|
Money matters:
Graham Macdonald MBMG International Ltd.
Dumb Investment of The Month
- without profits funds?
Obvious contenders for Dumb Investment of This
Month are the various artificially sliced and diced credit vehicles such as
CDOs, CDSs, SIVs that have brought about the credit crunch because the market
had no reliable basis for valuing them.
MBMG long warned against the eventual impact of these financial time bombs.
French bank BNP spoke up last year admitting that the artificial value ascribed
to these assets bore no resemblance to the realizable value of the sum of their
parts. The realization that bank balance sheets were overvalued brought on the
sub-prime crisis. The banking sector was no longer able to borrow against these
suddenly worthless assets heralding the credit crunch.
Our client portfolios had no exposure to sub-prime or to western commercial and
residential property or lower quality fixed interest. We had very little
exposure to equity markets which suffered in the fallout.
We also warned against artifice in investment. Encarta suggests some of the
following synonyms for artifice: pretence, ploy, trick, lie, sleight of hand
ruse, deception, deceit.
Transparency sounds a lot better to us than any of those. Investors should
demand full transparency right now and not the glossy allure of expensive
marketing materials for opaque schemes (DIoTM notes that the quality/cost of
marketing materials is often inversely proportionate to the quality of the fund
itself).
In particular we’re very wary of artificially priced investment funds. There are
plenty of examples of this - with profits funds retain some of their surplus
investment returns during good times to fill in shortfalls during bad times.
In the example here the profits in the crooked shaded areas of over-performance
are held back and used to cover losses in the black shaded areas. The straight
line represents the published price of the fund. However that only represents
the true value of the fund at the brief points where the crooked and straight
lines actually intersect. When the crooked line is above the straight line the
price of the fund is actually less than the fund is really worth and therefore
investors are effectively buying into the fund at a discount. They can never
realize the discount but it is held back to protect them against any losses if
markets fall. This was the case a year ago and was a good time to buy or hold
with profits for anyone who wanted some participation in equity upside with
protection against the downside.
However when markets have fallen like now then the asset value of the fund may
now be much less then the fund price - in which case you are actually paying a
premium to either buy or even hold this kind of asset. You’re simply being
overcharged because of an inefficient market pricing mechanism. Therefore it
makes no sense to buy or hold with profits funds at this time.
This applies to individual with profits policies and to traded endowment funds.
At the very best you will now have several years of underperformance before
eventually moving back into surplus. At the very worst the discrepancies in
pricing may lead to you being refused the right to take your money out without
paying a penalty resulting in you losing very heavily on a ‘safe investment.’
At least with profits allow you to make a reasonable estimate of how overvalued
the fund price is because the underlying assets themselves are generally liquid.
With specialist assets (like specialist property funds buying assets such as
student halls of accommodation within open ended fund structures) it can be
impossible to say. However, the price of these funds, where the capital value of
the asset hasn’t been adjusted for prevailing conditions, would appear to be as
much as 100% over valued currently compared to genuinely market-priced
structures such as listed property or real estate investment trusts - i.e. the
underlying asset values may be as little as $50,000 for every $100,000 invested
into such funds.
This is a time for certainty rather than speculation. The fact that many of
these artificially priced funds show a constant month on month or year on year
return isn’t a source of comfort to us - it’s a cause for concern. It merely
means that the current fund price may have become a long way separated from the
value of the underlying assets.
Any investment right now that doesn’t have a clear relationship between the
underlying asset value and the fund price could face real problems ahead. In the
above examples, TEP or student accommodation funds could easily fall by 50% or
more in value in the same way that sub-prime assets already have. Some of these
may be well-managed and may thrive despite the current situation. Others
patently won’t and therefore, even more than sub-prime, these are our current
dumb investment of the month. If you are holding any assets where the pricing is
less than transparent, we can provide an overview of the risks facing that
particular asset. Where these risks are too high hopefully you can still get out
… before it’s too late!
|
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
Experimentation
I received a letter the other day from reader Ian Sherratt who had read
the item on time exposure, and decided to give it a go. Here is the
letter, and his photograph.
Dear Harry,
 Ian
Sherratt’s ‘smiley moon’.
Funny that you should write your recent article on time exposure shots.
I’ve just bought a new box of digital brains (Canon G10) which gave me a
chance to practice on the “smiley” moon the other night. FYI: 15 secs.
at F ?
It was my first real attempt at anything other than “auto” settings.
It’s a pleasant feeling to think that you actually contributed in some
small way to getting an acceptable result. I am sure you know what I
mean.
Best regards,
Ian Sherratt
Thank you, Ian, and you will see that I have cropped your original shot
somewhat to give more emphasis on the two stars and the moon.
Of course, Ian Sherratt, with his new digital Canon G10, was able to
preview the shot to see if he really had got the shot he wanted. And, of
course, if you didn’t get it, then you just try again! For many this is
the best thing about digital photography. No more agonizing wait at the
photo processors to see if you did get “it”.
 Neon
sign.
The second shot this week is of a neon sign, and again was taken with a
digital camera, so the photographer could see straight away whether the
end result was satisfactory. It was actually one of three exposures
(called “bracketing”, with one half stop difference between each
exposure). In this instance, it was the lighter of the three which
worked out the best, but all were satisfactory.
In general, sensible bracketing will give two usable images, so do check
in your camera’s manual (you have read it, haven’t you) if you can
select auto-bracketing. As an aside, also see whether your camera has a
grid pattern for the viewfinder. It will help you get rid of sloping
horizons and toppling buildings.
Getting back to night photography, recording neon signs is actually very
easy, provided you turn off your flash, be that remote or the on-camera
one. The illumination provided by flash is much stronger than the light
produced by neon lighting, so with a flash shot you will wash out the
colors, and show just the glass tubes of the sign.
You can safely allow the neon tubes to dictate your exposure settings,
and then set the bracketing for one half stop above and below that
indicated by the exposure meter in the camera. Provided that the shutter
speed can be hand held, then do the different settings with the f stop.
You do not have to worry about depth of field, so you can shoot as wide
open as you can, to give yourself an acceptable shutter speed. The neon
shot here was hand-held at 1/15th second, using the camera’s own image
stabilization system.
As reader Ian Sherratt has found - experiment and put fun back into
photography.
Modern Medicine:
by Dr. Iain Corness, Consultant
Early detection
There has always been discussion about the advantages of
early detection, as far as cancer is concerned. Unfortunately there are
still people who say that if you get it, you’ve got it, and you’ve had it. I
am not one of those. It isn’t over until the fat lady sings, as they say.
These days there is enough clinical evidence to support the fact that the
end results for all cancers show an improved survival rate with early
detection and treatment. The same cannot be said for late stage cancers, I
am afraid.
In the UK they have actually been studying early detection with the National
Cancer Director Professor Mike Richards indicating that work is well
underway to catch more cancer cases earlier and improve the longer term
treatment for cancer survivors.
Professor Richards said, “Cancer treatment in Britain has improved vastly in
recent years and we are now beginning to see the impact on our survival
rates. Recent cancer mortality figures for under 75’s show that nearly 9000
more lives will have been saved in 2007 compared with 1996 and we are on
course to meet our target of a reduction of at least 20 percent in cancer
death rates by 2010.”
The NHS in the UK, despite its many shortcomings (waiting lists being just
one of them), does keep good statistics, and it is statistical analysis
which can keep us heading in the right direction. UK Health Minister Ann
Keen said, “I welcome the first annual report which details the excellent
progress the NHS has made in improving cancer outcomes and services. This is
evident in the reduction we have seen in mortality rates and improvement in
one-year survival rates. The challenge now is to keep up this momentum and
ensure that we continue to make further improvements. We are committed to
providing cancer patients with the best possible services to taking action
to prevent cancer in the first place and to detecting it at the earliest
possible point. The HPV vaccination program, extensions of the bowel and
breast screening programs and a new national awareness and early diagnosis
initiative will help to make this a reality.”
With breast cancer screening, Jeremy Hughes, chief executive of Breakthrough
Breast Cancer said, “Breast cancer is the UK’s most common cancer and we
have been concerned for some time that women remain unaware of the full
range of breast cancer signs and symptoms. At the same time not all women
invited to breast screening attend. Breast awareness and screening are key
to detecting the disease at the earliest opportunity and we know that the
earlier breast cancer is diagnosed the better the chances of successful
treatment. Breakthrough looks forward to working with the government to help
improve cancer awareness and detection which we hope will improve survival
rates.”
With that sage advice, have you, my women readers, had a mammogram and do
you regularly practice breast self-examination?
On the common male cancer of the prostate, much work is also being done
there, in the field of early detection and grading of tumors. Progress on
reducing the mortality rate is firmly linked to the research agenda.
Critically important is the need to develop a new generation test capable of
distinguishing between aggressive and slow-growing forms of prostate cancer.
This could form the basis for a screening program and would enable treatment
to be focussed on those men for whom prostate cancer presents a serious risk
to health.
Medicine is an ever evolving science, and even though we are currently
trying to develop these new screening tests, does not mean that we have
nothing at this stage. It may not be the gold standard, but the PSA, and
particularly serial PSA’s, can give a usable guideline, especially when
correlated with DRE (digital rectal examination) and ultrasound. Some
researchers say that the important factor to watch is the rate of change of
PSA, rather than the simple PSA level, and I would agree with that. Again a
very good reason to get your PSA checked with your annual check-up (which
you do have each year, don’t you).
All males of over 50 and women of over 40 should consider annual
examinations. Earlier if there is a poor family history!
 Heart to Heart with Hillary
Dear Hillary,
These chocolates are for you. Sorry I had to get one of your staff members to
deliver them for me. I’m really a bit shy.
Mike
 Belgian chocolates
Dear Mike,
Aren’t you the sweetest little Petal! Yes, the staff delivered them unopened to
my office. (They know I would have killed them if they had.) Belgian as well.
You have some class, Petal, which is more than I can say for that Mistersingha
and his Mars bar or whatever. Thank you again, Mike. I am pleased to you read
and enjoy the column.
Dear Hillary,
Re Archie’s letter he is quite correct in what he says. I am a U.K. citizen
living in Thailand and my wife is a Thai who has never visited the U.K. As a
pensioner I applied for my wife and was told, no problem, and was sent a form.
As well as returning the form they required the following:
National Insurance No.
Wife’s passport
Marriage certificate (they have to do the translation)
And if applicable - Divorce paper or death certificate of spouse
These all have to be notarized (I did this with Barry Kenyon at Immigration). It
took me a full nine months before it was completed, but they pay you from the
date you register plus an extra three months. They will not go back to the day
you are married unless you register from that date. On completion my wife also
received her National insurance No. But don’t give up it takes a lot of hard
work and perseverance. If you have paid the full stamps it will be worth about
50 pounds a week to you. The place to apply to is:
The Pension Service,
Tyneview Park,
International Pension Centre,
Newcastle upon Tyne
NE98 1BA
England
For an application form Tel. 191 21 87777
Hope this is of some help Hillary.
Peter
Dear Peter,
This has been of great help, and although really outside of my sphere, you have
given the contact details for all the previous writers to find out for
themselves. Thank you, on behalf of all the Thai spouses who might just get a
little more spending money each week!
Dear Hillary,
Here we are at Xmas time again and here we are spending heaps of hard earned
cash buying useless Xmas and New Year cards, and sending them off to people who
never contact you at any time other than Xmas. Why do we bother carrying on with
this charade? Surely people realize by now that they are being conned by the
stores. The original idea of Xmas spirit has long gone.
Scrooge
Dear Scrooge,
You really are the milk of human kindness, aren’t you! I wonder why people would
even bother to send you a card at Xmas, you are such a misery bag. For the rest
of us, Xmas is a time when we can remember friends and acquaintances and just
send a quick note to say, “You are not forgotten.” If it is the cash that you
object to, then you can always make your own cards or send an email, but I don’t
suppose you have a computer and 60 baht in the internet cafe for an hour would
be far too much. I hope you enjoy your Xmas! On your own.
Dear Hillary,
Is it possible to meet a Thai girl who does not want to drive a snow plough
through your wallet? Every time I think I have found “the one” it ends up that I
will be lucky if I have one baht left in the bill-fold. They start out alright,
looking after you very well, so you keep going back to the bar, then you make
the big decision and take them away from there to give them a better life and
everything is rosy for a while, then comes the hand out for this and for that
and a new fridge for her mother and then a big lick to pay off father’s land
mortgage. It doesn’t end till the money ends, then they’re gone! This has
happened to me three times so far and I have been so badly burned I don’t think
I’ll bother trying again. Do any of your readers have a suggestion, or perhaps
even you yourself Hillary?
The Victim
Dear Victim,
I do feel sorry for you, Petal, but there’s a very basic fact that you seem to
be missing, especially since you have gone down this road three times already.
Why are you continuing to go to the same places looking for a long-time mate,
when you are lining up at the short-term holding pens? You are going to the
marketplaces where they sell affection but you are looking for enduring love.
You are trying to buy a Mercedes in the motorbike shop! Unfortunately for you,
there is no “marriage market” even though there are places that seem to promise
this. Love and affection are never sold. Start looking elsewhere, Burns Victim,
and you will find there are some wonderful girls out there, hoping to meet a
nice man like you to fall in love with - not to fall into bed with. Get the
message, Poppet? You don’t buy cheese in a hardware shop.
Let’s go to the movies:
by Mark Gernpy
Now playing in Pattaya
Happy Birthday: Thai Drama/ Romance – Starring Ananda
Everingham. Looks like a real weepy love story. This time Ananda is a
travel photographer who travels around Thailand with his
guide/girlfriend, until she has a terrible car accident and ends up in a
hospital in a coma, while Ananda waits endlessly at her bedside for her
to wake up. From the previews, I have to say it looks perfectly
tedious, despite the fact that I’m a fan of Ananda.
The Day the Earth Stood Still: US Drama/ Sci-Fi/ Thriller – I
enjoyed this! If you like sci-fi thrillers, you should too. Of course,
you have to be willing to accept a lot of the “aliens invade Earth”
conventions. I did, and found it a lot of fun. And as for Keanu
Reeves, he’s perfect for the part of the alien! Absolutely perfect,
because he really is an alien himself! I think all of us have always
known that. Think about him in any movie he’s ever been in. He is not
human! He’s truly an alien himself, a little spooky, but accessible,
and lovable!
This is a remake of the landmark film of 1951 with Michael Rennie,
Patricia Neal, and Sam Jaffe, directed by Robert Wise. This time Keanu
Reeves plays Klaatu, a mysterious alien who travels to Earth with a
simple mission: to save the planet. He lands his vast space ship in
Central Park, New York, and tries without success to announce his plans
to the world via a speech at the United Nations. He’s taken into
custody instead. Thus rebuffed, he goes to his backup plan: He will
destroy everything on earth, then re-populate our planet with clones of
the current species. All, that is, except humans who he feels are
responsible for Earth’s destruction and must be permanently eradicated.
He unleashes swarms of dust size robots who sweep through New York and
the surrounding area dissolving everything in their path. As mankind
fights to survive, one female scientist tries to convince Klaatu to stop
the earth’s destruction and give us all a second chance.
Transporter 3: France Action/ Crime – I’ve seen it, and I can attest
that it’s an action movie – meaning that there are a lot of explosions,
car crashes, and men being violent and assertive. And it’s all quite
brilliantly done, and seasoned with just the slightest bit of plot and
humor. If that’s what you like, this is for you. It stars Jason
Statham, returning again as Frank Martin, a former British Special
Forces soldier turned mercenary, whose specialty is delivering risky
items in a timely fashion. In this third installment, Frank, just
relocated to Paris, awakes to find a bomb strapped to his wrist which
threatens to blow up should he try to remove it. Mixed or average
reviews.
Ong-Bak 2: Thai Action/ Adventure – With Tony Jaa, who also
directed. I’m not sure what the reception will be to this film, for
it’s rather difficult and really not too much fun to watch. It’s quite
dark, and exceptionally violent. Not for children! But it’s
extraordinary in many respects, and approaches almost every aspect of an
action film in a new way. And it seems a terribly personal film for
Tony Jaa, in which he apparently is trying to exorcise some inner
demons. I think it’s a fascinating attempt.
Beverly Hills Chihuahua: US Comedy/ Adventure/ Family – You must
know fairly well at this stage whether or not you and your child enjoy
talking animal pictures. (It’s not an animated movie.) I found this one
amusing with parts quite a lot of fun. It’s certainly well done of its
kind. It’s a Disney comedy in which a pampered Beverly Hills Chihuahua
finds herself accidentally lost in the mean streets of Mexico. Alone
for the first time in her spoiled life, she must rely on some unexpected
new friends to help her to find her way back home. Critical reaction
seems very mixed, with people either loving it or hating it. Overall,
mixed or average reviews. If this is your cup of tea, you should enjoy
it well enough.
Twilight: US Vampire love – It’s quite well done overall, and I
rather enjoyed it. Robert Pattinson is indeed a handsome, smoldering
devil as the vampire. It’s a complex story, in three volumes so far and
more to come. Mixed or average reviews.
Teeth: US Comedy/ Horror – Directed by Mitchell Lichtenstein (son of
Pop artist Roy). Dawn, a high school student, works hard at suppressing
her budding sexuality by being the local chastity group’s most active
participant. A stranger to her own body, innocent Dawn discovers she
has a toothed vagina when she becomes the object of violence. More
enjoyable than I thought it would be, it is still pretty sick and
unpleasant, and bites off more than it can chew. Mixed or average
reviews.
|
