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Money matters:
Graham Macdonald MBMG International Ltd.
Where do we go from here? Part 2
A key theme in establishing credentials is that a manager
needs to have a track record of making the right calls, both historically
and recently. He also needs to be impartial and he needs to be up to date.
Do not be surprised if organisations who have a vested interest in equities
are still recommending equity funds. If they do this because this is all
they have or where their main strengths lie then you might find that they
tend to recommend equities indiscriminately in all conditions. Such a
recommendation ceases to have any meaning or significance - it is simply a
mindless mantra, like a recorded message over and over again.
It is worth remembering that any assets that were bought prior to the credit
crunch and the 2008 crash would have been bought looking at a very different
global economy to that which we face now.
In 2008 alone, the following events occurred:
- Russia invaded Georgia (and then lost at beach volleyball in the Beijing
Olympics to Georgia)
- Terrorists attacked Mumbai
- America elected its first black President
- Oil reached an all time high in July of $147.27/barrel but finished the
year down by over 2/3 from the peak
- The financial system came close to collapse with the US rescue package
exceeding $1 trillion as the year ended
- The UK banking system saw HBoS and Bradford & Bingley follow Northern Rock
into oblivion with RBS and Lloyds falling into significant government
ownership
- Thailand’s parliament and airport were occupied by anti-government
protesters
- Bear Stearns, Lehman Brothers, Washington Mutual and AIG were among the
big casualties in America
- The governments of the Low Countries had to rescue ABN and Fortis
- The Australian Dollar came within touching distance of parity with the US$
before falling back to around 60 cents at the year end
- The S&P 500 had its second worst year ever
- US government bonds were at one stage rated higher risk than those of
McDonalds Corp
- Bernie Madoff’s giant Ponzi scheme using US equities was uncovered
The world is a very different place now compared to a year ago. Any asset
allocation strategy should be based on how the world looks today - not how
someone mistakenly thought it looked pre-crash. New opportunities exist now
and totally different information is available.
Look forwards not back - portfolio allocation should be driven by prevailing
economic conditions. We would never, ever believe in the concept of holding
onto an asset because of its value today relative to its cost. That has
nothing to with its relative attractiveness. Two investors may each hold the
same share which may today be valued at $10 per share. One investor may have
paid $5 to buy the share five years ago. The other may have paid $20 just a
few months ago. The prospects are the same for each investor going forwards
irrespective of the fact that one is showing a 100% gain and the other is
showing a 50% loss. The future behaviour of the asset is completely
irrelevant to the purchase price.
This is, again, where the psychological aspect comes in. However, any
understandable reluctance to realize an asset at a loss is based on emotion
not rationality. Emotion generally does not predicate good investment
decisions. The emotions of investors who feel more able to live with a loss
on an asset so long as they do not realize that loss by selling the asset
are entirely understandable, very human but ultimately pure self-deception -
the asset is currently selling for today’s price whether you choose to sell
it or keep it. The only question of relevance is, “Looking at today’s
investment conditions, how much, if any, of that asset should I hold?”
To answer that, we would always go back to the only measure that we
understand for deciding whether to buy, sell or hold any asset - the
relative attractiveness of the disposed value of that asset compared to
cash. In life, doing nothing is rarely the right solution to any problem.
Understand history - one widely used argument is that history
supports the idea of holding onto assets that have fallen in value. I
suppose the idea here is that empirical evidence can be produced that shows
that it is invariably better to hold than to sell; better to stick than to
twist as it were.
However, such claims are generally based on very flawed hypotheses. Fidelity
analysed stock market performance over the period 1993-2008. Being primarily
an equity manager, their research supported the idea of remaining invested
in equities throughout a cycle. They supported this with a table showing the
effect of missing the best days in the global equity markets over the last
fifteen years. For instance, an investor into the S&P 500 had made returns
of 8.39% per annum during this time. Take out the best ten days over that
period that return fell by over 3% per year. That sounds a lot.
However, it should be remembered that the ten best days were widely
interspersed throughout the whole time span. To manage to be invested for
3,644 days but to pull out JUST for each of the ten widely scattered days
and be re-invested for the next day would take far more monkeys equipped
with Quotron machines and dealing desks than would ever be needed at
typewriters to produce the complete works of Shakespeare, Proust and
Tolstoy.
It is a totally implausible idea that someone would choose to not invest for
just ten days out of fifteen years and would, somehow, randomly pick ten
days dotted so variously throughout the fabric of the period.
To be continued…
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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.comm.com.com
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Snap Shots: by Harry Flashman
A study of opposites
Diptych by Tom Moody
When you were very young, you were taught ‘opposites’. Hot and cold, big
and small, young and old, black and white and so on. An endless list.
However, one very good way to give extra impact to your photographs is
to ‘pair’ your images by use of opposites. This visual impact makes the
use of contrasting images excellent subjects for ‘wall art’ - especially
when displayed in diptych format.
The first, and one of the most obvious contrasts is to take the same
subject, but at different times of the day. The old phrase “as different
as night and day” is crying out to be used. Pattaya Bay by day and night
is an obvious example. Main streets day and night are again extremely
good.
Now there are a couple of tricks here that you have to watch. The first
is that you must take the shots from exactly the same position, even if
you have to camp there all day! What I often do is to mark the spot
where the shot was taken in the morning, so I can come back and find the
identical spot later. The second factor is to make sure that if you are
using a zoom lens, that you use the same setting each time. The idea is
to ensure that the only item of change is the lighting.
Another contrast is to use the weather to give you a different look to
the same subject. Even a street scene with pedestrians taken in daylight
and then again with umbrellas in the rain tells a very different story.
Once more, you are recording the same subject in another way. So next
time it is teeming down with rain (and that seems every day right now)
go outdoors with your camera and get something pleasing and then
recreate it in the dry.
What we will do now is to exercise our minds (yours and mine) and come
up with some opposites - then work out how to present these on film. As
I have said so many times, a good photograph is “made” rather than just
happening. The way the pro’s work is to build on a concept and then work
out the way of showing it on film.
So let’s take some - there is young and old that springs immediately to
mind. A shot of a very old person with a young child is always an
attention grabber. Now, how many times have you seen big advertising
companies use just that shot? Lots!
What about old and new? The range here is as big as your imagination. A
shiny new car parked beside a wrecked one, a new beach umbrella beside a
tattered old one, a shot of a workers corrugated iron and packing case
‘house’ beside a bright, spanking new mansion. Or even a photo of a box
Brownie and a new Nikon.
There’s even more - hot and cold, rough and smooth, light and heavy -
there is really no end to what you can portray when you start thinking
about it.
But it doesn’t end there either. Think about the different ways you can
do things. From digging a trench with an old shovel, to watching a huge
mechanical ditch digger at work. How about a sundial with a watch hooked
on it? A light bulb and a candle, a horse and buggy and a new Mercedes.
Again, just let your imagination run riot and go from there.
Now presentation of contrasting images is important too. This is where
you should finally select the best two shots and get enlargements done.
10 inches by 8 inches (called 8R by most labs) is a good size and then
get them mounted side by side using a double matte. With the cost of
framing being so cheap in Thailand it is very easy to produce great wall
art. All that is needed are your images and some original imagination.
This weekend, make some wall art and amaze your friends with your
creativity. By the way, a real diptych is generally hinged between the
two pictures. More expensive, but looks great.
Modern Medicine:
by Dr. Iain Corness, Consultant
Hear today and gone tomorrow!
Sorry about the heading for this week’s column. I can’t help
myself some days! However, hearing is something we tend to take for granted,
and we shouldn’t.
I began to think about ears and hearing during Children’s Day. In one of the
large shopping centers they had dedicated the stage area for children’s
entertainment. The noise from the battery of boom boxes was so loud that
foreigners were walking through the shopping mall with their fingers in
their ears. Without the benefit of a sound pressure level machine to get an
accurate reading, I would estimate that the children were being exposed to
around 120-125 decibels (dB). The significance of this is that adult workers
should not be exposed to more than 90 dB for an eight hour day (legislated
in many countries). Children should be exposed to much less.
I have always wondered why musical performances/entertainment in this
country need the volume control wound right up. Now I know. The audience has
been rendered deaf after a few Children’s Day experiences! This also goes a
long way towards explaining why the local populace does not hear phones
ringing, and why the girl in the next office has her mobile phone ring tone
set on maximum. I know she has an incoming call before she does!
However, the reason for deafness is not all the result of Children’s Day.
There are other reasons, including (dare I say it) getting older! The
effects of aging start around 20 years of age, and our hearing starts a
gradual decline. Higher frequencies are usually the first to go. This
age-related hearing loss is normal and is similar to the age-related effects
with vision.
The two main types of deafness are called Conductive deafness and Nerve
deafness. Deafness at birth is known as congenital deafness, while deafness
that occurs after birth is called adventitious deafness, and the most common
cause of adventitious deafness is noise, which accounts for over one quarter
of people affected by hearing loss (which gets us back to Children’s Day).
A brief look at the anatomy of the ear will help understanding the causes of
deafness. The ear is made up of three different parts, including the outer
ear which is the part you can see. Its shape helps to collect sound waves. A
tube, called the external ear canal, leads inward to the eardrum.
The middle ear is separated from the outer ear by the eardrum. The middle
ear contains three tiny bones called the malleus (hammer bone), the incus
(anvil bone) and the stapes (stirrup bone). These bones amplify the movement
of the eardrum produced by sound waves making the drum move in and out. The
Eustachian tube connects the middle ear to the back of the throat and helps
to equalize air pressure.
The inner ear is where the sound waves are picked up by a tiny spiral-shaped
organ called the cochlear. Hairs on the cochlear sense the vibrations and
pass the message as electrical impulses to the brain via the cochlear nerve.
Now, Conductive deafness is caused by the failure of the three tiny bones
inside the middle ear to pass along sound waves to the inner ear. Another
common cause of conductive deafness is the failure of the eardrum to vibrate
in response to sound waves. A build-up of fluid in the ear canal, for
example, can dampen the movement of the eardrum. In many cases, treatment is
available for conductive deafness and normal hearing will return.
Nerve deafness is caused by disease, trauma or some other disruptive event
targeting the cochlear nerve. The rest of the ear, including the tiny bones
and eardrum may be working, but the electrical impulses cannot reach the
brain. Most cases of nerve deafness do not respond to treatment.
Remember that Deafness can range from mild to profound and has
multifactorial causes including injury, disease and genetic defects, and
excess noise accounts for over one quarter of people affected by hearing
loss.
You can also have your hearing tested medically in our well-equipped
Hearing, Speech, Balance, Tinnitus Center. Tomorrow, rather than next month
is best!
 Heart to Heart with Hillary
Dear Hillary,
I’ve been reading you for some time and it seams (sic) to me that you’ve got a
down on the bar girls. Why? They all speak English and know how to keep a feller
entertained. They’d make a much better wife than the stuck up society girls you
are telling everyone to hook up with. Time for you to be a bit more real old
gal, and stop knocking the working girls.
Pete
Dear Pete,
I think it is time you went through the back copies of this illustrious
newspaper, my Petal, and see and note what I have really been saying. However,
you are right, the bar girls do speak (some kind of) English, and so I suppose
if you are looking for a long term relationship with a woman and you are happy
with the in-depth conversations of “Hello sexy man,” and “Sit down please” and
“Buy me cola”, then you are in paradise. This depends upon, of course, you
having an endless supply of cola at home, plus a rather large always-full
wallet. The “working girls” are just that - they are working and like all good
workers deserve their hire. What is forgotten in that heady rush of blood to the
brain is that you are doing exactly that - hiring. “Mia chow” (rented wife)
expects a monthly salary for her. It is not the more commonly thought of
“housekeeping” money. She will demand a salary, which is untouchable. Does this
make them a “better wife” as you claim? Each to his own, I suppose, but long
term liaisons with working girls do not have a good long term history, Pete.
Dear Hillary,
I married my Thai fiancée after a year of engagement. She is a professional lady
and we have always done everything in a proper fashion. My wife is 15 years
younger than me and this gives us a problem. When we go out, many foreigners
assume that my wife must be, or have been, a bar girl even though she in no way
acts like one. She has no tattoos or wears sexy dresses or even smokes. I
realize that as high as 85 percent of all Thai-foreigner marriages are between
bar girls and “sex tourists”, but this is not so for other 15 percent of
Thai-foreigner marriages. Please tell your readers that not all Thai-foreigner
marriages are between bar girls and “sex tourists,” and stop making false
assumptions.
Jack
Dear Jack,
Now you’ve got all that off your chest, do you feel a little better, Petal?
However, I think you have made a few false assumptions yourself too. Where did
you get that figure of 85 percent of Thai-foreigner marriages are between bar
girls and what you call “sex tourists”? Let me assure you that sex tourists do
not come to Thailand to get married. That is why they are sex tourists - they
want the fun in bed without the filling out forms at the local Ampur office.
Honestly, Jack, 85 percent of Thai foreigner marriages are between people such
as yourself and your wife. The foreigners who “look down” on you are the
foreigners who are not in the marriage market, just the bar meat market. Ignore
them, my Petal.
Dear Hillary,
I will be coming to Thailand next month and I like to rent motorbike and ride
all over your beautiful country. I arrive Chiang Mai and go Bangkok after two
weeks. Is possible? Yes or no? Where do I get the bike? I do not need big bike
as I am small man. I ride Vespa in Paris, so I am OK in the saddle. Is it with
insurance and can I ride with French license? Will girl come with me on
motorbike? Thank you.
Pierre.
Dear Pierre,
You have certainly got plenty of questions, especially for a small man, as you
so quaintly put it. I really think that you should sit down on the seat of your
trusty Vespa and think again, Pierre. I have been to Paris and seen the standard
of hair-raising driving there - but Pierre, my Petal, it is nothing compared to
the driving in this country. When you ride a motorcycle here it is not a case of
“if” you have an accident, it is “when” you have an accident. You don’t meet
another Vespa coming up the Champs Elysee the wrong way, now do you? The
gendarmes would not allow it. Here it is a different story. Going the wrong way
down a one-way street is normal in Thailand. They say that one of the ways you
know you’ve been in Thailand too long is when you look both ways before crossing
a one-way street! This country has one of the highest road tolls in the world,
and that is just one of the reasons why. Forget it Pierre. Next month is the
Songkran month and the last place you want to be in the water throwing marathon
is riding a motorcycle. Take a tour bus. The girls are happier on tour buses
anyway and will help negotiate a good price for you (while getting a small slice
of the price from the tour bus operator as well).
Let’s go to the movies:
by Mark Gernpy
Now playing in Pattaya
Seven Pounds: US, Drama/ Romance – Will Smith is an IRS
agent who is depressed and guilt-ridden about mistakes from his past,
and he sets out to make amends by helping seven strangers. When he
meets a beautiful woman with a heart condition, and falls in love with
her, his plans suddenly become very complicated. Directed by Gabriele
Muccino (The Pursuit of Happyness). Grim, morose, and undone by
an illogical plot. Generally negative reviews.
Miss You Again / A-Nueng Kidthueng Pen Yang Ying: Thai, Comedy/
Drama – The third entry in veteran director Bhandit Rittakol’s popular
teen romance series that began in 1992 with I Miss You, and
continued with I Miss You 2 in 1996. It’s a teenage movie about
old school friends trying to save their financially-troubled school from
closing and being sold to a big supermarket company.
Dragonball Evolution: US, Action/ Adventure/ Fantasy/ Sci-Fi/
Thriller – A young warrior seeks to gather all seven Dragonballs to
prevent the evil Piccolo from using the magical orbs to take over the
world. Based on the popular Japanese manga by Akira Toriyama, the
creator of best-selling graphic novels, video games, and a phenomenally
successful television series.
Bolt: US Animation/ Comedy/ Family – John Travolta does a superb job
voicing Bolt, a canine TV star convinced of his superpowers who sets out
on a cross-country journey to find his owner. I found this whole
enterprise a complete delight, containing many moments of real heart.
If you at all enjoy animation, don’t miss this one. Generally favorable
reviews.
Watchmen: US/ UK/ Canada – Action/ Drama/ Fantasy/ Sci-Fi/ Thriller
– Once you accept the violence and the comic-book origins, a monumental
film. If you liked The Dark Knight or A Clockwork Orange,
you should appreciate this. Complex and multi-layered, it’s set in an
alternate 1985 America in which costumed superheroes are a part of
everyday life, Richard Nixon is in his fifth term as president, and the
US won the war in Vietnam – and Vietnam is now the 51st State. Rated R
in the US for strong graphic violence, sexuality, nudity, and language.
Mixed or average reviews.
Best of Times: Thai Romance/ Drama – Leisurely romantic drama
centers on two couples, young and old. A young vet struggles to forget
his first love, and when he meets her again years later she doesn’t seem
to remember him at all. An elderly man and woman, each alone in the
world, meet and fall in love. By the director of Iron Ladies and
Metrosexual.
Power Kids: Thai Action/ Comedy – Except for the fights, a film of
mind-boggling ineptitude about kids battling terrorists in a hospital.
Sloppy script and plotting, sloppy directing and photography – none of
which seemed to bother the audience, who seemed to enjoy it immensely.
Street Fighter: The Legend of Chun-Li: US Action/ Sci-Fi – Only for
die-hard “Action” fans in my opinion. Has received mostly dreadful
reviews, with which I have to concur, but there is a place for things
like this, and some people like them. Adapted from the popular series
of “Street Fighter” video games. Undercover Interpol agent and
female fighter Chun-Li (Kristin Kreuk) gives up her career as a concert
pianist to seek justice after she discovers that her father has been
murdered. She is something like a female Batman for being rich,
brooding, and orphaned. Interesting location shooting in the Bangkok
slums, but I am not sure this movie is something Thailand needs the
world to see right now, wallowing as it does in the corruption and
poverty of Thailand. Reviews: Extreme dislike or disgust.
Valkyrie: US/ Germany Drama/ History/ Thriller/ War – This has a
really very good script; it’s intelligent, makes sense, the dialogue is
terse and expressive, the plotting is solid, and it’s tense and
exciting. One of the better scripts in recent memory, about the
near-miss assassination of Adolf Hitler by a ring of rebel German army
officers in 1944, starring a restrained and excellent Tom Cruise. A
well-crafted, thinking-person’s action movie. It is also a project that
takes its research seriously, and has gone to great lengths to insure
the accuracy of what is portrayed. For many reasons, I think it’s a
movie to be seen. Highly recommended. Mixed or average reviews.
Outlander: US Action/ Sci-Fi – Full-bodied Sci-Fi escapism that
should satisfy your cravings for both action and Norse mythology in one
fell swoop. Mixed or average reviews.
The Curious Case of Benjamin Button: US Drama/ Fantasy/ Mystery/
Romance – with Brad Pitt, Cate Blanchett, Tilda Swinton. Received Oscars
for best art direction (and set decoration) – the sense of time and
place, and the attention to the details of the period settings, were
mind-boggling; and for best achievement in makeup – which indeed was
wizardry; and for best achievement in visual effects – which was richly
deserved. Very much worth seeing for the marvels of filmmaking art.
Generally favorable reviews.
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