HEADLINES [click on headline to view story]:

Money matters 

Snap Shots  

Modern Medicine  

Heart to Heart with Hillary  

Psychological Perspectives  

A Female Perspective

Language Works

Money matters: How to learn from History (Part 2)

Graham Macdonald
MBMG International Ltd.

We saw in last week’s update that the potential power of the stock market is enormous. We also saw that this power can equally be used for good or for evil - wealth can be created or destroyed by both short term and long term fluctuations.

It’s well known that the prices of stocks can go up or down and yet most equity investors ignore this. They stake their investment entirely on the principle that stocks will increase in value. Ultimately, over time, that’s probable. However, as anyone who invested from 1929 to 1983 can testify, the growth in the value of their portfolio (less than 1% per year) was much less than the rate of inflation over that time.

Most folks say that they’re long term investors, but when 54 years isn’t long enough, you can understand why we tend to believe that long term investments are short term investments that people made which went wrong.

This focus on just making money from stocks increasing in value is ubiquitous. Recently, The Seattle Times recently carried an article featuring the thoughts of Tom Muldowney, managing director of Savant Capital Management in Rockford, Illinois who firmly believes that you can reduce your portfolio expense ratio and also lower your portfolio risk by holding no-frills index funds. Muldowney’s argument was that index funds have a lower kurtosis (risk of total loss) than hedge funds and, therefore, are lower risk.

This was a reaction to the recent rise in popularity of hedge funds due to their perceived lower risk and more consistent returns than investing in equities. Muldowney’s response is that index funds (which replicate the performance of an index such as the Dow Jones Industrial Average - less an annual management fee) are easier to understand and more accessible than hedge funds.

We’ll evaluate the merits of hedge funds in the near future, but this perception of index funds worries us. Index funds represent a cheap and easy way to buy exposure to the growth of an index. They are an ideal way to trade in and out of a market for short term gain.

For longer term investors they have the drawback that they don’t benefit from the dividend yield. The dividend is a variable annual discretionary payment to the shareholders as their share of the distributed profits the company has made.

“What is a dividend but your payment as an owner of the company?” said Joseph Lisanti, editor of S&P’s weekly newsletter, The Outlook. “If you don’t get that, then the only way you can profit from your investment is to sell all of it or part of it ... Otherwise, what’s the return on your investment?”

Dividend payments do fluctuate over time:

The historical dividend yield for the Standard & Poor’s 500 has been at times roughly 4 percent

The yield last month was just 1.70 percent, despite companies in the index sitting on a near-record $621.7 billion cash pile

In the 1930s-1950s, when growth was around 3% per year, dividends added a further 2% per year income.

In the 1970s, when growth was less than 0.5% per year, dividends supplemented this by around 0.3% per year

Dividends waned in the 1990s with newer companies unable to pay them and TMT (telcoms, media, technology) companies argued that their money was better spent investing in the business or buying competitors.

Dividends became relegated to “old economy” companies, or unfashionable industries, such as tobacco, which paid investors a premium to hold on to their stocks. However, four of the nine stocks in the Standard & Poor’s 500 that initiated dividends this year are in the tech sector.

Legislative changes are helping to encourage dividend payments in the US. The tax treatment of dividends changed in 2003 when a 15 percent tax on dividends replaced the tax structure, in which dividends were taxed at the same rate as investors’ income.

In a 2002 paper titled “Why are dividends disappearing? An empirical analysis” Malcolm Baker of Harvard Business School and Jeffrey Wurgler of New York University’s Stern School of Business found dividend payments grow when investors are willing to pay more for stocks with strong dividends and shrink when investors aren’t willing to pay more for stocks with strong dividends. So, investor behaviour could change corporate behaviour.

However, the basic flaw of ETFs is that they do what they say they do - they replicate the index. So, while they might offer a convenient and speedy way to make short term tactical profits from the market, they still present the same problem as traditional long equity investment.

In a falling market they fall just like the market does. They represent a mechanism for achieving cost-effective short term long exposure to a market. They’re not a methodology, merely a convenient cost-effective mechanism. They don’t reduce market risk or allow you to achieve neutrality (the ability to make money in rising or falling markets). They don’t allow investors to monitor or control risk or have any expectation of what returns should be, positive, negative or otherwise. Right now, we’d look to avoid them as we believe that the markets are approaching their inflexion point (they’re about to crash and burn horribly).

Why do we think that? That’s getting us back to our favourite topic of whinging about the economy and we’ll slip that in under the pretext of equity investing next week.

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]

by Michael Catalanello, Ph.D.

In my column appearing in the Pattaya Mail on December 9, 2005, I reported on two recently published studies of domestic violence in Thailand, one by the World Health Organization (WHO), and another by the Ministry of Public Health. The WHO study interviewed 24,000 women from both rural and urban settings in 10 countries: Bangladesh, Brazil, Ethiopia, Japan, Namibia, Peru, Samoa, Serbia and Montenegro, Thailand, and the United Republic of Tanzania. The Ministry of Public Health study, likewise, focused upon violence against women and children. Both studies concluded that domestic violence is on the increase in Thailand.

I pointed out that experts in the field often point to gender inequality as an important factor in perpetuating and protecting the crime of domestic violence. For example, women in this society are often taught that it is a virtue to be submissive and accepting of male domination. Further, women who seek legal remedies for domestic abuse often encounter attitudes among public officials implying that domestic abuse is a private matter between the husband and wife.

A reader responding to my piece correctly pointed out that men, too, are often victims of domestic abuse. In fact, according to the reader, some studies have shown that men are victims of domestic abuse at the hands of women as frequently as are women at the hands of men. The reader evidently felt that I was being unfair by focusing exclusively on men’s abuse of women. He/she then reasoned that because domestic violence is found equally among heterosexual couples, lesbian couples and gay male couples, it could not be related to gender inequality.

A few points bear mentioning in this regard. First, domestic violence is not exclusively a problem of men abusing women. According to the research, women also abuse men, men abuse men, and women abuse women. Suffering produced as a result of domestic violence is suffering, regardless of the respective genders of the victim and perpetrator.

As for the relative frequency of episodes of man to woman violence versus woman to man violence, I am not aware of any studies addressing the question within Thai society, and I would be cautious in generalizing findings from the United States, New Zealand, and Canada to a society as different as that of Thailand.

I am not prepared to comment here on the methods and findings of the studies cited by the reader; however, there are some important distinctions to keep in mind in interpreting studies like these. For example, are those researchers adequately distinguishing between the initiation of violence, and violence performed in self-defense? Are they lumping together discrete episodes of violence with long-term patterns of abuse? Are they distinguishing between physical abuse and verbal/psychological abuse?

My colleague, psychologist Sombat Tapanya at Chiang Mai University has cited anecdotal reports that Thai females have become somewhat more “aggressive” in recent years, as compared to the past. He, likewise, observes that Thai women seem to favor using tactics involving psychological, rather than physical abuse against men. Obviously, questions like these could form the basis for further research on local domestic abuse which Dr. Sombat and I intend to pursue.

Finally, I fail to see the logic of concluding that if gay males and lesbians abuse their partners with equal frequency as heterosexual couples, gender inequality can not be a factor in promoting domestic abuse. That’s because even within gay male and lesbian partnerships, there is usually a partner who adopts a dominant “male” role, while the other partner adopts a submissive “female” role. Unequal gender expectations inherent in these culturally defined roles can often be observed, even within such partnerships.

As I pointed out, domestic abuse is a complex issue. Questions of what “causes” this unfortunate phenomenon are complicated. Furthermore, ethics and other practical limitations prevent us from carrying out the kind of research that would be needed to provide a definitive answer to the question of what causes domestic violence. Nevertheless, the evidence for gender inequality, particularly within Thai society, seems to me compelling. Certainly, not all individuals holding attitudes reflecting gender inequality end up in abusive relationships. It would be quite surprising, however, if the inferior status of women in Thai society was not somehow implicated in domestic abuse, whether perpetrated by men upon women, or by women upon men.

Dr. Catalanello is a licensed psychologist in his home State of Louisiana, USA, and a member of the Faculty of Liberal Arts at Asian University, Chonburi. You may address questions and comments to him at [email protected], or post on his weblog at http://asianupsych.blogspot.com

A Female Perspective: Oh no! The World Cup!

with Sharona Watson

It’s not that I don’t understand football. It’s just that I don’t like it. And I have seen quite enough to make me realise that I really don’t like it. It’s not just the utter pointlessness of a group of overgrown children running after a ball, trying to put this ball through a construction with a net. It’s also the incredible amount of time and energy that men want to give to this sport, which seems so ridiculous to me.

Actually, it says a lot about men that they can become so agitated about something so meaningless. I suppose it keeps them away from bugging us women for a while. I was going to say it keeps them quiet but it does the opposite. I remember with some kind of regret, allowing my husband’s friends to come and watch football matches on television at our house. It was so noisy. Shouting, screaming, like complete idiots. And if their team lost, they acted as if they were really upset by it, as if there was something they could do about it in the first place! Unfortunately, it’s not as if it even keeps them busy for just a few hours. They have to bring it to us afterwards! But I’m just not interested! Please, don’t bore me!

Whoever is in charge of football on television must really be laughing! I bet it’s a woman. Only a woman could con men into thinking that they have some power to change a game by watching it on television! Or that the team and the players they pretend to support so much, care about them at all! It is so clear to me that it is all about money. How else could football clubs afford to pay their players so much? Just imagine how the game would fall apart if men suddenly realised that they were only wanted for their cash!

I have to say that since we stopped having cable TV, our house it a lot more peaceful. Before, when football was on, or I should say when Manchester United was on, my husband would want to watch them. But in our house, we’re a democracy and the fact that there are three women in the house and just one man isn’t exactly my fault. In fact, it’s definitely not my fault, seeing as how the sex of your children is decided by the man. So, if the majority decided that they wanted to watch “Pride & Prejudice” or “Balamory” then sorry, my husband would be out-voted. You should have seen his face! I tried not to laugh at him at times like this.

He always says he’s a believer in social justice, equal rights for everyone and all that, so here was an example, in his own house! I have to say that he accepted that very much, so much so, that this all ended up with us getting rid of cable TV! Now, instead of watching TV (unless we put on a DVD or something) we spend most of our time reading, or writing, or painting, or playing the piano, or chess, or something creative. So you could say that football has been good for us!

Of course, the funny thing is that we don’t even get to see Andy’s own show, “Perspectives” unless we go to someone else’s house, which I have to admit, we sometimes do. Andy came back really late the other night from filming a guy who is apparently quite a famous singer in Thailand, a guy called Kelvin Patrick. You know I was saying the other week, that sometimes it’s nice to meet the people who are guests on “Perspectives”? Well, Kelvin came round to our house before they went off to his club and he was such a nice guy. I have to tell you though, that it didn’t seem like he was a singer. I mean, he was really quiet and well, not small, but not tall either and quite tubby. Very sweet though. And Andy said he had an amazing voice. So I’m definitely going to watch that show and make an effort to go and see Kelvin sing one day soon. He regularly performs in Pattaya as well as Rayong.

Back to football. My husband used to play seriously. Thankfully, he’d kind of given up by the time we started living together. Unfortunately, he kept getting asked to play in games and one day, two days before we were going to move house in London, when we had one child who was only 10 months old, he broke his leg in a game he said was a “friendly”. Didn’t sound very friendly to me! I was furious and I’m sure it didn’t hurt as much as he made out. Sometimes, I’d give him a bit of a kick on the plaster, just in case he was trying it on. And of course he couldn’t help move house either. Just lay there like an invalid. Sometimes he’d try and be cheeky and give me orders. He paid for that. I was suffering myself, having to move house and look after the little girl at the same time.

The only time I enjoyed watching a game of football is when Andy played for Cambridge against Oxford. There were lots of people there and we had a great party afterwards. But it was only fun because all our friends were there, shouting really funny stuff at him during the game. You could see he heard them, because he kept laughing.

Andy came to me the other day with bad news. The World Cup is happening again. “Oh, no!” I cried. He told me just to warn me. Give him credit; he always tries to convince me to watch the games, especially when Brazil is playing. And I have tried, but I can’t really get excited by it. The last thing I’m going to do is pretend to like it, just to please him. And if he wants to watch it, then fine. But there’ll be pay back afterwards…

Next week, I’ll be talking about what Christmas and New Year means to me as a woman and a non-Christian. Until then, I wish all readers a Happy and Prosperous New Year!

Next week: Christmas & New Year

[email protected]

by Ian Smith

When I first arrived in the Kingdom, some twelve and a half years ago, I remember a raging debate being conducted in the letters pages of the Bangkok Post between British and American exponents of the English language. I imagine it is a debate that has been going on, in a general sense, from the time the first American colonists began to pay visits “back home”, displaying their dreadfully un-British dialects.

The letters pages of the Bangkok Post in late 1993 were, for some reason I never fully understood, dominated almost entirely by a very silly argument about the relative merits of “fully-fledged” verses “full-fledged”. The main thing I remember about this inane debate was one British wit noting that Americans these days favoured “full-blown” rather than “full-fledged”, which reflected the American propensity for “blowing things up rather than nurturing them.” Frankly, the whole nonsense reminded me of nothing more than a pair of dinosaurs squabbling over a pterodactyl bone – but then of course, I am an Australian!

More importantly, I am a linguist. By linguist, I mean here a student of linguistics – not someone has can speak a lot of languages, who is also, rather confusingly, called a linguist. Now, it will probably surprise many readers to know that most modern linguists have no opinion at all on the relative merits of “full” or “fully” “fledged” and/or “blown”, or any other grammatical nicety for that matter.

If we trace the history of linguistics back to late Roman times, we see that through the centuries there have been two broad camps of linguists – the Prescriptivists who like to tell everybody how they should and should not speak, and the Descriptivists, who get our jollies by observing how people actually do speak, while trying to analyse and describe it.

For more than a century now, we Descriptivists have been in the ascendency amongst linguistic scholars – except, of course, for those who get to write columns for newspapers, who, by and large, are cranky old Prescriptivists. Going against this tradition, the Pattaya Mail, being a publication of enlightenment, modernity and impeccable discernment, has given me a chance to redress the imbalance.

Something that tends to go along with prescriptivism is a pessimism about the future of a favourite language or languages. People bewail the seemingly inane banter of teenagers. They fret about the way words keep changing meanings, and mourn the passing of “proper” English, French or Thai.

At its most extreme, this pessimism resulted in the theory of Language Decay, popular in the 19th Century. According to this theory, modern languages are only a pale shadow of classical languages such as Latin and Sanskrit. It is yet another piece of evidence that the human race is going to hell in a hand-basket!

On the surface, there does seem to be ample evidence to support Language Decay. For example, Latin, Old English and Old German had much more sophisticated case systems than their modern descendents. Case markings show the grammatical or semantic functions of words and phrases. The only traces left of the wonderfully rich Old English case system are subject/object pronoun pairs such as “I” and “me”.

But do not fret; there is a simple, positive explanation for this. Languages have evolved to become more efficient. The advantage of case marking was to allow flexible sentence structure. For example, in modern English, it is the word order in the sentence “Australians eat pies,” that shows that Australians do the eating (semantic function: “actor”) and pies are the meal (semantic function: “patient”).

If English still had case markings (e.g. “Australianactors eat piepatients”), we could put the words in any order, while who eats and what gets eaten would remain clear: e.g. “Australianactors piepatients eat,” “Eat piepatients Australianactors,” or even “Piepatients eat Australianactors.” Those of you who have studied Latin or Sanskrit should recognise the basic principles; for those of you who have not, think of a little flag attached to each word telling you where it would normally go in a sentence. This allows words to wander off a bit without getting totally lost.

The weakness of such a system is the unnecessary overhead – the language suffocates with suffixes. Even in so-called free-phrase-order languages such as Latin, one phrase-order tends to be the norm. However, each word or phrase must be explicitly case-marked whether or not the normal phrase-order is adhered to.

By comparison, in modern English, if we keep to the standard phrase order, we can simply say: “Australians eat pies,” with no overhead of unnecessary grammatical complexity. Yet we retain flexibility with word order by using devices other than case marking: “Pies are eaten by Australians,” “It is pies that Australians eat,” or “Eating pies is what Australians do.”

Is this less complex? I can’t see it. What we have done is trade-in an admittedly rich, but unwieldy system for one which retains flexibility while dispensing with the excess baggage.

Well that was the inaugural Language Works column. I imagine that more than a few of you will take exception to much of what you have read here. If so, please do not sit there fuming in silence. Get to your word-processors and vent your collective spleens. I will be more than happy to respond to feedback – constructive or otherwise. My email address is [email protected]