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Money matters: Scott Campbell’s views on Thailand
(Written at the start of May 2004)
Graham Macdonald
MBMG International Ltd.
Continuing our mini-series on the views imparted by
Scott Campbell, the portfolio manager whose ‘Growth Fund’ has been
judged by S&P to be the best in its sector for the last 6 years,
during his first ever visit to Bangkok, last month we turn our attention,
once again, to Warren Buffett.
It is that time of the year when Warren Buffett reveals
the annual results of his company, Berkshire Hathaway and also provides
his insights into current trends and investment issues. Consider the facts
and it is easy to understand why so many wait in anticipation for this
commentary and his legendary annual general meeting in Omaha in May.
Over the past 39 years book value of Berkshire has
increased 22.2% compounded annually. NAV per share was US$19 in 1965 and
is now US$50,498. Shares trade at nearly 2 times book or US$100,000 per
share. Total results versus the S&P500 are awesome since 1965, but
probably more impressive to me is the out performance in tough times.
The table above depicts Berkshire’s annual percentage
change in per share book value versus S&P500 with dividends
reinvested. The startling historic fact is that intrinsic value has
somewhat exceeded the 22.2% pa book gain? Enough of the history, everyone
knows Buffett is a GURU. Where is he positioned today and what are his
current views?
Berkshire has 4 main investment sectors, insurance,
operating businesses, finance and common stock investments. When
valuations are similar they strongly prefer owning businesses to owning
stocks and the latter has decreased in percentage as stocks become the far
more expensive choice. In recent years they have found it hard to find
significantly undervalued stocks with 1) favourable and enduring economic
characteristics, 2) talented and honest management and 3) are available at
a sensible price.
2003 was a terrific year for their insurance
businesses. They produced an underwriting profit of US$1.7bn and had the
use of US$44bn of “float” assets. GEICO continued to prosper and the
reinsurance company, General Re looks to have turned the corner. Following
on from last year’s thesis on derivatives, General Re is still trying to
exit all derivatives activities since 2002. It has cost US$173mn in 2002
and US$99mn in 2003 to shrink this business but more importantly in early
2002 it had 23,213 outstanding contracts with 884 counterparties (some
having names that Buffett couldn’t pronounce let alone evaluate
creditworthiness).
Despite a concerted effort, they still have 7,580
outstanding contracts with 453 counterparties! These losses have come in a
benign market; all contracts were previously valued market to market and
without any major credit loss. Buffett cautions again on the shenanigans
of derivative accounting and what is lurking in the undergrowth, indeed
the more you learn the less you know from disclosure documents.
The scary thing about all this is the sheer gigantic
size of the unregulated OTC derivatives market place and that General Re
has taken these hits in an orderly market. What happens if a financial
crisis forced a number of derivative dealers to cease operations
simultaneously? Reported profits are illusionary and Buffet notes that the
cash needed to prop this business up in the tough times, would be exactly
the time they wanted to deploy that very cash into other assets at huge
advantages. They remain convinced that derivatives are financial weapons
of mass destruction, carrying dangers that, whilst now latent are
potentially lethal.
All Berkshire’s boring businesses performed well in
2003 and they made a major acquisition in manufactured housing, brought a
distribution business from Wal-Mart and continue to grow MidAmerican
Energy Holdings. Existing businesses such as Flight Services, Shaw
Industrial and Fruit of the Loom are in good shape. The common stock
investment portfolio remains dominated by Coca-Cola, American Express and
Gillette and they are neither enthusiastic nor negative about the
portfolio they hold.
Buffett is annoyed that he didn’t sell several of the
larger holdings in The Great Bubble. In 2002 Berkshire purchased US$8bn of
junk bonds or high yield debt because they felt it was cheap. He notes
that the pendulum has swung quickly and this sector looks decidedly
unattractive to them. Yesterday’s weeds are today being priced as
flowers and an exit strategy is in progress.
Finally, Buffett is critical of US corporate governance, the US trade
deficit, US$, mutual fund directors and un-repenting CEOs. His cash pile
of US$36bn (US$12bn is in foreign currencies for the first time) is only
earning a pittance, but he is prepared to under-utilise capital and be
patient as it is way less painful than doing something stupid. A very wise
man indeed!
Berkshire S&P500 relative
1966 20.3% (11.7%) 32%+
1973 4.7% (14.8%) 20%+
1974 5.5% (26.4%) 32%+
1977 31.9% (7.4%) 39%+
1981 31.4% (5.0%) 36%+
1990 7.4% (3.1%) 11%+
2000 6.5% (9.1%) 16%+
2001 (6.2%) (11.9%) 6%+
2002 10.0% (22.1%) 32%+
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 graham@mbmg-international
.com
Snap Shots: Henri Cartier-Bresson’s final ‘decisive moment’
by Harry Flashman
Henri Cartier-Bresson, the originator of the phrase in
photography, “The Decisive Moment”, has just died, a few weeks before
his 96th birthday. However, he will be remembered for his contributions to
photography for ever. However, despite his fame and notoriety, he was
never one to look for publicity. His photographs perhaps now will speak
for themselves.
 He
was born in France in 1908 and initially studied painting, following much
of the Surrealist school of thought of the time. However, by the time he
was 22 years old he had dropped art for photography, but began to apply
the art concepts he had been exposed to towards photography.
One of the factors that allowed Cartier-Bresson to do
this was the advent of the small portable cameras, such as the Leica,
which was to become Cartier-Bresson’s favourite instrument. It was this
portability that allowed Cartier-Bresson to become ‘one’ with the
subject. He believed that the photographer had to become part of what was
going on, and after becoming ‘in tune’ with the subject, it was then
possible to capture the essential moment, the very essence of the event.
This was explained by Cartier-Bresson in the foreword to his book,
published in 1952, “Images a la Sauvette” (The Decisive Moment). He
called it “The simultaneous recognition, in a fraction of a second, of
the significance of an event as well as the precise organization of forms
which give that event its proper expression.”
With this concept and the portable lightweight camera,
Cartier-Bresson was to become one of the principal ‘street’
photographers. A true journalist with a camera - a photo-journalist. He
would record not just a parade, but also the people watching the event,
and their reactions to the event.
Take a look at the classic photo to illustrate the
decisive moment. The shot was taken in 1932 at the Place de l’Europe,
where the marooned man has finally realized that there is no way out, and
having made the decision, launches himself off the ladder. That split
second, that decisive moment caught by Cartier-Bresson in such a way the
viewer can feel the moment still today, 72 years later.
His work took him across Europe. He recorded the
Spanish Civil War in the 1930’s and then WW II, but was finally captured
and he became a POW. He escaped three years later, and was there to record
the liberation of Paris from the Germans.
Of course, he was by that stage becoming an icon, and
in 1947 joined forces with two other ground-breaking photojournalists,
Robert Capa and David Seymour to form the Magnum agency. Magnum became
famous for its news photography. For Cartier-Bresson, news was much more
than the photo-journalists were showing. It was necessary to get behind
the scenes.
Cartier-Bresson and his confreres forged a name for
hard hitting news photography. Cartier-Bresson spent almost 20 years
there, covering Mao Zedong’s victory in China and the death in India of
nationalist movement leader Mahatma Gandhi.
Regarded as one of the pioneers of photojournalism, his
pictures now hang in art galleries around the world, with a retrospective
in Europe to be extended to allow more visitors the chance to view his
work.
Friend and fellow photographer Lord Snowdon paid
tribute to him saying, “He was brilliant. I will miss him very much. I
don’t think he’d like his work to be called art, he would like to be
remembered as an anonymous figure. His books record moments that can’t
be captured again.” Again that concept of the ‘decisive moment’.
French President Jacques Chirac said his death was a
major loss to his country. “With him, France loses a genius
photographer, a true master, and one of the most gifted artists of his
generation and most respected in the world,” he is reported saying.
Not just France, but the world has lost a photographer who had vision
and the ability to record his vision in a way the world could understand.
The decisive moment will always belong to Henri Cartier-Bresson.
Modern Medicine: Dengue Fever - again and again!
by Dr. Iain Corness, Consultant
Despite my pleas (and those of the Public
Health Department), Dengue Fever and its potentially fatal variant, Dengue
Haemorrhagic Fever (DHF) is still with us. The latest figures have now
prompted me to repeat my advice on this subject. If you remember reading
about it before, I apologize, but the subject matter is very important. This
is an important ailment that can be avoided.
However, first you should understand a little more about
Dengue. It was first described in 1780 by a Benjamin Rush in Philadelphia
(so it didn’t start here), when the name Break Bone Fever was applied,
with the symptoms of pain in the bones and rise in temperature. The name
“Dengue” came in 1828 during an epidemic in Cuba. The new name was a
Spanish attempt at a Swahili phrase “ki denga pepo” which describes a
sudden cramping seizure caused by an evil spirit! Let me assure you that the
local brand of Dengue Fever owes nothing to spirits, evil, bottled or
otherwise.
Like Malaria, the virus is carried by mosquitoes, this
time by one called Aedes aegypti. The virus itself is related to Japanese
encephalitis, Murray Valley encephalitis and Yellow fever, and there are
four “serotypes” or subgroups of it.
The mosquito lays its eggs in water containers,
preferring the clean water found in water tanks and pots, in the saucers
under pot plants and even under the pet’s food dish. Inside discarded car
tyres are another favourite spot. These mosquitoes are not of the
adventurous type and feed during the day and spend their time within 200
metres of their hatchery. Consequently, the eradication of any local
breeding areas becomes very important towards maintaining your own health,
as you can see. Keep your home free from lying water for a radius of 200
metres and you’re looking good!
Simple Dengue (if you can call it that) has an incubation
period of around four to seven days and then the full blown symptoms of high
fever and headache begin. The headache is usually behind the eyes and is
made worse by eye movement. From there the pains progress to the limbs with
acute muscle pains, which gave it the old name “Break Bone Fever”.
Interestingly, some patients complain of a metallic taste in the mouth.
(Please don’t ask - I have no idea why!)
On the other hand, Dengue Haemorrhagic Fever can
certainly be fatal! It appears that Serotype 2 may be the culprit here, but
does not usually produce DHF unless you have been previously bitten by types
1, 3 or 4. In addition to the symptoms of Classical Dengue the skin begins
to bruise very easily as the blood haemorrhages into the skin. Children are
also more susceptible to this than adults. This also becomes much more of an
emergency and is best treated in the Intensive Care Unit (ICU) of your
favourite hospital.
With our ability to treat the viral ailments being very limited, the
defence against the Dengue virus lies in the preventive measures. The other
precautions are to wear long trousers and long sleeved shirts, especially at
sun up and sun down, when the mosquito is at its most ravenous. The other
factor to remember is “D” for Dengue and “D” for DEET. DEET is the
magic ingredient in mosquito repellents, so when you go to buy some, check
the label - if it has DEET, then get it. And then remember to use it!
Learn to Live to Learn: International Schools
by George Benedikt
“Education, Education, Education!” was
Tony Blair’s clarion call when elected as Prime Minister of Great Britain and
Northern Ireland in 1997. For all his subsequent detractors, who question what
has been achieved in education since this time and how the government of the UK
has gone about addressing the ‘need for change’, there can be no doubting
the importance of education.
Wherever we are, it is at the centre of the community and
whether we be parents, students or teachers, whether we like it or not,
education lies at the heart of our past, present and future. Education helps us
better understand what has gone before, and makes us better equipped to handle
the increasing uncertainty of what lies ahead.
For the readers of the Pattaya Mail, “Learn to Live to
Learn” will provide relevant, concise, informed insight into the educational
provision that is available regionally and globally in general and locally in
particular, so that our readership can depart the pages better prepared to deal
with critical issues to do with making informed choices about the kind of
educational opportunities that are available.
Each week, “Learn to Live to Learn” will look at
different issues in local education and examine them critically, compassionately
and sometimes provocatively. Your participation through the letters section is
actively encouraged.
International Schools: Making the
right choice for you and your children
Increasingly, visiting local educational institutions can be
exhausting and confusing and it is certainly possible to leave a school feeling
one knows less about the place than when one arrived.
Education is a growth market in Thailand, and those entrusted
with marketing their product to you, the customer, can often seem like
unscrupulous salesmen. This is especially true for new arrivals in the country,
who are invariably tired and possibly disorientated when they arrive and have
any number of tasks to complete upon arrival, such as finding housing, transport
and waiting for shipments to arrive.
In this period, often referred to as a ‘honeymoon
period’, events and/or feelings such as culture shock might very well conspire
to create false impression of an institution, which may in turn lead to a
decision taken either in haste, or for what may turn out to be, the wrong
reasons.
Over the next few weeks, “Learn to Live to Learn” will
present informed advice on what to look for when making your choice of
international school and will provide tips on how to avoid a nightmare scenario.
The process of deciding upon schooling for our children can
become onerous, yet this decision is crucial to the future happiness of all the
family. Next week we will look in details at some of the questions we would all
like answered before we consider or visit a potential school: ‘What should we
look for?’ and ‘What should we avoid?’
Send questions, comments and/or suggestions to [email protected]
 Heart to Heart with Hillary
Dear Hillary,
This is a crazy time in my life and I am all at sea. I have provided for my wife
for the past 16 years. She has never had to want for anything. I am a model
husband, good looking, never play up, only drink in moderation, don’t smoke,
in perfect health, a witty intelligent companion, and I have always been
considered by everyone as a “good catch”. This week she calmly announced
that she wants a divorce. I can’t get it out of her as to why - just that she
wants a divorce. Why, Hillary, why?
Dumbfounded
Dear Dumbfounded,
I would say that the reason could just possibly be that after the same 16 years
she has woken up one morning to find she was lying beside an impossible self
satisfied, pompous and arrogant twit. If you were my husband, I would have
divorced you too. But it wouldn’t have taken me 16 years to waked up! As far
as being all at sea, don’t worry, your ship will wash up somewhere. Your type
always does.
Dear Hillary,
Where would you suggest I take my girlfriend for a romantic night? I intend to
propose to her then, so want the surroundings to make it an evening to remember.
You must have all sorts of rendezvous that you could suggest.
Romeo
Dear Romeo,
You didn’t say in your letter what it was that you wanted to propose to the
young Juliet. Marriage, m้nage a trois or a dirty weekend in Tianjin? Your
email also gave me no indication of where you are. What’s the use of me
suggesting somewhere that’s 1,200 kilometers from where you are? If you are so
indecisive and wishy-washy as this all the time, I hope she says No! to all
three of your proposals.
Dear Hillary,
I think your advice is stupid. What right have you got to tell people what to
do? Are you qualified to be handing out all this sort of silly nonsense? Why
don’t you go back to your dog-house or wherever you came from?
Frank
Dear Frank,
To be perfectly frank, which I’m not since I’m a Hillary, I have as much
right as you have, my Petal. Since you are the one with a bone to pick, perhaps
it is you that should be living in the kennel? Woof! Woof!
Dear Hillary,
I seem to have got myself into a little bit of hot water here, and need some
words of advice from a ‘senior’ person such as your good self. I am a young
single man, and considered to be not bad looking. My problem comes from one of
the girls I have met recently. She rang me at work the other day and asked if I
could come over and see her at the new bar she was working in. I have to admit I
did not remember her from her previous bar but was embarrassed so I agreed that
I would. Because I was not sure which lady this was, I never went, but now she
is ringing me up every day and everyone in the office is laughing. What should I
do? How can I tell her it isn’t a good idea to ring me at work in a crowded
office? Any suggestions?
Ernest
Dear Ernest,
You are far too “earnest” for your own good, my Petal! You have brought all
this on your own head, haven’t you. If you don’t want anyone to ring you up,
then don’t give them your telephone number! She didn’t dream up your number
or get given it by the fortune teller, did she? It’s quite simple, if you
don’t want a girl to ring you at work, then don’t give her your business
card. If you feel the need to chat her up on the phone just give her your mobile
and tell her what hours to ring you. The girl isn’t stupid. You are. And
thanks for calling me a ‘senior’! Let me assure you Hillary is not eligible
for any pension.
Dear Hillary,
You are often telling people that they should learn Thai if they are living here
for some time. I have retired here, but at 65 years of age, I find it very
difficult to learn a new language at my time in life. Is there any quick way of
doing this, or do you have any special tips for people trying to learn this
impossible Thai language?
Bill
Dear Bill,
First let me say congratulations, my Petal! It’s about time some of the people
out there realize that this country is called Thailand and the people speak
Thai. There are many ways to learn the language. There are the set courses
offered by language schools all over the country. They are used to people at
your stage in life and will tailor a course to suit you, so don’t feel
embarrassed. Second there is the ‘total immersion’ method. This is where you
take yourself off to an up-country village, where nobody speaks English. You
have to learn to survive! I have been told that by six weeks you will either be
talking reasonable Thai or will have gone stark raving mad. However, it is still
the quickest way to pick up a language. You will probably have picked up a small
language teacher as well!
Personal Directions:
Raise your ceiling
by Christina Dodd
The first skill each and every one of us
should learn, if we are to have any chance of bettering our lives and
reaching our dreams, is to develop a strong positive belief in ourselves and
our capabilities. This is the first thing that I instill into all
participants in our coaching and training courses. We all have untapped
resources of energy and creativity - like vast seas - just waiting to be
tapped, brought to the surface and refined for our use and personal, social
and sometimes financial profit.
The beliefs we have about ourselves are responsible for
who we ultimately become and what we eventually achieve in life. Indeed, a
positive self-belief is a prerequisite for achieving anything and everything
in life.
If you believe that you will fail, you will! If you
believe that you will succeed, you will! If you believe you will be rich,
you will be rich. If you believe you are destined for poverty, you will
never rise above that. It is a fact that you become like the person you
think and believe you are and achieve only what you think and believe you
are capable of.
Let’s look at an example. I’ll use a fictitious
character called Bill, whose experiences can be used to better illustrate
this article. Right from the start, Bill had to learn this first life skill.
He had to believe that he had the capability of making a better life for
himself and that he deserved this life before he could even begin to move
forward and go after it. Before we can even begin to imagine what it is we
want from life, we first have to believe that we have the capability to
achieve great possibilities. Without this belief, we would never even
attempt to do anything about our dreams.
What’s the point of imagining a better life when we
have already convinced ourselves that we are incapable of achieving it?
Don’t be fooled into believing that “you’ve either
got it or you haven’t and there is nothing you can do about it.” This is
one of the most common misconceptions and is why people do not rise above
their situation.
If you do not believe me, I want you to think about those
who have yet to be born. They will eventually grab at the very opportunities
you missed, rising to the top of their professions, running their own
successful companies and enjoying great wealth. Amongst them will also be
those who are going to become the great leaders of tomorrow, presidents of
their nations and athletic stars. I believe that you have an advantage over
them as you are alive now and they have yet to be born.
It’s easy to say, “Believe in yourself and you will
succeed,” but how do you develop a powerful belief in yourself? Just like
Bill did, you have to ask yourself, “What limiting beliefs do I have?”
Then work on getting rid of them and rather focus on uplifting and positive
beliefs.
Let’s list some of Bill’s limiting beliefs:
* You are either lucky enough to be born into the good
life or destined for poverty.
* He should forget about becoming a teacher as he has no
education.
* He should be satisfied with what he has and stop
wishing for more.
Bill began to rid himself of these limiting beliefs by
refusing to accept them. He began to convince himself that he was destined
for better things and could rise above his situation to achieve his dreams.
There is a popular saying that goes, “You create your
own ceiling in life!” What it means is that you unconsciously set your own
limits to what you can and cannot do, due to your beliefs about yourself and
your capabilities. The more limiting beliefs you have about yourself, the
lower your self-created ceiling will be and the less you will achieve. When
you start to rid yourself of limiting beliefs, you raise your ceiling and
are able to achieve more. In this way Bill had unknowingly raised the
ceiling to his potential.
I have met many successful people in my time. All of them
had one very important thing in common - before they succeeded in any way,
they first believed they could. They valued themselves highly, choosing to
raise their ceiling and refusing to accept any limitations to their
potential. Their central and unswerving belief and their “I can do it!”
principles drove them and inspired each of them to greater heights.
You must learn to believe in yourself and your
capabilities.
Your beliefs hold great power. They make up the person
you become and will influence what you achieve in life. I want you to start
believing that you can do anything you truly put your mind to. If you
believe you can, you will go to great lengths to prove yourself right.
However, if you believe you can’t, you will make no effort and you will
fail as your ceiling will be so low that you will see no opportunities to
better your life at all.
Now I have shared with you the first vital life skill on
the road to success. Note it well, for when you start believing you can, the
ceiling to your potential will rise a little higher so you can see further
and achieve a great deal more.
Until next time, have a fabulous week and believe in yourself, your
abilities ... and when asked just how high your ceiling is ... then “Reach
for the stars!”
For more details about our life coaching services,
personal and professional skills development programs, please email me
directly at [email protected] or visit our website www.asiatrainingassociates.com
Until next time, have a fabulous week and take one step
closer to reaching your goals!
Psychological Perspectives:
Origins of evil
by Michael Catalanello,
Ph.D.
At the time of this writing, U.S. and
Iraqi military operations against insurgents loyal to the Shiite cleric
Muqtada al-Sadr dominate the news. The bloody American-led war against
Saddam’s regime and its aftermath to date has claimed the lives of over
930 American military personnel. The number of Iraqis killed is not known,
but is estimated to be in the thousands.
This ugly conflict has taken an even uglier turn, and
now threatens to damage or destroy a world famous site of religious
significance, the Imam Ali shrine where al-Sadr’s militia has reportedly
taken refuge, the adjoining cemetery, and Najaf’s Old City.
Wars and military conflicts have been with us throughout
recorded human history. The modern industrialization of war and the rise of
huge bureaucratic military organizations have created new dimensions of
horror, death and human suffering. It is estimated that over 88 million
lives were lost as a result of 20th century warfare.
War is but one example of a range of destructive,
harmful, dehumanizing and demeaning acts which are carried out by humans
against our fellow humans. Other examples might include terrorism,
homicide, torture, child abuse, rape, and sexual abuse.
Early attempts by social scientists to understand such
events have tended to locate the source of evil within the individual
perpetrator. A theory which emphasizes internal determinants of behavior is
known as a “dispositional perspective”.
The pioneer psychoanalytic theorist, Sigmund Freud,
advocated a dispositional perspective. Psychoanalytic theory proposes that
violent and antisocial acts result from the personalities of disturbed
individuals. Psychoanalysts tended to examine the events of early childhood
development for evidence of unresolved conflicts to explain antisocial
acts. Other dispositional theories have identified genetic factors, or
personality factors as important in understanding antisocial behavior.
One such attempt by psychologists to understand the
human behavior underpinning the Holocaust, the rise of fascism, and the
historical appeal of Hitler, proposed a concept called the authoritarian
personality syndrome. According to this theory, some people possess
identifiable personality characteristics which predispose him or her to
embrace fascist political ideologies.
Theories like these, while interesting, have difficulty
explaining antisocial acts by seemingly normal individuals, such as the
young men and women sent to carry out governmentally sanctioned antisocial
acts called warfare in response to the commands of political and military
authorities.
In contrast to the dispositional perspective, modern
psychological theories place emphasis upon the characteristics of the
social situation. According to a “situationist perspective,” people
like you and I can be induced to perform violent and antisocial acts in
response to social situations. Psychologists like Philip Zimbardo discussed
previously in this column in connection with the Stanford Prison
experiment, advocate a situationist perspective of violence such as that
which occurs when nations go to war.
We humans generally seem inclined to focus primarily on
the role of dispositional or internal factors as being responsible for
people’s behavior, antisocial or otherwise. By contrast, we seem inclined
to overlook or underestimate the influence of the social situation on
people’s behavior. Social psychologists have investigated this tendency
of ours, which they have labeled “the fundamental attribution error”.
Next week we’ll look at some of the interesting research that has been
done into this phenomenon.
Dr. Catalanello is licensed as a psychologist in his
home State of Louisiana, USA. He is a member of the Faculty of Liberal Arts
at Asian University in Jomtien. Address questions or comments to [email protected]
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