Wednesday, February 18, 2009

Time to cut our losses

With new revelations that the Government of Singapore Investment Corp (GIC) suffered a loss of about 50 billion Singapore dollars last year, you have to wonder how much worse things are going to be in the future.

Between Temasek and GIC, Singapore’s two sovereign wealth funds has losses of about $100 billion last year. The thing I worried about is that unlike most other entities (the Koreans, the Arabs) who had also invested in financial companies like UBS, Merrill and Citigroup, neither Temasek or GIC has cut their losses.

Now I am all in favour of long term investments, but the signs are that we will only be able to recoup our losses in about 15-20 years at best. That's if everything go well. With no sign of a turn-around, the stock market tanking again, and with President Barack Obama's Treasury Secretary Tim Geithner, floating the possibility of nationalizing several major banks in the US, it might be better to bite the bullet and cut our losses now.

The fact that these investments were mistakes is something that no one will argue with now, so let's our losses now before things get worse.

No comments: