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Family Money: When is ‘The Right Time’?
By Leslie
Wright,
Managing director of Westminster Portfolio Services (Thailand) Ltd.
A wise philosopher a couple of centuries ago said:
“The best time to invest is when blood is running in the streets.”
More recently, the internationally-renowned financial
manager Dr Mark Mobius has said, “The best time to invest is always
Now!”
But many folk only want to invest when there’s peace
in the world and they see their favoured markets rising steadily for a
period of time - but never when they’ve fallen.
This often reflects a fundamental fear of what they
don’t fully understand - just like some people are irrationally afraid
of thunder. If you hear the thunder, the real danger - the lightning - has
already come and gone!
Of course market timing matters if you’re looking to
invest a sum of capital. Common sense (which is a surprisingly rare
commodity) tells us we should buy cheap and sell dear. But few investors
follow this maxim. They are motivated not by common sense or understanding
of fundamental investment strategy: they’re driven simply by the twin
emotions of fear and greed.
This leads them to hesitate before buying in (no matter
whether it be a stock or a fund) until they have seen price gains which
indicate they would have made a profit. Then they finally buy in,
expecting prices to continue rising and produce them a profit. If you stop
to think about it, this argument is totally fallacious.
The investment which has already gone up in fact has a
greater chance of reversing as shrewd investors take profits.
On the other hand, a stock or fund which has dropped
recently may have a fundamental reason for its fall (accounting
malfeasance, financial difficulties, or a slump in that market sector), or
it may be temporarily out of favour, or inherently volatile because of the
investment sector it concentrates on. It may be a potentially very good
investment, or it may be a lemon - you have to do some research and
objective appraisal to determine which.
But this assumes you are looking for short-term gains
rather than adopting a longer-term investment strategy. This style smacks
of speculation rather than strategic investment, and tends to be very much
driven by those two twin emotions mentioned earlier: fear & greed.
Unit-Cost Averaging
One way to even out the bumps is to invest regular
amounts into your chosen fund or (better) basket of funds.
As you buy units from month to month, over time you
will have actually paid an average price for them; it really won’t have
mattered too much whether the unit price went up and down in the meantime.
What is important is the price when you come to encash those units. So
even if the unit price slumped in the middle of the program (when you were
able to buy lots of cheap units for the same amount of money), if the
price at encashment is higher than the average you paid over time, you
will have made a profit.
Of course, the corollary is also true, so you
shouldn’t encash your units until the price has risen above the average
you paid for them.
This relieves an investor of the natural psychological
concern as to market timing. When the market is up, you buy fewer
expensive units; when the market’s down you acquire more cheap units for
the same amount of money.
You are doing automatically what all wise investors
should do - buy less at top and more at bottom.
Few investors are consciously willing to make that
decision, however, because of the psychological pain and fear in a falling
market, and the euphoria of greed in a rising one.
This principle is clearly demonstrated in the following
example.
In our example, Fund #1 is a good, stable performer.
The price of units rose steadily throughout the contributory period, so
the same regular contribution bought progressively fewer increasingly
expensive units as time went by. Our investor paid an average price of
$1.62 for his 30,933.46 units, which at the final price of $2.85 at
maturity were worth $88,160.35. If he encashes them, he will have made a
profit of $38,160.35.
The more volatile Fund #2, however, enabled our
investor to buy lots of “cheap” units when the fund performed poorly.
Thus he paid an average price of only $0.73 for his 68,603.67 units, which
at their maturity price of only $1.33 were worth $91,242.88. Although Fund
#2 performed relatively poorly, his gain of $41,242.88 at maturity was
greater than in Fund #1!
What does this tell us about portfolio selection for a
savings program? Is it so vitally important to constantly monitor your
portfolio’s performance, calculating its value every month or so? Is it
necessary to switch out of a fund immediately it performs poorly for a
period? In the case of a contributory savings plan, the answer to each of
these questions is clearly “No!” At the risk of repeating myself,
provided the price at encashment is higher than the average price paid for
units, an investor will always gain.
It is worth remembering however that Unit-Cost
Averaging does not apply to lump-sum investments, where all the units are
bought at one time and for the same price. Appropriate portfolio selection
and market timing then become much more critical issues, and a strategic
balance of “good performers” more appropriate.
To return to our example, for a lump-sum investor Fund
#1 would have been a better choice, as it put on 185% over the 10-year
period. Over the same period Fund #2 would have gained only 33%, and given
a capital investor a lot of heartache along the way!
Snap Shot: Being framed -
or it’s a frame-up!
by Harry Flashman
If you’ll pardon the pun, framing your photographs is
an art. You can spoil a brilliant shot with lousy framing, and you can
salvage an ordinary “record” shot by brilliant framing. Now, get a
brilliant subject and brilliant framing and what a picture! A prize
winner.
I have spoken before about the Rule of Thirds, and
quickly recapping, put the subject of your photo at the intersection of
thirds if you can possibly do it. In other words, one third in from either
side and one third down (or up) from the top and bottom. This “off
centre” approach does make for a more interesting photograph. Now
that’s easy!
The next item to make your framing up more interesting
is what we call the Frame within a Frame approach. Take a look at the
photograph with this week’s article. It says something. The man is
framed by the patio opening, and you straight away wonder “where” this
is and “who” this is. Note that his head is one third down from the
top and one third in from the right, so there’s the classical placement
again. To get this type of shot, find the window first and walk in close
enough to get the window frame within the edges of the photo itself. In
other words, leave a little on all four sides, then just position the
subject within it. No magic, but you’ll get a magic shot. (By the way
the picture was taken at Greg’s Kitchen in Pattaya, and that is Greg the
proprietor.)
In the frame-up above, the subject is actually inside
the frame, but there also is the situation where the frame is in the
foreground and the subject is some distance away. This frame within a
frame will pull your eyes deep into the photograph, giving it much extra
depth. The second photo is a classic example of the “Frame within a
frame” technique when applied to distance shots. The archway on the
chedi I was standing in frames the next chedi in the line. You see a
repeat of this archway on the distant one. You immediately know there are
more than one of these structures and by looking “through” the first
arch you have given a 3D effect to a two dimensional medium.
Now, let me assure you that the chedi’s did not line
themselves up in this order. Producing this shot required some input from
the photographer! It was a case of prowling around the site and seeing
what was available. This frame-up did not happen by accident, I was
actively looking to produce such an effect, and in fact, attempted this
shot on three occasions with other chedi’s before I got the one I
wanted. As I have said many times, good photographs do not “happen” -
they are made! And YOU, the photographer, make it happen.
Now there will be times when you would like to improve
the shot by framing, but there is no handy archway, window or whatever.
This is where you have to be even more creative. Look around for
overhanging trees or ground bushes that can be used as “frames” to
hide some part of the shot and thus accentuate your subject matter. A
little hidden area always heightens the curiosity of the viewer, and just
by doing that you have produced a better shot. It’s that easy!
The message from today’s column is not to be satisfied by just
pointing your camera at the subject and going “click”. Look for ways
of enhancing the photo to make it more interesting. Framing up is a good
start.
Modern Medicine: Aspirin? The Elixir Vitae?
by Dr Iain Corness, Consultant
I suppose we are all looking for the elixir of life in
one form or another. I know that I am enjoying life too much to want to
see it curtailed by such trifling things as getting older. No, give me the
elixir of life. No ice thank you, I’ll drink it straight!
Now all this came to mind following the visit to
Thailand last week of Dr. Corness junior, who came to pay his respects on
his way through to taking up a posting in the UK for a couple of years.
Dr. Jonathan grew rather vertically when younger and is
now a strapping 6’6" (nearly 2-metres) tall. While this does give
him a decided advantage in changing light bulbs and getting an
uninterrupted view at the movie theatres, it produces its own unique
problems as well. One of these is plane travel. Try folding 6’6"
into a Z shape and getting it into a standard plane seat.
Now the airline companies do keep the emergency exit
row seats for these giant basketballer type people, but only if you get to
the airport early enough to reserve them. So far Dr Jonathan has found
that three hours wasn’t early enough! Return to the cramped Z scenario.
I have written before about the “economy class
syndrome” where there is a (theoretical) risk of blood clots when flying
cramped up with legs at peculiar acute angles (and not so cute also). For
people like my son, the risk does increase, and he was aware of this;
however, rather than buying a business class ticket, his Scottish heritage
came to the fore and he went for the economy seating, but spent a few baht
on the antidote. Aspirin.
Yes, good old aspirin, one of the earliest effective
drugs known to mankind, a drug which is still amazing us all with its
abilities. Let me assure you that aspirin is much more than a headache
killer.
In therapeutic doses to stop the throbbing head or
settle throbbing joints, we are looking at something between 300-600 mgms
four times a day for most people; however, at that dosage you run the risk
of upsetting your stomach, to actual bleeding and ulceration. There are
also people who show allergic reactions to aspirin, from asthma right the
way through to anaphylactic shock and death! Yes, this is potent medicine.
However, there are other conditions for which aspirin
is the drug of choice, and not in the big doses either. We are talking
here of 100 mgm doses taken once a day only. This way the chances of
allergy/asthma and gastric bleeding are greatly reduced. The condition
treated here is aggregation of platelets. This is where the red blood
cells sort of form into clumps and these are the start of the Deep Vein
Thromboses (DVT’s). And this is the real cause behind the Economy Class
Syndrome.
Now Dr. Jonathan, being a good lad, also suggested that
Dr. Iain should take 100 mgm of aspirin a day - not because I am flying
bent up triple, but medical science has found that by taking 100 mgm of
aspirin daily you lower your chances of heart attack, something much
higher on my personal risk table than Economy Class Syndrome.
So I am listening to the new young bloods of medicine,
and swallowing my medicine every morning. I hope it is the Elixir of Life!
Heart to Heart with Hillary
Dear Hillary,
Here’s some good news for a change. Four years ago I
wrote and asked you for advice. I was to become a father for the first
time, at 48 years of age and my Thai girlfriend only 21 years old, pretty
scary! You gave me good advice and anyway, here I am still in Thailand. I
set myself a target to lose no more than 50,000 pounds (hard earned
previously in a very savage world) and am happy to report that yes I
married, yes I remain happy with my projected 50,000 loss which is now a
gain of an extra 200,000 pounds and I have a baby daughter. I left the
bright lights and moved to my wife’s poor provincial rice farming
village where I spent 12 months along with 22 villagers building a
beautiful house on 80 rai of land, where I also overlook rice production.
Now 80 rai of rice should seem viable? It is and it isn’t. Totally
dependant upon workforce and weather, both totally undependable! So I
began a little business, “Village Home Stay.” This is for anyone
wanting to have just the briefest insight into real Thai people (who are
really honest, proud, caring and loving people) and who want to see real
life, beautiful countryside, amazing temples and historic sites. Nothing
here is set up for tourists; here it’s all real, from people making silk
from the worm to the cloth. There are no entrance fees and open and closed
signs. Here we are surrounded by genuine beautiful young and not so young
Thai village folk. Their smiles are not to sell you more beer, just seeing
you, a real foreigner is reward enough. If you or your readers fancy a
break just phone me or go to Khorat and ask for Jimmy the Welsman. We’re
75 kilometres from the city but someone there will point you towards our
village. It’s easy to find - it’s the only one with 300 villagers and
one Welshman. No go-go’s, no bars, but there is beer and I give cookery
lessons in egg and chips. Sorry no internets or email here. Normal
communication is quite simple - you just shout loudly to each other!
Jimmy
Dear Jimmy,
Thank you for the letter (which I had to chop down,
Petal, sorry). Your story is lovely and shows that if you keep your head
on straight and take things slowly in this country, you can find your own
paradise, as you have with Lamai and baby Lizzie. Some of you who have
gone rushing blindly into relationships should think about this. Now I
know that this column is not really for advertising, but your story was so
touching, Jimmy, that I have included your telephone number if anyone
wants to contact you further. Readers please note that this is not an
endorsement, as I have never visited the Village Home Stay. However, you
do sound like a nice couple. Jimmy and Lamai’s telephone number is 01
393 0501.
Dear Hillary,
Is it possible to meet a Thai girl who does not want to
drive a snow plough through your wallet? Every time I think I have found
“the one” it ends up that I will be lucky if I have one baht left in
the bill-fold. They start out alright, looking after you very well, so you
keep going back to the bar, then you make the big decision and take them
away from there to give them a better life and everything is rosy for a
while, then comes the hand out for this and for that and a new fridge for
her mother and then a big lick to pay off father’s land mortgage. It
doesn’t end till the money ends, then they’re gone! This has happened
to me three times so far and I have been so badly burned I don’t think
I’ll bother trying again. Do any of your readers have a suggestion, or
perhaps even you yourself Hillary?
The Burn Victim
Dear Burns Victim,
I do feel sorry for you, Petal, but there’s a very
basic fact that you seem to be missing, especially since you have gone
down this road three times already. Why are you continuing to go to the
same places looking for a long-time mate, when you are lining up at the
short-term holding pens? You are going to the marketplaces where they sell
affection but you are looking for enduring love. You are trying to buy a
Mercedes in the motorbike shop! Unfortunately for you, there is no
“marriage market” even though there are places that seem to promise
this. Love and affection are never sold. Start looking elsewhere, Burns
Victim, and you will find there are some wonderful girls out there, hoping
to meet a nice man like you to fall in love with - not to fall into bed
with. Get the message, Poppet? Perhaps you should read Jimmy’s letter
above so that you can get some hope again. Stay away from the meat markets
and you won’t have to end up in the burns unit again.
A Slice of Thai History: By train to Songkhla in 1957
Part 2
by Duncan Stearn
The following is part two of extracts taken from a
letter written by the wife of a British embassy official to her family in
England, recounting a trip she took with her husband by train from Bangkok
to the southern Thai city of Songkhla.
‘We went along to the dining-car for dinner. There
were only four other diners there, two Chinese and an American and a Thai,
but perhaps this was because a European dinner was served - soup, fish,
meat, and caramel pudding, followed by coffee which was so strong that it
was almost thick. The custom among Thais seemed to be to have their meals
brought to them in their compartments and one waiter who looked worn out
long before the evening was over was rushing about with bowls of rice
covered with sauces and meat and eggs. He also served drinks to all the
travellers - local beer, 7-Up (fizzy lemonade), Green Spot and the
ever-popular coke.’
The only person who could speak English was the chief
dining-car attendant and he took their dinner order while ‘...A solemn,
round-eyed young man clad in white shirt and long dark blue trousers laid
the table for us with great care and precision...’
They returned to their compartment around 8:00 p.m. to
find their bunks already made up, ‘with a single bottom sheet, pillow
and one folded blanket...In the centre of the coach there was a bathroom
complete with shower and water stored in a huge jar and a scoop to scoop
the water out...The Thais, men and women, were wandering about in sarongs,
the women with blouses on top...’
The following morning, breakfast in the dining-car
‘consisted of a banana each, more thick black coffee, toast, butter
which someone seemed to have forgotten to put in the refrigerator the
night before and had turned rancid, and a choice of jam or marmalade...’
The train pulled into Had Yai at 1:00 p.m. and
‘...here we left the train, jumping down onto the sanded track, while
our faithful berth attendant handed our cases and all the packing cases
out through the window.’
The couple were picked up by a member of the British
consulate and taken to Songkhla, which she described as, ‘a small port
and fishing town with busy streets and thousands of samlors and bicycles -
the latter ridden by men, women and children alike.’
They stayed two nights in Songkhla before being driven
back to Had Yai to catch the train back to Bangkok. ‘The train was
already waiting for us and...we got into our reserved compartment, which
at first seemed more modern and better equipped than the one on our
journey down, but this turned out to be a sad illusion...The train...was
an all-Thai train and had come from Kota Bahru...and for some reason the
whole standard of service and cleanliness was very much lower.’
Women’s World: The stress management of an
ordinary woman (part 1)
“Each person is responsible for her own happiness”
by Lesley Warmer
During my ‘longish’ life I consider that I have
probably had my fair share of stress and found my own way to deal with it.
But over the last few months I’ve felt my stress level rising to a pitch
that eventually made me more ill than I feel comfortable with. I was not
aware of the symptoms that could be induced by stress or how damaging it
could be to one’s health. I decided to look into the subject more fully
and see what we can do to manage it.
 I found mountains of information on stress management
but have to say that applying it to myself wasn’t so easy. Exercise
routines, diets, quiet moments, menopause control, etc.; it’s easy to
listen and read about what to do but putting it into practice is often
just not practical. A lot is down to the individual - you need strength to
fight some causes of stress and when you’re stressed you tend to have
less power to fight, so it’s a bit of a vicious circle.
What are some of the causes of stress? I’m sure the
list is endless and what is stressful for some women will not affect
another. It’s well known that different individuals can manage more
stress than others. I know people that can work themselves into a frenzy
over the slightest thing and others that remain perfectly calm in all
situations.
Money, or should we say the lack of it can cause
considerable stress. Everyone is fond of saying money isn’t everything,
but try living without it! I know when I’m suffering with stress I do
tend to go and spend money, usually on myself. It always makes me feel
better at the time. It’s afterwards when I realize what I’ve spent for
that brief moment of euphoria. The only thing I can suggest is money
management regardless of how small your income is try and plan before you
spend it. No matter how boring it seems you must pay the necessities
before you start having a good time with the rest. Remember, for example,
if you don’t pay the rent there will be no roof over your head, which
can cause considerable stress. If you really find it impossible to manage
your money, get some help. Even if your income is small, advice on
planning will help you survive better until the next wage packet.
Relationships: Someone else wrote this phrase but I
really like it so I decided to put it in the article: “Each person is
responsible for her own happiness. This advice may go against your
instincts, for many women were raised to please others, many times at the
expense of their own growth and happiness.”
Ask yourself how true is this phrase? Are the people
surrounding you giving you energy or taking your energy? If you feel tired
or drained around certain people, watch how much time you spend with them.
True friendships are mutually giving. If you find yourself spending too
much time with someone that totally exhausts you I suggest you avoid
having too much contact with him or her. Especially if you are feeling a
bit low yourself, taking on board other peoples problems will not help
you.
Remember and accept that we can’t be all things to
all people and learn to say no.
As for your relationship with your husband or boyfriend, don’t you
find that it’s always easy to view another women’s relationship from
the outside and solve all her problems? But when you turn all this good
advice round onto yourself and your relationship it never works. The best
advice I can offer is to try and view your relationship objectively. To do
this you do need some quiet moments to reflect, usually around sunset
gazing at the sinking sun is a good time. You will get a clearer picture
of what is happening in your life, whether you do something about it or
not is ‘up to you’. At least you can face what’s wrong and either
accept it, or give yourself options on how to go forward and improve your
quality of life to reduce your stress level.
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