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Money matters 

Snap Shots  

Modern Medicine  

Heart to Heart with Hillary  

Psychological Perspectives  

A Female Perspective

Money matters: The Three ‘R’s - Risk and Reward and Returns (Part 2)

Graham Macdonald
MBMG International Ltd.

If you’d been psychic enough to pick leveraged tech funds until the crash, switch to bond funds in March 2000, move back into equities during the Iraq war and then move between commodities and property at the right times since, then your original $100 would today be worth $426!

We don’t know anyone blessed enough to make those precise calls at those times (Scott’s portfolio adjustments actually took in many of those moves BUT never exposed the investors to the extreme risks of taking 100% exposure to a single asset class). What we do know is that more investors were likely to choose the worst performing than the best performing funds.

It always makes us cringe when we receive marketing materials sent to us in error by inexperienced new financial advisors in town recommending specific market investment funds that have performed strongly over the last 1 or 3 years. They obviously haven’t seen the piece of research that we saw a couple of years back calculated that investing 100% of your portfolio on January 1st each year into what had been the very best performing fund over the previous 12 months would actually ensure a diminution of your capital by around 90% over most 10 year periods!

In the table here, we’ve tabulated the best performing fund of each year for the last seven years - irrelevant of sector or geo-political classification. We have also done the same for the worst performer of each year. As well as this you can see the average for each year and Scott’s PSG funds. Once we accept that we’re not likely to be able to guarantee picking the single best investment asset for the next 12 months, year in and year out, then looking at the performance versus the potential risk (i.e. the worst fund) and against the average become the most meaningful comparisons:

To us, this approach of consistency and capital preservation ties in with what most investors are trying to achieve. Some investors are prepared to take risks with their returns and their capital to try to ‘shoot out the lights’ in any given year, but most are realistic about their aims for their investment capital.

So, having satisfied ourselves that the returns are everything that they might reasonably be expected to be, that finally brings us round to assessing this aspect of risk.

The first aspect to consider is the way in which the skill of the fund manager has manifested itself in the investment decisions - his ability to add value by increasing returns and reducing risks by making the right investment decisions. In our arcane world of investment jargon, we refer to this as ‘Alpha’.

Over the long term, even in conditions that we have argued are not favourable, only 3 actively managed global funds have achieved higher Alpha than Scott over the 7 year period. In terms of the ability to generate returns and to reduce risks, if you choose the PSG portfolios then you have one of the top managers in the offshore investment universe making decisions for you.

However, that’s only part of the story; how does Scott choose to apply this Alpha - for increased return or for reduced risk? We’ve already seen that the return numbers are strong - should this concern us that the portfolios have been taking too much risk? As it turns out, no we shouldn’t.

Over the last 3 years no portfolio has exhibited less risk (in terms of variance from the average return - i.e. returns that shoot up and down like a rollercoaster). Over 4 years and 5 years, only 2 portfolios have. Over 5 and 7 years only 2 portfolios have sustained lower drawdowns (i.e. managed to lose less money in that 2 year period to 2002 when the PSG funds were off by just over 4%).

If there is a criticism therefore of the PSG funds you could say that perhaps they are skewed slightly too much in favour of caution - one of the most successful fund managers uses his Alpha to achieve exceptionally low risk and returns that are consistently very good rather than sporadically ebullient. We make no apologies for that - investors who suffered the 4% loss in the period to 2002 wouldn’t have returned so quickly to profitability if greater capital risks had been taken and greater drawdowns suffered. We believe that most investors would have been happy to see the relatively drama free gradual accrual of returns over the last 7 years rather than the greater excitement that almost all other funds generated while also generating lower returns.

Last month may have been a good month statistically on terms of being back on top of the podium in terms of short term performance, but we’re not actually too concerned about that. For the long term, the Miton-Optimal methodology remains the right way for most people to set their capital to work for them without taking unacceptable levels of risk.

  Cumulative 2005 2004 2003 2002 2001 2000 1999
Top Fund 426.67 26.63 28.40 23.40 20.03 3.16 24.94 37.46
Bottom Fd 21.41 1.64 -44.42 -7.37 -25.95 -33.40 -10.93 -6.86
Average Fd 121.47 10.08 13.90 1.67 -6.18 -17.68 7.01 15.3
PSG Fds 157.91 7.55 10.72 4.86 -0.36 -3.73 9.37 20.54
PSG Vs Top -268.77 -19.08 -17.68 -18.54 -20.39 -6.89 -15.57 -16.92
Vs Bottom 136.50 5.91 55.14 12.23 25.59 29.67 20.30 27.40
Vs Average 36.43 -2.53 -3.18 3.19 5.82 13.95 2.36 5.24

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: Digital distress

by Harry Flashman

After almost 100 years of producing film cameras, the manufacturers seem to have production of the ‘bullet-proof’ camera down pat. It is very rare to hear of these types of cameras having a problem affecting a large number of a particular model, particularly when you look at the more ‘manual’ cameras such as the Nikon FM2. However, the same cannot be said of the new ranges of digital cameras.

Since digitals are by their very nature all electronic, you are in a new and exciting area, but you are also in a new and frustrating area. Just as we have come to accept that our PC’s will malfunction because of their electronics, our digital cameras will as well. A brief time spent on the internet will soon unearth dozens of distressed owners with identical complaints. With the rapid pace of progress, and the manufacturer’s need to produce bigger and brighter models in as short a time frame as possible, quality glitches often do not show up until that particular model has been in the marketplace for a few months.

For example, Canon found a problem with one of their digitals in high temperatures and high humidities. Apparently in the extreme temperature conditions, parts of the wiring come loose and the camera stops recording images or records distorted images. Canon Asia is directing customers to their service centers in Singapore, Malaysia, Thailand, the Philippines, and Malaysia. Cameras found to be suffering from the problem will be fixed free of charge, regardless of warranty status, the company said.

There is also an enormous swing towards the very small digitals such as the Canon Ixus, now offering 5 megapixels and an optical zoom lens. Smaller than a pack of cigarettes, these will fit in a pocket or handbag very easily, and the marketplace is flooded with them from the competing brands.

I had the opportunity to test several of these in the last month, and the ease of use varied enormously. Some do not have any focusing light, so night photography is total hit and miss. Mostly miss. Others, in their quest for miniaturization, make it such that when holding the camera your fingers obscure the in-camera flash. As always, it is ‘caveat emptor’ (let the buyer beware), so try before you buy is needed here.

Another aspect of photography that is lost when going from a standard SLR to the new ‘mini’ digitals is the loss of the ability to use selective focus (a blurred or out of focus background is used to dramatize a sharply focused foreground and thereby accentuate the subject, especially useful in portraiture) due to the very short focal lengths of fixed digital camera lenses. Depth of field (how far the range of focus extends in front of and behind the focus point on the main subject) depends on the focal length of the lens, and to a lesser degree the aperture setting. The shorter the focal length of the lens the further the plane of sharp focus extends. Digital camera lenses (both zooms and prime lenses) have very short focal lengths which create great depth of field even at wide apertures and long telephoto settings, the usual settings to produce a shallow depth of field in normal ‘film’ cameras. This means that when trying to take portraits, you do not get a nice soft blurred background. Unfortunately, if you want to take good portraits, you will need a digital SLR, not one of the mini point and shoot digitals. However, you can still take a reasonable portrait by using the longest telephoto setting and then walking in close and making the head and shoulders fill the frame as much as possible, thus losing the background as much as possible.

Another problem with the miniaturization possible with digitals is that because of the small physical size, the flash ends up very close to the lens of the camera. This will mean that the likelihood of ‘red eye’ is very much greater than with other cameras. Some have ‘pre-flash’ to try and help stop this, but if you like to shoot portraits and you don’t want your subjects showing red-eye, the definitive answer is really an SLR with its own tele lenses.


Modern Medicine: Counting your calories

by Dr. Iain Corness, Consultant

There are those readers who religiously count their calories, anxiously scanning the supermarket shelves for items that are low in calories, as they fight the never ending battle of the bulge.

However, as I found out the other day, counting calories is not all that easy, and in some ways downright confusing. I was led into this wonderful world of confusion by a visitor to the hospital who took me over to a nutrition display and insisted I read the calories that each portion contained. He had noticed that the calorific value was expressed in “kilocalories” and suggested that if this were the case, the small fish containing 145 “kilocalories” was really delivering 145,000 “calories”, enough for a small army of people for several meals. I began to think that perhaps the old parable of the loaves and the fishes had a certain ring of truth to it.

Deciding, in all innocence, that the nutritionist must have meant “kilojoules” I made a trip to the display the next day to speak to the young lady. She listened to me, smiled sweetly, and told me that it was “kilocalories” and not “kilojoules” and was firmly defending her position.

It was time for me to regroup and reconsider. Was my previous medical advice, that used to revolve around 1,500 calories a day for weight loss, using the wrong parameters? It was time to consult a senior colleague, Dr. Google!

One quick Google consultation was enough to show me just how ‘inexact’ some of our scientific measurements and nomenclature really are. A calorie, it appears, is the energy it takes to raise the temperature of one gram of water by one degree Celsius. A kilocalorie was the energy needed to raise the temperature of one kg of water by the same one degree Celsius. Kilocalories was then 1000 calories, as you would expect by the name. After all, 1000 meters is a kilometer, is it not?

So far, it looked like I was going to be able to take the high moral ground, since food labeling always has “calories” per portion, which is generally around 100 calories. However, I was too hasty. It turns out that in Europe, manufacturers of pre-packaged food must state the nutritional energy of their products in “kilocalories” (kcal) and “kilojoules” (kJ), where one kcal is equivalent to 4.2 kJ. (I hope you have been following this closely, as I might ask questions at the end of this column!)

To really confuse the average weight watcher, the USA mandatory labeling has the nutritional labeling in “calories” instead of kcal. And to really complicate matters, the “calories” have the same numerical values as the “kilocalories” of Europe. My portion of fish was 145 kcal in Europe, but only 145 cal in America! This was verging on the more than faintly ridiculous. This fish had 145,000 “calories” in Europe but only 145 “calories” in America. With those sorts of values, how can Americans be so obese as a nation, consuming one thousandth of the energy values of the Europeans?

Further Googling brought out the fact that in food packaging “calories” and “kilocalories” are considered equivalent to each other and are used interchangeably. So my poor old fish has both an energy value of 145 “kilocalories” and 145 “calories”, making a mockery of the entire scientific system of measurement.

Mr. Google assured me hardly any confusion arises in practice, as even in Europe, which uses the kcal symbol, they will just refer to these as “calories”.

I am glad Mr. Google is so clear on this, as I am certainly not. However, in the meantime, if you must count “calories”, pick the small numbers and feel immeasurably thinner!


Heart to Heart with Hillary

Dear Hillary,
I see in today’s Heart to Heart, Fri. 25 November, you had to sensor cr*p in the letter from Mike because this is a family newspaper. I don’t understand why this was necessary. In this same issue, Howie Reed in his Square Ring column, on filling seats at a boxing match, quotes, “Toney can sell tickets, can fight and can put ass’s in the seats.”
I am sure all families the (sic) read the Pattaya Mail are familiar with the words crap and ass’s, so why should crap be censored? We all know crap comes from ass’s.
Charlie Brown

Dear Charlie,
Thank you for the physiology lesson, but if I wish to censor coarse vocabulary in this column, I will continue to do so. What Howie Read writes is of no concern of mine. I do not go to displays of pugilism, even if it does put long eared quadrupeds of the horse family in the seats (Pocket Oxford definition of ass). I hope they enjoy the fights.
Dear Hillary,
With each new online issue of the newspaper, I click your column first. I am variously amazed, shocked, saddened, amused, entertained or simply delighted by the questions/situations that are sent to you. I think you handle each question with integrity, sincerity and humor. I have learnt much from your column and believe I have a better appreciation of the Thai/Farang lifestyle because of your replies. My sincere thanks.
Grateful
P.S. Mon Cheri, I will be in Thailand on the 28 December. Would a fine Australian sparkling Pinot Noir, (the French won’t allow us to call it champagne anymore - especially because it tastes better) and boxed chocolates be a suitable reward for your teachings?
Dear Grateful,
Thank you! Let me assure you that Hillary does not have one xenophobic taste-bud that would preclude her enjoying a good old Aussie sparkler coming under the generic heading of Methode Champenoise. And the choccies to go with it! Who said that Australians were just a bunch of convicts? Convicts with ‘class’ it seems! There is only one little problem, my Petal, Hillary will be away for the New Year celebrations, but if you would like to leave your ‘donation’ at the office, suitably addressed to Hillary, I will think of you fondly on my return. After the requisite chilling and hearing that satisfying noise of the cork going ‘pop’ I shall certainly raise a glass to your good health. Thank you again, it is always so nice to meet a gentleman.
Dear Hillary,
Why is it that my Thai girlfriend shouts into the phone when she is talking to her Thai friends, but when she speaks to our native English speaking friends her voice drops several degrees, so much so that all my friends complain they can hardly here (sic) her whispers? My friends say that their Thai ladies are the same, bellow into the phone until a foreigner comes on the line and then things go quiet. Any ideas, Hillary?
Deaf Don

Dear Deaf Don,
This is an easy one to explain. You are forgetting that your Thai ladies have to speak a foreign language when they speak in English. Being Thais, they do not want to show ignorance or poor pronunciation, so to disguise their shyness in speaking the language, they speak very softly. When they are talking to other Thais, they want to make sure that the other party has heard and understood, so they do speak louder than normal. Think about this, how do you go when you speak Thai? Do you boom it out, or tentatively say the words? Just accept that this is the way in Thailand. Do not try and change it - or do so at your own risk. Hillary has warned you.
Dear Hillary,
We are fairly new to living in Asia and I am not sure what to do with our maid. She came with the apartment as the previous tenant recommended her, and seems to be a very nice person. The work is not hard and she whips through the place in a few hours, as there is only the two of us (husband and me). My problem comes with the number of days off that she seems to have. It is not that she does not come to work, it is that she tells me that she has to see her mother, or it is a special day for Chinese, or another Buddha Day, so she will not be here on some day next week. Is this the usual for Thai maids, or am I being made use of?
Helen

Dear Helen,
There are many reasons that Thai maids will take time off. Family pressures, family needs, too hard, too boring, no ‘sanuk’ (fun), the list is endless and most you will not understand anyway. Provided she keeps up with the chores expected of her and is giving you sufficient notice, then I believe you are stuck with the current situation. However, have you sat down with her and explained what you expect of a maid? You may need a Thai friend to help you with this, as it is easy for a communication breakdown to occur, with unsatisfactory results for everyone.


Psychological Perspectives: Airport shooting highlights human rights problems faced by people with mental illness

by Michael Catalanello, Ph.D.

A man was shot to death by federal air marshals at a Miami airport last week. Media reports indicated that the man, Rigoberto Alpizar, an American citizen, ran from an aircraft after claiming to have a bomb in his backpack. No bomb was found.

It was later revealed that Mr. Alpizar may have been mentally ill, suffering from a bipolar disorder, and off his medication.

This tragic incident is by no means unique. A nonprofit group called Treatment Advocacy Center this year published results of a study indicating that people who are mentally ill are four times more likely to be killed by police as compared to other members of the public. Moreover, people who suffer from a severe or chronic mental illness face a number of daily obstacles few of us can even imagine.

First, the mentally ill are confronted with the problem of dealing with the disturbing and potentially debilitating symptoms of a mental or emotional disorder. One’s symptoms might range from nervousness, anxiety, and depression, to hallucinations, and bizarre and frightening delusions. The simple process of reliably distinguishing between reality and fantasy, an ability taken for granted by most of us, can be a major challenge for a person experiencing a severe thought disturbance, known as psychosis.

Further, the mentally ill are often misunderstood and demonized by our societies. People often look upon mental disorders as a sign of low intelligence, indecisiveness, or worse. Some groups hold that the mentally ill are impious, immoral, even influenced or possessed by evil spirits. Despite the development and availability of effective treatments for mental illness, there is a persistent belief in our societies that psychological disorders are untreatable.

Ironically, Mr. Alpizar’s killing approximately coincided with December 10, designated as Human Rights Day, a day the World Health Organization (WHO) has dedicated to people with mental disorders. The following important facts are offered by WHO on this occasion:

* 450 million people worldwide are affected by mental, neurological or behavioral problems at any time.

* About 873,000 people die by suicide every year.

* Mental illnesses are common to all countries and cause immense suffering. People with these disorders are often subjected to social isolation, poor quality of life and increased mortality. These disorders are the cause of staggering economic and social costs.

* One in four patients visiting a health service has at least one mental, neurological or behavioral disorder but most of these disorders are neither diagnosed nor treated.

* Mental illnesses affect and are affected by chronic conditions such as cancer, heart and cardiovascular diseases, diabetes and HIV/AIDS. Untreated, they bring about unhealthy behavior, non-compliance with prescribed medical regimens, diminished immune functioning, and poor prognosis.

* Cost-effective treatments exist for most disorders and, if correctly applied, could enable most of those affected to become functioning members of society.

* Barriers to effective treatment of mental illness include lack of recognition of the seriousness of mental illness and lack of understanding about the benefits of services. Policy makers, insurance companies, health and labor policies, and the public at large - all discriminate between physical and mental problems.

* Most middle and low-income countries devote less than 1% of their health expenditure to mental health. Consequently mental health policies, legislation, community care facilities, and treatments for people with mental illness are not given the priority they deserve.

It is important for us to develop an increased awareness and sensitivity to the problems faced by those with mental illness. Treating these individuals with greater understanding and compassion makes good sense, both from a humanitarian and a practical, economic perspective.

To learn more about mental health issues, visit the WHO website at http://www.who.int/, or that of the American Psychological Association at http://www.apa.org/

Dr. Catalanello is a licensed psychologist in his home State of Louisiana, USA, and a member of the Faculty of Liberal Arts at Asian University, Chonburi. You may address questions and comments to him at [email protected], or post on his weblog at http://asianupsych.blogspot.com

A Female Perspective: At the end of the day

with Sharona Watson

They say that behind every great man is an even greater woman. Well, I’m not sure about that. My husband of 14 years is not someone whom I immediately think of as a “great” man. I certainly don’t think of myself like that. Sometimes I look at him and I think, “Oh blimey!” He’s bald, has a bit of a belly and seems to be in high dudgeon for much of the day. But then again, sometimes I remember that he’s really busy with TV, writing, travelling, giving talks on this and that, not to mention teaching. And I must say, he is a loving father. He loves being with the children and even with me (when it suits him). In fact, he didn’t need me to remind him this time that he’s working too hard and needs to spend more time with the family. And seeing as he’s taking a break from writing for the paper whilst he puts his book together, I thought to myself, “right, it’s my turn now!”

Not only that, but as his TV show is called, “Perspectives” it seemed like a good idea to call my column the same but from a female point of view. That’s it. A real husband and wife team! But if you think that this column is going to be like his, you’re wrong. In fact, I’m going to be making fun of him and maybe some others, on a pretty regular basis. I’m going to be giving my perspective, from where I stand, from what I see, as what is known as a “trailing spouse”.

However, I might mention his show a few times, because he gets to meet some interesting people. But what do you think I do when he’s off in Pattaya or Rayong, Bangkok or India? I tell you what I do. I look after our two girls. So one’s fourteen and kind of looks after herself you think? Well, let me tell you something. She needs a lot of looking after! And the six year old? She’s busy as a bee. Where do they get their energy from? Mine is completely gone by the time even nine o’clock comes around. Sometimes, no make that often, I fall asleep next to the little one when I’ve put her to bed. Then I wake up and feel kind of drowsy and crawl upstairs and collapse.

Of course, my husband comes home after filming and it’s late and he cannot understand why I’m asleep at all. He seems to think it’s all so easy, looking after a house and the children most of the time. Well, Hallas! (Enough!) Every woman knows, and every man who’s ever bothered to try knows, that it’s extremely tiring! So now, he’s looking after the children and I’m doing the writing. Now we’ll see who falls asleep next to their child!

The other day, he came back and he was telling me about one of his guests (he likes talking). Thor Halland was his name and he sounds like a very interesting guy. I don’t get jealous or anything that my husband’s out filming and meeting these people, but I would like to get to know them myself. At least that’s how I feel about most of the guests on the show I hear about. I listen to what Andy (that’s my husband) says and I think, “You know, I’d like to invite him over to our house for dinner, or tea or something.”

Thor Halland runs an expats group in Pattaya but he’s done all these brilliant things and he’s done so well for himself that apparently he’s ‘retired’, even though he’s still really young. One of the things I really appreciate is how he uses his time. Thor studies whatever interests him at a high academic level. So, already he’s got about three degrees in things like History and Philosophy. Of course you can easily study online now with really good universities. But it takes a lot of time and a lot of money.

When he was at his last university in England, called Birkbeck College in London, Thor was a member of the team which won ‘University Challenge’! I thought this was incredible. ‘University Challenge’ is a very popular television programme in which all the best colleges and universities take part. And they are all desperate to win!

Thor was saying that the colleges from Oxford & Cambridge always think they are going to win but Birkbeck beat them, and they received a lot of fan mail saying how pleased they were that they had beaten ‘the snobs’. It was in all the newspapers in the UK but what was funny was that all the programmes are ‘pre-recorded’ by about six months. I think everyone imagines that they are either ‘live’ or far more recent. So Thor was saying that he had almost forgotten about it by the time it came on TV.

Actually, Andy’s show is the same. He pre-records each series, so he’s basically doing other stuff by the time the shows come out on TV. I suppose if you’re not interested in how TV programmes are made, you never think about it. But I think it sounds quite clever.

Thor was also talking about his passion for the church. He’s working towards becoming ordained and he loves ‘old fashioned’, very English churches with very traditional services, with all the rituals. I must admit, when I first went to England, in 1991 it was a bit of a shock to see all that, but now I have become used to it. Although I don’t really see it very much over here in Thailand, of course. I prefer the temples. They are soft and gentle places. I always found churches cold and hard.

Andy’s coming to the end of another series of ‘Perspectives’ on TV, which means he’ll be working harder than ever on the next. Christmas is coming and I’m hoping to see more of him over the holidays that I usually do, unless he goes on ‘boys nights out’ with his mates. What do they do?

Next week: What I think they do…
[email protected]