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Money matters:
Graham Macdonald MBMG International Ltd.
You can fool all the people some of the time…
Richard Russell is 84 years old. He has been writing about
investments for 59 years. I make no apologies for quoting him here as he is
regarded by many as a particular sage when it comes to Wall Street. “People in
this country don’t realize how bad things can be, I lived through the Great
Depression. I remember people standing in bread lines. It was hard to get a job,
any job, back then. But now, you see the restaurants are still full. People are
still spending money. They may be worried and they may be beginning to save, but
there’s no sense of urgency. And there’s a rally on Wall Street. You know, every
bear market produces a rally. You can expect the market to retrace its steps by
one- to two-thirds. And every bear market has a surprise. I think the surprise
is that this is going to be a lot worse than people expect.”
Russell goes on, “The primary trend is down.” He thinks that President Obama and
the Federal Reserve (FR) can do what they want but, in the end, the primary
trend will have its way. The present bear market will carry on for the
foreseeable future until it “has fully expressed itself.”
Russell is right. People are starting to talk the markets up far too early.
Unfortunately, you can fool some of the people with this rhetoric but they will
soon realize they have bought too early. They have not studied history. Over the
last twenty five years, if there was trouble brewing then the FR cut rates and
the markets started to head towards positive territory again. Russell though
goes back further than a quarter of a century, in fact he goes back twice as
far. He can remember the Great Depression, World War II, the Bear market and
stagflation of the 1970s. Russell believes we are “a long way from the bottom.”
Russell went on, “The old Wall Street adage about the dangers of catching a
falling knife doesn’t seem to be scaring individual investors away from
Citigroup Inc. Some discount-brokerage firms report a surge of individual, or
retail, investors buying shares of Citigroup during the past five months, amid
the New York bank’s stock-price slide.” These investors believe they are taking
advantage of a real opportunity. Russell believes otherwise, so do our chaps at
Miton Asset Management. We have been expecting a rally for a while now and it
may go even higher before dropping like a stone.
Depending on which ‘expert’ you listen to this is either a recession or a
depression. If the American government has its way then it could lead to another
Great Depression. If it gets as bad as that then severe changes need to be
brought in. Richard’s was asked what he would do if he was in a position of
power in America. His reply was most illuminating, “Nothing, I’d do nothing. I’d
let it happen. I’d let the bear market do its work.” Why is he being to
Draconian? Basically because if things (companies) cannot function properly then
they need to be allowed to die away so that things that do work can make better
use of the available capital in a more efficient way.
If only Richard’s was in charge. The FR, Bank of England and European Central
Bank have increased money supply by an average 9.2% in the past year, or the
equivalent of $2 trillion, to $24 trillion. “Inflation worldwide is going to
surge in the years to come,” said Mickael Benhaim, who manages about $32 billion
as head of global bonds at Pictet in Geneva.
These comments are echoed by New York University professor, Nouriel Roubini, who
said that in the best-case scenario, the recession will continue through 2010 in
advanced economies while job losses will persist for an additional year. “People
were hoping it would be a V-shaped recession - a sharp fall, followed by an
equally quick recovery,” he said. However, he went on to say that, “we are in
the middle of an ugly U-shaped recession.”
Roubini said the bottom of the ‘U’ - the length of time the world economy will
continue to contract - would last a minimum of three years starting from
December 2007. If you think this is bad then please do not read on as he then
brought in an even worse scenario and said, “There was a one-in-three chance”
that the recession would “turn into an ‘L”, which is a period of stagnation put
together with a drop in prices as demand falls.
Roubini went on, “People say when the US sneezes, the rest of the world catches
cold. In this case, the US is just not sneezing, it has a severe case of chronic
pneumonia.” He added, “We all sink or swim together,” also saying there is no
way policy action in emerging economic giants India and China can pull the
global economy out of the slump.
We may have to all “sink or swim” but is there anything that will at least help
us to swim longer and more comfortably than the rest? Well, yes:
1. Western equities are not in good shape. The Japanese market is at the same
level as it was in 1981. To put it another way, it is thirty years behind where
it should be. This is similar to 1928 in America where you would not get back
your initial investment until 1954. If we only go back twenty years with the S&P
in America then it would be at 300. This shows that Asian Markets are at either
twenty or thirty year lows. The good news is that the dividend yields on Asian
stock markets are over three times what you get from bonds in the same
countries. Without doubt, when compared to America, Asian equities are quite
cheap. The other great thing is that they serve their own markets with tobacco,
alcohol or food.
2. Commodities have dived - especially mining and exploration companies. This is
a great time to hold gold directly, especially as we cannot trust central banks
any more. For the more adventurous oil looks cheap now, so oil exploration
companied should be considered.
3. Real estate in the west at the moment is not wise, unless you hedge against
continuous falling markets. However, there is still good money to be made in the
East - if you know where to look.
4. Even though it is difficult to make any money out of cash, this should be a
large part of your portfolio. Use your base currency. Do not trade in FX unless
you really know what you are doing.
5. Government bonds should do well short term but will then dive. Well rated
corporate bonds will come good.
6. Alternative markets will be incredibly volatile and should only be considered
via a vehicle that has a good track record that shows continued success.
Above all else, remember that volatility is the word at the moment. This is
because you have the private sector cutting down hard on lending. Families have
been hurt so they will try and save no matter what. This means that both credit
and liquidity will be harder to find. This is the good news as both parties have
learned from the pain of the last couple of years.
Unfortunately, this is being countered by the morons we put into power. Tim
Geithner says, “We know how to fix the problems.” He is now secretary of state
for the Treasury and has been since late January. If he knows what the problems
are why did he not fix them in the six years he was president of the Federal
Reserve Bank of New York? Bernanke has been the Federal Reserve chairman for
nearly four years and has not learned a thing. These people will make matters
worse. As they do not have the brains to sort out the problems then they will
just throw more money at them. This will further increase volatility.
The moral of the story? Multi-asset allocation with alpha management will give
you a better chance than most to swim in comfort. A decent, safe fund of funds
should be able to give you LIBOR (London Inter Bank Offered Rate) +4% with very
little exposure to volatility. Do this and you may even be able to buy a boat.
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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.comm.com.com
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Snap Shots: by Harry Flashman
Don’t leave home without them
 This
week I will look at items that you should have in your camera bag. The
list is not so large you need to employ a team of Sherpa porters, but
you should have a reasonably sized camera bag.
The first item is a small pocket torch. Any photographer who takes his
camera out at night will need one. Even if just to see what way up the
batteries go in the flash, which always runs out of volts just when you
don’t need it. Setting shutter speeds in the dark can also be difficult.
Or even seeing what aperture you are selecting on the lens barrel. And
in addition to the humble small torch are the even humbler batteries for
it. You can guess the scenario.
Another small, but definitely handy item is a remote release for the
shutter. Any time you are trying to do a time exposure, it becomes very
difficult holding the button down and not making the camera tremble -
especially with long exposures. Cheap, does not take up much space, and
very useful.
While talking about time exposures, another useful “camera bag” item is
a miniature tripod. With something like this you can mount the tripod on
the roof of the car and take five minute moonlight shots if you need it.
Often called table-top tripods. There are some with “springy” legs and
my photographic friend Ernie Kuehnelt was kind enough to bring me one
from Germany. Well built and sturdy and deserving of a place in the bag.
Thanks Ernie.
Now the next one is not so easy to get here, but you can always get
someone to bring you one in from overseas. With the bright sunlight
here, the magic brain inside your camera that sets the exposure settings
can get confused. Make that ‘very confused’. The answer for consistently
correct exposures is an 18 percent grey card. This you place beside the
subject and take a meter reading from it. You then set the camera to
that f stop and shutter speed and you have the correct exposure for the
main shot. If you are serious about getting the correct exposure, and
particularly if you shoot slides, one of these is invaluable. You can
just fold it up and slip it in the camera bag very easily. However,
another trick is to select an 18 percent grey camera bag, and you just
take your reading directly from there.
The next item is again not a true photographic item, but is invaluable.
It is a waterproof marker pen. How many times have you written details,
names, etc., on the back of a print, to find that it has rubbed off on
the face of the next print and so forth? Totally annoying and often
requires another set of prints to be made.
The last item that is worth considering, if you are a serious
photographer, is a battery charger. You will go through heaps of
batteries if you are shooting regularly. This gets expensive. Buy two
sets of the rechargeable batteries and a charger and your photography
expenses will be a lot less. This is particularly so with the new
digitals. They eat batteries, so keep a freshly charged spare in the
camera bag at all times. Other batteries you should have included are
those for any flash guns. There’s nothing worse than whistling while
waiting for the flash to recharge!
Another ‘silly’ item is a box of matches - even if you don’t smoke. The
rattle of a box of matches will catch the attention of dogs and
children. You set up the shot, select the exposure and then rattle the
matchbox. You have about two seconds to catch the ears-up inquisitive K9
look, and about the same for children, whose attention span can be
measured in nano-seconds.
Probably one of the most important and smallest items is a spare memory
card. There is nothing worse than standing beside a photo opportunity
frantically stabbing at the delete button to try and get some space in
the memory.
Finally, don’t forget the polarizing filter. Use it in the Thailand
sunshine and see how much richer your color shots will be.
Modern Medicine:
by Dr. Iain Corness, Consultant
Looking at health risks by numbers
I can assure you that every practicing doctor in the world
has heard about your Uncle Harry who smoked three packs of cigarettes a day,
drank two bottles of whisky by lunchtime and lived to be 104. The story of
Uncle Harry is trotted out to stymie any thoughts of stopping smoking, or
that too much alcohol is really too much of a good thing.
Unfortunately, the unstoppable Uncle Harry means absolutely nothing when we
look at health risks from an overall point of view. Just as one swallow
doesn’t make a summer, one Uncle Harry does not prove that smoking isn’t
dangerous, or that too many bottles of whisky won’t cause cirrhosis. That
kind of “proof” only comes after looking at large numbers of Uncle Harry’s,
and that is done by a special group of people called epidemiologists.
Now the World Health Organization (WHO) has teams of epidemiologists and
other health watchers, looking at the spread of disease in the world, and
that is more than just Swine Flu. Not just Uncle Harry either. They have a
good idea where we’re headed, and much of that depends upon where we are.
The WHO has data to show the major influences and risks to health all over
the world, and the global picture is interesting, with differences between
life expectancies between the richest and poorest countries now 40 years!
There are even differences between the rich and poor areas in one city.
Nairobi, for example, has an under five mortality of 15 per 1,000 in the
rich areas and 254 per 1,000 in its slums.
WHO believes that more emphasis on preventive medicine could reduce disease
globally by 70 percent. And although I have been critical of WHO in the past
(and in the present with its bumbling about Swine Flu), I am all in
agreement with its emphasis and focus on preventive medicine.
Now while the WHO wants to see global health coverage for everyone, that is
a little too Utopian for me. Throwing money at the health problems in the
slums does not fix the problems, and honestly I wouldn’t know where or how
to fix it. It is the result of sociological and cultural differences.
However, it is of interest to look at the global health risks, and these I
gleaned from a previous WHO Bulletin. The number 1 global health risk is
being Underweight. Here is the influence of the African continent, with
malnutrition and outright starvation influencing millions. Again, it is the
African continent that has dominated the second major health risk - Unsafe
sex. The HIV/AIDS epidemic in that region influencing the global statistics.
After those two comes High Blood Pressure and Tobacco and then Alcohol at
number five, and so much for Uncle Harry.
However, if you split the statistics up and examine the situation in
developing countries such as much of Asia the picture is different. Number 1
health risk is alcohol, followed by High BP, Tobacco and being underweight.
A close look at the risks for the developed societies (that covers the
Europeans, Brits, Americans, Australians) gives yet another differing list
of “most likelies”. Top spot is Tobacco, followed by High BP, Alcohol,
Cholesterol and being Overweight.
So, depending upon the society, the things that are waiting to get you are
quite different. The WHO report states, “As a country develops and more
people buy processed food rather than growing and buying raw ingredients, an
increasing proportion of calories tends to be drawn from sugars added to
manufactured food and from relatively cheap oils. Alongside the change in
diet, changes in food production and the technology of work and leisure lead
to decreases in physical exercise. The consequent epidemic of diet-related
non-communicable diseases (obesity, diabetes, hypertension and
cardiovascular disease) is projected to increase rapidly. For example, in
India and China, a shift in diet towards higher fat and lower carbohydrate
is resulting in rapid increases in overweight - among all adults in China
and mainly among urban residents and high income rural residents in India.”
It’s not too late to look at your diet either! And put that cigarette out.
Heart to Heart with Hillary
Dear Hillary,
My agent in the Ferrari parked on your forecourt reports that your red carpet is
looking the worse for wear! You really should not wear your carpet, Hillary! Pop
round to Mumbai ‘Arry and get him to knock you up a sari!
Mistersingha
Dear Mistersingha,
I had not realized just how ‘keeneow’ you really were until this latest missive.
The most I have ever received from you over the years has been a Mars Bar and a
Bacardi Breezer if my memory serves me, despite written promises of Belgian
chocolates and French fizz-water, and here you are with an agent in a Ferrari no
less. Of course, just in case the readers think you have discovered me in my
less than Sunday best, I have appended a little history of the sari. One of the
famous Sari legends was described in the 5,000 year old Indian epic, the
Mahabharat. Legend has it that when the beautiful Draupadi - wife of the
Pandavas - was lost to the enemy clan in a gambling duel, Lord Krishna promised
to protect her virtue. The enemy was determined to take their prize, caught one
end of the sari that draped her so demurely, and pulled and pulled at it to
unravel. They continued to pull and unravel, but could reach no end. Thus
protecting her virtue.
The ordinary sari requires eight meters, my Petal, and since there is no eight
meter red carpet in the office, I think you and your Ferrari agent have been
mistaken. Or would you like to send me eight meters of suitable cloth?
Dear Hillary,
Here is some more information about Khru Bah Noi the young abbot of Wat Doi Noi,
Lamphun. As well as his bio-diesel and petrol manufacturing, he has designed a
rice planting machine which plants seven rice plants at a time with the pull of
a lever. He also has made inexpensive air-conditioning units and has plans to
produce electricity by using the heat from the sun. But that’s another story!
Delboy
Dear Delboy,
As you can see, I did have to shorten the letter somewhat, but I’m sure you’ll
forgive me, as I did manage to squeeze one of the photos in. This young abbot is
certainly a very inventive young man and the North of Thailand should be proud
of him, with what he is selflessly doing for others.
Dear Hillary,
I will come clean right off and say that I do spend a fair bit of time at night
in the bars. I am single, and it’s a good way to meet people. The old bill in
the cup routine I think is very good because it shows that the bar trusts you
not to lose a couple before you pay at the end of the night. Recently though I
have been getting the feeling that my bill is not right, because it seems to be
a lot more than I thought it should be. Is it OK to check the amount yourself
before the girl takes the cup to the cashier? I don’t want them to think I don’t
trust them, when they are trusting me. What is the usual thing?
Unsure Drinker
Dear Unsure Drinker,
You are having me on, aren’t you, Petal. Nobody is that naive any more, surely?
It is your bill, and you pay it with your money. Of course you can check it.
Mind you, if you are getting yourself to the stage where you can’t count past
ten without taking your shoes off, you have a real problem. Is this the
situation? You’ve got no real idea how many drinks you’ve had, or how many “lady
drinks” you’ve bought in the course of the evening? You have the choice - go on
the wagon for a while or take a pocket calculator into your favorite bars.
Khru Bah Noi’s Rice planting
machine
Let’s go to the movies:
by Mark Gernpy
Now playing in
Pattaya
The Secret of Moonacre: Hungary/ UK, Adventure/ Family/
Fantasy – A pleasingly old-fashioned fairy tale, fashioned from the
relatively little-known children’s novel “The Little White Horse” by
English author Elizabeth Goudge, and it’s probably just perfect if you
happen to be an 11-year-old girl. By the Hungarian director and
animator Gabor Csupo, who gave us Bridge to Terabithia in 2007.
The plot springs from a large, dusty, leather-bound fairytale book about
a strange land far, far away. The book is a relic the 13-year-old Maria
Merryweather (Dakota Blue Richards) has inherited from her dead and
dissolute father. The orphan is dispatched to live with her brooding
uncle (Ioan Gruffudd) in a shabby Gothic pile cursed by an ancient feud
over a handful of pearls. His nemesis, Tim Curry, stews in the woods
near by. Maria has the magic to settle their dispute – whether she will
or not is another matter. The film’s magic realism is frightfully
English.
Nymph / Nangmai: Thai, Mystery/ Romance – A slow-paced, minimalist
offering with supernatural overtones from one of Thailand’s most
interesting directors, Pen-ek Ratanaruang, who gave us the excellent
Ploy in 2007. This is his seventh feature, and it premiered last
month in the Un Certain Regard competition at the Cannes Film
Festival – to decidedly mixed reviews. I found it intriguing, and
beautifully executed.
It revolves around a relationship in trouble – the marriage of May and
Nop which seems to have nothing left but inertia to hold it together.
The two barely speak to one another, and May has been involved in an
affair with her boss for months. Signs of physical affection are still
more rare. Despite the emotional distance between them, May decides to
accompany Nop on a photography trip into a deep forest where some time
before two young men were mysteriously struck dead while attempted to
rape a woman. Nobody had ever been able to sort out what happened, but
Nop can’t help but feel a certain attraction to a tree near where the
incident occurred. Then one night he simply disappears. For
aficionados of Thai art films, who will love it.
Ice Age 3: Dawn of the Dinosaurs: US, Animation/ Action/ Comedy/
Romance – If you enjoyed the previous two installments, you should like
this one as well, because it’s more of the same, but with even better
animation. Excellent for kids and families. Mixed or average reviews.
Wongkamlao: Thai, Comedy – Popular comedian Mum Jokmok directs and
stars in this romantic comedy.
The International: US/ Germany/ UK, Crime/ Thriller – With Clive
Owen and Naomi Watts. In this gripping thriller, an Interpol agent and a
US district attorney attempt to expose a high-profile financial
institution’s role in an international arms dealing ring. Their
relentless tenacity puts their own lives at risk as their targets will
stop at nothing – even murder – to continue financing terror and war.
Rated R in the US for some sequences of violence and language. Mixed or
average reviews.
Transformers: Revenge of the Fallen: US, Action/ Adventure/ Sci-Fi –
Shia LaBeouf again joins with the Autobots® against their sworn enemies,
the Decepticons® in this battle of the toys. It’s super-intense, and
bigger and longer than the original. High noise level, smashing images,
a loud and relentless score, everyone yelling their lines at high speed
– if this is your idea of fun, go. Me, I just have to throw up my hands
in surrender and disbelief! What’s the use of fighting such a force of
nature? It seems to come from director Michael Bay’s childhood
fantasies about playing with toys and blowing stuff up. And fantasizing
about the hot-looking Megan Fox. It’s really unapologetic about
delivering these fantasies. Bigger battles. Massive explosions. Megan
Fox. Generally negative reviews, but it’s a smash hit anyway!
Up: US (Disney/Pixar), Animation/ Family – Everyone’s current
favorite, and the most loved film of the year so far! An animated
fantasy adventure about a 78-year-old balloon salesman (voiced by Ed
Asner) who finally fulfills his lifelong dream of a great adventure when
he ties thousands of balloons to his house and flies away to the wilds
of South America. But his biggest nightmare has secretly stowed away on
the trip: 8-year-old Russell. Also starring Christopher Plummer, and a
speech-assisted dog. Another masterful work of art from Pixar – an
exciting, hilarious, and heartfelt adventure, impeccably crafted and
told with wit and depth. Reviews: Universal acclaim.
Up has a cartoon playing before it, called Partly Cloudy, a
6-minute Pixar study of cartoon genius. Not too much has been made of
this very funny short, but for my money it is pure brilliance – and
without dialogue!
Terminator Salvation: The Future Begins: US/ UK, Action/ Sci-Fi – If
you’ve seen any of the other three installments of this series, you know
what to expect: Plenty of chases, explosions, and great effects. But
without Arnold Schwarzenegger. Mixed or average reviews
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