Just some updates. I finished my risk management rotation at the end of Dec 2011. However prior to finishing, I moved from the Naphtha desk to the Gasoline desk (early September), where I became the lead. Life wasn't easy but I learned much and had greater responsibilities.
Now, I am currently based in Geneva, Switzerland, doing my final rotation in Corporate Finance. Essentially this is where all the corporate financing for the company is done. I am involved in bond issuance, launching of revolving credit facilities, selling asset backed securities etc. In this role, I also get to monitor all the availability liquidity in the company and the expected Capex of the company.
This role has also given me great insights on the group level business strategy (bulk & non ferrous metals, oil, industrial and asset management) of not only my own company, but also my competitors in similar industries. I also get to meet really senior bankers from various banks as my company has over 100+ banking relationships worldwide.
One interesting thing is that I get to see all the bankers who are in the investment banking division of the various banks! I am essentially their clients as they often come over to pitch their bank in order to secure the deal. And seriously, it is easy to see a bank trying to smoke their way through a pitch!
Halve way though now and 4 more months to the end!
I have an idea in mind with regards to optionality trading. But besides oil, I can't seem to find similar products that work in the same way.
The criteria are as follows
The physical commodity prices off a transparent exchange on a regular basis (i.e the price of the commodity can fluctuate everyday but there should be a fixed/closing price at regular intervals that is recognised by market players)
There is a paper market that follows this price movement
Preferably, this commodity can be stored
Preferably this commodity's absolute value is low (to make financing the purchase easier)
Thanks in advance. You can comment on this post or drop me an email at firstname.lastname@example.org
I must say that it has been a very long time since I actually looked at my own blog and did a post. So today, I will just like to share a few things that I have gathered over the past 10 months or so.
1. Seems like many of my business ideas that I actually penned down in this blog has materialised. a. Coupon dispensing idea has been implemented, though still at the infancy stage b. Nandos is taking off c. Teaching financial education to students is getting more popular now
Only the last idea of a landlord agency has not been implemented/taken off yet.
2. The current market correction seems to be a good time to start picking up long term stocks. Look for high dividen yielding stocks to invest in! I would think that REITs with low gearing would be a good choice once their dividen yield goes up to 8+ %.
3. My Job.
I am currently working in a rotational program in one of the top few private oil trading companies. My rotations will bring me through shipping/cargo operations, risk management and corporate finance. So far, I have completed my operations rotation and am currently in risk management.
Being in a physical oil trading industry is more like doing a business as compared to what speculative trading that banks do. The part that most resembles a financial institution is where we use derivatives like swaps and futures to hedge our physical underlying position.
Just a brief summary of what I have done/learned over the last 10 months.
Operations: I did shipping and cargo operations for the following products: gasoil/jet/fuel oil. This involves getting vessels to bring the products from one country to another, while watching the quantity and quality of every loading and discharge. Quantity ranges ranging up to a million barrels per vessel. I estimated that the value of products that I personally shipped, is worth more than USD 1 billion during my time as an operator.
I would say that this is really a big responsibility, considering how new I am in the industry. But the responsibility also came due to certain shifts on my desk whereby I became the most senior far east operator on my desk after only a few months. Hence I had to quickly pick up the skills and knowledge on blending, terminal operations on top of the regular cargo and shipping operation.
The main take away that I had from this rotation is that everything in the world is flexible. People are the ones who make things happen. Most often, problems are solved by being creative, flexible and having good relationships with people all over the region.
Risk Management: This is currently where I am at the moment, working on Naphtha risk management. Essentially in a physically trading house, we minimize the speculative positions by hedging almost 100% of our cargoes. Knowledge of the different exposures in the book is crucial to knowing where the PnL (profit and loss) is coming from.
Exposures can come about from a variety of reasons. The different hedging instruments that are used, or simply different pricing terms that are used on the buy and sell side. Some exposures are like the Front-to-Back exposure, crack position, east/east position etc. Hence my job is to find out these exposures and see how they affect the book, though some exposures are almost impossible to hedge fully. The ultimate decision on whether to flatten these positions will be determined by the trader.
To end off: Lastly, physical trading talks about optionality in doing a business. This is the fundamental concept on how to make money in trading and can be applied to any products, any where in the world. The basic concept is simple but it is up to the trader to decide on how to leverage on this and make money. Thus, if any of you out there who are running a simple import/export company and would like to see if this optionality ideal can be used in your business, feel free to drop me an email and we can discuss the possible of applying this concept.
Dear readers, the lack of updates recently is because of my commitment at my work place. Though the hours at my trading house are rather long, but I actually enjoy what I am doing now and am learning lots of stuff with regards to physical oil trading.
Also because of work,I have also turned down an offer from Mr Tan Kin Lian's (ex CEO of NTUC income) offer to help set up and teach a financial course, but I feel honoured to have been approached by him too.
In other news, currently I am not really actively trading the markets for 2 main reasons,
1. Work makes it hard for me to monitor the markets as actively as in the past 2. Just by looking at the charts, I feel that the market is going to correct soon. All the RSIs are above 70!!
However, I do check my watchlists daily..which comprises of commodity stocks and REITS.
Finally, I believe that I will be updating this blog much less frequently in the future and I thank everyone for the support over the years.
I was in China for my graduation trip when I saw this particular machine dispensing deals via coupons on food/clothes/products etc. It has taken off in China but somehow no one has brought it into Singapore yet. Personally I find the idea very lucrative as I did a mini business plan with a few friends including asking around for potential investors. However I regret to say that nothing has been done as everyone that I talked too would like to concentrate on their jobs.
Nonetheless, here is the idea that I would like to share and maybe someone will actually do it? All the best to the person!
Sample picture of the machines (from english.sina.com)
Build a machine that dispenses vouchers from merchants in the proximity to passersby, so that they will be enticed to visit these shops.
Charged the merchants for advertising on your machine
Over time, create a profile list of the users of these machines and more revenue can be gained for being able to target specific groups of people
Why I think it will work
At least for people my age group, we tend to meet at a certain MRT station first before actually deciding what to eat. Because some people in a group will definitely be earlier than the rest, he can go take a look at the machine and decide what's having a promotion and propose to the group.
Singaporeans are price conscious
Putting these machines at MRTs is essentially targeting the middle/lower class people who will be more likely to be price conscious
Even if people do not use the vouchers, by having people looking at the machine and the respective merchants on it, advertising is essentially done already
It has been proven that coupons dispensed on these machines have a higher conversion rate as to those given by via pamphlets. (source from the China company)
1 x MRT panel in City hall per month is approx SGD400
15 merchants per machine, each paying SGD500/mth (Presently in China, some merchants pay up to SGD800) = SGD7,500
So as in you can see, even with other costs, the potential returns are huge! If you put it at the major heartland malls where aunties/students are..it should be a hit!
Low barrier of entry. Essentially a big company like JCDecaux can just come in and build a similar machine beside yours and outlast you as they have more capital. Hence I propose teaming up with another big player in order to allow the company to be sustainable in the long term.
Looking for merchants to partner up with will be a problem. But I propose that we can team up with 'The passion card'. Personally I do not think their card is as widely used as expected (I might be wrong), but essentially partnering with them would give a greater backing and also a list of their existing client. This is also good for them, as it will help promote the use of their card. (The china company actually issues membership card that can be used with the machine. Passion card can be promoted via this means too)
Here is the link to an online article too. Click here
Feel free to comment/email me to exchange ideas and views.