns surrounding the Delta variant remains our focus as governments are attempting to adapt to the new normal of living with the endemic COVID-19.  Relative valuation continues to favour equities over bonds and credits, and the gap has widened given lower Treasury yields and improving earnings.  Agility on adding or trimming equity in correction or for profit taking is necessary to balance the return potential against risks.  The factors driving recent weakness in Asian equities, could potentially provide a good entry point in the region. 

While our investments are all made with a long-term outlook, our portfolio performance has been delivering positive returns since inception.  There have been mixed results in the short term, but as the market turns, they will balance out, since the emphasis is on the long-term investment horizons.  During the quarter, our funds have continued to remain overweight to equities for the Adventurous, Balanced and Conservative Funds, adding to the outperformance since inception.  The global recovery is stemming from the flood in liquidity through fiscal and monetary policies.  The lifting of lockdown restrictions around the world is still very much on track even after the recent two months of rising Delta infections.  New waves of infections from further coronavirus mutations will only delay the recovery, but not completely derail the reopening narrative.  Global and regional economies cannot afford to remain closed. 

Baillie Gifford’s Iain McCombie, sub-manager of the AIA Global Quality Growth Fund, shared his views on stock picking fundamentals, the macroeconomic environment, and short-term volatility. 

Baillie Gifford has a long-term growth investment thesis for the AIA Global Quality Growth Fund.  What are the advantages of this strategy in the current cycle? 

The environment this year provides strong evidence for why a strategy based on market timing and economic forecasting is fraught with challenges.  At the beginning of this year, “re-opening” stocks came into vogue as the expectations of a strong and sharp economic recovery gathered pace.  As the number of COVID-19 cases has spiked again, the shine has been taken off these re-opening beneficiaries in favour of more defensive names.  It would be fantastic if we could accurately predict the see-sawing of the market between these two poles, but we think that it would be near impossible to do consistently.  Instead, we seek to own a small number of the world’s most exceptional growth companies.  These are structurally advantaged businesses with differentiated cultures and large markets to grow into. 

Ultimately, portfolio positioning is driven by our bottom-up stock picking and is reflective of where we are currently finding the most attractive growth opportunities on a 5-10 year view.  Key portfolio themes that emerge would include: climate and the energy transition, the opportunity in innovative healthcare, and the new wave of technology companies supporting entrepreneurship by offering “scale as a service” – this includes companies like Amazon Web Services, Shopify and Twilio which are helping to level the playing field between the largest and smallest, essentially lowering the barriers to entrepreneurship. 

What are the key risks that might derail your long term growth investment thesis? 

There is a lot of time and effort spent by market commentators on the likely risks created by rising interest rates and inflation.  Higher rates have traditionally been bad for equities, and growth equities in particular, because a larger proportion of their earnings lie further into the future, so a higher discount rate means a lower present value. 

However, within the Global Quality Growth Fund we would highlight a clear preference for companies with strong balance sheets - many holdings have net cash, pricing power and a market leadership position which should, on average, leave them better positioned than rivals in this type of environment.  For example, software businesses that operate subscription models rather than one-time only charges, and companies like Alibaba, Netflix and Amazon have illustrated that their customers stick with them even when they put prices up. 

So, we are pretty relaxed about the potential for a modest uptick in rates and inflation going forward.  The main reason we are unconcerned is that we are much more interested in how the world might look a decade in the future.  We are currently seeing a level of economic disruption that perhaps only presents itself once a century, so if our vision of the world in the 2030s is even close to correct – a world where there is abundant clean energy, where vast amounts of data is thrown off by innumerable connected devices, and where technology and healthcare collide to significantly improve the quality of people’s lives – then a bit of near-term inflation will seem insignificant in the context of the long term gains we can make for clients by looking past seemingly high near term valuations and investing around these structural megatrends. 

What are some of the recent portfolio developments and the rationale behind them? 

Perhaps one of the most exciting themes emerging in the portfolio at the moment is in healthcare.  Some have predicted that the 21^st century will be the century of biology, as our increasing ability to analyse and understand human diseases at the genetic level leads to a transformation in medicine.  This potential exploded into the public consciousness during 2020 with the rapid development of COVID-19 vaccines.  Famously, it took Moderna, which is not held in the Global Quality Growth Fund, just four days to create its version: two days for Illumina, a longstanding holding in the Fund, to sequence the coronavirus genome, then two days for Moderna to apply its technology to the problem. 

We firmly subscribe to the view that we are on the cusp of something quite extraordinary in healthcare and the Fund has been gradually increasing its exposure in this area.  Alongside current holdings Illumina, Staar Surgical and Denali Therapeutics, we have recently taken a new position in 10X Genomics, which develops instruments and consumables for the analysis of single cells, and added to the holding in Exact Sciences, which offers molecular cancer diagnostic tests.  We also own firms looking to improve the efficiency of new drug discovery and development, such as Dassault Systèmes, a software company that helps with the design and development of new products, and Codexis, a protein engineering company that creates custom enzymes. 

Since our clients are mostly Asia based, how does Billie Gifford identify companies with high quality growth potential in the long run given the idiosyncratic differences from this side of the world? 

At Baillie Gifford, we have been investing across the globe since our inception in 1908.  Indeed, our very first investments as a firm were in the rubber plantations of Malaysia, predicated on the growth of the car industry in the US.  The key point being, as investors, we have always retained a global outlook in our approach, married with a willingness to remain open-minded to different business models and consumer preferences emerging from different parts of the world. 

A case in point is China.  Many investors have and continue to view China largely through a Western prism.  How often have we heard the descriptions: “Alibaba is the Amazon of China” and “Meituan is China’s Grubhub”?  The danger with these lazy comparisons is that firstly they ignore the scale differences between the US and China, but they also infer that these are copycat businesses.  The reality, however, is that many of China’s internet businesses are leading rather than lagging on the innovation front.  The deep relationships we have been able to build with companies across Asia over the past few decades has helped immensely in educating us on these rapid developments and cultural differences. 

In addition, the emphasis we place on alternative sources of information in our research process has also been hugely helpful.  Rather than relying on traditional, financial sources of information which are typically short-term and US and Europe centric, we have spent the last couple of decades cultivating alternatives that we believe help us to see the world differently, expand our horizons, and help us generate value for clients.  Within China, as an example, these relationships span industrial and market experts but also experts within academia.  We sponsor the University of Oxford’s China Centre and have developed a relationship with Tsinghua University’s Computational Biology Department.  We are also continuing to grow and develop our own Shanghai investment research office.  Having an on-the-ground presence will help to deepen existing relationships with companies we own, get closer to exciting growth companies of the future, and provide a cultural lens to enhance and challenge existing perspectives.

S$670,000 Loss: A Cautionary Tale

Ashley Wong was a UOB relationship manager.  That designation carries a specific legal meaning in Singapore.  A licensed representative operates within the scope of their principal’s authorisation.  They recommend products their principal has approved, through channels their principal controls, to clients whose suitability they have formally assessed.  Wong did none of this.  He recommended PixelTrade to Mr. Andy Poh in his personal capacity — outside UOB, outside his authorisation, and in direct contravention of MAS guidelines governing licensed representatives.  A financial adviser cannot solicit investments in products unconnected to their principal.  It is a clear regulatory violation, and Wong knew it.  The moment he crossed that boundary, he exposed himself to personal liability and handed MAS a violation on a platter.  That UOB bore no legal responsibility for his conduct was the correct judicial outcome.  Wong was not acting as UOB’s representative.  He was acting as himself — and the consequences were his alone to answer for.

Mr. Poh invested US$500,000 in PixelTrade on the promise of 7% to 8% annual returns from a company lending to “big institutions.”  He signed PixelTrade’s documents — not UOB’s.  He transferred money to PixelTrade — not UOB.  He received no UOB trade confirmation, despite having received one for every prior bond purchase.  He claims he did not read a single document he signed.

Judicial Commissioner Andre Maniam found that Mr. Poh had failed to prove Wong misrepresented PixelTrade as a UOB product, noting that the documentary evidence contradicted his account at every turn.  Mr. Poh’s own wealth planning document, dated 4^th October 2017, stated: “I want to maximise my return. I am comfortable with taking significant levels of fluctuation to the value of my investments, including the possibility of losing more than my initial investments.”  He signed it.  He claimed in court to be risk averse.

His investment history contradicted this further.  Just before investing in PixelTrade, he made four bond investments with UOB — non-risk-free.  After discovering PixelTrade was not UOB-approved, he went on to purchase ten more bonds from UOB — again, none guaranteed. The man who claimed extreme risk-aversion continued purchasing risk instruments without interruption.  His police report against PixelTrade made no mention of Wong deceiving him into believing the investment was UOB-approved.  The judge noted this pointedly: if Wong had genuinely defrauded him, Mr. Poh would surely have told the police exactly that.  The Court of Appeal upheld the High Court ruling entirely.

The first failure was professional.  Wong violated the boundaries of his licence.  A licensed representative exists within a regulated framework because unsupervised personal recommendations carry exactly this risk.  MAS guidelines are the architecture that protects both clients and practitioners.  Wong dismantled that architecture for reasons we can only speculate about.  The consequences for Mr. Poh were catastrophic.  The consequences for Wong’s career were terminal.

The second failure was personal.  An 8% annual return from a single, unlicensed, unverified counterparty is not a conservative investment.  It is a yield that demands explanation of where that return comes from, what risk underwrites it, and why a licensed institution is not offering it.  Mr. Poh asked none of these questions.  He relied on friendship and the promise of yield.  MAS’s Investor Alert List is publicly accessible.  PixelTrade appeared on it one month after Mr. Poh invested S$670,000.  A basic search before transferring funds would have surfaced it.  He did not search.

For investors, the obligations are clear.  Read every document before signing it.  Verify every investment against MAS’s registers and alert lists.  Understand that a yield significantly above market rates reflects risk — not opportunity.  A relationship with a banker is not a guarantee.  It is a professional engagement governed by regulatory requirements, and those requirements exist to protect you — but only if you engage with them honestly.  The investor who signs without reading, chases yield without understanding risk, and then claims ignorance in litigation is not a victim of the financial system.  He is a participant in his own loss.

For practitioners, the lesson is simpler.  Your licence defines your boundaries.  Operating outside those boundaries — regardless of personal relationships, regardless of the investment's apparent merit — exposes your client to unprotected risk and yourself to regulatory and legal consequences.  The regulated framework is the infrastructure that makes professional trust possible.

Wong destroyed that trust.  Mr. Poh compounded the destruction by refusing to exercise the basic diligence that would have prevented it.  S$670,000 plus legal fees for lessons that cost nothing to learn in advance.

This is the article: Man's $670,000 Investment Loss, a Cautionary Tale, dated 12^th September 2021.

SINGAPORE - There are plenty of cautionary tales about mishaps in the financial world, but few come with a price tag of $670,000 plus tens of thousands of dollars in legal fees.  This sorry saga began in 2017, when a bank customer, Mr. Andy Poh, plunged headlong into an investment on the recommendation of a bank relationship manager at UOB at the time.

Mr. Poh sunk US$500,000 (S$670,000) into a British investment company to supposedly earn 7 to 8% of annual returns through its business of giving loans to big institutions.  He did not read the documents he signed, but still invested in the company because he had relied on what bank relationship manager, Ashley Wong, supposedly told him - that the company PixelTrade would continue to do well and that Mr. Wong’s own colleagues were also dealing with the firm.

Mr. Poh viewed Mr. Wong as his friend, as he had made substantial bond investments with the bank through his help and guidance.  But about a month after he completed his transfer of funds to PixelTrade, the Monetary Authority of Singapore put the company on its Investor Alert List in January 2018 to caution the public that it was not licensed to do business here.  Mr. Poh tried to recover his money, but when this proved futile, he lodged a police report against PixelTrade in October that year.  Mr. Wong had resigned from UOB by then due to personal reasons.

As it turned out, Mr. Wong had recommended the company to Mr. Poh on his own, without the bank’s knowledge, because PixelTrade products had nothing to do with UOB.  Mr. Poh tried to get back his money from PixelTrade, and Mr. Wong, who knew “the main person” at the company, helped to arrange a meeting.  That attempt also failed, so Mr. Poh asked UOB’s senior management “to find a way” to recover his hard-earned cash.  A UOB team met Mr. Poh to discuss the situation, but no compensation was offered because the investment was not made with the bank; Mr. Poh had dealt with PixelTrade directly and signed its documents.

Mr. Poh’s next step was to file a lawsuit, claiming that Mr. Wong had defrauded him by making various false representations about investing in PixelTrade.  But the suit was directed not at Mr. Wong, but UOB, on the basis that, as it was Mr. Wong’s employer, it was liable for his alleged fraud.  Mr. Poh also claimed that UOB had been negligent in not protecting him against the loss of the money that he had transferred to PixelTrade.  But his case was dismissed by the High Court last year.  Mr. Poh appealed, and the case was heard by two judges of the appellate court recently.  Their decision last month upheld the High Court ruling on the case.

Mr. Poh’s main argument was that he was misled by Mr. Wong into thinking that PixelTrade was a UOB-approved investment, which was why he put in so much money.  When Judicial Commissioner Andre Maniam heard the case in the High Court, he found that Mr. Poh had failed to prove the manager had indeed said that, noting that he was no novice investor.  Just before he bought into PixelTrade, Mr. Poh had made four bond investments with UOB, and he had to sign bank documents.  If PixelTrade were indeed a UOB investment, he would also have signed similar documents.  But in this case, he had signed PixelTrade’s own documents and transferred money to it and not to UOB.

“Indeed, Mr. Poh’s case is contradicted by the documents which he received from UOB and PixelTrade, all of which he claimed he did not read even though he had signed them and returned the signed copies to UOB and PixelTrade,” noted the judge, adding that Mr. Poh was clearly negligent in “blindly” investing hundreds of thousands of dollars.

“Mr. Poh says that if he knew the contents of the documents, he would not have signed them.  The short answer to that is: Mr. Poh should have read the documents, and if he did not agree with the contents, he should not have signed them,” the judge added.  Judicial Commissioner Maniam also noted other evidence that would have alerted Mr. Poh that PixelTrade was not a UOB investment - UOB sent him trade confirmations for his bond purchases, but there was no such confirmation for his PixelTrade investment.

During the trial, Mr. Poh said that he was very “risk-averse” and that he would not have bought into PixelTrade but for the fact that he was misled into thinking UOB was selling it.  But this was contradicted by his own investment record with UOB because he had signed documents on “understanding your investment decision”, and such documents stated that even the bonds that he bought were not risk-free.  For instance, his wealth planning document, dated 04^th October 2017, stated: “I want to maximise my return.  I am comfortable with taking significant levels of fluctuation to the value of my investments, including the possibility of losing more than my initial investments.”  Mr. Poh said that he just signed documents whenever they were given to him without reading them, even though they warned customers not to sign if they did not understand the contents.

The judge also looked at Mr. Poh’s police report against PixelTrade.  The report focused on the company and made no mention that Mr. Wong had deceived Mr. Poh into thinking his investment in PixelTrade was “UOB-approved or UOB-guaranteed”.  “If Mr. Wong had defrauded him, Mr. Poh would surely have told the police that,” noted the judge, who concluded that Mr. Poh had known all along that PixelTrade had nothing to do with UOB.  Judicial Commissioner Maniam said that as a frequent investor, Mr. Poh should have known that even bonds issued by banks or financial institutions were not risk-free.  “Indeed, Mr. Poh went on to purchase 10 more bonds from UOB, after he had been informed that his PixelTrade investment was not a UOB-approved investment product,” he noted.  “Those 10 bonds, like the first four he invested in, were neither risk-free nor guaranteed by UOB, but that did not deter him.”

Mr. Poh’s claim that the bank was negligent in transferring his money to PixelTrade was dismissed as well, with the judge saying that the transfers were according to his instructions to UOB.  The bank had no duty to ensure that Mr. Poh did not lose money by investing in PixelTrade, simply because bank transfers were common transactions for many purposes.  “To take a simple example, if a customer remits money to buy gold, a bank is under no duty to check whether that is a good purchase or investment, let alone to reimburse the customer for any losses if the price of gold falls,” Judicial Commissioner Maniam ruled.

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Terence Nunis | Executive Chairman, Equinox Zenith | Author, The 1% Playbook: The Billionaire Cheat Code

The Origin of “Mayday”

“Mayday” is an emergency procedure word used internationally as a distress signal in voice-procedure radio communications.  It is used to signal a life-threatening emergency, primarily by aviators and mariners.  In some countries, firefighters, police forces, and transport organisations also use the term.  Convention requires the word be repeated three times in a row during the initial emergency declaration: “Mayday, mayday, mayday”.  This is to prevent it being mistaken for some similar-sounding phrase under noisy conditions, and to distinguish an actual mayday call from a message about a mayday call. 

It is a French word, meaning, “help me”.  In English, we spell it the way it sounds, but the French spelling is “m’aider” but it is pronounced the same. 

The mayday procedure word was conceived, by Frederick Stanley Mockford, as a distress call in the early 1920s.  He was the officer-in-charge of radio, at Croydon Airport, England.  He had been asked to think of a word that would indicate distress and would easily be understood by all pilots and ground staff in an emergency.  Since much of the air traffic at the time was between Croydon and Le Bourget Airport in Paris, he proposed the term “mayday”, the phonetic equivalent of the French “m’aidez”, “help me”, or “m’aider” which is a short form of “venez m’aider”, “come help me”.  The new procedure word was introduced for cross-Channel flights in February 1923.

Swedish “Gift”

In Swedish, “gift” has two meanings: “married” and “poison”.  How appropriate.

Spanish & “S” Words

In Spanish, the “s” sound cannot stand alone at the beginning of a word.  It is always an “s” blend such as “espalda” or “esta”.  This is why Spanish speakers add an “e” to the beginning of words beginning with the letter “s” in English.  For example, they would say “esquid” instead of “squid”.

Results are In or Out

The phrase “Results are out” is used for results of tests and examinations, while “Results are in” is used for election results.

Ordering Latte in Italy

The word “latte”, which English speakers use when referring to coffee with milk, actually means “milk” in Italian.  If you order a “latte” in Italy, they would serve you milk.  If you want coffee with milk in Italy, you should order a cappuccino instead.

Identifying Bad Leaders

Just as it is important to identify good leadership to be nurtured and emulated, it is important to identify bad leadership, and either address it, or avoid these failures.  Leadership is not authority.  Leadership is not titles.  Leadership is a process.  That process is the science of maximising resources and the efforts of subordinates, by providing them with a common vision, and a map to move towards that vision, while creating the foundation for continued success.  This means developing the people we lead. 

One of the key indicators of bad leadership is failure to recognise the good work of others.  This is borne of arrogance and ignorance.  This also happens when people acquire authority beyond their abilities and are unable to understand the work put into projects and making things run.  Another reason is not so much failure to recognise good work, but insecurity that treats good work of subordinates as a threat to his authority.  Leaders like these do not engender loyalty.  Managing people means having an instinctive grasp of psychology of people.  People who receive recognition and praise increase their productivity, they increase their engagement, and are more likely to commit.  This job satisfaction is paid forward in better customer interaction. 

Another quality of bad leadership is disrespect of people.  A bad leader is rude and disrespectful to subordinates.  Examples of this behaviour include shifting blame to subordinates, refusing to take responsibility for the actions of his team, disparaging them to colleagues in their absence, criticising them in front of their peers, and refusing to exercise decision making.  This is a lack of integrity.  People like these cannot be trusted. 

Bad leaders are typically terrible communicators.  They say too much, they say too little, they send the wrong message, or they refuse to provide clear direction.  This is tied to a refusal to take responsibility, low self-esteem, or simply having no discernible direction.  These are leaders of the status quo. 

Coming back to the lack of integrity, leaders such as these cultivate some at the expense of others, and exercise favouritism.  They make questionable decisions, and while they may not be dishonest with regards financial gain or personal benefit, they are not honest with their management.  Such leaders leave behind cliques and infighting.  In such an environment, promotion and advancement is determined less about qualification and accomplishment, and more about relationship with the right people. 

Identifying bad leadership is merely the first step in a process.  Once it has been identified, it must be addressed.  Depending on the nature of the organisation, this process may be complex.  It varies from non-profit to profit, from corporate to command hierarchies, from private sector to public sector.  There is no one way.  Addressing it depends on our position in the hierarchy and relative power in the system.  All that said, forewarned is forearmed.

Facetious Vowels

“Facetious” is the only word in the English language where all the vowels appear in the correct order.

Dutch “Dutch”

In the Dutch language, “Dutch” means German.

The Umbrella: A Lesson in Hesitation, Language, & the Accident of Naming

The joke: The “umbrella” was originally going to be called “brella”, but the inventor hesitated.

The surface level is the pun: the inventor hesitated, the hesitation sound became part of the name, and “umbrella” is therefore the accidental monument to one man’s uncertainty.  The deeper level is that the explanation is linguistically plausible enough to produce genuine cognitive hesitation in the listener before the mechanism is detected.  That moment of authentic uncertainty — in someone who knows language well enough to evaluate the claim — is the joke’s actual achievement.

The Actual Etymology

“Umbrella” entered English in the early seventeenth century, from the Italian “ombrella” — itself a diminutive of “ombra”, meaning shade or shadow.  The root is the Latin “umbra” — shadow — which also gives English “umbrage,” “adumbrate,” and the astronomical term for the darkest region of an eclipse shadow.

“Ombrella” literally means “little shadow.”  The object was named for its primary function: the creation of portable shade.  The English adopted the word, adjusted the orthography, and retained the Italian diminutive suffix “-ella” intact — one of the more elegant borrowings in English’s long career of wholesale vocabulary acquisition from every language it has encountered.

The first recorded English use appears in 1609 in a letter by the poet and cleric John Donne, who referenced “large umbrellas” used in hot climates as sunshades.  Rain protection came later, in a culture where rain was considerably more pressing than sunshine.  The first Englishman documented as carrying an umbrella publicly against rain was Jonas Hanway — merchant, philanthropist, and apparently a man of considerable personal conviction — who did so consistently through the streets of London from approximately 1750 onward.  He endured sustained public mockery.  Sedan chair carriers and coachmen viewed the umbrella as an existential commercial threat and were reportedly his most vocal critics.  Hanway persisted for approximately thirty years regardless.  He did not hesitate.

The Rhetoric of the False Etymology

The joke belongs to a specific rhetorical category: the plausible absurdity.  It works not because it is obviously funny but because it requires the listener to perform a genuine evaluative operation before arriving at the correct conclusion.  The mechanism is what classical rhetoric called “paraprosdokian”, a figure of speech in which the latter part of a sentence or statement surprises the audience in a way that causes them to reframe the earlier part.  The setup establishes a conventional framing.  The punchline disrupts it.  The cognitive work of reframing is experienced as pleasure, which is, in structural terms, what a joke actually is.

But the umbrella joke adds a layer that pure paraprosdokian does not require: it is momentarily believable.  The listener does not immediately identify it as absurd because the claim — that a word’s origin involves a hesitation sound — is not obviously impossible.  Languages incorporate onomatopoeia, accidental phonetic convergence, and mishearing into their vocabulary with considerable regularity.  The claim is evaluated against genuine linguistic knowledge before being rejected.

The Linguistics of Hesitation

The joke’s premise — that a hesitation sound could accidentally name something — is linguistically more interesting than it first appears, because hesitation phenomena are a genuine and extensively studied subject.  The filled pause — the “um,” “er,” or “uh” that speakers insert during processing, is universal across human languages, though the specific sounds vary considerably.  English uses “um” and “uh.”  French uses “euh.”  Japanese uses “eto” and “ano.”  German uses “äh” and “ähm.”  Dutch uses “um” and “eh.”  The universality suggests the phenomenon is not culturally acquired but reflects something structural in the relationship between speech production and cognitive processing.

Dr. Herbert H. Clark of Stanford University, whose research on hesitation phenomena and speech acts is foundational to psycholinguistics, demonstrated that filled pauses are not random noise but functional signals.  They communicate to the listener that the speaker is processing and will continue — distinguishing a productive pause from a completed utterance.  They are, in a technical sense, meaningful rather than meaningless, which is why listeners find prolonged silence more disruptive than filled pauses of equivalent duration.

The “um/uh” distinction has attracted specific scholarly attention.  Research by Professor Martin Corley of the University of Edinburgh found that “um” and “uh” are not interchangeable — “um” tends to precede longer pauses and more significant reformulations, while “uh” precedes shorter pauses and minor corrections.  Speakers use them differently, and listeners interpret them differently, even without conscious awareness of doing so.

This body of research makes the umbrella joke linguistically richer than it appears.  The joke assumes the listener knows “um” as a hesitation marker — which everyone does, consciously or not.  It then proposes that this marker entered a word’s etymology, which the linguistically informed listener knows is implausible but not impossible.  The evaluation of the claim requires genuine linguistic knowledge.  The joke rewards that knowledge by making the evaluative process itself part of the comic experience.

The Etymology of Hesitation

The word “um” as a hesitation sound has its own etymological interest.  It appears in English from at least the seventeenth century as an interjection — the Oxford English Dictionary’s earliest citation dates to 1671.  Its origin is uncertain — it may be a natural vocalisation of the closed-mouth humming sound produced when the vocal tract is active, but no specific phonemes are being formed, which would make it one of the few English words whose etymology is the sound itself rather than a borrowing from another language.

The related “hum” — as in “hum and haw,” meaning to hesitate or be indecisive — shares this phonetic base.  “Hem and haw” is the American variant.  Both idioms preserve the connection between the nasal humming sound of hesitation and the concept of uncertainty or indecision that the umbrella joke exploits.

False Etymology as a Rhetorical Device

The umbrella joke belongs to a broader tradition of false etymologies — folk etymologies — that have shaped both language and culture in ways that are simultaneously fascinating and unreliable.  Folk etymology is the process by which speakers reinterpret an unfamiliar word’s origin in terms that are phonetically similar and semantically plausible.  The word “posh” — British slang for elegant or upper-class — is conventionally said to derive from “Port Out, Starboard Home,” the preferred cabin positions on voyages to India that avoided direct sunlight.  This etymology is almost certainly false — no documentary evidence supports it — but it is so plausible and so frequently repeated that it has effectively displaced the actual unknown origin in popular understanding.

“Golf” is claimed by some to stand for “Gentlemen Only, Ladies Forbidden” — a backronym constructed long after the word’s actual Scottish origin.  “News” is claimed to represent the four cardinal directions — North, East, West, South — despite the word deriving straightforwardly from “new things.”  “Tip” as a gratuity is claimed to stand for “To Insure Promptitude” — another backronym with no historical basis.

These false etymologies persist because they are more satisfying than the truth.  They explain something that previously seemed arbitrary.  They impose a narrative on what was mere historical accident.  They give the word a story.  The umbrella joke operates in this tradition — but with the crucial difference that it is obviously a joke rather than a sincere false etymology.  The comic effect depends on the listener recognising the falseness.  A sincere false etymology persuades.  A comic false etymology reveals itself and invites the listener to enjoy the revelation.

The distinction between these two — the sincere false etymology and the comic one — is the distinction between rhetoric as manipulation and rhetoric as play.  Both exploit the same cognitive mechanism: the human preference for narrative over arbitrariness, for explanation over accident.  The joke makes this preference visible by exploiting it in a context where the exploitation is acknowledged.

The Accident of Naming

The deeper linguistic point embedded in the joke is one that serious etymology confirms: many things are called what they are called for reasons that are arbitrary, accidental, or historical rather than logical.  The salary derives from the Latin “salarium” — related to salt — because Roman soldiers were partly paid in salt or given a salt allowance.  The word “hazard” — now associated with risk and danger — supposedly derives from the Arabic “az-zahr,” meaning dice, because gambling was considered the archetypal risky activity, although that origin is now contested.  “Companion” derives from the Latin “com panis” — “with bread” — because sharing a meal was the original marker of close association.  “Disaster” derives from the Italian “disastro” — bad star — because adverse celestial alignment was considered the cause of catastrophic events.

These etymologies reveal that the words we use to describe the world carry within them the assumptions, beliefs, and material conditions of the cultures that formed them.  A salary is etymologically a salt allowance.  A disaster is etymologically a bad star.  The words are accidental monuments to beliefs and conditions that no longer exist.  The umbrella is, etymologically, a little shadow.  The joke proposes that it is instead a monument to hesitation.  The proposal is false.  But it is false in a way that illuminates something true: that the names of things are arbitrary, that they could have been otherwise, and that the gap between what a word sounds like and what it actually means is a space in which wit can operate with considerable freedom.

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Terence Nunis, DTM | Division Advisor, District 80 Division M | Club Advisor, AIA Toastmasters | Past President & Founder, Awesome Toastmasters