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HEADLINES [click on headline to view story]:

Money matters

Snap Shots

Modern Medicine

Learn to Live to Learn

Heart to Heart with Hillary

Personal Directions

Psychological Perspectives

Money matters: Scott Campbell’s views on Thailand

(Written at the start of May 2004)

Graham Macdonald
MBMG International Ltd.

Continuing our mini-series on the views imparted by Scott Campbell, the portfolio manager whose ‘Growth Fund’ has been judged by S&P to be the best in its sector for the last 6 years, during his first ever visit to Bangkok, last month we turn our attention, once again, to Warren Buffett.

It is that time of the year when Warren Buffett reveals the annual results of his company, Berkshire Hathaway and also provides his insights into current trends and investment issues. Consider the facts and it is easy to understand why so many wait in anticipation for this commentary and his legendary annual general meeting in Omaha in May.

Over the past 39 years book value of Berkshire has increased 22.2% compounded annually. NAV per share was US$19 in 1965 and is now US$50,498. Shares trade at nearly 2 times book or US$100,000 per share. Total results versus the S&P500 are awesome since 1965, but probably more impressive to me is the out performance in tough times.

The table above depicts Berkshire’s annual percentage change in per share book value versus S&P500 with dividends reinvested. The startling historic fact is that intrinsic value has somewhat exceeded the 22.2% pa book gain? Enough of the history, everyone knows Buffett is a GURU. Where is he positioned today and what are his current views?

Berkshire has 4 main investment sectors, insurance, operating businesses, finance and common stock investments. When valuations are similar they strongly prefer owning businesses to owning stocks and the latter has decreased in percentage as stocks become the far more expensive choice. In recent years they have found it hard to find significantly undervalued stocks with 1) favourable and enduring economic characteristics, 2) talented and honest management and 3) are available at a sensible price.

2003 was a terrific year for their insurance businesses. They produced an underwriting profit of US$1.7bn and had the use of US$44bn of “float” assets. GEICO continued to prosper and the reinsurance company, General Re looks to have turned the corner. Following on from last year’s thesis on derivatives, General Re is still trying to exit all derivatives activities since 2002. It has cost US$173mn in 2002 and US$99mn in 2003 to shrink this business but more importantly in early 2002 it had 23,213 outstanding contracts with 884 counterparties (some having names that Buffett couldn’t pronounce let alone evaluate creditworthiness).

Despite a concerted effort, they still have 7,580 outstanding contracts with 453 counterparties! These losses have come in a benign market; all contracts were previously valued market to market and without any major credit loss. Buffett cautions again on the shenanigans of derivative accounting and what is lurking in the undergrowth, indeed the more you learn the less you know from disclosure documents.

The scary thing about all this is the sheer gigantic size of the unregulated OTC derivatives market place and that General Re has taken these hits in an orderly market. What happens if a financial crisis forced a number of derivative dealers to cease operations simultaneously? Reported profits are illusionary and Buffet notes that the cash needed to prop this business up in the tough times, would be exactly the time they wanted to deploy that very cash into other assets at huge advantages. They remain convinced that derivatives are financial weapons of mass destruction, carrying dangers that, whilst now latent are potentially lethal.

All Berkshire’s boring businesses performed well in 2003 and they made a major acquisition in manufactured housing, brought a distribution business from Wal-Mart and continue to grow MidAmerican Energy Holdings. Existing businesses such as Flight Services, Shaw Industrial and Fruit of the Loom are in good shape. The common stock investment portfolio remains dominated by Coca-Cola, American Express and Gillette and they are neither enthusiastic nor negative about the portfolio they hold.

Buffett is annoyed that he didn’t sell several of the larger holdings in The Great Bubble. In 2002 Berkshire purchased US$8bn of junk bonds or high yield debt because they felt it was cheap. He notes that the pendulum has swung quickly and this sector looks decidedly unattractive to them. Yesterday’s weeds are today being priced as flowers and an exit strategy is in progress.

Finally, Buffett is critical of US corporate governance, the US trade deficit, US$, mutual fund directors and un-repenting CEOs. His cash pile of US$36bn (US$12bn is in foreign currencies for the first time) is only earning a pittance, but he is prepared to under-utilise capital and be patient as it is way less painful than doing something stupid. A very wise man indeed!

Berkshire S&P500 relative

1966 20.3% (11.7%) 32%+

1973 4.7% (14.8%) 20%+

1974 5.5% (26.4%) 32%+

1977 31.9% (7.4%) 39%+

1981 31.4% (5.0%) 36%+

1990 7.4% (3.1%) 11%+

2000 6.5% (9.1%) 16%+

2001 (6.2%) (11.9%) 6%+

2002 10.0% (22.1%) 32%+

The above data and research was compiled from sources believed to be reliable. However, neither MBMG International Ltd nor its officers can accept any liability for any errors or omissions in the above article nor bear any responsibility for any losses achieved as a result of any actions taken or not taken as a consequence of reading the above article. For more information please contact Graham Macdonald on graham@mbmg-international .com


Snap Shots: Henri Cartier-Bresson’s final ‘decisive moment’

by Harry Flashman

Henri Cartier-Bresson, the originator of the phrase in photography, “The Decisive Moment”, has just died, a few weeks before his 96th birthday. However, he will be remembered for his contributions to photography for ever. However, despite his fame and notoriety, he was never one to look for publicity. His photographs perhaps now will speak for themselves.

He was born in France in 1908 and initially studied painting, following much of the Surrealist school of thought of the time. However, by the time he was 22 years old he had dropped art for photography, but began to apply the art concepts he had been exposed to towards photography.

One of the factors that allowed Cartier-Bresson to do this was the advent of the small portable cameras, such as the Leica, which was to become Cartier-Bresson’s favourite instrument. It was this portability that allowed Cartier-Bresson to become ‘one’ with the subject. He believed that the photographer had to become part of what was going on, and after becoming ‘in tune’ with the subject, it was then possible to capture the essential moment, the very essence of the event. This was explained by Cartier-Bresson in the foreword to his book, published in 1952, “Images a la Sauvette” (The Decisive Moment). He called it “The simultaneous recognition, in a fraction of a second, of the significance of an event as well as the precise organization of forms which give that event its proper expression.”

With this concept and the portable lightweight camera, Cartier-Bresson was to become one of the principal ‘street’ photographers. A true journalist with a camera - a photo-journalist. He would record not just a parade, but also the people watching the event, and their reactions to the event.

Take a look at the classic photo to illustrate the decisive moment. The shot was taken in 1932 at the Place de l’Europe, where the marooned man has finally realized that there is no way out, and having made the decision, launches himself off the ladder. That split second, that decisive moment caught by Cartier-Bresson in such a way the viewer can feel the moment still today, 72 years later.

His work took him across Europe. He recorded the Spanish Civil War in the 1930’s and then WW II, but was finally captured and he became a POW. He escaped three years later, and was there to record the liberation of Paris from the Germans.

Of course, he was by that stage becoming an icon, and in 1947 joined forces with two other ground-breaking photojournalists, Robert Capa and David Seymour to form the Magnum agency. Magnum became famous for its news photography. For Cartier-Bresson, news was much more than the photo-journalists were showing. It was necessary to get behind the scenes.

Cartier-Bresson and his confreres forged a name for hard hitting news photography. Cartier-Bresson spent almost 20 years there, covering Mao Zedong’s victory in China and the death in India of nationalist movement leader Mahatma Gandhi.

Regarded as one of the pioneers of photojournalism, his pictures now hang in art galleries around the world, with a retrospective in Europe to be extended to allow more visitors the chance to view his work.

Friend and fellow photographer Lord Snowdon paid tribute to him saying, “He was brilliant. I will miss him very much. I don’t think he’d like his work to be called art, he would like to be remembered as an anonymous figure. His books record moments that can’t be captured again.” Again that concept of the ‘decisive moment’.

French President Jacques Chirac said his death was a major loss to his country. “With him, France loses a genius photographer, a true master, and one of the most gifted artists of his generation and most respected in the world,” he is reported saying.

Not just France, but the world has lost a photographer who had vision and the ability to record his vision in a way the world could understand. The decisive moment will always belong to Henri Cartier-Bresson.


Modern Medicine: Dengue Fever - again and again!

by Dr. Iain Corness, Consultant

Despite my pleas (and those of the Public Health Department), Dengue Fever and its potentially fatal variant, Dengue Haemorrhagic Fever (DHF) is still with us. The latest figures have now prompted me to repeat my advice on this subject. If you remember reading about it before, I apologize, but the subject matter is very important. This is an important ailment that can be avoided.

However, first you should understand a little more about Dengue. It was first described in 1780 by a Benjamin Rush in Philadelphia (so it didn’t start here), when the name Break Bone Fever was applied, with the symptoms of pain in the bones and rise in temperature. The name “Dengue” came in 1828 during an epidemic in Cuba. The new name was a Spanish attempt at a Swahili phrase “ki denga pepo” which describes a sudden cramping seizure caused by an evil spirit! Let me assure you that the local brand of Dengue Fever owes nothing to spirits, evil, bottled or otherwise.

Like Malaria, the virus is carried by mosquitoes, this time by one called Aedes aegypti. The virus itself is related to Japanese encephalitis, Murray Valley encephalitis and Yellow fever, and there are four “serotypes” or subgroups of it.

The mosquito lays its eggs in water containers, preferring the clean water found in water tanks and pots, in the saucers under pot plants and even under the pet’s food dish. Inside discarded car tyres are another favourite spot. These mosquitoes are not of the adventurous type and feed during the day and spend their time within 200 metres of their hatchery. Consequently, the eradication of any local breeding areas becomes very important towards maintaining your own health, as you can see. Keep your home free from lying water for a radius of 200 metres and you’re looking good!

Simple Dengue (if you can call it that) has an incubation period of around four to seven days and then the full blown symptoms of high fever and headache begin. The headache is usually behind the eyes and is made worse by eye movement. From there the pains progress to the limbs with acute muscle pains, which gave it the old name “Break Bone Fever”. Interestingly, some patients complain of a metallic taste in the mouth. (Please don’t ask - I have no idea why!)

On the other hand, Dengue Haemorrhagic Fever can certainly be fatal! It appears that Serotype 2 may be the culprit here, but does not usually produce DHF unless you have been previously bitten by types 1, 3 or 4. In addition to the symptoms of Classical Dengue the skin begins to bruise very easily as the blood haemorrhages into the skin. Children are also more susceptible to this than adults. This also becomes much more of an emergency and is best treated in the Intensive Care Unit (ICU) of your favourite hospital.

With our ability to treat the viral ailments being very limited, the defence against the Dengue virus lies in the preventive measures. The other precautions are to wear long trousers and long sleeved shirts, especially at sun up and sun down, when the mosquito is at its most ravenous. The other factor to remember is “D” for Dengue and “D” for DEET. DEET is the magic ingredient in mosquito repellents, so when you go to buy some, check the label - if it has DEET, then get it. And then remember to use it!


Learn to Live to Learn: International Schools

by George Benedikt

“Education, Education, Education!” was Tony Blair’s clarion call when elected as Prime Minister of Great Britain and Northern Ireland in 1997. For all his subsequent detractors, who question what has been achieved in education since this time and how the government of the UK has gone about addressing the ‘need for change’, there can be no doubting the importance of education.

Wherever we are, it is at the centre of the community and whether we be parents, students or teachers, whether we like it or not, education lies at the heart of our past, present and future. Education helps us better understand what has gone before, and makes us better equipped to handle the increasing uncertainty of what lies ahead.

For the readers of the Pattaya Mail, “Learn to Live to Learn” will provide relevant, concise, informed insight into the educational provision that is available regionally and globally in general and locally in particular, so that our readership can depart the pages better prepared to deal with critical issues to do with making informed choices about the kind of educational opportunities that are available.

Each week, “Learn to Live to Learn” will look at different issues in local education and examine them critically, compassionately and sometimes provocatively. Your participation through the letters section is actively encouraged.

International Schools: Making the right choice for you and your children

Increasingly, visiting local educational institutions can be exhausting and confusing and it is certainly possible to leave a school feeling one knows less about the place than when one arrived.

Education is a growth market in Thailand, and those entrusted with marketing their product to you, the customer, can often seem like unscrupulous salesmen. This is especially true for new arrivals in the country, who are invariably tired and possibly disorientated when they arrive and have any number of tasks to complete upon arrival, such as finding housing, transport and waiting for shipments to arrive.

In this period, often referred to as a ‘honeymoon period’, events and/or feelings such as culture shock might very well conspire to create false impression of an institution, which may in turn lead to a decision taken either in haste, or for what may turn out to be, the wrong reasons.

Over the next few weeks, “Learn to Live to Learn” will present informed advice on what to look for when making your choice of international school and will provide tips on how to avoid a nightmare scenario.

The process of deciding upon schooling for our children can become onerous, yet this decision is crucial to the future happiness of all the family. Next week we will look in details at some of the questions we would all like answered before we consider or visit a potential school: ‘What should we look for?’ and ‘What should we avoid?’

Send questions, comments and/or suggestions to [email protected]


Heart to Heart with Hillary

Dear Hillary,
This is a crazy time in my life and I am all at sea. I have provided for my wife for the past 16 years. She has never had to want for anything. I am a model husband, good looking, never play up, only drink in moderation, don’t smoke, in perfect health, a witty intelligent companion, and I have always been considered by everyone as a “good catch”. This week she calmly announced that she wants a divorce. I can’t get it out of her as to why - just that she wants a divorce. Why, Hillary, why?
Dumbfounded
Dear Dumbfounded,
I would say that the reason could just possibly be that after the same 16 years she has woken up one morning to find she was lying beside an impossible self satisfied, pompous and arrogant twit. If you were my husband, I would have divorced you too. But it wouldn’t have taken me 16 years to waked up! As far as being all at sea, don’t worry, your ship will wash up somewhere. Your type always does.
Dear Hillary,
Where would you suggest I take my girlfriend for a romantic night? I intend to propose to her then, so want the surroundings to make it an evening to remember. You must have all sorts of rendezvous that you could suggest.
Romeo
Dear Romeo,
You didn’t say in your letter what it was that you wanted to propose to the young Juliet. Marriage, m้nage a trois or a dirty weekend in Tianjin? Your email also gave me no indication of where you are. What’s the use of me suggesting somewhere that’s 1,200 kilometers from where you are? If you are so indecisive and wishy-washy as this all the time, I hope she says No! to all three of your proposals.
Dear Hillary,
I think your advice is stupid. What right have you got to tell people what to do? Are you qualified to be handing out all this sort of silly nonsense? Why don’t you go back to your dog-house or wherever you came from?
Frank
Dear Frank,
To be perfectly frank, which I’m not since I’m a Hillary, I have as much right as you have, my Petal. Since you are the one with a bone to pick, perhaps it is you that should be living in the kennel? Woof! Woof!
Dear Hillary,
I seem to have got myself into a little bit of hot water here, and need some words of advice from a ‘senior’ person such as your good self. I am a young single man, and considered to be not bad looking. My problem comes from one of the girls I have met recently. She rang me at work the other day and asked if I could come over and see her at the new bar she was working in. I have to admit I did not remember her from her previous bar but was embarrassed so I agreed that I would. Because I was not sure which lady this was, I never went, but now she is ringing me up every day and everyone in the office is laughing. What should I do? How can I tell her it isn’t a good idea to ring me at work in a crowded office? Any suggestions?
Ernest
Dear Ernest,
You are far too “earnest” for your own good, my Petal! You have brought all this on your own head, haven’t you. If you don’t want anyone to ring you up, then don’t give them your telephone number! She didn’t dream up your number or get given it by the fortune teller, did she? It’s quite simple, if you don’t want a girl to ring you at work, then don’t give her your business card. If you feel the need to chat her up on the phone just give her your mobile and tell her what hours to ring you. The girl isn’t stupid. You are. And thanks for calling me a ‘senior’! Let me assure you Hillary is not eligible for any pension.
Dear Hillary,
You are often telling people that they should learn Thai if they are living here for some time. I have retired here, but at 65 years of age, I find it very difficult to learn a new language at my time in life. Is there any quick way of doing this, or do you have any special tips for people trying to learn this impossible Thai language?
Bill
Dear Bill,
First let me say congratulations, my Petal! It’s about time some of the people out there realize that this country is called Thailand and the people speak Thai. There are many ways to learn the language. There are the set courses offered by language schools all over the country. They are used to people at your stage in life and will tailor a course to suit you, so don’t feel embarrassed. Second there is the ‘total immersion’ method. This is where you take yourself off to an up-country village, where nobody speaks English. You have to learn to survive! I have been told that by six weeks you will either be talking reasonable Thai or will have gone stark raving mad. However, it is still the quickest way to pick up a language. You will probably have picked up a small language teacher as well!


by Christina Dodd

The first skill each and every one of us should learn, if we are to have any chance of bettering our lives and reaching our dreams, is to develop a strong positive belief in ourselves and our capabilities. This is the first thing that I instill into all participants in our coaching and training courses. We all have untapped resources of energy and creativity - like vast seas - just waiting to be tapped, brought to the surface and refined for our use and personal, social and sometimes financial profit.

The beliefs we have about ourselves are responsible for who we ultimately become and what we eventually achieve in life. Indeed, a positive self-belief is a prerequisite for achieving anything and everything in life.

If you believe that you will fail, you will! If you believe that you will succeed, you will! If you believe you will be rich, you will be rich. If you believe you are destined for poverty, you will never rise above that. It is a fact that you become like the person you think and believe you are and achieve only what you think and believe you are capable of.

Let’s look at an example. I’ll use a fictitious character called Bill, whose experiences can be used to better illustrate this article. Right from the start, Bill had to learn this first life skill. He had to believe that he had the capability of making a better life for himself and that he deserved this life before he could even begin to move forward and go after it. Before we can even begin to imagine what it is we want from life, we first have to believe that we have the capability to achieve great possibilities. Without this belief, we would never even attempt to do anything about our dreams.

What’s the point of imagining a better life when we have already convinced ourselves that we are incapable of achieving it?

Don’t be fooled into believing that “you’ve either got it or you haven’t and there is nothing you can do about it.” This is one of the most common misconceptions and is why people do not rise above their situation.

If you do not believe me, I want you to think about those who have yet to be born. They will eventually grab at the very opportunities you missed, rising to the top of their professions, running their own successful companies and enjoying great wealth. Amongst them will also be those who are going to become the great leaders of tomorrow, presidents of their nations and athletic stars. I believe that you have an advantage over them as you are alive now and they have yet to be born.

It’s easy to say, “Believe in yourself and you will succeed,” but how do you develop a powerful belief in yourself? Just like Bill did, you have to ask yourself, “What limiting beliefs do I have?” Then work on getting rid of them and rather focus on uplifting and positive beliefs.

Let’s list some of Bill’s limiting beliefs:

* You are either lucky enough to be born into the good life or destined for poverty.

* He should forget about becoming a teacher as he has no education.

* He should be satisfied with what he has and stop wishing for more.

Bill began to rid himself of these limiting beliefs by refusing to accept them. He began to convince himself that he was destined for better things and could rise above his situation to achieve his dreams.

There is a popular saying that goes, “You create your own ceiling in life!” What it means is that you unconsciously set your own limits to what you can and cannot do, due to your beliefs about yourself and your capabilities. The more limiting beliefs you have about yourself, the lower your self-created ceiling will be and the less you will achieve. When you start to rid yourself of limiting beliefs, you raise your ceiling and are able to achieve more. In this way Bill had unknowingly raised the ceiling to his potential.

I have met many successful people in my time. All of them had one very important thing in common - before they succeeded in any way, they first believed they could. They valued themselves highly, choosing to raise their ceiling and refusing to accept any limitations to their potential. Their central and unswerving belief and their “I can do it!” principles drove them and inspired each of them to greater heights.

You must learn to believe in yourself and your capabilities.

Your beliefs hold great power. They make up the person you become and will influence what you achieve in life. I want you to start believing that you can do anything you truly put your mind to. If you believe you can, you will go to great lengths to prove yourself right. However, if you believe you can’t, you will make no effort and you will fail as your ceiling will be so low that you will see no opportunities to better your life at all.

Now I have shared with you the first vital life skill on the road to success. Note it well, for when you start believing you can, the ceiling to your potential will rise a little higher so you can see further and achieve a great deal more.

Until next time, have a fabulous week and believe in yourself, your abilities ... and when asked just how high your ceiling is ... then “Reach for the stars!”

For more details about our life coaching services, personal and professional skills development programs, please email me directly at [email protected] or visit our website www.asiatrainingassociates.com

Until next time, have a fabulous week and take one step closer to reaching your goals!


Psychological Perspectives:  Origins of evil

by Michael Catalanello, Ph.D.

At the time of this writing, U.S. and Iraqi military operations against insurgents loyal to the Shiite cleric Muqtada al-Sadr dominate the news. The bloody American-led war against Saddam’s regime and its aftermath to date has claimed the lives of over 930 American military personnel. The number of Iraqis killed is not known, but is estimated to be in the thousands.

This ugly conflict has taken an even uglier turn, and now threatens to damage or destroy a world famous site of religious significance, the Imam Ali shrine where al-Sadr’s militia has reportedly taken refuge, the adjoining cemetery, and Najaf’s Old City.

Wars and military conflicts have been with us throughout recorded human history. The modern industrialization of war and the rise of huge bureaucratic military organizations have created new dimensions of horror, death and human suffering. It is estimated that over 88 million lives were lost as a result of 20th century warfare.

War is but one example of a range of destructive, harmful, dehumanizing and demeaning acts which are carried out by humans against our fellow humans. Other examples might include terrorism, homicide, torture, child abuse, rape, and sexual abuse.

Early attempts by social scientists to understand such events have tended to locate the source of evil within the individual perpetrator. A theory which emphasizes internal determinants of behavior is known as a “dispositional perspective”.

The pioneer psychoanalytic theorist, Sigmund Freud, advocated a dispositional perspective. Psychoanalytic theory proposes that violent and antisocial acts result from the personalities of disturbed individuals. Psychoanalysts tended to examine the events of early childhood development for evidence of unresolved conflicts to explain antisocial acts. Other dispositional theories have identified genetic factors, or personality factors as important in understanding antisocial behavior.

One such attempt by psychologists to understand the human behavior underpinning the Holocaust, the rise of fascism, and the historical appeal of Hitler, proposed a concept called the authoritarian personality syndrome. According to this theory, some people possess identifiable personality characteristics which predispose him or her to embrace fascist political ideologies.

Theories like these, while interesting, have difficulty explaining antisocial acts by seemingly normal individuals, such as the young men and women sent to carry out governmentally sanctioned antisocial acts called warfare in response to the commands of political and military authorities.

In contrast to the dispositional perspective, modern psychological theories place emphasis upon the characteristics of the social situation. According to a “situationist perspective,” people like you and I can be induced to perform violent and antisocial acts in response to social situations. Psychologists like Philip Zimbardo discussed previously in this column in connection with the Stanford Prison experiment, advocate a situationist perspective of violence such as that which occurs when nations go to war.

We humans generally seem inclined to focus primarily on the role of dispositional or internal factors as being responsible for people’s behavior, antisocial or otherwise. By contrast, we seem inclined to overlook or underestimate the influence of the social situation on people’s behavior. Social psychologists have investigated this tendency of ours, which they have labeled “the fundamental attribution error”. Next week we’ll look at some of the interesting research that has been done into this phenomenon.

Dr. Catalanello is licensed as a psychologist in his home State of Louisiana, USA. He is a member of the Faculty of Liberal Arts at Asian University in Jomtien. Address questions or comments to [email protected]


Personal Directions: Raise your ceiling