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Money matters: How to learn from History
Graham Macdonald
MBMG International Ltd.
Having spent the last weeks sending out our
dissertation on the history of the stock markets, it’s time to move to
the present tense. In the current economic situation “tense” could
turn out to be particularly apposite.
For most people investments are largely synonymous with
equities. Even though the bond and commodity markets, as we discovered in
our history of the VOC, pre-date the equity markets and are larger,
equities are still where most people expect to see most of their capital
invested for most of their lives. Until recently the paradigm was that:
equity investment = growth
bonds (or high dividend equities) = income
Sadly those assumptions haven’t always been borne out
by events.
If we look at the returns generated by equity
investment (using the Dow Jones as a proxy) and the level of risk (using
standard deviation from the mean return) the level of risk seems at
various times to be higher than the actual returns would have compensated:
The figures look quite shocking but it’s only when
you start to think about what they mean in real terms and not as
statistics that it really hits home.
Anyone who invested in 1930 would have seen their
investment fall by an average of 5.64% every year for 10 years until the
US entered WWII. Anyone who invested in the Dow in 1960 would have gotten
back their capital plus an annual return of just over one third of one
percent - 0.33% - for each year that they invested when they cashed out
again TWENTY years later. Anyone who bought the Dow at its 1929 peak would
have shown a LOSS if they’d sold 44 years later. If they’d held on for
another 11 years after that, they would have just about broken even.
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Annualised
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Annualised
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Return
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Risk
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1910s
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3.00%
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19.20%
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1920s
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9.16%
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19.58%
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1930s
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-5.64%
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35.59%
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1940s
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3.28%
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14.16%
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1950s
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13.03%
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11.22%
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1960s
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0.28%
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12.45%
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1970s
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0.47%
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15.76%
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1980s
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12.62%
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16.22%
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1990s
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15.37%
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13.72%
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2000-
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-5.57%
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17.73%
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55 years and the DJ exhibited no growth. Yet we all
still believe that stocks do grow in value. Perhaps that’s because in
more recent history we’ve seen the DJ move from below 1000 points in
1983 to its current level of around 10.5 times that. If you’d only lived
through the last 20 years you’d expect that to be the norm - stocks to
increase 10 fold every 20 years and you’d invest every cent that you had
into the Dow (or the NASDAQ whose growth was even more dramatic during the
1990s but which only dates back some 34 years), but if you lived from 1929
to 1975 you’d be equally convinced that over time stock markets just
fluctuated and never actually went up!
However, we live in 2005 and we know that both of these
states can exist. We also know that methodologies exist that will make
certain types of equity investment suitable at some times and other types
suitable at different times. The key to successful equity investing is to
appreciate the possibilities of what might happen going forwards in the
market and what methodologies are suitable or unsuitable for those
possibilities.
The important lesson is that an inflexible dogmatic
approach to equity investing will end in tears whatever it may be. A stock
bull who invests long in all the stocks in the index would have been
suffering pain from 1929 to 1983. A market bear who constantly shorts the
market would have been wiped out by the 1050% increase between 1983-1999.
Both would have been bamboozled by the Dow’s gyrations down from just
over 11,500 to just below 7,500 and back up to 10,500 in the 6 years since
then.
However, by adopting various approaches to equity
investing that are suitable to prevailing market conditions, you could
have made good returns throughout.
We’ll talk more about that next week.
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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]
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Snap Shots: Digital Tips
by Harry Flashman
With seemingly everyone now having a digital camera,
and more of you getting one for Xmas, it is time for some tips on how to
maximize your investment. Many (in fact most) of these tips also refer to
film cameras, especially the point and shoot varieties. This is because
compacts have the same problems, whether digital or otherwise, and SLR’s
have the same advantages, whether digital or otherwise!
 It’s
all down hill from here!
The first tip is one that I give to everyone at least
once a year. “Walk several meters closer”! More good shots are ruined
by having the subject as small dots in some huge background. Make the
subject the hero. If the subject(s) are people, then use the telephoto
setting and still walk in closer. Fill the frame with the subject and you
do not need to worry about the backgrounds. Ever! And remember when taking
pictures of a group, get them to really cuddle up together, and don’t be
afraid to get them to angle their heads in towards the center. The happy
giggling faces will make a good photo.
Another easy procedure is to use filters to warm up the
scene, or polarize and add some intense color to the photo. “But my
point and shoot digital doesn’t take filters,” I hear you say. Sure,
but the lens is physically so small, it is easy to place something before
it. Various colored sunglasses can both polarize and add warmth to the
shot. You may want to put the camera on a tripod, while you hold the
sunglasses directly over the lens. You do not need a one meter high tripod
for this either. There are small ‘mini’ tripods you can use, which
retail for around B. 200 and do the job admirable. You can set the camera
on a table, or the roof of the car.
By the way, the polarizing effect is most noticeable
when you are shooting “with” the light, rather than into it.
When taking portraits outdoors, turn the flash on as
well. The camera will have set itself to expose the brightest part of the
scene, so the flash then brightens up the foreground subject.
Another trick to outdoors portraiture is to take some
shots with the sun behind the subject to ‘rim light’ the hair with the
halo effect. With the sun behind the subject, you also stop the screwed up
eyes from the sun’s glare, which is never very photogenic.
You should also explore your camera’s capabilities.
After all, you are not wasting expensive film, are you? Try different
setting and see what the end result can be, but remember what the settings
were if you want to repeat the effect!
One setting that most digital cameras possess is a
‘macro’ mode. Use this to discover new and exciting details in your
garden. The macro mode is usually depicted as a flower in your on-screen
menu. Remember that to get the best macro shots, look carefully at which
part of the subject will be in focus. The depth of field in macro is very
shallow, so note where the camera magic eye is indicating the focus point
is, relative to the subject, before slowly pressing the shutter release.
Another very simple tip, but one that seems to be
forgotten is the placement of the horizon line, which should be one third
down from the top of the LCD screen, or one third up from the bottom of
the screen. The horizon line (as the name suggests) should also be
horizontal!
Another tip is to buy another memory card. The one you
will get with the camera is too small. You will then try and put the
camera in a mode which lets you take more shots, but this is done at the
expense of sharpness. Buy a 512 MB card and use the highest resolution you
can. This way, if you do have a great shot, you can have it enlarged, and
still be sharp. Another advantage of having two cards is you never end up
with a full card and another great shot to be taken.
It should be remembered that when you bought this new camera because it
had plenty of megapixels, unless you run the camera at its highest
resolution, all the expense of the additional megapixel capability has
been wasted. You got a 4 megapixel camera, rather than an old 2 megapixel
for that reason! So enjoy your camera, this festive season.
Modern Medicine: Christmas Disease
by Dr. Iain Corness, ConsultantChristmas
Disease has nothing to do with Santa, but everything to do with Stephen.
Stephen Christmas, that is. Stephen, a young British lad, was the first
patient with a bleeding tendency recognized to have a different form from
“classical” haemophilia (or hemophilia if you come from the left hand
side of the Atlantic Ocean).
His condition was studied by researchers Biggs, Douglas,
and Macfarlane in 1952, who discovered that young Stephen was missing a
different coagulation factor than the more usual one (which is known as
Factor VIII). They named Stephen’s missing factor as Factor IX, and his
condition became known as Christmas Disease.
Just to confuse the issue, we also call Christmas Disease
by other names, including Factor IX deficiency, haemophilia II, haemophilia
B, haemophiloid state C, hereditary plasma thromboplastin component
deficiency, plasma thromboplastin component deficiency, and plasma
thromboplastin factor-B deficiency. There’s probably more, but Christmas
Disease has a much nicer “ring” to it. (Probably “Jingle Bells” at
this time of year!)
From the diagnostic viewpoint, it is very difficult to
differentiate between classical haemophilia (I come from the right hand side
of the Atlantic, so it is spelled with “ae”) and Christmas Disease. The
symptoms are the same, with excessive bleeding seen by recurrent nosebleeds,
bruising, spontaneous bleeding, bleeding into joints and associated pain and
swelling, gastrointestinal tract and urinary tract haemorrhage producing
blood in the urine or stool, prolonged bleeding from cuts, tooth extraction,
and surgery and excessive bleeding following circumcision.
Christmas Disease covers around one in seven cases of the
total haemophilia incidence and is around 1/30,000 in the general
population. This disease is also male dominated, being called a sex-linked
recessive trait passed on by female carriers. This means the bleeding
disorder is carried on the X chromosome. Males being of XY make-up will have
the disease if the X they inherit has the gene. Females, who have XX
chromosomes, are only carriers if either X has the bleeding gene.
Haemophilia has been noted in history for many years, and
Jewish texts of the second century A.D. refer to boys who bled to death
after circumcision (not an ideal way to go), and the Arab physician
Albucasis (1013-1106) also described males in one family dying after minor
injuries.
In more recent history, Queen Victoria of Britain’s son
Leopold had haemophilia, and two of her daughters, Alice and Beatrice, were
carriers of the gene. Through them, haemophilia was passed on to the royal
families in Spain and Russia, including Tsar Nicholas II’s only son
Alekei.
Initially the medical profession thought that the
bleeding tendency was caused by a structural defect in the blood vessels,
but in 1937, a substance was found that could produce clotting in the blood
of haemophiliacs. This was called AHG, or ‘anti-haemophilic globulin’.
However, in 1944 researchers found a remarkable case
where blood from two different haemophiliacs was mixed, both were able to
clot. Nobody could explain this until 1952, when the researchers in England
working with Stephen Christmas documented there were two types of
haemophilia. They called his version Christmas disease. So it became obvious
that there were two factors at work and when the different bloods were
mixed, they supplied for each other, the missing AHG’s.
The actual names were assigned to these AHG’s by an
international committee in 1962. Factor VIII deficiency became known as
Haemophilia A, and Factor IX deficiency as Haemophilia B or Christmas
Disease.
A Merry Christmas to you all.
Dr. Iain.
 Heart to Heart with Hillary
Dear Hillary,
I wish you all the best but I find many stories in your column very funny.
Sorry to tell you but I not find Thailand very different from other
countries in the world. The people in Thailand wish a good life for
themselves and their families. Same as everywhere in the world. The problems
for Farang coming here starts when they think they can buy anything for
money. You can never buy a people’s heart with money but what you can do
is the following: If you meet a nice Thai woman and you take very good care
of her then she can start take you a little bit into her heart but it is up
to you. If you treat people no good then people will treat you no good back.
Same as everywhere in the world. If you are coming here and you are in the
middle age, hairless with big stomach - then I suppose you have a mirror in
your home? Now, go to your mirror and take a look and you will have the
answer. And I don’t think you will find your self very sexy. If you are
coming here and looking for a good life - you can have it, but you have to
find the right woman for you same as in Europe. You must also look at her
mother because here is a hierarchy which means that the mother is the boss
in the family. If the mother is good then you can have a very good chance to
have a good relationship with your lady. If you wish to give somebody money
or other stuff, then you should give from your heart and not ask for
something back. If you not can give from your heart then I recommend you not
to give. And remember you are the boss of your wallet. In Thailand I have
meet many fantastic people but like any other countries in the world you can
also find bad people here. I will recommend the farrangs to act as follows:
You must remember nobody asked you to come to Thailand - you come of your
own free will. You are a guest in this country and you act like a guest. You
also act as you do in your homeland and I am sure you will not have any
problems in Thailand whatsoever. To all farrangs: I wish you good luck in
this fantastic land. Best regards.
David
Dear David,
Thank you for your letter, obviously written from the heart (and not in your
native tongue, so forgive my rewriting a couple of passages, Petal), and
from someone who seems to have found his way to happiness in this country.
The message of ‘Do unto others as you would wish them to do unto you’
works very well in all societies, European or Asian. There is no difference.
You put down Thai ladies at your own risk. This is their country. You will
never win. Remember that as well as David’s tips. So every time you walk
down Soi 6 and a bevy of beauties call out, “Hello sexy man!” have a
think about David’s description “middle age, hairless with big
stomach” and say to yourself whether you honestly really are a ‘sexy
man’, or whether you are being conned. When the relationship begins with a
falsehood, it won’t get any better. It’s as good as it gets. Beware, my
Petals!
Dear Hillary,
I posted some Belgian chocolates to you today as promised, unlike that
stingy Mr. Singha, I did keep my word. I hope they arrive safe and sound,
the boxes are wrapped in foil so I hope they will be okay. Thanks for
printing my letters to you. I’m Derrick, an Australian made in England,
but whose heart is 100 percent Thai. Thanks for your great column Hillary
and I wish you and all at Pattaya Mail a very Happy and Healthy
Farrang New Year. Lotsaluv.
Delboy
Dear Delboy,
Thank you so much. I hope they arrive safe and sound too. Wrapped in foil
sounds good, though I hope the post office doesn’t blow them up, thinking
they are some sort of bomb. I will also alert our messenger at the office
that if the said choccies are not delivered immediately to my office, I will
tear his left leg off and beat him to death with the soggy end (in a gentle
ladylike manner of course). I am glad you enjoy the column, Petal, and look
forward to helping you again in the New Year, and all the best to you, down
in Australia.
Dear Hillary,
Just a quickie. I want to send a little girl some money for Xmas/New Year,
but I’ve been told that it’s not too safe sending by post. As I won’t
be back in Thailand till around March/April, it is a bit late to bring it
over myself. What’s your suggestion?
Ralf
Dear Ralf,
That is nice of you, but your little lady friend will soon tell you the best
way, if you haven’t worked it out before Santa comes down the chimney. You
don’t post it, you transfer it to her bank account, and she will have one,
believe me! Posting is a no-no!
Psychological Perspectives: The death penalty debate: A case of emotion versus reason?
by Michael Catalanello,
Ph.D.
The high-profile and controversial
execution last week of Stanley “Tookie” Williams in California has
reignited the public debate on issues surrounding the use of the death
penalty. But will this new round of debate result in death penalty reform?
Don’t count on it.
Williams was cofounder of the notorious Crips gang,
reportedly implicated in countless killings and other criminal activity. He
was convicted for the 1981 killing of convenience store clerk Albert Owens,
26, and Los Angeles motel owners Yen-I Yang, 76, Tsai-Shai Chen Yang, 63,
and the couple’s daughter Yu-Chin Yang Lin, 43.
Over the years Williams has maintained his innocence in
the murders. He, nevertheless, renounced his former life as a gang leader,
and spent his time on death row writing children’s books about the
dangers of gangs and a life of violence. For his efforts Williams received
international acclaim, even being nominated for Nobel Prizes in peace and
literature. In the end, however, even appeals on his behalf by
international celebrities were not enough to enable him to escape death by
lethal injection. Even celebrity Governor Arnold Schwarzenegger refused to
intervene to commute Williams’s sentence to life in prison.
Like many attitudes, those concerning the use of the
death penalty, whether pro or con, are usually held quite firmly and
passionately. The arguments on both sides are familiar. The logic of the
arguments, however, does not always succeed in persuading, particularly
those most affected by the crime. Research has demonstrated that emotions
sometimes trump logic, particularly among those less educated or less
analytical.
Some arguments, such as those based upon appeals to
authority, religious, or cultural values, cannot be easily challenged by
appeals to “facts,” or “evidence.” Bible passages, for example are
sometimes used to defend capital punishment for murder. Few, however, would
tolerate capital punishment for those engaging in premarital sex or
adultery, although support for such punishments can also be found in
passages from the Bible. The contradictory injunctions, “You shall not
kill” and, “Let he who is without sin cast the first stone,”
are also Biblical.
Other arguments can be informed by research carried out
by social scientists, and can be factually challenged and refuted. For
example, the claim that it is less costly to execute a convicted criminal,
than to incarcerate him for life has been investigated, and refuted.
Likewise, the notion that the threat of execution acts as a deterrent to
other would-be murderers has been found to be without empirical support.
Nevertheless, such beliefs persist among the public, and arguments like
these continue to be offered in support of capital punishment.
Death penalty advocates often correctly point out the
harm experienced by the family and friends of the murder victim. A
victim’s family members can often be seen attending the murder trial,
applying whatever influence they can muster to obtain a conviction and
maximum penalty against the accused. Some victims take the position that
they cannot possibly achieve “closure,” find peace, and get on with
their lives until they see their loved one’s murderer duly convicted and
executed. The evidence of others who have done just that, despite a failure
to receive “justice” for some reason, fails to persuade that nonviolent
routes to achieving peace and closure are also available.
Death penalty advocates often base their arguments upon
appeals for justice, a sort of balancing of the scales. They, nevertheless,
appear to overlook the secondary trauma and suffering produced as a result
of the offender’s execution. For example, innocent family members of the
accused and convicted offender, already adversely affected by their loved
one’s heinous crime, are further traumatized when the offender is
subsequently killed by the state. It has also been demonstrated that those
who serve on juries at capital trials are prone to suffer the effects of
trauma as a result of their role in putting another human being to death.
Witnesses to an execution have also experienced psychological distress as a
result of the experience. Can the traumatization of other innocent people
be considered a “just” outcome? Who is to determine when the
requirements of justice are sufficiently fulfilled?
Our world is, after all, filled with injustice. One need
not look far to see evidence of this fact. Death penalty advocates appear
quite selective in their choice of injustices to attempt to rectify. If
fighting injustice were truly the motivating principle behind death penalty
advocacy, wouldn’t such proponents be equally vocal on other glaring
injustices, such as poverty, hunger, and similar human rights abuses?
Viewed in this way, the use of appeals for justice as a rationale for
capital punishment begin to appear more as rationalizations for further
acts of violence, perhaps motivated by darker impulses, such as hostility
and a desire for vengeance.
Crime is certainly not pretty. Murder is arguably the
ugliest of all crimes. Those impacted by crimes are understandably affected
emotionally, and anger is a quite natural human response to such events.
Punishment and retribution, however, by no means guarantee a sense of
closure, nor do they necessarily restore justice and dissipate anger. We
have other more humane means at our disposal for resolving anger and for
working toward social justice. Perhaps future societies will evolve away
from the use of violence as a response to violence. Perhaps we will begin
to develop and make use of more creative alternatives available to us.
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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
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A Female Perspective: What I think they do…
with Sharona Watson You
know, I really do not have the least objection to a man such as my husband
going to town. With his friends or for whatever reason. Maybe you find this
surprising, that I do not mind, what with the temptations that are possible.
As it happens, he seems to go to Pattaya quite a lot but that is for TV
work. Anyway, I will tell you why it is fine with me. First of all, believe
it or not, I trust my husband. I trust him one hundred percent. I mean, if
there is no trust in a relationship, let alone a marriage, then what is
there? OK, there’s love of course and I do love him, but love and marriage
can mean different things sometimes, can’t they? Anyone who has been
married or is married, especially with children, understands this. It is as
if love is where it all starts and then marriage is like a business
arrangement. I don’t want to sound like marriage isn’t great, although
sometimes it can be difficult, it is just that there seems so much to do all
the time, keeping things ticking over.
Secondly, frankly, I don’t think anybody else would
have him! I know this sounds unkind, more than it’s meant to be actually,
but I think what I really mean is that I think I know him so well - what the
English call “warts n’all” - that it’s just hard to imagine someone
wanting to be with him! Oh dear! That sounds even worse! I should stop with
this, or I’ll talk about his snoring. Except that no man seems to believe
they snore, isn’t that right? Even when they say they do, I get the
impression that secretly they think they don’t. It’s one of those things
about men…
Thirdly, another reason I don’t worry where my husband
goes is that this area of the Eastern Seaboard where we all live is such a
small community, that if he did anything he shouldn’t, then I’m sure
I’d get to hear about it almost straight away. I’m not sure whether he
thinks about this, but I suppose it’s the kind of thing that would really
scare a person who was trying to be dishonest. And if a person really did
want to deceive someone else, then they’d have to make up lots of big lies
to cover up the small lies and they would never be able to stop. You see it
in films all the time. Men pretending to go to one place and ending up in
another. This kind of lying takes up a lot of time and energy and you
can’t hide this sort of thing from a wife.
Fourth, if I ask my husband where he has been, he can
tell me. In fact, he usually does tell me, more often than I can be bothered
to listen to, especially if it’s about football. Don’t even get me
started on football! I know there are lots of women who enjoy watching it,
or even playing it but I am not one of them! Andy used to play all the time,
even when our children were babies and I know that I am not alone when I say
that I think it is ridiculous how much time it takes away from the weekend.
Back to my husband going out and if I wanted to, which I don’t, I could
always check where he has been by talking to his friends, or emptying his
pockets (which I do anyway). Men always think they are cleverer than they
really are. It is one of the secrets of being a woman that you know they are
not. I stay quiet (most of the time) and let him think he is clever and then
sometimes I give him a taste of his own medicine and say something like;
“The worst sort of delusion is self-delusion!” That shuts him up.
I don’t even want to think about what men talk about
when they go out. Probably football or some other sport and drinking, which
they seem to think is a sport sometimes. I don’t think my husband would
talk about other women in the same way as we women talk about handsome men
and boys, unless maybe it’s to talk about the “proportion” of the
female. Anyway, he wouldn’t talk in a bad way, in fact he tells women that
they look good to their faces and I like that. I just can’t imagine him
talking in a vulgar way, even in the company of other men. Even with his
best friends - they are just like grown up children.
He’s bugging me to plug this week’s show, so I
suppose I should. He always gets really excited when he goes to an art
gallery. He’s a painter so it’s not surprising. Andy went to meet Alan
Kirkland Roath, who runs Gallery Opium on Thepprasit Road in South Pattaya.
I thought, “That’s brave”, opening up a modern art gallery on a
commercial basis. I mean, Pattaya’s not renowned for its modern art scene
is it?
Well, it turns out that there are quite a few galleries
opening up. Lots of people know the “Art Cafe” in Naklua of course, run
by Joe Stetton. As for Alan Kirkland Roath, he is obviously a man who likes
a gamble, or a ‘punt’ as Andy called it. He used to work in the casino
business in the UK so he’s probably used to working out the odds and
casinos never lose, do they? And suddenly, the more I think about it, there
seem to be artists and studios and galleries popping up all over the place.
In fact, Alan Kirkland Roath was one of the organisers of the “Art Raising
Thoughts” exhibition in the Royal Garden Plaza in October. I went to that
exhibition and it had a really good feeling about it. So maybe he’s on to
something. As for Andy, I know exactly where he was that evening. In fact I
can watch it on TV!
Next week: Oh no! The World Cup!
[email protected]
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