Fast forward ten years to July 2007, and it looks like "irrational exuberance" is here once again. The prices of properties in Singapore are escalating. Unheard of prices of S$4000 per square feet (psf) have been breached. Prices in prime areas are over S$2000 psf. It means that if you want an appartment of just 1,000 sf, you have to pay S$2 million. This is no small sum, for many.
Reverse back ten over years in 1996, property prices peaked then, and then the crashed in 1998. In the good days, buyers were paying people to queue up to buy a unit. Such queuing could be a few days and nights! Many were making a killing by buying and selling almost immediately. Fine dining restaurants were having a great time, pantering to all these new found wealth. Life was so great then.
Today, the stock market indices are at their all time high, and again another source of revenue. Money seems so easy to come by. The banks pay you an interest of less than 0.3% per annum. It means that if you deposit $100 with the bank; one year later, the bank pays you back $100.30. You gain 30 cents! Wow, will you jump with joy with a 30 cents gain? If you put that same amount into a fixed deposit; it could return you $3.00 after one year with a 3% interest rate. The amount may not look great in absolute term. If you use percentage, it means that you have made ten (10) times more in return for your money!
Now, if you put that same $100 into the equity market, and get a return of 10%; this translates to $10 gain for you. Compared to the bank saving rate, your return in the stock market is 10/0.3 or 33.3 times more! Do you understand why so many in China and elsewhere are rushing into the stock market? They want better return on their hard earn cash.
The emotion was named "irrational exuberance" when one is caught up to think that the gain will be exponential, and it will never stop. It is as if you were given an ATM card that you can withdraw as much money as you like, and never have to return any. Isn't this a wonderful dream?
Will I never have to stop this dream? Can I live in it forever? It is such a great dream, like in 1996, where pay increase will be nothing less than 10% and life will always be like in the garden of Eden, where there is everything one would ever desire.
Perhaps it could be for some. For most, it will be a dream. Read the Straits Times Saturday (June 30, 2007) Special Report on the Asian Financial Crisis: 10 Years On. It is worth the read.
Life will never be a repeat of what had happened before. It will be a variant of the event with different settings and players. Just make sure you are not the one holding onto the last musical chair when everyone has left, with debts and worries that will last you another decade to come. That would indeed be a pity.
Learn from history and practise moderation in desire. After all, life is impermanent. What is most important to you in life? A simple question that surprisingly few have time to spend time to answer it. I hope you do have the time now, or you will still need to answer it, ten (10) years on.
Reverse back ten over years in 1996, property prices peaked then, and then the crashed in 1998. In the good days, buyers were paying people to queue up to buy a unit. Such queuing could be a few days and nights! Many were making a killing by buying and selling almost immediately. Fine dining restaurants were having a great time, pantering to all these new found wealth. Life was so great then.
Today, the stock market indices are at their all time high, and again another source of revenue. Money seems so easy to come by. The banks pay you an interest of less than 0.3% per annum. It means that if you deposit $100 with the bank; one year later, the bank pays you back $100.30. You gain 30 cents! Wow, will you jump with joy with a 30 cents gain? If you put that same amount into a fixed deposit; it could return you $3.00 after one year with a 3% interest rate. The amount may not look great in absolute term. If you use percentage, it means that you have made ten (10) times more in return for your money!
Now, if you put that same $100 into the equity market, and get a return of 10%; this translates to $10 gain for you. Compared to the bank saving rate, your return in the stock market is 10/0.3 or 33.3 times more! Do you understand why so many in China and elsewhere are rushing into the stock market? They want better return on their hard earn cash.
The emotion was named "irrational exuberance" when one is caught up to think that the gain will be exponential, and it will never stop. It is as if you were given an ATM card that you can withdraw as much money as you like, and never have to return any. Isn't this a wonderful dream?
Will I never have to stop this dream? Can I live in it forever? It is such a great dream, like in 1996, where pay increase will be nothing less than 10% and life will always be like in the garden of Eden, where there is everything one would ever desire.
Perhaps it could be for some. For most, it will be a dream. Read the Straits Times Saturday (June 30, 2007) Special Report on the Asian Financial Crisis: 10 Years On. It is worth the read.
Life will never be a repeat of what had happened before. It will be a variant of the event with different settings and players. Just make sure you are not the one holding onto the last musical chair when everyone has left, with debts and worries that will last you another decade to come. That would indeed be a pity.
Learn from history and practise moderation in desire. After all, life is impermanent. What is most important to you in life? A simple question that surprisingly few have time to spend time to answer it. I hope you do have the time now, or you will still need to answer it, ten (10) years on.
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