The Long/Short of History

If you’re male and aged over 40 then the chances are that Mohammed Ali remains one of your most enduring sporting heroes. That unique combination of grace, power and that much overused word, charisma, set him apart. From the early victories by the Louisville Lip culminating in the Sonny Liston fights and then the spectacular comeback with the Thriller in Manila and the Rumble in the Jungle (who can forget the advent of the rope-a-dope tactic?) through to the sheer determination that got Ali through the last few fights against Spinks and co to finally the consequences today that are all too evident of those last few fights too many, the Ali story is far more gripping than anything that any boxing fiction writer could ever devise.
However, in boxing the harsh realities mean that if you don’t get out before it’s too late, then you really pay the price. George Foreman had a good career and his subsequent comeback reminded anyone who’d forgotten what a quality fighter he had been but both times George quit while he was still able to go and concentrate on his ministry and his low fat grills. At the time every young boy who shadowed boxed against his bedroom mirror (entertainments and amusements weren’t as varied or plentiful for most of us growing up in the ’60s as they are now) you would have wanted to be Ali. Given the choice now, you’d probably rather be Ali than Foreman today. Legacies are great things to leave behind but as any sportsman knows, they’re no substitute for the thrill of competition.
But what does all this have to do with you and your money? Well, we’ve been through a real Jake La Motta (Raging Bull) of a market but like Ali at his peak, all good things have to come to an end. Bull markets are followed by bear markets because during booms governments, businesses and individuals spend, borrow and then spend some more. This is what creates booms - if nothing were ever consumed anywhere, we’d be in a permanent state of stasis. When consumption rises above the norm, so does supply, as therefore does production and this becomes exaggerated by leverage (borrow money to build the factory needed to make a profit from making more of the things that are in demand).
On the way up it’s a virtuous circle - on the way back down it’s a vicious one. But it always has to come back down - the laws of physics teach us that nothing is capable of indefinite expansion and while a lot of egg has ended up on a lot of educated faces by trying to apply the laws of physics to financial markets this is one that we’d do well to remember. Infinite borrowing is impossible because debt has to be serviced from income. Forget the specifics of the sub-prime morass. Anyone still dismissing this as a blip that doesn’t have wider consequences is living in denial as much as Ali was in his mid 40s taking the ring against hungry young punchers half his age.
This bull market is old. Whether or not we see a bounce back from the current corrections is, to us, a moot point. The best time to invest in any asset is when it’s supported by fundamentals and technicals. We see technical research as an indicator of market psychology or momentum - a signpost as to how the market is thinking. We see fundamental economic research as a guide to what’s really happening in the world (often this is disconnected from the markets).
If you have both factors, fundamental and technical working together, it means that you have a market that is going up for all the right reasons. If you have a market with strong fundamentals but weak technicals, that usually means that the markets don’t yet understand the economic realities but this is when, as contrarians, we often see the greatest buying opportunities. The danger is not to be too early but not to wait too long until boat has already started to sail away without you.
When technicals are supportive in the face of contra-indicative fundamentals then there is a short term opportunity BUT one that will ultimately turn against the asset in question and therefore you need to be extremely careful (picking up nickels from in front of bulldozers as we call it at MBMG). There’s been a lot of picking up nickels this year and we’ve tended to steer clear because this bulldozer has looked mightily big and scary to us.
The years 2002 and 2003 were the equivalent of Ali’s amateur career, turning pro and the Liston fights - it was a period when fundamentals were positive even if markets sentiment was negative, scarred by the 2000-2002 correction. 2004-2005 was like Ali in his pomp - mature and confident. Technicals and fundamentals were supportive of markets and they continued to rally with very little downside. Last year saw us start to enter the equivalent of that final phase of Ali’s career - still some spectacular days but more and more as we entered 2007 some bad ones too. Technicals were still positive - the market was still awash with positive sentiment but fundamentals had caught up and were now severely negative. We’ve been bearish since then. We knew that the bulldozers were coming and we didn’t see the nickels as being enough justification to risk being mashed up by them. Someone should have stopped Ali taking those last few fights when he spoiled his record as well as his physical well-being, but we recognise that it’s all too human not to want to stop while you’re winning and then not to want to quit after a defeat.
In the markets, the technicals are now lined up with fundamentals - both are pointing negative. It’s the time when even Ali had to quit and live with the consequences of not having gotten out sooner. It may be bad now and there might still be a few good days left in the tank but overall it will only get worse. It’s hard when your heroes get older and have to quit - a stark reminder of your own mortality perhaps. In the same way it’s hard to say good bye to a bull market if you’re an investor. But in the long run, it’s a lot less painful than trying to live in denial. Bull market 2002-2007 R.I.P.
Whilst Ali is obviously a part of recent sporting history we are also reminded of English history over 500 years ago. Henry VII’s primary tax collector was Chancellor John Morton who devised the strategy know as Morton’s fork. Cardinal Morton would visit the large estates of the realm once a year to assess how much tax they should pay to the Treasury. Initially in order to impress and try to curry favour, lavish entertainment would be laid on for the Cardinal’s visits. However, the Cardinal began to gradually increase taxes. When asked to justify this he would invariably point to the amount spent on the entertainments and amusements for his visits and hypothesise that this indicated that the estate revenues must have been extremely good that year and therefore higher taxes could be afforded. The landowners of course cottoned on and in subsequent years very meagre and miserly entertainment was provided. Morton continued to increase taxes. When challenged by the gentry who said that they had expected a reduced tax bill in view of the clearly lower entertainment budget they had at their disposal, Morton was having none of this and claimed that this merely indicated a much tighter rein on outgoings and expenses and therefore the estates could clearly afford to pay more to their sovereign.
Investors are trapped into the 21st Century equivalent today - markets go up, and the CNBC-heads make you feel foolish for not getting a slice of the action. Markets go down and then they make you feel that you’d be even more foolish to sell. In reality, the folly is to listen to this self-interested nonsense. I’d love to wake up and hear someone announce that due to prevailing bearish economic conditions they’ll be taking their platitudes off air until 2010 when market conditions will again justify investing in US equities, but until then they’ll be showing re-runs of all the major heavyweight fights from the ’60s, ‘70’s and ’80s...
This isn’t a random walk. There are signposts for those who want to read them and at the moment the equity signposts are generally marked ‘Exit’. The main problem with exit strategies from the equity markets tends to be the widespread reluctance to do so. The reasons are essentially a combination of complacency, habit, greed and fear of missing out when markets are still rising at the end of a bull run and fear of crystallising a loss and admission of error (non-seller’s remorse) once the markets start to head south. This is compounded by an ignorance of the choices available and the significance of each choice from a risk and reward perspective. Which just goes to show how important it is to have a multi-asset class approach to times like this.

The above data and research was compiled from sources believed to be reliable. However, neither MBMG International Ltd nor its officers can accept any liability for any errors or omissions in the above article nor bear any responsibility for any losses achieved as a result of any actions taken or not taken as a consequence of reading the above article. For more information please contact Graham Macdonald on [email protected]@mbmg-international.com.com

Snap Shots: by Harry Flashman

Nikon Coolpix P5100. Fish or fowl?

Another test digital camera this week. The Nikon Coolpix P5100 which is certainly a mouthful of a title. Was it a watering mouthful as a camera, however?
During the week that this Nikon compact was with me, I did have the opportunity to try it in many situations – sunshine, overcast, evening and night, both indoors and out. It was an interesting week in many respects.
First off, this is not really a small camera, nor was it a large one. However, unlike the Canon Ixus range which will easily slide into a shirt pocket, the Coolpix is far too bulky. It also felt heavy for its size, and whilst this may show good sturdy engineering, it also meant that it was too heavy to fit comfortably in a trouser pocket.
The camera as delivered to my office came without the instruction manual, but with a reference to an ‘e-version’ instead. This manual had 176 pages, and I’m sorry Mr. Nikon, but I am not at my stage of life going to read a 176 page manual. If it needs 176 pages, then you have made it all too difficult and out of the reach of the average punter who wants to point and shoot.
The camera does come with many easily understood controls, so I felt that if I could follow my instincts, this should be the way to go. The top surface has an on-off button, a rotary mode selector wheel, a wide-tele lever, and another rotary wheel to change shutter speeds, apertures etc when in semi-manual or full manual modes. This wheel could also be used when scrolling through the menu options.
Let me use this column to tell Mr Nikon something. Not all photographers want an electronic menu. In fact, there are many who consider it a time-wasting and definitely ‘fiddly’ exercise. Professional cameras such as Hasselblad, Mamiya, Sinar and the like can produce a final image without an electronic menu. Mechanical switching, rotary knobs and other manual controls are quicker and easier, and you will not find that it is necessary to have a 176 page manual for a Hasselblad.
Getting back to the Coolpix P5100, it boasts 12.1 megapixels and a zoom lens giving 35-123 mm coverage. There is an optical viewfinder as well as a reasonably large LCD screen. But there is a world of difference in using them. The tiny optical viewfinder does not show you anything near what you are going to get. It is so poor, I wonder why Nikon even bothered.
Having forgotten about the optical viewfinder and using the LCD exclusively was much better, until I wanted to compose the picture using the wide-tele control. This is a hair-triggered device, which was very difficult to use, overshooting where you wanted to stop every time, going in either direction.
Another problem came up with composing at night, as the pre-focus beam was very difficult to see, and at times I felt I was shooting blind. The camera also took its time on homing in and locking on the image at night with the AF. The flash output was small and final low-light image quality poor.
So what did I like? Well, the Mode control was very easy to use, in conjunction with the rotary wheel to change aperture/shutter speed. The camera could be used without flash, but here’s another dislike - to turn the flash off required reverting to menu, flicking through and selecting the sub-menu and then scrolling down to be able to select “off”. One manual button could have done quicker and easier.
By this stage, I wondered if it were just me that was unhappy with this offering from Nikon, but perusing a couple of camera tests in the magazines showed some dissatisfaction there as well.
Everyone was of the opinion that 12.1 pixels were indeed over-kill, and there was too much electronic ‘noise’ if you selected any ASA rating faster than ASA 200. There were other complaints, but that is enough.
For me, this camera was neither fish nor fowl. It was not a compact and not an SLR. It is an orphan, without a real home. Sorry, I didn’t like it.

Modern Medicine: by Dr. Iain Corness, Consultant

A miracle for Mrs Gonzales

Mrs. Gonzales was your typical Gibraltarian Mumma. Around 20 stone in weight, give or take the odd pound or three. She presented at outpatients with a history of alternating diarrhoea and constipation for some months and now she noticed that there were some hard lumps in her stomach. Some? She had lots.
My boss, Mr. Toomey, confirmed the presence of the lumps and told me the diagnosis. Mrs. Gonzales would have disseminated cancer and would be inoperable; however, we would open her up to confirm the diagnosis, but that would be as far as the operation would go, he said. Open and close.
Mrs. Gonzales was prepped and a large abdomen awaited us. Mr. Toomey made a mid-line incision and we did not have to go further. Large grey/white lumps, firmly adherent to everything. We did not count how many. It was pointless. It was, just as Mr. Toomey predicted, simply everywhere. We had opened, and we closed.
Mrs. Gonzales was returned to the ward and the gravity of the situation was explained to her. We could not help. There were limits to medical science, expertise and knowledge (and there still is), but we would make her last remaining weeks as comfortable as possible, while she came to terms with her personal God (Gibraltar, like Spain was predominantly Roman Catholic).
Mrs. Gonzales reacted to the bad news with none of the expected wailing, but by telling us that she would be getting better and she would be going home for Xmas. “In a wooden box,” I thought to myself.
The post-operative phase was not uneventful. The cancer tissue came through the wound and we now had an abdominal ulcer that was never going to heal.
It did not stop there. The cancer then eroded through the bowel, so now there was a direct passage for the faecal matter to get to the outside. It was quite horrible. The smell was so bad we had to put her in a private room. And yet, all the time, Mrs. Gonzales said she would be going home for Xmas.
By this stage, the other junior surgeon and myself would take turns in going to see Mrs. Gonzales. No matter how much the nurses tried, the stench was abominable (as well as abdominal). It was difficult not to retch.
After around two months, the Nursing Sister from the ward rang me and said she wanted me to come and see Mrs. Gonzales. “She’s getting better!” “Sister, it cannot be getting better,” but I went down to the private room to humour the usually sensible nurse.
The bandages were removed, and the ulcerated wound was indeed smaller, though still discharging faecal material. Being quite sure she would now discharge into the belly if the wound healed over, I advised the nurse to look for signs of peritonitis (infection inside the abdomen), as that would undoubtedly hasten the situation in the direction of the pine box.
A few days later, I was again summonsed to the private room. The wound had healed over and there was no more discharge. And rather than discharging from the bowel into the abdominal cavity to produce a fever and the expected peritonitis, the bowel waste began to discharge from the normal anal outlet.
By this stage I had no answers, only questions. “How could this be?” “Was the cancer resolving spontaneously?” I did not have to wait long to find out. A hand laid on the belly detected no masses, no lumps, no kidding!
So here we were, after three months, and the seemingly impossible had occurred. Inoperable multiple cancer had disappeared, along with the abdominal discharge.
Mrs. Gonzales did indeed go home for Xmas, waddling proudly out of the hospital to the waiting taxi. She thanked us all for what we had done, but I felt embarrassed. We doctors had done nothing to get her over her cancer problem. Simply, her personal ‘Higher Physician’ was obviously not ready for her.
Unfortunately, very often doctors can start to believe in their own omnipotence. It needs people like Mrs. Gonzales to bring us back to earth.

Learn to Live to Learn: with Andrew Watson

Global awareness

“A platitude for the twenty first century” I hear some cynics cry in self-parody. Like “global warming”, we’re all familiar with the term global awareness, but perhaps few of us consider the words as anything more than a peripheral generality. For the great majority (let’s be honest) the closest we get to considering what global awareness might mean, is how much rent our house in Devon or Dorset, is pulling in. And let’s also be fair, because considering the possibilities of real estate ownership across the globe is definitely part of the “big picture”. Pattaya and her environs are perfect examples, as was Spain and is now Italy and with the dollar at its nadir, so are the United States.
Clever buttons are being pushed as entrepreneurs in increasing numbers find the energy to navigate local legal minefields and invest heavily in prime spots around the world. Good luck to them!
I wonder though, sometimes, whether the “global awareness” we might purport to be aware of is anything other than surface deep, anything other than a means to cash in on global financial opportunities, without recourse to the “human factor” or indeed, the human or global costs of global profiteering. A recent article in the Guardian by George Monbiot (Tuesday October 30, 2007, the Guardian) caught my attention; “Civilisation ends with a shutdown of human concern. Are we there already?” Monbiot tells a terrible tale of hypocrisy, larceny and deceit as global power brokers hoodwink the unsuspecting, the uncaring and the otherwise engaged.
He speaks of “technological hubris” as a significant component in humanity’s disinterest in global issues, global reality, global disasters and global disasters-in-waiting, realities that currently affect a majority of the world’s population but critically, not the wealthy, not the power-brokers. And it all came from reading a novel; Cormac McCarthy’s book “The Road” considers what would happen if the world lost its biosphere, and the only living creatures were humans, hunting for food among the dead wood and soot. Some years before the action begins, the protagonist hears the last birds passing over, “their half-muted crankings miles above where they circled the earth as senselessly as insects trooping the rim of a bowl”. McCarthy doesn’t claim that this is likely to occur, but merely speculates about the consequences. He presents an apocalyptic vision of a dystopian future that casts frozen light on the appalling consequences of our universal apathy.
I wonder, does this resonate? If it doesn’t, then think. Have you ever experienced organisational apathy that incurs iniquitous consequences? Have we ever felt part of a culture of injustice? Have you ever felt helpless in the ugly face of institutionalised bullying? If the answer to any or all of these questions is “yes” then this potentially depressing realisation inevitably issues forth another question; what can be done about it? Or do we agree that we cannot change the world, only learn how to survive in it? Do we rage against the dying of the light, or do we succumb to darkness? And if we choose the former? Where do we find the passion, the strength, the will, to fight for what is right? When we are being cheated, lied to and metaphorically (and sometimes literally) mugged, what is our response? Do we, like the Buddha or the New Testament might preach, refuse to accept the gift of anger and turn the other cheek? Or do we just “move on” as persecutors would have us do, because the alternative is to be persistently targeted by the terrorist aggressor?
I put these questions to a group of Theory of Knowledge students recently and their responses, as ever, were illuminating. A Canadian student, alluding to disturbing United Nations data in Monbiot’s article, spoke of his determination to change the way he did things because it was necessary to provide a better place for his (as yet unconceived) children. This, at least, was refreshing.
Another student, from Italy, was brave enough to say that he didn’t really care, because actually the idea that people care in general, he claimed, is a lie. “Everyone’s out for themselves,” he proclaimed with accompanying gesticulations, “it’s always been the same, always will be. It’s human nature - I bet they were saying the same things to you when you were at school.” And you know, disconcertingly, he was right.
I remember being in a class hearing “save the world” mantras from a few teachers and a couple of interested students. But I’m not sure anybody changed their lifestyle or consumer habits in the slightest and I’m by no means certain that the teachers regurgitating their textbooks had any real interest at all either. I saw no evidence of it. I suspect, in retrospect, that they were more interested in the pub.
Nonetheless, as I have grown older, I have observed first through my children’s education and latterly as a teacher myself, increasing allusions to “saving the world”. But when these words (or words like them) appear on the inevitable (and usually paralysingly unimaginative) PowerPoint in a school assembly, there is an almost audible groan from the assembled, a sound which marks the switching off of collective brains.
Unfortunately, you see the same in the way some schools “celebrate” different cultures in their schools. Hastily arranged lip service only is given to a festival or day of significance; it’s peripheral. Cursory coverage only is generated by a fundamentally disinterested body. Someone once described this phenomenon as the culture of “Saris and Samosas”, one that does less than nothing to enhance understanding of a potentially enriching inter-cultural experience. Try asking a senior member of the school about the meaning and messages of Diwali, or Eid ul-Fitr, Hanukah or indeed Christmas. For example, how many among us might be able to describe the significance of the Christmas tree to Christianity? And whilst we’re on that subject, who amongst us might be able to articulate an interpretation of what “forgiveness” means according to different religions?
You can lead people to the waters of global awareness, but until leaders believe in what they say and lead by altering their self-seeking, self-serving lives, and privileged young people are ready to challenge the easy reality of their increasingly cocooned existence, you ain’t gonna make them drink.
Next week: Paris in the Autumn

Doc English, the Language Doctor: Questions you can ask during and after you have read with your child

Hello folks, welcome back! This week we include more tips and techniques for teaching your children English at home. I hope your children are making good progress and growing more enthusiastic about learning English.
Last week we talked about how to encourage your child to predict what will happen in a story, to aid their understanding. This week we open our English books and get to grips with the thrilling stories on offer!
I mentioned last week that questioning your child is very important for their language development. Encouraging your child to ask questions is equally as important. Questions can range from those requiring a simple ‘yes’ or ‘no’ answer, to those requiring a deeper understanding of a story and a more detailed response, including how your child feels about a situation or character. Showing an understanding and appreciation of your child’s feelings and opinions is important of course for raising their self-esteem. Having improved self-esteem empowers your child and motivates them to learn more, so give always remember to provide plenty of praise and gently model how it should be done, rather than correct.
In the table, there are some questions you can use when reading with your child. They should increase in difficulty over time, as you go down and across the list. You could start with the simplest questions and gradually increase the number of questions you use in each reading session. Encourage your child to use a full sentence when they answer (rather than ‘one word’ answers) and encourage them to gradually increase the complexity of their response over time. Don’t try and repeat all these questions for each page! It’s way too much and will make reading less fun! Learn how to introduce questions without interrupting the ‘flow’ of the story.
Easy Medium Hard
Who’s in the picture?Who are the ‘characters’?What are they doing?Can you see a __? (e.g. tree)Where is the __? (e.g. ‘cat’)What else can you see?Why is he/she doing that? Where is the story ‘setting’?Would you like to live there, why?Which characters do you like and why?What are they going to do next? (Whilst reading)What happened in the story?What happened in the end? What happened in the story? (First, Next, Afterwards, Finally?)What did you like about this story?What did you dislike?If you were the Author, would you have changed anything in the story?Has anything like this ever happened to you?
OK, good luck with the questioning! Remember to ask your child’s opinion about the book. As they continue to read they will acquire their own interests and special taste in particular kinds of books. Listen to their opinions so that you can choose books that they enjoy and that motivate them to read.
Next week we investigate skills your child can use to read and ‘decipher’ new words and we’ll also concentrate on how to read the text. Remember, you can write to the Pattaya Mail or email me at docenglish [email protected] and I will try to answer all your questions or suggestions, either by return email or via this column. I always welcome feedback from parents (and students).