Mommy Makeover for the STI
By TAN Kee Wee
(MediaCorp 938LIVE’s Money Talks, Thursday, 11 October
2007, 7.45 am and 7.20 pm)
If you think fat balding men and ugly women are only
found in the driving seats of expensive sports cars, you are
There is a relationship between financial success and
looking good. A recent study by two economists from Elon
University in North Carolina shows the relationship between
higher salaries and the time spent grooming.
Based on a survey of 13,000 men and women, they found
that, for men, every extra 10 minutes spent grooming increase
their salaries by 6 percent. For women however, if they want to
increase their salaries by 6 percent, they must increase their
grooming time by a factor of four.
We know that, for women, it is not just looking
well-groomed. There is the added pressure to look young and
sexy. Women struggle with the impact of aging and pregnancy on
This has led to the growing popularity of a new
service from plastic surgeons. It’s targeted at mothers and is
called the “mommy makeover”. It involves three steps. They are:
a breast lift, a tummy tuck and a liposuction.
The aim is to pull up slackened skin, reduce stretch
marks and pregnancy fat. In the US, over 325,000 “mommy
makeovers” were performed last year. This is an 11 percent
increase over the previous year.
The desire to remain fresh has not been lost on the
administrators of major stock indices like the Dow Jones
Industrial or the Hang Seng Index. Ever so often, these indices
also go through “mommy makeovers”. Tired stocks are discarded
in an effort to keep the stock index looking sexy.
Last Friday, it was announced that the STI was going
through its own “mommy makeover”. The number of stocks in the
STI will be reduced from 48 to 30.
The new STI stocks were carefully selected according
to standard criteria such as availability, liquidity, growth
potential, and their representation of the evolving Singapore
By including such rapidly-growing companies’ stocks in
the new STI, one of the benefits will be to bias the STI
upwards in the long term. And a rising STI will always give a
good impression of the economy it is based on.
Small investors, who wish to benefit from a rising stock
index, like the STI, can do so by buying the relatively new
class of products called exchange-traded funds, or ETFs.
Typically, an ETF tries to duplicate the main stock market
index, or a sub-section of the stock market, whether it be in
energy, technology, or commodities.
An ETF is created by putting together a basket of
stocks that mirror an existing stock index. This basket is then
divided into ETF stocks, and then traded freely just like any
By buying into an ETF, you automatically spread your
risks as you are buying a bit of everything in the existing
stock index. And without you doing anything, your portfolio
will be given regular makeovers.
Currently, there are about ten ETFs traded in
Singapore. But there’s only one for the STI. More ETFs for the
STI might be created later.
If you take a bullish view of the Singapore economy, and
want to invest in stocks, but don’t really know how to, you
should consider an ETF. With regular “mommy makeovers”, the
value of your investment should be able to defy gravity over
the decades ahead.
Unfortunately, this gravity-defying trick does not
apply to us. When we grow old, certain parts of our bodies will
just not be able to defy gravity anymore.