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Money matters: FTSE Forecasts for 31st December 2004
Graham Macdonald
MBMG International Ltd.
The City’s leading equity strategists are now
predicting that the FTSE100 index of leading shares will rise by just 6%
in 2004. The relatively downbeat forecasts are in contrast to those issued
at the start of the year when some of the leading investment banks, such
as Nomura, were predicting the FTSE100 would end 2004 at well above 5,000.
Merrill Lynch is the bank with the most pessimistic view of equities in
2004, with a forecast of 4,400 for the FTSE100. Deutsche Bank and UBS are
the most bullish with predictions for the end of 2004 of 5,000. Deutsche
Bank said, “The US has been growing more strongly than people thought
possible and I think we are going to see a reasonable recovery. For the
foreseeable future the market is set fair”.
Merrill Lynch said, “The UK will under-perform the
rest of the world over the next 12 months if the economic recovery
continues because of cyclical stocks in the FTSE”. The banks’ gloomy
predictions come after the FTSE100 reached new highs in 2003 and its
highest level since August 2002. Shares have recovered strongly over the
last nine months rising by 34% since the low in March when the FTSE100
index fell to 3,287 – a fall of 53% from its peak of 6,930 in 1999.
Meanwhile a survey by Citywire, the financial
publishing and date group, revealed that the UK’s top fund managers are
deeply divided over whether the bear market is over. Some 53% said they
thought the bear market was over, 18% argued that the market had further
to fall while 29% said they did not know. A massive 94% expect to see
positive returns from equities this year. Just one in three believes the
market is undervalued.
Overall, our survey of all the leading investment
banks’ strategists reveals an average prediction for the FTSE100 in 2004
of 4,400.
However our experience is that these institutions,
which tend to offer to retail clients a choice of only equity or bond
funds, have a vested interest in being overly optimistic, as this makes
their funds more attractive to investors. Two years ago, several
investment banks including Morgan Stanley, Schroder Salomon Smith Barney
and Deutsche Bank all forecast the FTSE100 would end 2002 at above 6,000
– the market ended at 3,940. Predictions at the end of 2001 were even
worse. None came within 1,000 points of the closing figure of 5,217 –
their estimates ranged between 6,600 and 7,400. Therefore, we’re not so
sure that reality has set in while more than half of the 2 out of every 3
managers who believe that the market is either fully valued or overvalued
can believe, or can state that they believe that the market will climb
this year.
We prefer to stand by the general principles that we
issued in January, at which point our biggest concern was that issuing
forecasts to 31.12.04 was rendered rather arbitrary, because however clear
many aspects of the big picture might have seemed to be, the timing of the
most significant event on the investment horizon, the shift to prolonged
negative performance in the equity markets, was extremely hard to call
because of the level of political intervention with elections looming in
US, UK and Australia.
However the main features of the investment landscape
to our mind, (as stated 6 months ago) are in the following sectors.
We see a dramatic reduction in disposable income of US
consumers, lack of wage inflation and falling national wage product in the
USA, and a major fall in US equity markets (most notably the NASDAQ)
averaging up to 40% from the market peak, over the next 3-5 years.
For 2004 we expect to see a rally at the start of the
year, and then remain largely range-bound until the start of a prolonged
bear market, with a fall of around 10% over the year, although we’d
emphasise that especially with regard to the NASDAQ, it could be far
greater than this or it could be deferred until H105.
We see the beginning of a major fall in value US
housing markets - around 15% on average, but exceeding 50% in parts of NYC
- over the next 4-6 years; the continued fall of the Dollar against strong
currencies, although marked by great volatility US interest rates are
likely to spike significantly during the year but fall back again by the
end of 2005 and this should be seen as a buying opportunity; a fall in the
European markets in line with the US markets, although lower BETA markets
like the FTSE might suffer only around half of the declines ultimately in
the DJI, whereas higher BETA like the DAX are more likely comparable to
the NASDAQ. In other words the UK market will outperform when the downturn
comes, a mirror view of Merrill Lynch’s continuing bizarre take on the
markets.
A major fall in the property markets in the UK, Ireland
and Spain is likely as is an initial weakening and then subsequent
strengthening of Euro against Pound and Dollar, but an ultimate weakening
against Swiss Franc, which is likely to be the main beneficiary of
uncertainty. UK and especially Euro zone interest rates will move up
slightly, before easing again in 2005 and market anticipations of higher
rates could present buying opportunities.
A major correction is expected in China on the back of
a massive fall in exports to US by 2005, although China’s best hope is
to be involved in the mergence of Japan from recession/below trend growth
rates. Japan should see a decoupling whereby it emerges from deflation
into a period of growth.
Some Asian currencies such as Singapore Dollar and Yen
will be volatile but could ultimately strengthen. The Australian Dollar
will take a beating when the Australian property sector starts to fall,
but will outperform the US Dollar over the next year or 2 from that point
onwards. The Australian equity market will be pulled both ways by the high
prices of tangible assets but the reduced demand in China. The
All-ordinaries will suffer to some extent, but should significantly
outperform the US indices but also significantly under perform Japan.
Australian bonds look an attractive proposition although prices would edge
slightly down in the first half of 2004.
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 [email protected]
Snap Shots: Underwater photography
by Harry Flashman
With the floods that we have had recently, there is
probably more than one camera that has gone underwater, and is now
(hopefully) the subject of an insurance claim. However, there is truly
another world beneath the surface.
 One
of the regular readers, who humorously signed himself as “Joe Fishman”
wrote in to say, “You can take underwater images which are such great
images of marine life unmatched with anything above the surface. And your
photographic techniques are almost unlimited. A Garden of Eden for
underwater photographers is lying close to our dear city: the corals of
the inner and outer islands in front of Pattaya as well as those around
the islands of Samae San near Sattahip. I’ve been an underwater
photographer almost two years - an absolute amateur - and snorkel or dive
these coral reefs on a weekly basis during the dry season. I’m quite
sure that a number of people are also interested in learning more about
the techniques of underwater photography in general and the possibilities
around Pattaya in particular.”
Unfortunately Joe, many years ago I struck a bargain
with sharks, those denizens of the deep with the amazing dentition. The
deal was that I would not swim in their bath water, if they would refrain
from swimming in mine. I have been true to my word, and they have also,
with no dorsal fins seen anywhere near my jacuzzi. Hence my knowledge of
underwater photography is restricted to shooting through the portholes of
swimming pools!
However, with the advent of cheap underwater cameras
these days (even disposable ones), you do not have to invest in a Nikonos
to try getting a few shots beneath the surface.
What has to be remembered is that water (especially sea
water), is 700 times more dense and 2000 times less transparent than air.
Even though it may look crystal clear down there with the dugongs, it is
not. It has been suggested to me that if you are using natural light (that
is from the sun above the waves) then do not go lower than seven metres
below the surface.
For these reasons, underwater photographers will use
wide angle lenses, so that they have to be close to the subject, so there
is then less water between the camera and the item being photographed. If
it is a large fish with teeth, you need to be a knee tremblingly three
metres from it to get a good shot. Far too close for me! Those that claim
to know (and I do know a couple of underwater photographers who have
neither been eaten or drowned) say that a focal length lens of between 28
mm and 15 mm (almost a ‘fish eye’) would be appropriate for 35 mm
cameras.
Another tip given to me by the wet-suit and water-wings
brigade is to take the meter reading on the surface and open up the
aperture one f stop for every three metres depth.
Again when using sunlight, the best time of day is the
exact opposite from the above the surface shooter. Forget early morning
and late afternoon, as the sun’s rays get reflected away from the
surface of the water. The best time is when the sun is directly overhead
and the light penetrates the water more easily.
You may have also noticed that underwater shots can
have strange colours. This is because the light becomes diffused as it
travels through the water, and the different colours, which have different
wavelengths, become absorbed at different rates (or depths). Red is the
first to go and yellow is the last. The predominant colour is then usually
bluish or greenish, which explains why underwater shots have that colour
cast. You can counteract this by manipulation in the computer with your
electronic paint brush.
However, whatever the technicalities, if you just want to try something
different one weekend, buy one of the inexpensive throw-away waterproof
cameras, stay just under the surface and see what you get. You will
probably be delighted with the results. But if you are considering SCUBA
diving with a speargun in one hand and a camera in the other, you will
need much more specialized equipment!
Modern Medicine: Prostate Cancer - what are the options?
by Dr. Iain Corness, Consultant
All in one week, three of my friends
contacted me to say they had prostate cancer. They range in age between 50
and 70. One has had the operation to remove the prostate gland completely,
the second is waiting till November to have his prostate removed, while the
third has gone to Europe, hoping for a miracle cure.
Prostate cancer is also extremely common; in the United
States this year almost 180,000 men will be told that they have prostate
cancer. The figures are that by age 50, about one-third of American men have
microscopic signs of prostate cancer. By age 75, half to three-quarters will
have some cancerous changes in their prostate glands.
Does this mean that life ends at 76? Fortunately no. Most
of these cancers stay within the prostate, producing no signs of symptoms,
or are so slow-growing that they never become a serious threat to health.
In other words, you may die of something else before the
prostate gets you! We should never forget that the death rate will always be
the same - one per person. We all have to die of something - even me, and I
just hope it isn’t from boredom!
While the numbers quoted above look fearsome, the real
situation is not quite so bad. A much smaller number of men will actually be
treated for prostate cancer. About 16 percent of men will be diagnosed with
prostate cancer during their lives; 8 percent will develop significant
symptoms; but only 3 percent will die of the disease. Put another way, 97
percent won’t die from prostate cancer.
While prostate cancer can be ‘aggressive’, attacking
other tissues, including bone, the great majority of prostate cancers are
slow growing, and it can be decades between the early diagnosis and getting
symptoms.
Let’s get diagnosis and the “blood test” out of the
way first. The blood test is called Prostate Specific Antigen, or PSA for
short. PSA unfortunately is not a go/no-go test. A normal range result
doesn’t guarantee you haven’t got it, and an elevated result doesn’t
automatically mean that you are about to claim early on your life insurance.
Prostate cancer can only be fully diagnosed by examining
prostate tissue under the microscope. When your doctor suspects prostate
cancer on the basis of your symptoms, or the results of a digital rectal
examination (DRE), and/or a PSA test - the definitive diagnosis needs
biopsy.
So let’s imagine your biopsy is positive. What are the
options? Actually very many and depend mainly upon the ‘stage’ of the
cancer and your age at the time of diagnosis.
‘Staging’ has four main grades. Stage I cannot be
felt but is diagnosed through pathological testing. Stage II can be felt,
but it is confined to the prostate. Stage III is coming out of the gland and
Stage IV has grown into nearby tissues.
Treatment can be ‘watch and wait’, surgery,
radiation, hormone therapy, eating herbs or muttering mantras. Often it will
be a combination of some of the above (but I’d forget the mantras).
You need to discuss your options with your doctor. If you
are a young man with stage IV, then you have to make up your mind quickly.
But if you are 75 with stage I or II, then you have more time, as you will
most likely die of other causes before the prostate gets you.
‘Watch and Wait’ has much going for it, but you must
be prepared to get to know your urologist on first name terms. You will be
seeing a lot of him over the years!
Learn to Live to Learn: The IB diploma
by George Benedikt
The International Baccalaureate Organization
was founded in Geneva, Switzerland in 1968 as a non-profit educational
foundation and the diploma was created in English and French by teachers at the
International School of Geneva with increasing assistance from several other
international schools.
It is now delivered around the world in English, French and
Spanish and sooner or later, probably Chinese. The Diploma Programme (DP) seeks
to provide students with an unapologetically idealistic and truly international
education - an education that encourages an understanding and appreciation of
other cultures, languages and points of view.
All diploma students must choose six subjects in total from
six subject areas (actual subjects vary from school to school), including two
languages (at appropriate levels) and some level of Mathematics, yet the system
is inherently flexible – as all great systems are – and is built on
philosophical and academic rock. Depending on inclination, for instance, it is
possible for students to take three languages, or three sciences.
The IB’s mission statement and philosophy are mirrored in
the content and provision of the course, which includes three very special
mandatory components at the centre of its hexagon. ‘Theory of Knowledge’ (TOK)
is a course which looks at how different cultures see things differently and
puts (in educational parlance) the ‘learner at the centre of education’. It
examines different perspectives or ‘ways of seeing’ and should, if delivered
properly, infiltrate the teaching of all six subjects. ‘TOK’ teaches the
student how to think critically and compassionately – for themselves.
Second, there’s something called CAS, ‘Community Action
Service’ in which students have to complete and satisfy internal requirements
(externally moderated) in three areas; community work, action (such as team
sports) and service (which could be local, regional or global) - or they fail
their diploma.
CAS encourages and nurtures independent thinking skills,
creativity, planning, imagination and initiative, all from a ‘giving and
sharing’ point of view and includes reflection and recording of their
experiences. Indeed, students might be brilliant academics, but if they don’t
enter into the spirit of CAS, they will fail. So for your most entrenched
academic who has difficulty indulging in giving or sharing, or playing, or
having fun making things, or making other people happy, the diploma forces them
to recognize the importance of the context of their learning.
This is perhaps best illustrated with the kind of students
who might want to go to medical school who, having recognized how stringent are
the academic demands of achieving entry, might hitherto have almost ignored the
issue of interpersonal skills, which are clearly a critical aspect of being a
medical doctor.
Through a school’s community outreach programme, CAS forces
them and encourages them to engage in situations where they have to communicate
with a range of people from all walks of life. Through CAS, the IBO has formally
recognized that ‘learning that goes on outside the classroom is just as
important as leaning that goes on inside’ and has placed that understanding
(which we all already know, right?) at the centre of their academic programme.
This is a critical point of divergence between the IB diploma
and other pre-university courses. Students can (and have) achieved excellent
scores academically, but have failed to receive their diploma because they have
failed to satisfy the criteria of CAS.
The third special component of the diploma is the Extended
Essay (EE), which is a 4000 word piece on a student’s area of interest, which
is designed to introduce them to the rigours of academic research. It does
exactly that and represents a tremendous entr้e into the world of
university study. Small wonder then, that universities around the world will
most unusually, openly acknowledge their preference for IB diploma graduates
over any other student. Or will they?
Next week we’ll begin to look at the role of the IBO.
 Heart to Heart with Hillary
Dear Hillary,
You blew it, so to speak, when you advised Victor V to tell his girlfriend
to back off. Victor has had a long and happy life and he is going to have to
go sometime in the not too distant future anyway, so why not go using up a
triple Viagra? Can you think of a better way? I certainly can’t!
Blaze of Glory
Dear Blaze of Glory,
Where were you at The Alamo, Petal? Standing there holding the flagpole no
doubt, when Davy Crockett was killed by the burritos and taco-eaters, going
out in your supposed ‘blaze of glory’. Coming back to today and my
advice to Viagra Victor a couple of weeks ago, I hardly think that
collapsing after a sweaty chemically enhanced encounter, while holding his
flagpole, could be called going out in a blaze of glory either. I’m sure
Mr. Crockett with his raccoon tailed hat could have thought of better ways
to go too. For me, a surfeit of chocolates and champagne would be infinitely
better as a final choice, but then I keep my brain between my ears, and not
in my knickers, so perhaps I don’t really understand at all!
Dear Hillary,
I am a foreigner here and have noticed that many Thai
people walk around with a five baht coin stuck in their ear. Is there some
reason for this? I have seen it many times.
Ear Today
Dear Ear Today,
As you are ‘ear today’ and will certainly be ‘gone
tomorrow’, I’ll be quick, my Petal. There is a reason. It is so that if
they lose all their money (mislaid of course, as there is no gambling in
this country) then they will still have enough money to catch a ‘song taew’
home. With you being a foreigner, you would probably have to roll a twenty
baht note up your nostril, just to be sure!
Dear Hillary,
I’ve been reading your articles for several months and
I do commend you for your advice and wisdom. I have questions that you may
help me with. Occasionally when I do go to the bars, I overhear some bar
girls calling other obviously drunk farangs “kwai”. When I ask them what
it means, they giggle and get defensive and refuse to answer my question.
What is “kwai” and its meaning?
Why Kwai
Dear Why Kwai,
Thank you, Petal, for the kind words. They are always
very welcome (especially when attached to a bottle of bubbly or chocolates -
not that you should look at this as a hint). ‘Kwai’ literally means
‘Buffalo’ but when applied to drunken farangs means “thick, heavy,
stupid, ugly and ignorant”. Which aptly describes drunken anyones, not
only farangs, in Hillary’s opinion. Don’t let this happen to you. You
have been warned. Behind the welcoming smiles and the calls of “Hello sexy
man!” there can be the tongue of the viper (old Liverpudlian proverb).
Dear Hillary,
My six year old puts on tantrums before going to school
because she says the teacher does not like her. This behaviour only started
recently after she was disciplined for throwing food in the classroom, but I
have to admit I am not sure of what to do next. Bribing her with treats does
not sound the right way. Have you any ideas, Hillary?
Worried Mum
Dear Worried Mum,
This is an easy one, Mum. Ignore these tantrums (in fact
always ignore all tantrums), wear ear plugs if necessary and don’t give
her food to take to school. If she goes hungry for a day or two she may then
want to eat her lunch rather than throw it around (as long as it is not
those dreadful soggy tomato and lettuce sandwiches). When the behaviour
improves then reward her with sandwiches of her own choosing, and involve
her in helping to make them in the mornings. Having made them, she will also
be less likely to throw them away indiscriminately. If all else fails then
there’s always boarding school. Or adoption.
Dear Hillary,
I was standing at the urinal the other evening, in a
hotel and looked over and saw a very important Thai dignitary at the urinal
alongside. What is the correct thing to do under these circumstances? Should
I wai?
Willy
Dear Willy,
You must be kidding. The correct protocol is to look
away. Definitely do not wai unless you want to pee in his pocket.
Dear Hillary,
I do not smoke cigarettes, and I am getting tired of
people saying, “Do you mind if I smoke?” and then just lighting up as if
it were their ‘right’ to do so. I don’t like it, I don’t like the
smell of smoke in my hair and clothes. How do you stop this?
Anti-smoking Aunty
Dear Anti-smoking Aunty,
There is much you can do. When the smoker drops the “Do
you mind if I smoke?” into the conversation, you have to come straight
back by saying, “Actually I do mind. It gives me very bad sinus and I
don’t like the smell in my clothes. I’m sure there’s an area outside
for smokers. Thank you.” You have not been rude, as the smoker had not
been rude either by just lighting up without asking, but you will have
firmly stated your position, and given the smoker a face-saving alternative.
PC Blues - News and Views:Linux versus Windows
For quite some years now, there has been a marketing
war between Windows and Linux. Largely this has been the proponents of
some Linux-based system (i.e. based on ‘free’ software), trying to
sell a replacement for Windows. They said, quite rightly, that the Linux
operating system was better, and hoped that the punter would buy the
user interface (not so good).
Over the years, the user interfaces for Linux
multiplied, and became better, and Windows itself matured. These days,
you will often find marketing trying to defend Windows. Several of the
user interfaces for Linux are just as good as Windows, and the suites of
office tools are comparable. Under Linux, you can, in fact, run
emulators which will let you run Windows as a subset of Linux.
You understand that Linux, and all that goes with it,
is ‘free’ (there will be a delivery/packaging charge). A borough
council in North London who shall be nameless, recently commissioned a
report from CapGemini, to compare the costs of a Micro$oft system with a
Linux system. Surprise 1: the study was financed by Micro$oft! Surprise
2: The study showed that Linux would cost more. At the release press
conference, the journalists present laughed. I understand that to be
treated with contempt by journalists hurts.
When Micro$oft has to fund ‘unbiased’ reports to
show their systems are better, you know they are having to work hard to
sell their systems.
What is this leading to? There is a natty little
product just out, costing under 220 USD. It’s a hard disc with a full
Linux installation on board, all ready to run on your PC.
This is a portable 40 GB disc drive, the LaCie Mobile
Hard Drive designed by F.A. Porsche. The installation is the highly
reputable Mandrakelinux 10.0 distribution. The available space is 28GB
(32 GB of Linux is a Full installation: how big is WinXP?). The drive
connects over USB, so you need a fairly modern computer to use it. And
you don’t need to throw away your windows system.
This is a very good development - very good value for
money.
If you can’t afford this, you can carry a bootable
CD around with Linux on it, and work on any computer connected to the
internet. All you need is a Google Gmail account. At http://richard.
jones.name/google-hacks/gmail-filesystem/gmail-filesystem.html you can
find out how to use your Gmail account like a file system. Obviously,
you can’t change the data on your CD, so you have to put it somewhere
accessible to any computer on the internet. With GmailFS, you can do
just that. There is one small problem. Many of the modems used on
(Windows) computers will not work under Linux, so on your CD you will
need drivers for all the modems you are likely to encounter, together
with some diagnostic software to find out which one you need.
Psychological Perspectives: “Right-wing authoritarians”
and “social dominators”
by Michael Catalanello,
Ph.D.
“Our country desperately needs a mighty
leader who will do what has to be done to destroy the radical new ways and
sinfulness that are ruining us.”
“The only way our country can get through the crisis
ahead is to get back to our traditional values, put some tough leaders in
power, and silence the troublemakers spreading bad ideas.”
If you agree with statements like these, you might
possess a personality trait called, “right-wing authoritarianism.”
“Right-wing,” in this context, means a person who displays a submissive
attitude toward those whom he considers to be the established authorities.
Researchers in social psychology have developed questionnaires and
personality inventories that are designed to measure this personality
trait.
The usefulness of the notion of “personality traits”
is hotly debated in contemporary psychology. Those who advocate the concept
of personality traits point to evidence that we tend to think, feel and act
relatively consistently in various times and places. These consistencies,
they suggest, are best understood as resulting from “personality
traits.” Opposing theorists emphasize the flexibility of people’s
actions. In their view, people’s behavior is affected primarily by the
demands of the situation, and capable of changing substantially as time and
circumstances vary.
Psychologist Bob Altemeyer of the University of Manitoba
subscribes to the former view. He describes people scoring high on measures
of right-wing authoritarianism (RWA) as “relatively submissive to
government injustices, unsupportive of civil liberties and the (American)
Bill of Rights… punitive toward law-breakers, mean-spirited… happy with
traditional sex-roles, strongly influenced by group norms, highly religious
(especially in a fundamentalist way), and politically conservative…” In
his view, these are dogmatic individuals, incapable of considering the
potential justifiability of opposing points of view. Religious
fundamentalists in many faiths as well as members of terrorist
organizations qualify as right-wing authoritarians. Tests measuring RWA
have been shown to be reliable across time and valid in cultures outside of
North America.
People high on RWA are described as markedly
inconsistent and compartmentalized in their thinking. They tend to display
a relatively high degree of prejudice against women and minorities –
homosexuals, atheists, and followers of religious faiths other than their
own. According to Altemeyer, the degree of their prejudice is exceeded only
by that of another authoritarian group, consisting of those high on a trait
called “social dominance orientation, (SDO).”
Proposed by psychologists Felicia Pratto and Jim
Sidanius, people high on SDO, so-called “social dominators” can be
identified by their responses on questionnaires which ask, in various ways,
to what degree the person believes in interpersonal equality. Although
investigation of these individuals is in the early stages, it appears that
people high in SDO tend to be viewed as mean and domineering. They appear
driven to control and dominate others. When it comes to exhibiting
prejudice against minorities, these individuals take first prize. They
often gravitate to positions of leadership within organizations made up of
people high on RWA.
Some social dominators are skilled at presenting
whatever image will best propel them into power, without necessarily
believing in what they say they stand for. For example, they might consider
it more important to look religious than to actually be religious. They are
likely to encourage others to die for “the cause,” and profess their
own willingness to do so. When push comes to shove, however, they typically
show little interest in allowing that to happen.
Research in this area appears to be motivated, in part,
by an interest in understanding the factors that might affect a person’s
decision to join groups that promote violent and illegal acts like
terrorism or war crimes. It has been suggested, for example, that
institutions that promote or advocate strict Marxist-Leninist dogma or
religious fundamentalism could become places for the recruitment of young
people into terror organizations.
Because individuals who score high on authoritarianism
tend to exhibit racial and sexual prejudice, these prejudices can be a way
of identifying and influencing individuals who are at risk for recruitment
into dangerous authoritarian organizations.
Dr. Catalanello is a licensed psychologist in his home
State of Louisiana, USA. He is a member of the Faculty of Liberal Arts at
Asian University, Chonburi. Address questions and comments to him at [email protected]
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