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Money matters:
Graham Macdonald MBMG International Ltd.
Finance is the art of passing money from hand to hand until it finally disappears – Robert Sarnoff
If this is true then we are all in trouble.
However, a good fund manager should not be worried by this statement. Supposing,
as we have been concerned about all along, the current meltdown is the closest
thing to the Great Depression that anyone living has ever seen. Then last year,
when equity markets made small gains, comes somewhere between 1928 (the last
boom year) and 1929 - the year of ‘The Crash’.
That means that this year straddles the losses accumulated in 1929-30. Many
people forget that 1931 was the worst year for stock markets since the formation
of the modern markets and, with this kind of thinking, we would have that
prospect still to face over the next 18 months.
The years of 1932, 1934 and 1937 were also times that saw significant falls in
the markets, although the intervening years saw healthy gains. Looking at
history this way probably is bunk but at least it gives some kind of context.
The worst may very well not be over for the equity markets. There is a decent
chance that 2009 could be the worst year ever recorded for equity markets and
that the following year will also be negative. We are not doctrinaire about this
and we are basing our decisions on what is happening now and what we see
happening in the future rather than what happened eighty years ago. However, as
we are just about the only people in recent years who have mentioned the
possibility of a DJIA back below 5,000, we like to think that at least we are
aware of the dangers and that this awareness carries through to the performance
that we deliver to our clients.
Our results for the year are quite respectable despite the recent setbacks
caused by the extremely challenging market conditions:
- Equity markets are typically down by between 40-50% YTD
- Property investments are down over 30% YTD (that’s the average between
individual residential property averages and listed property vehicles)
- Hedge funds are down around 15% YTD (per HFRI)
- Sovereign bonds are generally flat
- Corporate and high yield bonds have been decimated in value in many cases as
badly or worse than the equity markets
- Banks have been going out of business left right and centre
- Commodities such as oil have recently lost more than half of their value
We continue to believe in diversification and asset allocation but long term
asset correlations have completely broken down and, in a perfect storm, almost
all assets have lost value. While a typical portfolio (as represented by the PCI
indices of private banking portfolio performance) would have lost around twenty
five percent of its value to the end of Q3 and has probably fallen a whole lot
more since then, we would not want any kind of comparisons done because we are
leaving bench-marking to the likes of Standard & Poors, etc.
Similarly any comment about equity markets being down the best part of 50% is
also not relevant because we are multi-asset class allocators and we cannot
compare what we do to a single asset class. Even in the context of what was
happening during this time, it was actually possible to still make good money.
For example, the Man AHL Diversified (AUD) Fund figures are:
|
Year |
Jan |
Feb |
Mar |
Apr
|
May |
Jun |
Jul |
Aug |
Sep |
Oct |
Year To Date |
|
2008 |
5.78% |
2.77% |
4.29% |
1.07% |
3.19% |
1.22% |
-5.71% |
-3.69% |
0.02% |
16.4% |
26.5% |
Fortunately, our portfolios have
held Man in various currencies and this is reflected in the performance of our
portfolios. As long term readers know, we have long believed in the philosophies
of diversification as espoused by the managers of Midas Capital. However, we are
certainly not resting on our laurels - conserving capital in times like this,
making as much as you can and limiting losses where you can is important for two
reasons:
1) You may remember the tagline that the Multi Manager Awards Panel of
independent judges used when describing Midas Capital, “...a team that never
loses sight of the fact that the money it runs belongs to its clients, and they
want to see it rise in value.”
2) Looking forward, it is far easier to generate meaningful long term returns if
we can avoid losing in the short term.
Basically, anyone who’s down 50% in the current environment needs a bounce back
of 100% just to get back to where they started. If you are already ahead of the
game then anything else from here on in is a pure and simple gain, you double
your money with no catching up needed. This can be done by investing in good
Venture Capital funds which are incredibly high risk down to good solid Fixed
Interest ones. Naturally, the former can bring returns like the early stage
investors in Focus Media (NASDAQ:FMCN) achieved when their initial investment
was returned by than 100 times just over three years later when the company was
listed. The latter will take a lot longer to achieve these sorts of gains but at
least it will not cause you too much anxiety.
There are a lot of people out there who must be hurting right now and although
this has been a difficult period, we believe that certain fund managers have
really risen to the challenge and our partners at Midas and Man are now able to
go and exploit the opportunities that are presently arising - it must be
emphasized these are not necessarily equity market opportunities. A good
portfolio will have done half of the job by keeping capital intact through these
turbulent times - now it should finish the job by exploiting opportunities as
they arise.
Despite, and partly because of, the volatility that we expect to see in equity
markets, there has never been a better time than now to make money by
diversification of investment assets. It may be a bumpy ride to start with but
the potential rewards are there for the taking.
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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
Getting up close for effect and other tips
 How
many of you received a digital camera for Xmas? Quite a few I would
imagine. The principal advantage of digital photography is the ability
to review a photo immediately after you have taken it. However, this
does not mean that all photographs taken digitally are top pictures.
Here are some tips to give you better results.
The first tip is one that I give to everyone at least once a year, even
in camera clubs. It is, “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. Take a look at these two shots, which one has
more impact? The one taken closer to the water lilies!
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, as opposed to the rigid ‘soldiers on
parade’ that happens so often.
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.
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! Some
cameras will give you a grid template in the viewfinder. If your new
camera has this capability, use it. Drunken horizons are no more.
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 (or even larger capacity) card as a back-up for
your 1 MB main card and use the highest resolution you can. This way, if
you do have a great shot, you can have it enlarged, and it will 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 just
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 end up with a 4 megapixel camera, rather
than the expensive 12 megapixel you selected.
Finally, look very carefully through the viewfinder and note what you
have got, not what in your mind you think you are going to get! I know
the review LCD screen is not large, but you will soon see whether the
subject fills the screen or otherwise.
The messages this week are ‘closer’, ‘flash on portraits’, focusing
‘grid’ and use your megapixels.
Modern Medicine:
by Dr. Iain Corness, Consultant
It’s that time of year again
Well, you survived Xmas and New Year. Excess parties, pies
and pints for many of us. The waistline has swelled, anti-flatulents have
been purchased, following which, New Year’s resolutions have been made
regarding weight loss. But are there good reasons for the resolutions?
Unfortunately the answer is a very resounding ‘yes’!
Take the risk of developing diabetes; it’s a nasty condition that affects
just so many organs and makes you more likely to develop everything from
cataracts to cardiac arrest. Diabetes UK warns that excessive food and drink
consumption over the festive period will increase your risk of developing
Type 2 diabetes.
Over-indulgence in too many calorific treats such as mince pies (around 200
calories each), Christmas cake (approximately 250 calories per slice) and
mulled wine (about 250 calories in a glass) can leave us all struggling to
buckle our belts in the New Year. Having a large waist has been shown to
mean that you are up to eleven times more likely to develop Type 2 diabetes
and being overweight or obese is one of the strongest risk factors for
developing Type 2 diabetes. And it’s a little late to start sucking in your
stomach as you read this article!
‘At risk’ waist measurements are 80cm or more for women, 94cm or more for
men and 90cm or more for South Asian males. As well as having a large waist,
people are more likely to develop Type 2 diabetes if they are overweight,
over the age of 40, of South Asian origin, or have a family history of Type
2 diabetes. If you have two or more of these risk factors you really should
have a fasting blood sugar test.
Interestingly, recent research found most people perceive themselves to be
slimmer than they really are. When 500 people were asked to estimate their
waist size, most under-estimated by an average of 6.7 cm. Men were the most
deluded and underestimated their waist size by a significant 7.9 cm, whilst
the estimates of South Asian women were generally the most accurate. Another
plus for our local ladies.
Diabetes is a serious condition that can lead to heart disease, stroke,
kidney failure, blindness and amputation. There are 2.5 million people
diagnosed with diabetes in the UK but shockingly more than half a million
people have this Type 2 diabetes but do not know it.
To reduce your risk of Type 2 diabetes, Diabetes UK, which keeps some very
comprehensive statistics, recommends you should eat a healthy balanced diet,
maintain a healthy weight and be physically active. Even a moderate degree
of physical activity can reduce your risk of developing Type 2 diabetes by
up to 64 percent. Similarly, if you reduce your weight by between 5-10
percent you reduce your risk of developing Type 2 diabetes by 58 percent.
Diabetes UK Chief Executive Douglas Smallwood said, “The Type 2 diabetes
epidemic is one of the biggest health challenges facing the UK today.
Watching our waistlines at this time of year is vital as we all need to do
our best to reduce our chances of developing this often preventable
condition. It is important to remember that around 80 percent of people with
Type 2 diabetes are overweight at diagnosis.”
“There are around half a million people in the UK unaware they have Type 2
diabetes. The condition can be undiagnosed for up to 12 years and 50 percent
of people who have it show signs of complications at diagnosis. The sooner
Type 2 diabetes is diagnosed and becomes well managed, the better your
long-term health is protected and the lower your risk of developing
devastating complications.”
Now while that is a quotation from the UK Diabetes group, the
recommendations are just the same for all of us, even though we are a
numerically smaller group, and the overall percentage of overweight people
is less.
However, that percentage always increases after the Xmas-New Year blowout,
so my first message for 2009 is to step on the scales, put the tape measure
around the waist, and do something about it - before it is too late!
 Heart to Heart with Hillary
Dear Hillary,
I hope this gets to you before the New Year, but all the very best to you and
the staff at the paper for 52 weeks of smiles. The Paper of Smiles in the Land
of Smiles. I look forward to coming to Thailand once a year and reading you each
week.
Jim from Vancouver
Dear Jim from Vancouver,
Thank you, Petal, and we all wish the very best for 2009 for all our readers
(not just the lovely folk from Vancouver who are currently freezing and wishing
they were in tropical Thailand).
Dear Hillary,
My friend Nairod is back you’ll be thrilled to know, and after reading your
remarks about him in a back issue, has asked me, Dorian, my Ingerlish being a
little better than his, to enquire about the said remark? His “alter ego”? Does
this mean you think he’s some kind of conceited vicar? And your seeing his name
being mine in some strange rearrangement is just imagination, he insists, he
being the exiled crown prince of Remrafia, an oil rich state which his family
are on the verge of reclaiming. In the meantime (since 1947 in fact), Nairod
having been granted political asylum in Britain, and asylums being few and far
between these days, has begrudgingly accepted using taxpayer’s money to be
accommodated in other government institutions, similar to Pattaya in having many
‘bars’, in which he has made many pals with whom he soon hopes to retake his
stinkingly rich kingdom. You too, Hillary, being such a fan of his, have been
invited to be part of the retake by placing a cheque for one million dollars
(Sterling buys nothing these days), made out to me, Dorian, because he wasted
the last donation by purchasing a battle-ship which was of little use, Remrafia
being landlocked 500 miles from the sea. Your reward, Hillary, he promises, that
once reinstated, he’ll deliver 50 barrels of the best crude to your office every
Thursday, an offer we both know you’ll find hard to decline. A possible vacancy
in his 300 strong harem has also been mentioned, so you never know?
Nairod and Dorian
Dear Nairod and Dorian,
I have perused your lengthy letter and have to say that the offers I have
received just today alone have been astounding. The first was a very nice lady
from Zimbabwe who offered me 10 percent of her father’s six million dollars he
had salted away for a rainy day just before he had an accident with a machete,
followed by a nice gentleman from a bank who offered me 40 percent of ten
million dollars if I just claim to be related to some very dead chap with nobody
to claim the money. And now, 50 barrels of the best crude! Each week, no more no
less, and a chance of wearing 17 veils and dancing in the sand with the other
299 maidens in the harem. Such a bewildering choice. Good fortune is really
smiling upon me. Mind you, I have heard that there’s plenty of crude available
at some of the seedier bars, not that I’ve ever been, of course. But back to
reality, Dorian, I will be happy to give both you and Nairod a cheque for one
million dollars each, as soon as the nice lady in Zimbabwe sends me my cut (not
machete) and the bank chappie send me my 40 percent. Just as soon as the money’s
in, it’s yours, boys! In the meantime, tell the exiled clown prince to just stay
on the battleship I bought him last time, but watch out for Somali pirates.
Beware of swarthy chaps with wooden legs and a parrot.
Dear Hillary,
You might think this is a trivial problem, but it isn’t for me. About a year ago
I set up home with a Thai girl. Her family comes from the north east and I have
been up there and met them, and they seemed nice enough farming folks. They
accepted me quite readily, but I always felt a little left out at the family
gatherings as they can only speak Thai and my girl had to translate all the
time. For this reason, and because I am busy at work, I have not been back up
there, though my girl does go up frequently. Is this the usual way in this
country? If it is, I will say nothing, but she will often go back for a week or
so, the last being the end of Buddhist Lent. Have I anything to worry about?
Confused
Dear Confused,
You may have lots to worry about, or nothing at all. Are you worrying because
you think she is not going back to the family rice paddy? I am having to try and
read between the lines too much here. It is very usual for daughters to go home
and pay respects to their family, and often contribute financially as well. Does
your lady have children there that are being looked after by her Mama? Honestly,
Petal, it sounds very normal to me. Talk to your friends who have been married
to a Thai girl for some time. Caring and following the family principles will
carry over to you as well, if you allow her to follow her traditions. In the
meantime you can always employ a private investigator!
Let’s go to the movies:
by Mark Gernpy
Now playing in Pattaya
George A. Romero’s Diary of the Dead: US Horror/ Thriller
– A group of young film students run into real-life zombies while
filming a horror movie of their own. Romero, gore’s godfather, reboots
his influential zombie series in this stinging indictment of
child-rearing practices that produced sullen offspring incapable of
thinking for themselves or working in groups. Rated R in the US for
strong horror violence and gore, and pervasive language. Generally
favorable reviews.
Mutant Chronicles: US Horror/ Sci-Fi – Starring Ron Perlman and John
Malkovich. A 27th century soldier leads a fight against an army of
underworld NecroMutants. Bad acting, poor CGI, clunky script, and no
thrills. Generally negative reviews.
Deep in the Jungle: Thai Horror/ Action/ Fantasy/ Romance – A
soldier falls in love with a woman who is actually a snake. Seems to be
a retelling of “The Snake King’s Child,” an old and still popular
Cambodian legend that was last depicted in the Cambodian film of that
name in 2001.
Bedtime Stories – US Comedy/ Family/ Fantasy – Adam Sandler in a
family comedy about a hotel handyman whose life changes when the lavish
bedtime stories he tells his niece and nephew start to magically come
true. Generally negative reviews.
Australia: Australia Drama/ Adventure – Baz Luhrmann directs
this epic, sweeping tale of an English woman (Nicole Kidman) who
inherits a sizable cattle ranch “down under.” When English cattle
barons plot to take her land, she reluctantly joins forces with a
rough-hewn drover (Hugh Jackman) to drive 2,000 head of cattle across
hundreds of miles of the country’s most unforgiving land, only to face
the bombing of Darwin by the Japanese forces that had attacked Pearl
Harbor only months earlier. Mixed or average reviews.
The child who narrates the film and whose story forms the spine of the
plot is a delight to watch. His name is Brandon Walters and he is a
half-caste Aborigine, and he is everything a child actor should be,
unlike the one we talked about last week. In true epic style, however,
the film clocks in at 165 minutes, so make yourselves comfortable for
the ride.
Madagascar: US Animation/ Family – A delightful animated film, which
I thought quite cute.
Super Hap: Thai Comedy/ Musical – An enjoyable Thai teen-oriented
musical comedy, in which two guys try to break into the music industry
by forming a Korean-style boy band. But the one who looks cute and can
dance, can’t sing, and the other can sing, but doesn’t look the part.
So one lip-syncs the other. Some quite entertaining bits and though it
seems to lose its way in sentimentality toward the end, it’s still one
of the better Thai comedies.
4 Romances: Thai Romance – Four love stories directed by four Thai
filmmakers. Pretty much of a bore and not nearly as entertaining as
Super Hap. The most enjoyable section was the last, featuring the
band “August” and singer “Pitch” Witwisit Hiranyawongkul of Love of
Siam fame – that one had a few nice surprises, and the kids are
great.
Happy Birthday: Thai Drama/ Romance – Starring Ananda Everingham. A
weepy love story, and almost incomprehensible to anyone without a deep
understanding of Thai social behavior. Ananda is a travel photographer
who travels around Thailand with his guide/girlfriend, until she has a
car accident and ends up in a hospital in a coma, while Ananda waits
endlessly at her bedside for her to wake up. Maddeningly tedious to
most farangs, I’m afraid. Beautiful location photography.
The Day the Earth Stood Still: US Drama/ Sci-Fi/ Thriller – Other
than the child, I enjoyed this! If you like sci-fi thrillers, you
should too, except for the child. You have to be willing to accept a
lot of the “aliens invade Earth” conventions. I did, and found it a lot
of fun. Except for the child. Generally negative reviews.
Transporter 3: France Action/ Crime – It’s an action movie – a lot
of explosions, car crashes, and men being violent and assertive. All
quite brilliantly done, and seasoned with just the slightest bit of plot
and humor. If that’s what you like, this is for you. Mixed or average
reviews.
Ong-Bak 2: Thai Action/ Adventure – With Tony Jaa, who also
directed. Quite dark, and exceptionally violent. Not for children!
It’s extraordinary in many respects, and approaches almost every aspect
of an action film in a new way. A fascinating attempt, and quite
exciting.
Scheduled for Jan 8
Yes Man: US Comedy – Jim Carrey as a guy who challenges
himself to say “yes” to everything for an entire year. Mixed or average
reviews.
Quarantine: US Horror/ Thriller – A television reporter and her
cameraman are trapped inside a building quarantined by the US government
after the outbreak of a mysterious virus which turns humans into
bloodthirsty killers. Rated R in the US for bloody violent and
disturbing content, terror, and language. Mixed or average reviews.
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