kotmj

I was paying for my vegan meal just now when I noticed a stack of The Edge weekend edition newspapers next to the counter. I have not bought newspapers in years. Not even when a story about me comes out in one. I bought it. Inside, I find a curious list of what passes for luxury items and how their prices have changed in the past year. Cigars were very inflationary, followed by boarding schools, which went up as much as men's suits.

Brand new Fiesta collection, called the Fiesta IV. Made in Italy to H&S's designs and specifications. Compared to previous Fiestas which focused on solid basics eschewing stripes and checks, this new collection now has...check designs.

To give an idea, if the EPF manages to grow NAV just 5%, that is equivalent to GST collection for the whole of 2017. But if they lose 5%, that's like doubling the GST rate. Except, the GST is mostly redistributed. If EPF loses it, these is no redistribution. It's like lighting 40b on fire. Alas, I think they achieved the latter, not the former. You guys are very welcome to disprove this.

Since I don't really have that much money in EPF, all this is just my curiosity manifesting itself. Not much skin in the game for me. (By choice.) What really matters is not government guarantee or not. What really matters is wealth destruction, or wealth creation. When the EPF builds wealth, due to its collossal size, the country as a whole becomes noticeably wealthier. When the EPF destroys wealth, the country as a whole loses, government guarantee or no government guarantee. When EPF loses money, that loss is "socialized", i.e. spread across everyone by the government. When EPF buys Maybank at RM3 and it goes down to RM2, that is wealth destruction. That lost RM1 has benefited nobody. It just vanished. But if Maybank goes to RM4, EPF would have created wealth. All this is just an intellectual exercise for me. It has been a rewarding inquiry. I've gazed into the psyche of humans: their mediocrity, their stupidity, their haplessness.

Yes, I can see the attraction of the EPF for that part of a personal portfolio that needs to be very low risk. You have guys clawing each other in the face out there for 3%, and here you have a guaranteed 2.5% but more typically 6% of government handouts. I don't agree 0.4% is a low expense ratio. You can buy into index funds in the US for a fraction of that. At least the index funds have historically made a lot of returns just tracking the S&P500. In the case of EPF, they probably lost money historically. You pay them to lose money. Somebody can try disproving this. There is this problem of too big to fail. What you're describing is the problem of too big to sell?! My thoughts: Mutual funds have learnt decades ago how to avoid this. They impose a limit on their shareholdings. For example, they may own no more than 5% of the total outstanding shares of a company. And, no more than 5% of assets under management can be in a single company. This is very, very common!! This policy is there is to exactly avoid the "too big to sell" problem. TH obviously does not have this policy. EPF also probably not, but I didn't check. Why not? What else don't they have? People who have large blocks of shares and wish to divest rarely do it on the open market. It's not possible anyway. They do it off market. Prices are negotiated. NAV vs declared "dividends": If I'm privately wealthy, say dynastic wealth, and I am assembling a home office, I would never let management go the "dividend" route. NAV all the way. The "dividend" route is too easily abused, as we have seen with TH.

Either one of my dogs can invest better. You can pick stocks blindfolded and do substantially better. Can't believe we pay these idiots a salary.

In the same period, the klci lost maybe 3%.

http://www.theedgemarkets.com/article/tabung-hajis-top-20-companies-lost-rm274b-market-value Some of you think I exaggerate the stupidity and complete incompetence of the public funds. I do not. See for yourself. Nearly every one of their top 20 securities lost them money this year. Not a little bit of money. A lot of it. It's pretty much the same at EPF, at least the equities portion.

https://www.thestar.com.my/business/business-news/2018/12/12/th-cutting-exposure-to-stock-market/ Wow. Just wow. The gov bails out TH. TH gives all its manure to the gov. The gov pays it 5% per annum for the pleasure. No changes to the TH Act. Still audited by Jabatan Audit Negara. Oversight by Bank Negara. Those people at BN are themselves clueless. Basically nothing has changed. A decade or two from today, the gov will have to bail it out one more time. Why? Because nothing has changed, and going forward, the fund managers there will still buy the same crap. Incidentally, the same crap EPF buys. Because they don't know it's crap. Because they don't care it's crap. Only the dumbest people work at these public funds. They also don't know how to manage a portfolio. In the very best case scenario, they will grossly underperform the market. In the typical scenario, they lose money. When they have lost enough money, they start having to cover it up. That's when they become criminal.

When the customer for the above was in the shop, there was an overlap with the next appointment. It turns out they both know each other. "Hi, H!" H. then said, "Hey, hi G!" I was wondering if I've saturated the market.

Forward fitting in Escorial

Then it's really as bad as I had suspected. If the dividends are based on realised profits, then basically it is an arbitrary figure. The only reason they do not have a higher dividend declaration would be to avoid having a higher outflow of cash to those eligible to withdraw. The probability it is Ponzi is higher in my mind than ever before. I don't understand why they structured it this way. The EPF can be structured like any open end fund. The figure you watch is not an arbitrary dividend, but net asset value per unit, published daily. With NAV, there is nowhere for management to hide. Their performance as managers of money becomes completely transparent. We then also all know how much money there is in our collective retirement fund. Measuring performance through realised profits while ignoring market value of assets (which the EPF must have been doing) leads to major distortion of management focus. Instead of focussing on growing net asset value per unit, they are organising the fund so that they are able to realise some trading profits no matter what. The sort of conversation we are having about EPF is singular in the whole country. The others are just looking at the stupid dividend. This includes the entire civil service, including the MPs. I mean, you've seen just how retarded Kelana Jaya is, and he's one of the smarter ones. In fact, he's one of the very few who even welcomes questions from the public and gives a video reply. This charade, unfortunately, can go on for a very, very long time. As long as GDP grows and employee+employer contribution rate is not adjusted downwards, this Ponzi scheme may never be exposed.

Year Per Annum (Simpanan Shariah) Per Annum (Simpanan Konvensional) 2017 6.40 6.90 2016 - 5.70 2015 - 6.40 2014 - 6.75 2013 - 6.35 2012 - 6.15 2011 - 6.00 2010 - 5.80 2009 - 5.65 2008 - 4.50 2007 - 5.80 2006 - 5.15 2005 - 5.00 2004 - 4.75 2003 - 4.50 2002 - 4.25 2001 - 5.00 2000 - 6.00 1999 - 6.84 1997 - 1998 - 6.70 1996 - 7.70 1995 - 7.50 1988 - 1994 - 8.00 1983 - 1987 - 8.50 1980 - 1982 - 8.00 1979 - 7.25 1976 - 1978 - 7.00 1974 - 1975 - 6.60 1972 - 1973 - 5.85 1971 - 5.80 1968 - 1970 - 5.75 1965 - 1967 - 5.50 1964 - 5.25 1963 - 5.00 1960 - 1962 - 4.00 1952 - 1959 - 2.50 I always knew we have smarter people on this forum than in parliament. Above, the dividend declarations for EPF. Two things: In 1997 during the Asian financial crisis, the KLCI went down 79%. The only asset class than went up is probably gold. Real estate, equities, sovereign bonds (especially Malaysian) were all junk. Yet, EPF declared a dividend of 6.7%. How is this possible? Am I to believe EPF really made at least that much that year? Then in 2008, the KLCI went down 40%. EPF is "up" 4.5%. How is that possible?

Sometime early 2017, the thought came to my mind that the EPF is operating under a perfect set of conditions to make it a Ponzi scheme, the largest known to humanity. It would make Bernie Madoff's look like a minor case. So when the chief economist of a certain central bank came to the shop, I asked him what indications there are that the EPF is NOT a Ponzi scheme. I no longer recall his reply, but it did not kill my doubt about EPF's integrity. Whenever financial types come to the shop, I ask them this question. I asked it of the Chief Investment Officer of a bank which invests primarily EPF money. He said there is such a thing as an EPF act that regulates what the EPF may and may not do. They are also audited, he says. That was what I was looking for. An act of law they must conform to, and auditors to make sure they really do. Not to mention oversight bodies, etc. However, even Madoff was audited. Auditing does not seem to uncover Ponzis. Actually, nobody knows anymore WTF auditing achieves. Even 1MDB was satisfactorily audited. Of course when the scandal broke they asked us, the public, to ignore their endorsement of the accounts. More recently, I asked a private equity guy that question. I don't remember his reply. I normally forget replies that are not memorable. A reply is not memorable when it doesn't really answer the question and when it isn't a particularly stupid answer. A middle-of-the-road reply. Reasonable, but not very strong. In Feb 2017, I asked Wong Chen this question. I wrote him this email: Hi! I have a question you may want to answer on your Monday night chat. What evidence is there that the EPF is not a Ponzi scheme? I ask because several decades ago as a teen, I read the "annual report" of one of the funds managed by PNB and I thought it was very opaque. In particular, I could not make out what they invested in and how the value of those assets faired. I imagine the same is true for the EPF. Cheers, Jeremy Wong Chen's reply was very memorable because I could not dream of a stupider reply. It was the reply of a mentally retarded person. Here's his video reply to my question: First off, I have to give him an "F" for reading comprehension. I did NOT ask if the EPF is a Ponzi scheme. Who does he think I am---one of his dumb interns? I asked for EVIDENCE that the EPF is not a Ponzi scheme. He went on to answer the question I did not ask by saying he does NOT think it is a Ponzi scheme. Wong Chen, I don't give a fuck what you think. Who do you think I am---one of your dumb interns who hang on your every word? I asked you for what you KNOW, not what you think. You tell me what you know, and I'll do my own thinking. I don't even insist on evidence. Just an indication will do. He then goes on about his respect for Dato Shahril. I don't give a fuck. Then comes the truly retarded portion. He says the EPF can afford the dividends it declares because back in the 70s, 80s and 90s it made successful investments in Malaysian blue chips. Those investments have balooned in value. That's when I knew my EPF money is fucked. This MP is retarded. Malaysian GDP has grown at 4-6% per annum in those decades he mentioned. Every day, EPF receives fresh money it must invest and pay "dividend" on. That cash, which is of such staggering sum today compared to 1980 because of GDP growth, can only be invested today, at today's equity prices. And the "dividend" has to be paid today, on every ringgit of fresh cash received. In other words, investments you made in the 80s and 90s cannot pay the dividends on the fresh cash you have since received. And there is a lot more recent cash in EPF than old cash (because of GDP growth). Moreover, most of what EPF buys isn't equity. It's bonds. Those do not appreciate in value like equities. Wow, Wong Chen, you're such a disappointment. Life must be very confusing for you. All this is now current because of revelations at Tabung Haji. It's a Ponzi scheme. Despite the Tabung Haji Act 1995. Despite being audited by Jabatan Audit Negara, the same body that audits EPF. TH actually has less fertile conditions for Ponzi than EPF.

Would be interested to see him explain his trousers.