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Money matters:
Graham Macdonald MBMG International Ltd.
Running Scared, part 4
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Company/Fund Risk of Losing X %
1-5 in 2008 5-25 in 2008
50-75 by 2010 75-100 by 2010
Citibank Very
High High Moderate
Low
Berkshire Hath Very
High High Low
Very Low
Man Moderate Low
Extremely Low Negligible
Core Diversified Moderate
Extremely Low Negligible Negligible
Iridium Low Extremely Low
Negligible Negligible
Asian Century Extremely
Low Negligible Negligible Negligible |
Investment approaches, continued
Continuing on from the UK commercial property example started last
week, think of a business sector that you can name 10 companies in - airlines,
car manufacturers, hotels, restaurants - imagine 8 of the businesses out of
those 10 closing down forever and no-one else taking their place (that is 3-4
times more extreme than what happened during the Great Depression. Think of it
another way - imagine 8 out of every 10 people that you know who currently have
good jobs suddenly being made redundant tomorrow AND not ever having any hope of
getting back to work). That is basically the break even point for Scott on this
trade - that’s how bad things would have to be for Scott just to get his money
back on this trade - to lose on it, things would have to be even worse than that
- 9 out of 10 people without jobs? No-one having a job any more? So trades like
that - where logic dictates that the pricing is lower than any conceivable
reality of how bad things can get - are good trades.
There is a 0-70% upside and a downside that can only be envisaged in purely
theoretical terms. Buy things that are selling too cheaply and when the markets
realize that things cannot actually get that bad (maybe in 6 months to a year’s
time when Scott’s commercial properties are only 50% occupied - which would
probably equate to something like the 40-70% gain range that we are expecting
here) then the market no longer has to guess, it now has the new occupancy and
yield data and it re-prices the asset allowing us to pocket the gain and walk
away very nicely thank you.
3) Reactive trading - Man Investment funds do not take positions, they respond
to market data. We do not have to predict what will happen in any market
because, since I started to type this particular sentence, Man will have
assimilated thousands of pieces of computer data about what has happened in the
last minute and changed all their positions accordingly. Ninety-nine percent of
the time, Man will do extremely well because their systems are reacting to what
has JUST happened not predicting and not taking positions based on any other
interpretation than latest events.
With any investment there is always kurtosis. This is where the risk of an
extreme event will wipe an investment out altogether. With the Man funds this is
actually much lower than with say Berkshire Hathaway - but every single stock
has reasonably high kurtosis, whilst every multi-asset fund has a much lower
kurtosis and Core Diversified because of its diversification has negligible
kurtosis. So when people talk about risk it is important to assess that
properly. A good financial advisor should care deeply about the impact of what
we do. That is why it is so important to fully understand what risk is now and
to explain that message to as many people as possible.
We should not be frightened of risk or of talking about it - it is important to
understand it in order to feel comfortable with it. You have to invest
accumulated wealth in order to make it grow BUT you have to protect it too. My
personal take on risk would probably look something like this:
When you look at it like that, our role is even more important now than it has
ever been. Over time, high returns are a component of making what you can when
you can and avoiding the real pitfalls. As we mentioned earlier, Thai equities
are still 75% down in hard currency terms compared to just over 10 years ago -
someone with 1 million Quid in the bank looking at retiring in 2008 would have
just £250,000 now if they’d been invested 100% into the SET in the mid 1990s -
worse still, they would probably have pulled the plug a couple of years back and
walked out with just over £100,000! We were too terrified to invest in the SET
when it was above 1600 and you could only get 36 baht to the pound.
We expect to make good money for our clients this year, next year and,
hopefully, every year BUT we also fully understand the risks - we are finding
ways of making money despite the worst investment conditions for a long, long
period of time but we have to understand the risks because then actually we can
be more, not less, confident when we talk to clients. Our role for clients has
never been more important and the one thing that we are not frightened of right
now is sticking our heads over the parapet and saying, “We don’t know what will
happen from here; no-one does. This is potentially a new paradigm and any
approach to money management should reflect that. It is a time for caution and
flexibility and diversification. The consequences of any other approach are
truly terrifying!”
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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]@mbmg-international.com.com
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Snap Shots: by Harry Flashman
Holiday photography
 The
best way to relive all holidays is through the photographs you bring
back. However, like the fish, just how many ‘got away’? And since they
were taken while you were on holidays, it will mean that you might just
have to wait till next year.
Many years ago, I used to carry a Polaroid back for my camera, so that I
could take the shot and review the result in 60 seconds, just to make
sure I’d got it. Now you can see if you’ve got it in one second.
Digitally!
As much as I loved film, digital photography makes much more sense, in
many ways. The first of these ways is that ability to see instant
results. If you haven’t got the shot you wanted, you are still there and
can take it again. For that reason alone, you should take a digital
camera with you on holidays.
However, there are many other good reasons, including the fact that the
memory chip is not affected by the airport security scanners. You can
take two or three memory cards with you without using up space in
handbags. And photo shops all over the world can read the cards very
easily and burn you a CD instantly.
However, to come back with some cracker holiday shots is not all that
difficult, it just needs some thought and time. Not taking the correct
amount of time in shooting is probably the number one reason for getting
disappointing results. The corollary is that by taking time, you will
get good results!
Take a look at the shot of the Cambodian girl on the bicycle. This was
taken by keen amateur Ernie Kuehnelt and took one hour. No, he did not
get the girl to cycle back and forth for 60 minutes, but he stayed in
position (in the shade) close to a bridge in Siem Reap for one hour.
During that time he snapped interesting looking subjects and this shot
was one of the best. It is a wonderfully evocative shot that shows the
life of a Cambodian peasant girl. By the way, the shot was taken on an
AF Nikon using the follow focus facility, and it certainly worked well.
What is worth noting from Ernie Kuehnelt’s photograph is that he came
back with images of Cambodia, not photographs of “me beside a temple” or
“me taken with our guide”. Your camera should be used to record the
places you visited, not just you on your holidays. The former kinds of
photographs are interesting. The latter are not, other than to your
mother!
Before your trip, you should also have some ideas on the subject matter.
This you can get from the internet or your friendly travel agent, but if
you are going to Koln, for example, you have to put some time aside for
the cathedral and the river transport there. Or if you are going to
Canada, try to make sure you get a moose. Or if going to the US, look
for Mickey Mouse.
What camera should you take? Well, unless you are hoping to send the
photographs to National Geographic, I would probably suggest you leave
the digital SLR at home. Why? Because lugging an expensive camera around
tourist spots can be a chore, as well as worrying about its welfare.
Ever tried to fit one, and lenses, into a hotel security box? A point
and shoot compact with a mini-zoom would be my choice, and a large
capacity memory card. With the price of these going down all the time,
look at seeing if you can take a 2GB card with you.
Finally, think about how you are going to present the results. It is
always a huge temptation to bring out folders of photos as soon as you
get back. Wait! Sort them, keep the good ones, delete the bad. Put your
best shots on CD and think about an on-line site that will host your
shots for the world to access. Your shots could make you famous!
Modern Medicine:
by Dr. Iain Corness, Consultant
Dupuytren’s Contracture - The ‘Viking Disease’
What has Samuel Beckett, Ronald Reagan, Margaret Thatcher,
and Bill Nighy got in common? And for that matter, you can add my name to
that list. The answer is not Alzheimer’s Disease, but is the ‘Viking
Disease’.
The early Vikings colonized much of Europe over 1,000 years ago but the
longboats carried more than just warriors. They carried a remarkable disease
producing contracture of the fingers on either hand, and which was later
called Dupuytren’s Contracture after Baron Guillaume Dupuytren, a surgeon
who first described the corrective surgery for the condition.
Dupuytrens contracture generally affects the fourth and fifth fingers of the
hands and slowly flexes the fingers towards the palm of the hand. Eventually
the fingers cannot be straightened out and the sufferer cannot put his hand
in his pocket without catching the finger(s) and it also becomes difficult
to shake hands, as the flexed fingers make it difficult to open the hand.
The amount of flexure is stated in degrees - up to 60 degrees covers mild to
moderate cases, whilst more than 60 degrees is considered severe
contracture. It is quite simple for the sufferer to straighten out the other
fingers and measure the angle of contracture of the affected digits.
Since it is considered to be an inherited, genetic disorder, it is not a
condition that is accepted by insurance companies in many countries. Males
outweigh females in the ratio of at least 3:1 and the vast majority of cases
are also older than 50 years. Those of us with this condition can
righteously say that our great-great-great-great-great grandmothers were
raped by some dastardly Viking, famous for their longboats and rape and
pillage.
Now the Viking rampage lasted for hundreds of years and went further than
you might imagine. There is even some evidence that the Vikings set foot in
America about 300 years before Christopher Columbus, but they didn’t have
such a good publicity officer.
The Viking longboats also influenced the design of maritime vessels all over
Europe, and a visual descendent of the Viking longboat was still used till
very recently in Portugal.
The far-reaching nature of this Viking gene is seen in the incidence in
various nationalities:
America - approximately 5-15 percent of males older than 50 years are
affected.
Norway - approximately 6 percent of individuals older than 60 years are
affected.
In Australia, 26 percent of males and 20 percent of females older than 60
years are affected (this comes from the fact that the majority of
Australians have British or European heritage).
UK - 17 percent over the age of 65 have some degree of Dupuytren’s
contracture.
Iceland - 7.2 percent in men aged 45-49 years and 39.5 percent in men aged
70-74 years has been reported.
Spain - 9.9 percent of individuals aged 45-54 years, increasing to 25.5
percent in patients older than 75 years.
The best treatment to correct this condition is surgery, just as Baron
Guillaume Dupuytren suggested, but requires the skill of a specialist in
hand surgery. One of the problems being the fact that the genetic
disposition cannot be removed, even though the constricting tissue can be
pared away. This means that if you live long enough, you may require
re-operation.
I do also suggest that you pick an orthopedic surgeon with an understanding
of this condition, and my hospital does have a hand surgeon, experienced in
the correction of Dupuytren’s Contracture. With contractures less than 60
degrees (and this is easily evaluated by the patient), the operation can be
done under local anesthesia, or by regional Bier block, and general
anesthesia is not required. The surgery can also be done as a day-patient,
and overnight in-patient stay is not necessary. Suture removal is done 10-14
days after operation, and for this mild to moderate group, rehabilitation is
not usually required.
So, if you too have a Viking heritage, welcome brother. Just don’t try and
shake hands, I’m already at 60 degrees contracture and it is getting painful
to try and open the hand enough.
 Heart to Heart with Hillary
Dear Hillary,
Here are the photos I said I would send you. Khru Bah Noi, the young abbot of
Wat Doi Noi is an amazing man, he has so much energy, and puts it all into
helping the local people of Ban Jambon, in Lamphun. He has now enlarged his
petrodiesel plant, there are five full time workers plus the young abbot and his
novice monks. From one kilo of plastic he can make one liter of petrodiesel.
When more money is available he will be able to expand and produce petrol and
LPG.
The local people have opened a small service station where they sell his bio
diesel for 10 baht a liter cheaper than the big companies. The local people are
now building a new sala for him, donations have paid for the materials and the
work is voluntary. I find Thai people have a lot of natural talent, more so than
we farangs.
These days I am helping a lot of youngsters at the local temple school, but the
Friday before last I had an operation on my foot and couldn’t get to the school
on Sunday. I was sitting in my apartment feeling sorry for myself when there was
a knock on the door and when I opened it there were 10 youngsters from the
school. They had come 40 kilometers from their village, driven by one of the
Dad’s in his pick-up truck. They brought food and drinks for me. I had a big
lump in my throat and thought that only in Thailand would that happen.
I wish you and all the staff at the Mail all the very best, keep up the good
work Hillary, you do a great job. Thanks for all the sensible answers you have
given me. Forgive any spelling mistakes. All the best,
Delboy
Dear Delboy,
Your abbot is inspirational, but so are you, my Petal. As a simplification
of the laws of Karma, “What goes around, comes around” and that is what you
have experienced. I would not go so far as to say that this only happens in
Thailand, but I think the way of life of the local people makes it easier
for this type of thing to happen. Thank you for being a loyal reader.
Hillary can only try her best, but you certainly always give me a smile. As
you can see, I have published the photo of your abbot. Thank you for sending
it down.
Dear Hillary,
I have found recently that I have become very attracted to a waitress in our
favorite restaurant. We go there every Friday night and I have begun to look
forward to Friday very much. Maybe I’ve been reading too much into it, but I
am sure she stands closer to me than she needs to, brushes the back of my
arm when she serves me, and is always smiling and very attentive. It is
really giving me much heart-ache. How do I find out if she really does find
me attractive too? Obviously I cannot ask my husband about this, but I need
to know before planning the next move. I should add that I am 40 years of
age (but look younger) and I have never done anything like this before.
Very Tempted
Dear Very Tempted,
A waitress smiles at you every Friday night when she recognizes you as a
regular customer, and here you are “planning the next move.” A “move” that
is nothing like anything you’ve done before. To where? Oh my poor girl!
Don’t you realize that service people are trained to smile and give personal
attention to the guests? That is their job. The good ones will always make
you feel special, but you should not take that beaming smile to mean “How’s
about a quick bit of what’s your fancy behind the salad bar?” You are eager
to experiment I can see, but the place to do this is not in your favorite
restaurant, Petal. Or even in commercial aeroplanes! That’s not heart-ache
you’re experiencing - are you sure your left breast isn’t in the ash tray
while gazing into her eyes. Hillary suggests you look to the alternative
relaxation places, rather than risk embarrassment in an eating place, which
is quite different from a meeting place. However, I do suggest caution. It
may seem that Thailand is a free and easy place, but it is not. And as a
foreigner the road is even more dangerous.
Let’s go to the movies:
by Mark Gernpy
Now playing in Pattaya
Twilight: US Horror/ Romance – A teenage girl, always a
bit different, falls in love with a mysterious and dazzlingly beautiful
vampire. Already a phenomenon, somewhat akin to the Beatles frenzy on
their first appearance in America - but for one person: heartthrob
Robert Pattinson, who plays the vampire. In this story you have your
against-the-odds teen love, your woman in peril, your vampires, and your
cult following. And girls are getting injured in the mass near-rioting
wherever Pattinson makes a personal appearance. Mixed or average
reviews.
Teeth: US Comedy/ Horror – Directed by Mitchell Lichtenstein (son of
Pop artist Roy). Dawn, a high school student, works hard at suppressing
her budding sexuality by being the local chastity group’s most active
participant. A stranger to her own body, innocent Dawn discovers she
has a toothed vagina when she becomes the object of violence. More
enjoyable than I thought it would be, it is still pretty sick and
unpleasant, and with the number of appendages that eventually litter the
ground, I think Teeth bites off more than it can chew. Mixed or
average reviews.
007 – Quantum of Solace: UK/US Action/ Adventure/ Thriller –
Starring Daniel Craig and Judy Dench. Really a continuation of the 2006
Casino Royale, which was a reinvention of the James Bond film
series for present-day audiences. Here, with a different director, I
found the undertaking greatly diminished in charm and style and
elegance, with the action sequences more mindless and muddled, the plot
vastly more convoluted and confusing, but with much to still like if
you’re a fan of Bond films. The locations are grand, as are Bond’s
female foils and villains. Mixed or average reviews.
Midnight Meat Train: US Crime/ Horror – At last! A thinking man’s
slasher flick. I don’t usually like movies of this icky ilk, but I do
have to say that this one is a very creative and energetic adaptation of
a very bloody short story by the renowned horror writer Clive Barker,
with enough scares and thrills to be a potential cult classic.
Unusually literate for a slasher, it’s nearly a perfect bloody horror
film. Understand, it’s disgusting! Rated R in the US for sequences of
strong bloody gruesome violence, grisly images involving nudity, sexual
content, and language. Mixed or average reviews.
Traitor: US Drama/ Thriller – Another serious look at the world of
moral uncertainty amid the war on terror. I am a lot more fond of this
movie than most reviewers. I think it’s beautifully done, and Don
Cheadle gives another outstanding performance. I found the story (by
Steve Martin – yes, him) very engrossing. It’s one of a very few
terrorist-themed movies that presents its situation without resorting to
exploitation or oversimplification. Only mixed or average reviews, but
I recommend it highly.
Tropic Thunder: US Comedy/ War – I heartily recommend the film for
those not easily shocked – you might just have the best laughs you’ve
had in years. Robert Downey, Jr. gives another amazing performance,
this time playing a black. It’s an action comedy about a group of
self-absorbed actors who set out to make the biggest war film ever.
Rated R in the US for pervasive language including sexual references,
violent content, and drug material. Generally favorable reviews.
Twentieth Century Boys: Japan Fantasy – A live-action film based on
a wildly popular manga comic. An expensive Japanese extravaganza with
many top Japan stars. Unfortunately, in a Thai-dubbed version only,
which is a real shame.
The House Bunny: US Comedy – About the travails of an ex-Playboy
Bunny. Apparently it’s appallingly nauseous, and I’m sorry, I just
don’t have the heart to get involved in this nonsense. You’re on your
own, but you might enjoy it if you like dumb blonde movies. Mixed or
average reviews.
Headless Family / Hua Luud Family: Thai Comedy – The usual, this
time about a family that has a freak accident that leaves them able to
detach their heads without ill effects.
Ha Taew: Thai Action/ Drama – A country boy returns home from a
pilgrimage to find that people in his town are dying from unknown
causes, possibly due to black magic. He determines to get to the bottom
of the mystery, and save his town.
Painted Skin: China Action/ Fantasy – An action-thriller about a
vampire-like woman who eats the skins and hearts of her lovers. Thai
dubbed only, with no English subtitles.
Coming Soon: Thai Horror – Another bloody scream-fest, this one is
about a projectionist who decides to help a friend illegally film a
newly released horror movie, with dire consequences. Has some
interesting twists.
Sex Drive: US Comedy – An eighteen-year-old sets out on a cross
country drive with his best friends determined to lose his virginity.
Randy and raucous. Rated R in the US for strong crude and sexual
content, nudity, language, some drug and alcohol use - all involving
teens. Mixed or average reviews.
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