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Money matters: “We Don’t Need No Education…”
Graham Macdonald
MBMG International Ltd.
Pink Floyd’s ‘The Wall’ hit number
one 25 years ago - the same day that the price of gold hit an all time
high. At the end of January 1980 gold touched $850, before plummeting. In
fact, the very next day gold fell by $113 to $737. By the 18th March 1980
it was back below $500! Of course $850 was the nominal gold price. In
today’s money, $850 would be worth $2303. So today’s gold price of
$423 represents a greater-than-80%-loss in value since 1980. In 1980 ten
ounces of gold might have bought you a nice car. Now it might buy you a
nice bike.
If gold is a “collective hallucination,” what is a
US Dollar? Or a share of Google? Or a 30-year Treasury bond? Aren’t
these paper assets merely derivatives of a hallucination? Would you rather
receive shares in Yahoo as payment for your month’s labour or worse yet,
at retirement?
To rephrase the question: “If we investors are all
hallucinating to some extent, might some hallucinations be more benign
than others? Might the current market value of gold, for example, be a
less dangerous ‘hallucination’ than the current market value of a
dollar bill?” Even conceding the fact that our eyes may be deceiving us,
we think we perceive more value in an ounce of gold costing $432.00 than a
US Dollar costing 1/432 an ounce of gold. Indeed, we suspect that the
dollar’s illusionary value is the sort of deceptive apparition that
entices unsuspecting investors to stroll off a financial cliff.
How many times have I heard: “Gold is valuable only
as long as we collectively agree that it is. It may be soft, shiny,
durable, and rare, but it has no more intrinsic value than toilet paper or
a lock of Elvis Presley’s hair ... Buying gold is the purest form of
speculation ... You’re buying into a collective hallucination - exactly
what those dot-com investors did in the late nineties. One could say that
gold is the biggest, most durable bubble in history.” In the sterile
environment of pure financial theory, this sounds a valid argument.
But when exposed to the virulent microbes of real-world
economics, this thesis degrades rapidly. To be sure, the value of EVERY
asset in the world relies upon a collective judgment - or hallucination,
if you prefer. But this is hardly a groundbreaking insight. No financial
asset - gold included - possesses an absolute, eternal value. Rather, all
values are relative. However, any financial asset whose relative value
remains somewhat constant over time is deemed to be a “store of
value.” In this respect, gold has proven itself to be an extremely
lifelike hallucination - having successfully retained its value relative
to competing assets over several thousand years. The same cannot be said
for paper currencies or government bonds, both of which routinely find
themselves cluttering the waste dumps of financial history. But gold’s
relative long-term value has nothing to do with its short-term investment
merit. Indeed, 1000-year investment trends rarely benefit those investors
who operate on a shorter time horizon, as gold’s recent history plainly
shows.
To emphasize this point, we note that gold is up
“zero percent since 1988, while the S&P 500 has almost
quadrupled.” Very true; but if we were to mine for data in more recent
annals of financial history, we would discover that gold and stocks have
reversed roles. Since 1998, it is the S&P 500 that is “up zero
percent,” while the yellow metal has advanced more than 50%. Selective
slices of history are just as likely to deceive as to inform - as the
saying goes, “There are lies, damned lies and statistics”. Truth
resides with long-term investment horizons. Gold wasn’t born
yesterday...
Both gold and paper dollars have history, but gold has
far more of it. Both gold and dollars have a future too. But, and this is
the important part, gold is likely to have more of that, too. Indeed, we
suspect gold is likely to grab an outsized share of the immediate future,
thanks to the substantial pressures weighing on the US Dollar. These are
the deepening current account imbalance, the worsening trade balance and
the rise in the net U.S. ownership of foreign assets.
All three trends provide solid reason to believe that
gold should strengthen while the dollar weakens (although in the very
short term, corrective factors might actually temporarily reverse both of
these trends).
Foreign central banks may soon begin to disgorge some
of the hefty dollar reserves on which they are now choking - following the
examples of Australian and New Zealand central banks in managing their
reserves the way that any multi-national conglomerate would do - if its
CFO expected to keep his job. A bull market in gold may very well result.
We remain bullish on the thing that glints in the sunlight, is recoverable
at five parts per billion from the earth’s crust and has no central
banker.
Money For Nothing And
Chicks For Free…
Mark Knopfler’s wish is something every asset manager
should take to heart. If surfers, rock stars and movie stars can do it,
then so can we. Let me explain. “Crude oil may be the next commodity on
tap in the world of exchange-traded funds,” reports a recent Wall Street
Journal. It will not be the last, we predict. Commodity-based ETF’s will
proliferate, not only because they provide a direct means of investing in
specific commodities, but also because they provide an indirect means of
investing OUT of US Dollars. Commodity-based ETF’s offer a unique kind
of alternative to the US Dollar. They are currency in ETF’s clothing. In
other words, the investor who is canvassing the world for hedges against
dollar weakness will find the commodity ETF’s to be very handy vehicles.
As it happens, the NYMEX already offers a very handy
crude-oil-based hedge against dollar weakness - and this hedge sells for a
discount! The forward strip of crude oil contracts on the NYMEX are in
backwardation – i.e. the short term oil cost is greater than that in the
longer term future. In this case, the spot price of crude oil is $48.38 a
barrel, while the contract for delivery in 2010 is only $38.17 a barrel.
In other words, an investor may buy a barrel of crude oil today for $38.17
and take delivery of that barrel (or sell the contract) in 2010.
(Actually, one futures contract on the NYMEX covers 1,000 barrels of oil.
So the investor buying one contract would pay $38,170). If the oil price
does not change between now and 2010, the far-sighted oil investor would
bag a profit of $10.21, or 27% over 6 years. That’s a return of about 4%
per year, before commissions. But just maybe, the oil price will not be
$48.38 in the winter of 2010. It might be lower, of course. But it might
also be much, much higher, thanks to soaring demand for crude or a falling
dollar or rising terrorist activity, or all three. In short, there are
probably worse hedges against monetary and geopolitical uncertainty than
the December 2010 crude oil futures contract. \
In
Conclusion
Gold and oil are but two of the seventeen commodities included in the CRB
(Commodity Research Bureau) Index. To us it is clear that the commodity cycle is
far from over. We have just started the long and profitable road to the previous
high of the early eighties. In commodities we trust (as much as we trust in
anything right now).
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]
Snap Shots: Eye-catching inexpensive wall art
by Harry Flashman
There is something about walking into a house and
seeing some spectacular photographs being used as wall art. This week’s
column will show you how you can produce your own wall art inexpensively.
One very good way to give extra impact to your
photographs is to ‘pair’ your images by use of contrasts. Contrasting
images are excellent subjects for wall art - that photographic end product
that can make you a ‘star’ even if it is only in your own lounge room!
 The
first, and one of the most obvious contrasts is to take the same subject,
but at different times of the day. The “cold” blue light of morning,
compared with the “warm” golden glow of the late afternoon. The sun
will be coming from different angles, and the light is totally different.
If you have a tripod, you could even add a third image by taking a shot
just after sundown as well.
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! However, 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 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 pros 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. Or even the same person 50 years
apart. 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 plenty more - hot and cold, rough and smooth,
light and heavy - there is really no end to what you can portray.
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.
The presentation of contrasting images is important. 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.
Modern Medicine: Knees up Mother Brown - if she can
by Dr. Iain Corness, Consultant
Unfortunately, we all wear out. Joints in
particular are mechanical devices, with one bone sliding on another with a
slippery bit (called cartilage) in between. Most joints, especially knee joints,
are designed to last our three score years and ten, and that’s about it. We
now live longer, but we have not worked out how to make the joints last longer!
We do know why they wear out, especially knee joints. Since
they are mechanical, increase the loading on the joint and it wears out quicker.
Imagine that your knee has been designed to hold up 80 kg for 70 years, and now
increase that loading to 120 kg. That same knee now has to support 50 percent
more than it was ‘designed’ for, so you can expect it to wear out 50 percent
sooner. Simple.
Of course, when the damaged knee starts to give its owner
pain and grief, what happens? For a start they stop walking and exercising
because it becomes too painful. This in turn means that they will now become
more overweight, and so the problem gets worse, and worse, and worse.
So they hobble down to the doctor and ask for something for
the pain. The doctor thinks through the latest medical drugs for this condition,
and most probably will hand over some Non Steroidal Anti Inflammatory Drugs
(NSAIDs) and tell the patient to lose weight.
Now I am not saying that this is totally wrong - but - when
the NSAIDs first came out (hands up all those who remember Indocid) they were
heralded as being the answer to these problems. Some were even supposed to
‘grow’ new cartilage. The answer to a maiden’s prayer, or the
osteoarthitic’s prayers at least.
Unfortunately, we very quickly found that Indocid and its ilk
drilled holes in the lining of the stomach and were more than slightly
dangerous. So we developed newer and better and more stomach-sparing NSAIDs.
Unfortunately, these too produced problems.
Nothing daunted, we came up with even newer and more
wonderful NSAIDs, which came with even newer and more wonderful array of side
effects. Really, we have been chasing our tails here, and not winning.
So what can the poor patient do? The doctor is not offering
help, only tablets with abominable (read abdominal) side effects. Most patients
have already tried paracetamol, hot water bottles, someone else’s great new
tablets, NZ green lipped mussels, a cabbage leaf (which does work for mastitis,
or so the ladies tell me), various herbal or homoeopathic medications, yoga,
meditation, copper bracelets, and goodness knows what else.
So what can the “osteo” sufferer do? Exercise does help
to improve the mobility in the knee joint, and by strengthening the muscles and
ligaments around the knee, give it more stability.
There is another avenue in the treatment, and that is direct
injections into the affected joints. This produces spectacular results, which
unfortunately is short lived. However, even a couple of weeks can make it such
that the person can go on holidays and actually enjoy some mobility.
Finally, there is surgery, which currently is the treatment
of last resort. Since around 90 percent of patients show lessening of pain,
improvement in functional status and overall quality of life, I think we should
be looking at operation sooner, rather than later. But that’s just my opinion.
In the meantime, Mrs. Brown should take paracetamol and short
bursts of NSAIDs when required. However, if she is over 60 years of age, stick
to paracetamol and talk to the orthopaedic surgeon about knee replacements.
 Heart to Heart with Hillary
Dear Hillary,
Year after year, I see and hear many lonely, ignorant, old, fools complaining
about Pattaya’s bar girls and freelancers. But can you really blame them? Can
you imagine yourself shaking up with someone who is 15, 30 or 50 years older
than you are and expect to be happy? What do they expect? Thai girls, well as
all girls in the world want to be with someone their own age and not someone who
can be their father’s or grandfather’s age.
Thailand and especially Pattaya attracts some of the worst
quality tourists and expatriates in the world. We are talking about, etc.
Albeit, we do have some good “dirty-old-men” here who treat these girls and
women nicely and gets along fine.
So stop whining. We have a good thing going here and enjoy
Thailand while it’s still affordable.
Happy Camper
Dear Happy Camper,
Oooh, I must meet your friends! Are all of them alcoholics, druggies, perverts,
pedophiles, psychos, delinquents, criminals, crooks, losers and loners? No
wonder you have such an attitude. I would too, surrounded by all that lot!
However, getting back to your letter, I wonder if it should have been
“shacking up” rather than “shaking up”? Although I suppose they can
almost be the same thing! In actual fact, the old adage is very pertinent here,
“You get what you pay for!” So if your motley lot are happy to pay for the
pleasures, knowing there is no permanence being offered, then let them continue,
and ignore their complaints. By the way, not all the farangs here are
“alcoholics, druggies, perverts, pedophiles, psychos, delinquents, criminals,
crooks, losers and loners”. I met a very nice chap the other evening. I just
can’t remember his name!
Dear Hillary,
She said, “Hello, handsome man,” and led me into her bar where she then
challenged me to a game of pool. She beat me three games to zero. I then
challenged her to a game of darts. She threw with pinpoint accuracy and beat me
four games straight.
Not wanting to be outdone by a cheeky female who was only
five feet tall, I instructed the bar staff to keep the beers coming until one of
us quit drinking. She was about to order her tenth bottle when I quit on my
eighth. I took her to the grill house and ordered two large sirloin steaks. She
quickly devoured hers and was looking through the menu to order more food,
whilst I struggled to finish mine. On the disco floor, she energetically bumped,
rocked and bopped, I tripped, stumbled and flopped. Later, with the bedroom
Olympics well under way, she immobilised me in some kind of Greek Kama Sutra
wrestling hold that completely depleted me of my remaining power, and I was
finally forced to admit defeat. The next morning she flipped a coin, double or
nothing for her taxi fare money. The coin came down heads and, you guessed it,
she picked heads.
Am I doing something wrong or are all Walking Street girls
this skilled?
Mighty Mouse
Dear Mighty Mouse,
Oh my poor little (less than Mighty) Mouse, how can you allow yourself to be
deceived in this way? You should have known from the first greeting of “Hello,
handsome man,” that she was being somewhat sparing with the truth. Even Happy
Camper’s “alcoholics, druggies, perverts, pedophiles, psychos, delinquents,
criminals, crooks, losers and loners” get that greeting as well. We are not
talking about ‘skill’ here, my smooth grey Petal. We are talking about
‘practice making perfect’. Your lady of the night was no enthusiastic
inexperienced amateur novice, but a well experienced professional who could toss
ten heads in a row (and probably has)! So you lost at pool, darts, dental
diversions, the disco-duck, rumpy-pumpy and the taxi fare. Why didn’t you
challenge her to ‘Connect 4’ as well? You would have been able to add that
to your list of defeats, my Petal. Hillary has told you before, nice little mice
should not be out at night. There’s far too many pussies looking to pounce on
little mice and devour them after dark!
Dear Hillary,
Nit and Ying (the adorable wee ones) have legged it northwards for the buffalo
tickling and so I popped down to ‘Percy’s Puds’ the other day for lunch
with Hortense Slobotham. Horti tells me that her new bar is progressing nicely
but would benefit further by having an ‘Aunty in Residence’. Fancy hanging
out at ‘Slobotham’s’ Hillary? Hammock provided (Nit likes stripey ones)
and a flute of Brut as required!
Mistersingha
Dear Mistersingha,
Lunch with Hortense has all the portents of disaster, Mistersingha. For her
sake, I hope she didn’t have to pay for your lunch, as I doubt very much that
you would have offered to pay for hers. Since you are so well experienced in all
things Thai, I would imagine that you would have done a runner before the third
course, giving you time to leg it before the cashier could add up the total. And
does Hortense know that you are offering me a flute of Brut, from her bar? I
doubt it, my prevaricating Petal. Why don’t you just accompany Nit and Ying
and practise buffalo fighting with red cape and butter knife, that’s a good
chap. Please feel free to contact me again after you’ve made good on last
year’s promises.
Psychological Perspectives: Is love a mental illness?
by Michael Catalanello,
Ph.D.
During my trip to the US at Christmas
time to reconnect with my family, I had occasion to spend some time with my
friend Ted. Ted, once a member of our family through marriage, has been
divorced and living as a single man for more than ten years. Despite this,
Ted has continued to appear regularly at our periodic family gatherings,
and is considered a family member in good standing.
Ted’s big news was that he had finally met his “soul
mate” through an online dating service, and was planning to be married.
As I listened to Ted waxing poetically about the spectacular qualities
possessed by his “perfect” new love interest, I had a feeling not
unlike the experience of hearing a mental patient discuss the details of
his… dare I say it… delusions! In psychological jargon, delusions are
patently false beliefs firmly maintained by people suffering with
psychosis. “Has Ted developed a psychotic disorder?” I wondered.
Last week’s Valentine’s Day column on the topic of
love prompted this question from my colleague Dr. Marisa: Can love “get
out of hand enough to actually become an illness?”
I can imagine some manifestations of love and affection
that might qualify as symptoms of any number of medical and/or
psychological disorders.
The incurable romantic might experience recurrent and
persistent thoughts about the object of his affections. Clinically, these
might be considered ruminations or perhaps obsessive thoughts. If
accompanied by some form of repetitive behavior, such as repetitively
checking for text messages or emails from the person, it could be a sign of
an obsessive-compulsive disorder (OCD). This is particularly true if the
obsessing person recognizes that his thoughts or behaviors are excessive or
unreasonable, and experiences distress as a result.
The experience of distress is an important component of
many emotional disorders. People experiencing romantic love, however,
rarely experience it as distress. They are more likely to experience it as
extremely pleasant and desirable. Without distress, we would be hard
pressed to consider romantic love as a mental disorder. I’m sure Ted
would have denied that his love affair was disturbing, nor in the least bit
problematic.
We often see evidence of love afflictions in the lyrics
of popular songs. This excerpt from Cole Porter’s song, “Night and
Day,” for example, seem to be romanticizing an obsessive brand of love:
“Like the beat, beat, beat, of the tom-tom;
When the jungle shadows fall,
Like the tick, tick, tock of the stately clock,
as it stands against the wall,
Like the drip, drip, drip, of the raindrops,
When the summer show’r is through;
So a voice within me keeps repeating, you, you, you —
Night and day
you are the one,
Only you
beneath the moon
And under the sun.
Whether near to me or far,
It’s no matter,
darling, where you are
I think of you
Night and day.
Day and night”
Is his reference to “a voice within me” an
indication of auditory hallucinations? From these lyrics, it sounds as if
Cole Porter may have been just one step away from becoming a stalker!
Perhaps nowhere does love appear more like a mental
disorder than in cases of domestic abuse. Many women, and even some men,
continue living with a partner who regularly abuses them physically,
sexually, or verbally. Typically, a victim of domestic abuse will strongly
resist abandoning an abusive partner, often citing “love” as the
rationale for remaining in a dangerous and often life-threatening
situation.
Whether love is really responsible for a decision to
remain with an abusive partner, however, is highly questionable. There is a
fair amount of research to suggest that people who remain in abusive
relationships are doing so, not out of love, although they may very well
consider themselves to be in love with their abuser. Rather, such people
usually experience a feeling of helplessness. They tend to view their lives
as being under the control of external factors. They are convinced that
they have no other option than to remain, often fearing that they will be
killed if they leave.
It is important to keep the two issues of “love” and “mental
illness” separate. People with mental illness who fall in love may give
love a bad name, because their disturbed emotions and behavior become
superimposed upon their relationships. Beliefs such as, “I’m nothing
without you,” “I can’t live without your love,” “You’re
perfect,” and “I can’t think of anyone but you,” are more properly
viewed as signs of irrationality, than as indicators of love or affection.
People holding such beliefs might not qualify as emotionally disturbed
based upon their “love.” Beliefs like these set the stage, however, for
poor decision making and disturbed emotions down the road.
Dr. Catalanello is a licensed psychologist in his home
State of Louisiana, USA. He is a member of the Faculty of Liberal Arts at
Asian University, Chonburi. Address questions and comments to him at [email protected]
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