Temasek Portfolio falls 31%

What a nice headline, just days after Ho Ching stepped down as CEO. I supposed all Singaporeans with fully functional brains would be clever enough to know the reason why, despite the government insisting it has nothing to do with the poor performance of the portfolio. For the uninformed, major stock market indices are not exactly a good benchmark to compare the portfolio against with. We have to look at the component and structure of the portfolio before a good benchmark can be established. Jumping into comparing with major market indices is simply a no-brainer simplistic lazy manner of comparison.

Almost anyone can achieve a relatively 'beat-the-market-major-stock-indices' portfolio as long as it is relatively diversified especially in today's economic climate where bad news land upon bad news. Probably I am wrong to say that, and itself a naive, unsupported suggestion, but a decline is a decline. By stating:

Mrs Lim also reiterated that the two companies are long-term investors, and should be evaluated as such.

'This is not the first major decline in markets that they have seen, and will certainly not be their last,' she said.

So what are they trying to say? When portfolio performs well it's the 'extraordinary' efforts of the Temasek/ GIC management. But when the portfolio performs badly, it's the global market's fault. It's normal. It's acceptable. And it's nothing much to throw a few billions away as long as you take in long term views. If you look at stock history, it has always been a rising trend especially when you take a much longer view, simply because technology advancement has to improve the economy as a whole. A simple economic model Cobb-Douglas Model Y = AF(K, L) would show that technology becames the main economic growth driver as capital and labor reaches it's limits (Solow Growth model). In other words, given that explanation, no matter what happens, the people at Temasek/ GIC will never be held responsible for any poor performance and will always enjoy credit for 'strong performance' even when the entire market is performing well.

This brings me to the topic of finance obsession among today's Singaporeans who view the finance industry as an ultra cool and rewarding (monetarily speaking) job. I myself used to be one of the cash-cow-chasers but has since grown to be disgusted at the kind of personality and character of students who view themselves as future bankers-and-I-am-gonna-earn-millions.

The local newspapers are all fired up again with the recent release of Financial Times MBA rankings for 2009. NUS and NTU were filled with joy as they made quantum leaps in their rankings. While NUS boost their 35^th spot, they stare in envy as NTU boosted a seemingly impressive 24^th spot, while knowing behind their back an upcoming SMU is ready to roar as well (since only MBA with 5 years history can qualify).

But then, it’s all just marketing. Simply leverage tools that both universities would deploy to entice the naive students to register for the universities in 2009. How powerful is marketing? They would use a MBA ranking to boost that the undergraduate programmes would be superior as well. After all, if the Masters programmes are good, needless to say, so would be the undergraduate programmes. Right? Well…maybe not entirely true.

Such rankings are subjective. And it’s kind of pathetic that our local universities need to derive joy and happiness from an external foreign source. Wharton was labeled number one 8 times for the past 10 years and no where on the website would they even bother to boost the rankings. Reason? Because they know they’re good, and they know they have strong alumni and they are world renowned. Harvard Business School isn’t bothered if they are number 1 or 2 or 3. The business cases they produced each year are humongous, and it was used all around the world, even in ‘Number 1’ Wharton. Why can I say that? Coz I am now at UPenn and I study them almost every day.

Make no mistake, I love my university and I think I have benefited quite a lot from studying there with so many opportunities abound. But I think we Singaporeans ought to have more confidence. We seem to be all caught up in rankings and deriving satisfaction from praises from others. Primary and Secondary Schools market their schools by wasting money on banners and posters boosting individual results (in some minute areas such as ‘Overall Most Improved Award’ or ‘5 7-As students produced in 200X’….omg, what is the world coming to). Does it really make a difference to the education standards the students are getting? It just contributes to an elitist-mization of schools. After being top for so many donkey years, the new elites came up with Integrated-Programme. While it doesn’t sound any elitist, we all know it’s the usual suspects that have this programme.

Singapore has too small a population to get really selective in the quality of their students and I would boldly say the quality of students across the 3 local universities is very similar with probably marginal differences in more competitive courses such as Medicine. Of course, there are outliers every where. Even in UPenn, not all are as impressive as they may seem to be. After all, it’s an Ivy League right? Singapore students ain’t too bad as well.

What makes a school good? The alumni they produced and the influence that comes with it. With so many alumni controlling the business world, politics, social programmes, charity etc, it’s no wonder the Ivy Leagues and Oxbridge (and many others as well such as LBS, Insead, MIT, Stanford) had such strong influence and reputation. However, one can also argue that it takes time for the universities to do so. After all, not even Stanford Business School becomes famous overnight, and Silicon Valley contributes to its rise as well. But I do think the marketing and competition especially among biz schools in Singapore is kinda irritating, pardon my language, creating a false elitist ‘phenomena’ among the business school students. I got pissed off when some biz students start to display an air of superiority in front of me. Don’t you?