Dear Hilary,
Last weekend I was in Pattaya and read the letter from
"Big ATM". I think the advice you gave him was wrong. So I hope you will allow
an ‘old Thailand hand’ to give my advice, based on over 20 years’
experience living in Thailand. During that time, I have been married to 2 Thai women, as
well as spending some of that time free to ‘shop around’.
My advice is this: Get rid of the girl, Big ATM! She is taking you for a
ride. Your feelings for her are not reciprocated. And I bet you met her in a bar, right?
I got the impression from your letter that you have only recently arrived
in Thailand and still don’t know your way around. You were probably married back
‘home’, and feel that you would like to settle down with a Thai woman in married
bliss. But when a girl starts calling you Big ATM, the warning bells should go off.
It’s time to get out of the relationship and find someone who shares genuine feelings
for you. This may sound like painful advice, but if you don’t get out now you risk
being hurt much more when you finally realize this girl is just using you and has never
cared for you.
Once you get rid of her, you will find plenty of eager young women who
would find a man as generous and kind hearted as you a good catch. But there are a few
things to keep in mind:
1. Before making any commitment, make sure you know her background
thoroughly. Go to her home town and meet her family. If you have any doubts about her
sincerity or intentions, hire a private investigator to find out as much as possible. It
is common for a girl to be married to a Thai man in her home town while she works in
Pattaya. If she goes home frequently "to see her family", make sure she
doesn’t mean to see her husband and kids.
2. Never give up control of your money by setting up a joint bank account
or handing over large sums. If she suggests this, she is surely after your money and will
probably clean out the account one day while you are away. It’s your money, you
earned it, so why give up control of it to someone you hardly know?
3. Never buy a house in her name. Although you can’t legally own land
yourself, your company can. If you are retired, you might like to consider opening a
company and doing a small business. Once you have a company, you can buy a house in the
company’s name.
4. Avoid making your wife/girlfriend your business partner. Should the
relationship go sour, you will have a lot of trouble getting her out of the company, and
may even end up losing it to her. Unless you are a US citizen and can open a company under
the special treaty conditions between the US and Thailand where you can own it 100%, you
should ask your lawyer to appoint 7 Thai partners and then get them to sign their proxies
over to you, so that you control the company.
5. There are 2 types of women in Thailand. Those that work in bars, and
all the other women. There are a lot more of the ‘other women’ than there are
bar girls. All you have to do is go out and meet them. Have fun with the bar girls, but
don’t take them seriously. The old saying that "You can take the girl out of the
bar, but you can’t take the bar out of the girl" is really true. I have seen far
too many farangs bled dry by the little gold diggers, and then dumped or worse when the
money is gone. One guy I know of finished up locked in his apartment with no passport or
money. His wife took everything except his clothes, carried off their daughter, and locked
the door on her way out. He finished up in Immigration jail for 3 months for overstaying
his visa. When he finally got back to his home country, the next day he was committed to
an asylum. There are plenty more horror stories like this. I hope you don’t end up
starring in one of them.
6. If you are lucky enough to meet a woman who is not on the game, take it
slowly, get to know her. Good Thai women don’t consider sex a part of the courtship
ritual, unless they know you well and are very sure you will marry them.
I hope this advice helps. Good luck!
Cheers!
Marc Holt
Dear Marc,
Thank you for your alternate view of the "Big ATM’s"
situation. Your suggestions are all valid from the view point of protecting oneself from a
possible exploiter.
But as someone who has lived in Thailand for more than 40 years and is
native in the language, your viewpoint is much different than mine.
All the ‘private investigator’ techniques you suggest are
unnecessary if the Thai (male or female) is from the same social and economic class as the
foreigner. I mentioned before that ATM was violating ‘social rules’. In their
own countries, most foreigners usually have relationships with people from similar
backgrounds. (Class difference is a part of life whether we like it or not, and it would
be considered odd for anyone to marry a prostitute.)
Of course, it is not easy to meet the upper middle class in Thailand.
Foreigners who work for large multi-national companies, university lecturers and people in
similar professions have much more opportunity.
Your advice is totally correct if a man wishes to marry a woman he does
not trust, although I find it incomprehensible that someone could be happy in a
relationship in which they constantly have to ‘watch their back.’
I agree with No. 6 in your list of suggestions.
Best Regards,
Hillary
Presented by Bangkok-Pattaya Hospital
by Dr. Iain Corness
There is a misconception that you can only get Rabies from
rabid, frothing dogs. Unfortunately you can also get this nasty disease from a veritable
menagerie of animals such as bats, cattle, sheep, horses, pigs, goats, skunks, raccoons,
and mongooses (mongeese?). You can also get it from other humans - so don’t go out
and get bitten by anyone or anything!
While Rabies is potentially fatal, there is treatment available, as well
as pre-exposure vaccination. According to the World Health Organization, the only Rabies
free countries are Australia, New Zealand, Papua New Guinea, Japan, Singapore, U.K.,
Ireland, Sweden, Norway, Finland, Iceland and some Caribbean Islands. Note that Thailand
does not appear on that list!
Thailand, however, appears on the list of countries where there are many
post exposure treatments given every year. In our case that is around 150,000 cases!
Rabies is a real risk, and anyone who walks up to pat or stroke stray feral animals is
literally taking unnecessary risks.
The answer for anyone who is potentially at risk (backpackers, hikers,
bushwalkers, etc.) is to have pre-exposure vaccination. This immunization will protect the
adventurous traveller for two years and is certainly the best form of insurance you can
get.
The actual immunization procedure can be tricky, in that medication for
malaria prophylaxis can impair the vaccine when taken intradermally. However, deep
intramuscular vaccination is untroubled by the anti-malarial drugs. The course is three
injections over the period of one month on days 1, 8 and 29.
So what happens if you get bitten and you haven’t had the
pre-exposure vaccine? Firstly, do the normal hygiene practices to clean the wound and then
hightail it off to the closest doctor. The next step is administration of Rabies
Immunoglobulin, with half of it being infiltrated directly into the wound and the rest
gently, but firmly into your waiting bottom! In addition, you should receive the
Immunization injections on days 1, 8, 15 and 29 as well.
The obvious message here is "Immunize". It is not worth the
anxiety to be without it.
By Leslie Wright
Ask four market analysts which way the world economy is
going to go, and you’ll get at least four different opinions at the moment.
Conditions are certainly unclear as far as some of the major markets are
concerned, and some commentators are saying that if one or two of the lesser markets drop
- Brazil, for example - this will confirm their opinion that the world is headed for a
recession.
On the other hand, the majority of analysts seem to think this will not
happen, and that once lowered interest rates in the major economies have re-stimulated the
markets, these will recover ground lost during the past couple of months.
What many analysts are hoping is that the past year has seen a huge bear
market in emerging markets, followed by a correction in the major markets, and that things
will soon sort themselves out and return to the pattern everyone’s been used to over
the past twenty years. Me too.
The Russian turmoil has certainly affected Western banks and created
something of a liquidity crisis. This was exacerbated by the recent crash of John
Meriwether’s hugely leveraged Long Term Capital Management fund - a misnomer if ever
there was one! - which has required a massive capital bail-out in the U.S. to prevent a
knock-on effect to the banks which had lent astronomical amounts of money to support this
fund’s trading activities.
Most readers will have heard or read about this particular crisis, but few
really understand how hedge funds work or how one such fund could potentially cause a
massive banking crisis in the U.S. It is therefore worth looking into this case example in
a little more detail.
Exercising options
In general, hedge funds operate by betting against the market sectors in
which they’re operating. In their simplest form, this is done by trading in options.
An option is simply the right to buy stocks or currencies or commodities
(or whatever asset class the fund in question happens to specialise in) at a certain
designated price before a certain designated date.
This option is bought with a relatively small "deposit".
The bet is that the market will then move in the direction the managers
think it will (either up or down), at which time they exercise their option and take a
profit from the difference between the market price now and the price stipulated in their
option contract.
If the market moves against the manager’s bet, then he simply
doesn’t exercise his option. All he loses is the relatively small amount he paid for
the option.
Simple isn’t it?
Yes, so long as he’s gambling with his own money, and gets it right
more often than he gets it wrong.
But since these hedge funds are quite often gambling on tiny movements in
the markets - sometimes to the third place of decimals - the only way they can make big
money is by betting big. And problems can arise when this is done with borrowed money,
which it often is.
For example, the way some hedge funds operate is by looking for small
discrepancies between trading prices in different markets.
If, say, the Yen is being exchanged against the U.S. Dollar for one price
on one market, and the Yen is being traded against Sterling in another, and there’s
even a tiny difference between the three-way Sterling-Yen-Dollar trade and the two-way
Sterling-Dollar exchange, then a profit can potentially be made from this tiny difference.
(This is just an overview of what in practice is far more complex - but even this
simplistic example is beyond the trading scope of most average investors.)
If the fund managers are able to borrow sufficient additional money
against their existing assets to bring more capital to bear on a market, this can reach
the sort of critical amounts that can actually influence the direction the market is
taking, and the manager’s bet can then become a self-fulfilling prophecy.
This is how George Soros made his famous $1 billion killing in 1992 when
he identified the weakness of Sterling at the time and bet so heavily against it that the
Bank of England was unable to bring sufficient support capital into the market to
counteract him and the others who followed his lead, and the Pound was forced to devalue
by some 25%.
He has tried the same trick several times since with other less noteworthy
currencies, but with somewhat less success since some governments and Central Banks have
seen him coming and forestalled his activities with rapidly imposed exchange control
regulations.
Big boys, big toys?
Curiously, everyone speaks of Mr Soros as if he is just a single
individual doing all this trading with his own wealth. In fact he heads the management
team of a substantial hedge fund which is accessible to other investors who can invest at
least $1 million each into it, and are willing to pay a substantial entry-premium for the
privilege of riding his management coat-tails and track record of success.
Another noteworthy who effectively was trying to do something similar was
the now infamous Nick Leeson. By reason of his past success in betting correctly, he was
allowed by his superiors to do what many Las Vegas gamblers do - bet larger and larger
amounts when they lose. In Mr Leeson’s case his bet was that the Japanese stock
market would turn around at his bidding - which it didn’t. The amounts involved were
so enormous that he was single-handedly responsible for bringing the long established
Baring Bank to its knees, requiring support from an acquisitive Dutch bank to prevent its
total collapse.
(This same bank, ABN Amro, will be familiar as having recently been
instrumental in saving certain Thailand financial institutions from going under, although
their imminent demise was not brought about by the same sophisticated international
trading activities, merely poor management and inappropriate lending practices.)
The latest highly-publicized debacle concerns another hedge fund which
operates along much the same lines as Mr Soros.
Managed from the U.S., the LCTM fund had assets of around US$500 million.
An impressive figure, you might think. So how could it go bust?
Well, it leveraged up these assets to the extent that at top it had a
market exposure close to US$200 billion. In other words, it was using each $1 of its
assets to trade $400 on the market.
Effectively it was gambling with borrowed money.
If the fund managers got it right, it would stand to make a huge profit
for its investors. If, however, they got it wrong (which they did), it would owe an
enormous debt - which of course its assets were insufficient to cover.
Now with around $90 billion exposure in complex bets in financial markets
around the world, LCTM was bailed out by a consortium of 50 major financial institutions,
including international banks and brokerage houses, to the tune of US$3.5 billion.
This makes George Soros’ reputed losses of $2 billion from betting
wrong on Russia paltry by comparison.
As a result of this fiasco U.S. Treasury Secretary Robert Rubin has called
for a study of the whole hedge fund business, which many perceive as lacking proper
controls and regulation.
However, as one of the leading London-based hedge fund’s managers has
commented, such regulation might be hard to achieve or implement.
Cloaked in mystery
The question arises as to why the U.S. Treasury should intervene to save
such a fund. Some cynics might say it should simply have been left to go down the tubes.
While this is an over-simplistic view, many hedge funds have brought this
criticism upon themselves by having cloaked themselves in secrecy and mystique in what is
a largely unsupervised sector of the investment industry.
They have operated in the belief that there was no need to explain or
account for their actions in any meaningful or coherent way on the premise that such funds
are aimed at sophisticated investors capable of understanding the risks involved.
The trouble with this arrogant attitude is that not only the sophisticated
initiates but all investors are put at risk by the highly leveraged position these hedge
funds can take.
Not only would a failure of the LCTM fund have left the banks which had
lent it money nursing huge losses, such a failure would also have forced LCTM to unwind
many of its positions which some have calculated could have led to a global stock market
crash.
This would not have been the first time such an event occurred.
When interest rates were unexpectedly raised in February 1994 and bond
markets had an unprecedented 20% drop as a result, our famous friend George Soros was
caught in the awkward position of being forced to sell off huge amounts of equity holdings
to cover his bond position, and reputedly lost around US$800 million in the process -
which was almost as much as the profit he made from his foray against Sterling back in
’92.
His 1994 sell-off in turn had a knock-on effect, and, some have said,
sparked the global market meltdown of ’94 and the subsequent "flight to
quality" away from emerging markets, which snowballed through 1995-96 and eventually
resulted in the liquidity-driven bull run in the U.S. and Europe which has lasted until
now. In the meantime, thousands of small investors in emerging markets who were caught by
events beyond their knowledge let alone their control lost substantial portions of their
invested capital. Thank you, George.
Imposed restraints
While there is no doubt that more transparency and accountability needs to
be applied to the alternative investment arena, it would in the end be counter-productive
to impose heavy restrictions on such an innovative investment sector, particularly when in
some regimes such as the U.K. there are some hedge fund groups and industry organisations
such as the Alternative Investment Management Association (AIMA) which have been doing a
good job of promoting a more sensible image of this interesting sector and supporting
educational programs to raise the awareness of all investors.
Attempts to shake off the gambling label in favour of promoting a better
image of the risk management element of hedge funds - which indeed can form a very useful
portion of a strategically constructed diversified portfolio - have not been helped by the
recent publicity surrounding the LCTM debacle, and it seems that if the hedge fund
industry doesn’t quickly implement better internal self-regulation and establish a
clearer direction for its own long-term good, the regulators will do it for them.
If you have any comments or queries on this article, or about other
topics concerning investment matters, write to Leslie Wright, c/o Family Money, Pattaya
Mail, or fax him directly on (038) 232522 or e-mail him at [email protected]. Further details and back
articles can be accessed on his firm’s website on www.westminsterthailand.com.
Leslie Wright is Managing Director of Westminster Portfolio Services
(Thailand) Ltd., a firm of independent financial advisors providing advice to expatriate
residents of the Eastern Seaboard on personal financial planning and international
investments.