The Perak tic-tac-toe

Its all but over for the Pakatan Rakyat government in Perak.

In a series of moves akin to the game of Tic-Tac-Toe, Datuk Seri Najib Abdul Razak has reclaimed the Bota state seat and won support from legislators representing Behrang, Changkat Jering and Jelapang for Barisan Nasional to brazenly offer to form the state government.

The score is tied 28-28 between Pakatan Rakyat and Barisan Nasional with three indepdendents supporting the ruling federal coalition, strengthening the deputy prime minister’s hand as he prepares to succeed Datuk Seri Abdullah Ahmad Badawi this March.

Getting Perak back into the fold will make up for the ruling coalition’s dismal performance in the March 2008 general elections although it will not change anything in the federal Parliament where Barisan Nasional holds a simple majority.

As all eyes turn to Sultan Azlah Shah as he mulls whether to accede to Menteri Besar Datuk Seri Nizar Jamaluddin’s request to dissolve the 59-seat assembly for snap polls and deny Barisan Nasional an easy ride to Ipoh, the implications of today’s events will reverberate wider.

First, it can put to stop any idea of Barisan Nasional assemblymen in Negri Sembilan crossing over like Bota’s Datuk Nasharudin Hashim as Seremban has been awash with rumours of defections resulting from in-fighting in Umno.

Second, it will show Najib’s resolve in keeping Barisan Nasional together as seeks to inspire them against a resurgent opposition led by Datuk Seri Anwar Ibrahim while fending off a souring global economy that is already affecting Malaysia.

Third, it reflect’s Najib’s desire to ensure he will not be the Prime Minister that will lose Putrajaya to the opposition and will take all means necessary to keep the government firmly in Umno’s grip.

Anwar, who 10 days ago crowed about his success in luring Nasharudin, put it bluntly today when he said, “BN is trying to form the state government by hook or by crook - more by crook.”

His allies in the Pakatan Rakyat, DAP and Pas, are still the government pending the sultan’s decision but he has been clearly outfoxed by Najib and Barisan Nasional’s latest moves to unseat the pact by defections.

“We are pushing for dissolution of the state assembly and fresh elections in the state. We must go back to the people and get a fresh mandate,” said Anwar, echoing the wide belief that Pakatan Rakyat can easily win the snap polls with a bigger mandate.

Elections are clearly not on Najib’s mind as he put it succinctly, “Barisan Nasional now has the majority to form the next government. We will seek an audience with the Perak sultan”.

The next few days will see more Tic-Tac-Toe moves as both sides try to shore up their positions to govern the Silver State and by extension, offer a glimpse of their potential to rule Malaysia in a two-party system

As recession ravages their assets, the rich retrench

NEW YORK, Feb 3 — The rich may not be quite so different than you and me these days: They, too, have less money. Their fortunes have fallen along with the prices of stocks, oil and real estate.

Luxury condos on Florida beaches languish; champagne sales are down; private jets sit idle.

Times may be tough for the wealthy, but they're tougher for those who serve and sell to them.

"Business may be a bit off this year," allows Doug Turner, president of Millionaire's Concierge in Fort Lauderdale, which offers everything from VIP concert tickets to US$13,000 (RM46,800) rides in fighter jets for the wealthy. The rich are cutting non-essential items, and that hurts his business. "Everything I sell, you don't need," he says.

Just what defines "wealthy" is subject to debate. The Securities and Exchange Commission defines a high-net-worth person as someone with US$750,000 or more in investible assets. Under US President Obama's tax plan, people earning US$250,000 or more annually are wealthy enough to get a tax increase — and those people are in the top 2 per cent to 5 per cent of all income levels.

By most accounts, the wealthy have done well. Those in the top 10 per cent of income have seen their income rise 34 per cent after inflation since 1979, according to the Federal Reserve, vs 4 per cent for those in the bottom 10 per cent. Their gains have spawned thousands of businesses whose employees pamper, prop up and please the very rich. Those workers are the builders of the vacation condos, the delivery drivers of champagne, the pilots of private jets.

And while the luxury industry isn't anywhere near as big as the market for everyone else, it's still a significant part of the economy (1.2 million luxury cars sold last year alone) — and one that won't recover until the recession is well over.

High-end pain

Make no mistake: The recession is easier to bear if you have a few million in your wallet.

And people with a great deal of money are still going to spend it. For example, the Ritz-Carlton hotel in Washington offered a four-night package that included two tickets to the Inaugural Parade, two tickets to an Inaugural Ball and Gucci luggage. A well-heeled Obama supporter paid US$12,000 a night for it.

Nevertheless, the wealthy are cutting back. Bentley, the British automaker, says sales are down 32 per cent in North America. And a 1947 Matisse cutout at auction at Christie's in December went without a single bid.

"It's conspicuous non-consumption," says David Wyss, chief economist for Standard & Poor's.

And retailers who cater to the wealthy are slashing prices. In tony department stores such as Bergdorf Goodman during Christmas, shoppers could find handbags marked down 40 per cent or more. Big chains such as Saks Fifth Avenue and Bloomingdale's were chopping prices 50 per cent or more.

"It was unbelievable," says Faith Hope Consolo, chairman of the Prudential Douglas Elliman Real Estate's retail sales and leasing division. "Luxury never had sales before Christmas before."

They had little choice. For retailers, inventory is a wasting asset: No one wants winter clothes on the rack in the spring. But many luxury retailers are finding that shoppers are still cutting back.

One strategy retailers are trying, Consolo says: Rolling out lower-price luxury lines that will appeal to the slightly less affluent, thereby increasing their potential market. High-end designer Roberto Cavalli, for example, has launched a line called Roberto Cavalli at H&M, the hip yet far less luxe outlet than, say, Cavalli's line for Saks, where dresses range from US$2,195 for a silk halter gown to US$575 for a diamond-chain-print tee.

Yet, some luxury items hold up well no matter the economic climate, Consolo says: "Anything that makes them feel good or look good." A client who will no longer buy a US$3,000 bag, for example, might splurge instead on a US$30 lipstick.

Luxury-home builders have been hit even harder than luxe retailers. A survey by the National Association of Home Builders found that sales of homes in the US$250,000 to US$1 million price range declined 80 per cent last year from 2007. Sales of homes priced more than US$1 million fell 70 per cent, says Gopal Ahluwalia, vice-president of research for NAHB.

Low-end suffering

High discounts and low sales have meant financial woes for companies — and that means layoffs.

Neiman Marcus, citing a tough sales climate, said this month that it would cut 375 jobs, or 3 per cent of its workforce. Macy's said it would close 11 stores. Gadget purveyor Sharper Image filed for Chapter 11 bankruptcy in 2008. And in Florida, two affiliates of Ginn Cos filed for bankruptcy as two of its high-end housing developments ran into trouble.

Unemployment in luxury retail and the construction industries is soaring. The unemployment rate in the construction industry is 15.3 per cent vs 9.4 per cent in December 2007. For those in the restaurant business, unemployment has shot to 9.8 per cent from 7.8 per cent a year earlier.

Even casinos are feeling the pain. At the Silver Club Hotel & Casino in Sparks, Nevada, 200 workers were laid off in December when banks refused to fund a buyer. The Stations Casinos in Las Vegas said in December that, as a cost-cutting measure, it would stop matching worker 401(k) contributions.

"Layoffs have been significant, and they will be even more significant in the weeks and months ahead," says Bruce Raynor, general president of Unite Here, the union that represents hotel and restaurant workers. "Las Vegas has been hit particularly hard."

Hotel workers in Hawaii and Puerto Rico have been hurt because those areas cater mainly to tourists rather than business travellers, Raynor says.

Then there's the yachting industry. The market for 450-foot ships called gigayachts is relatively unchanged, says Kristen Cavallini-Soothill, director of the American Yacht Institute, a Fort Lauderdale school for stewards and stewardesses. But sales of yachts in the 60- to 110-foot range are suffering, she says. "Even the Russians are slowing down."

Those who are hiring interior crews for yachts are being more discriminating, and those who get jobs are trimming their salary demands, Cavallini-Soothill says. Crewmembers don't demand US$4,000 a month anymore.

"They're going to get paid US$2,500 a month," she says, adding that crewmembers do get free board and meals prepared by a chef.

In Vail, Colorado, the luxury ski resort, lodging occupancy is down over previous years, says Chris Romer, vice-president of sales and marketing for the Vail Valley Partnership. But many of the bookings were made at the last minute, in large part because of special offers: lower prices, extra days, free meals. And, he says, family restaurants are packed at Vail, while average tabs at luxury restaurants have fallen. For the first time, the town of Vail has started its own marketing campaign to lure skiers.

When will the luxury market come back?

It depends, to some extent, on public attitudes towards wealth. At Symbolic Motor Car Co, which sells Bentley, Rolls-Royce, Lamborghini, Lotus and Spyker, business is slow, says general manager Graham Cox. To some extent, that's to be expected in a slow economy. "We're not on the list of everyone's priorities."

But the slowdown may be due, in part, to a recognition that this economic slowdown seems worse than most. After all, the wealthy can still afford fancy cars. But going luxe may be seen as déclassé in an ailing economy, Graham says.

"The wealthy still have the wealth," he says. "It's the image you project in a bad economy of driving a nice car when your friends or colleagues may be losing their businesses." — USA Today

Stocks: Stuck in the Twilight Zone

In a market where hopes for a government-led recovery are countered by fears of worsening earnings and economic data, what could finally free stocks to soar—or tumble further?
It's not as if the market is acting calm or boring. Stocks, and especially particular stocks and sectors, can bounce wildly from day to day. But the bouncing hasn't really gotten equities anywhere. Standard & Poor's equity strategist Alec Young noted Jan. 29 that stocks are "boxed into a near-term trading range." Despite several attempts, the broad S&P 500 index can't seem to dip below 740 to 800, while it can't rise above 940 to 1,045.

A deteriorating economy and terrible corporate earnings have stopped any major rallies in their tracks. But hopes for a new Presidential Administration and for an economic recovery in the second half of 2009 have kept stocks from sinking lower.

Rates at Near Zero
So far, the federal government has provided investors with some downside protection. "Anytime there is a move from Washington, the market moves up," says Quincy Krosby, chief investment strategist at the Hartford (HIG). "Then, the gains quickly evaporate."

The Federal Reserve has slashed interest rates to near zero and the Fed's monetary committee said Jan. 28 it may buy long-term U.S. Treasuries to help heal credit markets. The U.S. Congress continues to weigh a large economic stimulus package, with the House of Representatives approving its $825 billion version of the plan Jan. 28. The Obama Administration, meanwhile, is reportedly studying the idea of a new Federal Deposit Insurance Corp.-managed "bad bank" that would buy up toxic assets from financial institutions.

Demonstrating the hopes many market participants put in the government, PIMCO bond fund manager Bill Gross offered his own prescription in his monthly note on the firm's Web site, published Jan. 29. He said the government needs to find ways to support the prices of assets like municipal bonds or commercial mortgage-backed securities.

The Wisdom of Bill Gross
At a time like this, "the benevolent hand of government is required and Keynes is reincarnated in an attempt to plug the dike via fiscal spending and imaginative monetary policies that support asset prices," Gross writes in his February outlook.

But while government help can spark optimism in the market, those gains can fade quickly. The problem is that many of the government's most important plans are still being developed. The measures that have already been implemented—such as low interest rates or last year's financial bailout—haven't yet stabilized the economy or financial system. "We need to see it happen," says Uri Landesman, head of global growth at ING Investment Management (ING). "It's one thing to debate a bill in Washington and another to see it put in action."

Moreover, many of the measures being debated are unprecedented. No one knows if they will work. "There's no proof in the pudding," says Richard Sparks of Schaeffer's Investment Research. Without knowing if these measures will be successful, investors are stuck merely hoping for a recovery.

Global Google Breakdown

Google users around the world have been hit by a malfunction that incorrectly reports every other website as potentially harmful.

An apparent system error left millions of visitors to the site puzzled when links to all search results were flagged with the warning 'This site may harm your computer'.

It is thought the site had erroneously identified all other websites - and some of its own pages - as containing malicious software or 'malware'.

The glitch, which prevented internet users from directly clicking through to search results, was fixed within 30 minutes although users of Google's email service Gmail have since reported finding genuine messages sent mistakenly to spam folders.

The errors prompted panic among web surfers who at first feared the popular search engine had suffered some kind of major failure that could have had serious implications for internet commerce.

The Google search page is by far the most popular on the internet, with the overall site receiving several hundred million queries each day. It is the most common homepage and accounts for almost four out of every five internet searches, making it a crucial part of the global economy.

Google automatically identifies sites that may carry viruses and harmful software as part of its searches, but on Saturday all sites that were searched for carried the warning.

It suggests that either every server on the internet had become infected with a virus, an unlikely scenario, or the Google security system had suffered a breakdown.

Users trying to access search results during the outage were forced to cut and past the links into the toolbar and visit the sites manually.

Surfers who tried to find out about the error were unable to access Google's own blog as it has also been incorrectly identified as a harmful link.

A Google spokesman said: "There was a fault. We don't know the nature of it yet. Everything has been solved. We are still making initial enquiries."

Users of the social network tool Twitter who discussed the error reported their internet searches had returned to normal but that problems with Gmail remain. One Twitterer, BradBrownDotCom, joked: "The Google outage frightened me like a schoolgirl, until I remembered an old technology called 'Yahoo'."

Google is so popular worldwide, earning £3bn in income during 2008, that it has been claimed 750 megawatt-hours of electricity could be saved every year if the home page was changed from white to black.

Its headquarters in Mountain View, California, is referred to as the 'Googleplex'

The Story of Anne Scheiber

In his book The 21 Irrefutable Laws of Leadership, John Maxwell says that becoming a leader is a lot like investing successfully in the stock market. If you hope to make a fortune in a day, you won’t be successful. What matters most is what you do day by day over the long haul. This, he terms as The Law of Process.

Maxwell recounts the story of Anne Scheiber, an elderly and thrifty lady who lived in New York and worked for the Inland Revenue Service. When Scheiber retired at age fifty-one, she was only making $3,150 a year. She was treated poorly by her employer and was never promoted. Yet when Anne Scheiber died in 1995 at the age of 101, it was discovered that she left an estate to Yeshiva University worth US$22 million!

How did a public service worker with minimal salary accumulate such a staggering wealth? Here’s Maxwell’s take on it:

“By the time she retired from the IRS in 1943, Anne Scheiber had managed to save $5,000. She invested that money in stocks. By 1950 she had made enough profit to buy 1,000 shares of Schering-Plough Corporation stock, then valued at $10,000. And she held on to that stock, letting its value build. Today those original shares have split enough times to produce 128,000 shares, worth $7.5 million.

The secret to Scheiber’s success was that she spent most of her life building her worth… When she earned dividends – which kept getting larger and larger – she reinvested them. She spent her whole lifetime building…. When it came to finances, Scheiber understood and applied the Law of Process.”

The above story of Anne Scheiber was actually used by leadership guru Maxwell to illustrate an important leadership principle. But it can be equally applied to investing. I’m not sure if Maxwell got the facts right, but we can certainly learn a couple of important principles here:

1. Time in the Market
It is now how you start that is important. It is what you do day to day, and how you finish that counts. Sure it’s nice to time the market correctly but if you’re looking to make some serious bucks, time in the market counts.

Patience and consistency is everything!

2. Focused Investing
Most of Scheiber’s wealth was in a handful of stocks, the largest one being Schering-Plough. Like Warren Buffett, Scheiber is a Focused Investor. A Focused Investor puts meaningful amounts of money in a few things. Scheiber liked companies which are leading brands in their market.

Most of us will not have the experience of picking one company which will ride on a tsunami wave. If you had bought a piece of Microsoft or Berkshire Hathaway when they started business, you would have the same ecstasy… but how many companies are like that? What are your chances of picking such companies? Nevertheless it is not impossible… imagine if you had bought and held on to Public Bank since inception. Now isn’t it worth a little time and effort to research and identify the next Public Bank?

3. Compound Growth
Whether the stock went up or down, she never thought, I’m finished building; now it’s time to cash out. She was in for the long haul, the really long haul. We are told that Anne Scheiber reinvested all of her dividends. She didn’t say lets take out some money and buy the latest LV handbag. In fact Anne Scheiber was frugal to the point of being miserable. She lived in a rent-controlled apartment, wore the same clothes year in year out, didn’t own a car and even went to shareholder meetings so she could take home bags of food.

Don’t get me wrong… I’m not saying you shouldn’t reward yourself once in a while. In fact I would say there is a thin line between extreme thrift and greed. If you are blessed with so much money, spend some of it, give it away or whatever. Not only will you bless others, you release yourself from the trappings of greed

“Keep your lives free from the love of money”
Hebrews 13:5 (NIV)

The important lesson here is to realize the power of regular investment and compound returns. When you invest in good things and you invest regularly, your wealth will eventually multiply.

Remember attending one of those Unit Trust presentation and the Agent puts up that Regular Investment & Compound Return chart? Then everyone’s jaw would drop because your RM100/month savings can turn into a six figure sum when you retire? Start early, invest and have the discipline to keep re-investing…

Anne Scheiber loved stocks for her whole life and it is likely that she started investing much earlier than 1943 (the time she retired). Although she met with limited success initially, she came out tops in the end.

4. Hard Work
Anne Scheiber worked on her investments. She studied the companies she invested in, attended shareholder meetings and asked many questions to satisfy her curiousity and passion. Hard work with laser-like focus usually pays off.

“Successful leaders are learners. And the learning process is ongoing, a result of self-discipline and perseverance. The goal each day must be to get a little better, to build on the previous day’s progress.”
John C. Maxwell

50,000 civil servants involved in get-rich-quick schemes

KUALA LUMPUR: More than 50,000 government employees are believed to be actively involved in promoting dubious “get-rich-quick” schemes.

Worse, many senior officers and heads of department were encouraging their subordinates to participate in such schemes, which promised quick and multiple returns for a small investment, said Cuepacs secretary-general Ahmad Shah Mohd Zin.

He said that Cuepacs was very concerned with the development as it eroded the people’s confidence in the civil service.

He said that the problem was so serious that the Public Services Department (PSD) had issued a special circular banning civil servants from joining such schemes.

Circular 2/2009, signed by PSD director-general Tan Sri Ismail Adam, took effect on Jan 13 and bans all categories of civil servants from promoting, participating or investing in such schemes.

The circular, which also covered those in statutory bodies, local authorities and state government authorities, also instructed those involved in such schemes to cease their activities immediately or face disciplinary action.

It said that the participation by a large number of civil servants in such schemes could mislead the public into thinking that the schemes were approved by the Government.

The circular described get-rich-quick schemes as a marketing method which promised high returns with a small investment while the organisations that promoted such schemes were not registered with any licensing authority.

The Federation of Malaysian Consumers Associations (Fomca) fully supported the Government’s move to ban civil servants from these activities.

Its secretary-general, Muhammad Shaani Abdullah, said the schemes were not only promoted by Malaysians but also foreigners through the Internet.

The schemes were usually based on the multilevel marketing model where early entrants gained more than those who join later.

Muhammad Shaani described the schemes as a “victimisation of the majority by the minority early birds.”

He said these schemes thrived on greed and eroded the true business value of honesty and fair play.

Ahmad Shah said that although the Government had given permission to some civil servants to engage in business on a part time basis, it did not mean that they should get involved in dubious activities. -- Bernama

Malaysia plans to allow 3-day week to avoid layoffs

KUALA LUMPUR, Jan 29 - Malaysia's government is to allow companies and factories to move to a three day week in order to preserve employment at a time of falling demand for its exports and plant closures by major foreign companies.

Malaysia exports are equivalent to its gross domestic product and the exports fell for the second successive month in November, with the electrical sector that accounts for around 40 percent of the total especially hard hit.

Japanese electronics giant Panasonic Corp <6752.T> is to close two of its three Malaysian plants, according to press reports this week.

U.S. company Western Digital Corp is to close a plant employing 1,500 workers here while Intel Corp is to close two of its assembly plants, according to local press reports.

"It is the duty of the department to ensure that workers were adequately protected and at the same time, companies did not lose out," Labour director-general Ismail Abdul Rahim told state news agency Bernama on Thursday.

Ismail, outlining the plan for the three-day week, said that workers would have to agree to the shorter working week.

Malaysia's government is scrambling to put together a second fiscal package to boost the economy after an earlier round of spending worth almost $2 billion came under fire for being too little and too late.

The government is sticking to forecasts that the economy will grow 3.5 percent this year, despite the gloomy outlook for exports that has hit Asia hard amid the global economic slowdown that started with the U.S. mortgage crisis.

Most private sector economists believe that Malaysia will slide into its first recession since 2001.

A Malaysian government official said recently that almost 45,000 workers, mostly in electronics, would be laid off as a result of the slowdown in global demand.

Malaysia's unemployment rate was 3.3 percent, according to the latest data.