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Money matters: The Long and Short of it (part 1)
Graham Macdonald
MBMG International Ltd.
Of the five asset classes that we have been discussing
recently, you’d be forgiven for thinking that stocks should be avoided at all
costs. However, the recent discussions have focused on the downsides of
investing in stocks in the traditional manner. One way of trying to harness the
upside volatility of stocks while avoiding the risks is to take exposure to
equities via long/short funds.
What are long short funds?
Long/Short Equity funds combine long equity holdings and the
short sale of stocks, along with other instruments to vary their net exposures
depending on their views on the market. The funds tend to increase their
exposures in bull market periods and, decrease them when they feel that the
markets will be in decline. By varying exposures in this fashion, long/short
managers have a valuable tool to control their participation in directional
market movements.
The long side of the portfolios are constructed from stocks
that are expected to outperform the market. These stocks will most likely have
strong fundamentals with a good market position, an attractive rate of earning
growth and offer a high return on equity.
An example of a long trade would be Google, the market leader
in internet search engines. Google was floated on August 18 with a price of $85
per share after a controversial auction mechanism that set the flotation price.
From a fundamental point of view, the company had a promising valuation with
high margins, strong, 3-digit rates of sales growth and an above-30% return on
equity. At the end of the first day of trading, Google shares were in the region
of $100 per share; indicating that the market was pricing in their expectations.
A long/short manager, who could not participate in the IPO,
having a bullish view on Google could have invested $500,000 in the stock on the
following day at a price of $100.33 and could have closed his position October
27 at the historical highest price of $187.56. This would have been a perfect
trade for the manager’s long side of his portfolio, realising a profit around
$434,000. This would constitute a return of nearly 100% in three months.
On the other hand, the short side of a manager’s portfolio,
particularly focuses on the stocks that he maintains a bullish view on. These
short ideas originate from flawed business models, poor balance sheets, and/or
expected/emerging litigation cases acting as negative catalysts.
The negative exposure obtained through taking short positions
serves two different purposes. First of all, the shorted individual stocks
identified through deteriorating fundamentals create an opportunity to provide
additional returns when the markets maintain their bullish sentiment. Secondly,
when there is a general downturn, these short positions in their entirety will
act as a hedge to offset the losses incurred by the long side of the portfolio.
Next week: more on how short-selling can earn a profit.
The above data and research was compiled from sources believed to be
reliable. However, neither MBMG International Ltd nor its officers can
accept any liability for any errors or omissions in the above article nor
bear any responsibility for any losses achieved as a result of any actions
taken or not taken as a consequence of reading the above article. For more
information please contact Graham Macdonald on [email protected]
Snap Shots: Kids pix made easy (well, at least easier!)
by Harry Flashman
The music hall comedians always worked on the principle
that they should never get on stage with children or animals. There were
many good reasons for that, one of which was the fact that neither took
stage direction very well.
Photographing children and animals is also fraught with
the same problem. Neither take stage direction very well.
 (Photo
by the late Howard Greene)
I was reminded of this the other day when a baby had to be
photographed for a passport. The baby in question was nine months old, and had
to be photographed against a white background. For a brief moment I actually
considered the request to take the photo, but then experience, that wonderful
teacher, intervened and I sent mother and child to the local photo shop. There
they struggled for 20 minutes and after several attempts finally managed to get
the requisite passport likeness.
The biggest problem is that children have the attention span
of three point four milliseconds (if you’re lucky) and to expect kiddy
co-operation while you spend time setting up the shot, focussing and finding the
best lighting is to fly in the face of reality. No, to get a good kid pic means
that you have to be totally set up and ready. That means you must begin with an
idea of how you want the end result to look.
Let’s look at the equipment needed first. In general, the
further away you get, the more natural the photograph you will get. So, a small
zoom lens (35-70) works very well in this situation as you can get far enough
away from the child without invading the child’s ‘personal space’ and
producing shyness or forced behaviour.
Some photographers swear by Auto-focus (AF) for this type of
shot, but personally I find that the noise is distracting for children. The
“whiz-whiz” attracts for the aforesaid three point four milliseconds, and
then they are off again.
Focussing is important, as it is for all photography, and I
generally use the “pre-focus” technique in this type of situation. When you
have found the position you want to shoot from, then focus on where the child is
and “lock” that focus into the camera. When you suddenly see the shot you
want, you won’t have to waste time trying to focus.
The most important item with child photography is to get down
to their level, otherwise by shooting from above you get distortions and a
“strange” view of the child. Have a look at this week’s picture taken by
the late Howard Greene. This happy youngster was snapped by doing all the above
techniques.
Since children are fairly mobile creatures, you do need to
get a reasonable depth of field to keep the subject in focus. There are a couple
of ways to ensure that this happens. The first is to select 200 ASA film. This
means you can use a smaller aperture (or your camera can select it, on
“auto” settings). This increases the depth of field, keeping your subject in
a deeper area of sharp focus. The second is to photograph in good light, which
again means the camera can select small apertures.
Now let’s get down to the nitty gritty of taking the shot
of your terrible two year old. Put little Johnny in a well lit area of the
house, patio or garden with some favourite toys. Sit down on the floor a little
way from him and pre-focus the camera. Now just sit there, not joining in to his
play world, looking quietly through the viewfinder. Remember that you do have a
limited time before Mr. Two gets bored and wants to wander off.
When everything is right, call out the child’s name and catch the child’s
first response to you. The inquiring look, or the big smile, will be there to be
caught forever on film. You can repeat that exercise perhaps three times before
the child will not respond any more, no matter what you do! As I said at the
beginning, these little creatures have a very short attention span. Be prepared,
be ready and be watchful and you too can get that ‘magic’ shot.
Modern Medicine: Cosmetic Surgery.
Who do you want to look like?
by Dr. Iain Corness, Consultant
I once saw a program about a woman who wanted
to look like a Barbie doll, and after many cosmetic procedures, she did indeed
look as close to a Barbie doll as you could imagine, and equally as vacuous. The
program did not go on to say whether she met her “Ken”.
Personally I believe that kind of cosmetic surgery has all
sorts of ethical issues associated with it, but then again, that is just my
opinion. However, I have no problems with people who want to correct physical
defects to improve their image, or people who feel they have a problem with
their appearance, and who would feel happier in themselves if this were
corrected. I, too, have held my hands at the side of my face and pulled slightly
to reveal how I used to look 30 years ago. I, too, have been tempted by the
thought of a face lift!
Before I go much further, before contemplating any cosmetic
surgery, you must consult specialists in the field. These are doctors who have
specialist qualifications in plastic and reconstructive surgery and do nothing
but that type of work every day, not the clinic on the corner that does
everything from coughs and sneezes and venereal diseases and the odd breast
enlargement job as well!
There are many cosmetic procedures these days, and here is
just a few of them.
Rhinoplasty is functional re-modelling of the nose and is
carried out to correct malformations and developmental abnormalities. These
procedures can usually be done under local anaesthetic, in most instances, and
will take 1 to 1-1/2 hours in surgery. The important word here is
‘functional’. It is no good having a super looking nose that you can’t
breathe through!
Blepharoplasty is removal of excess skin from the upper or
lower eye lids. This can be done under local anaesthesia with surgery taking
around one hour.
Face Lifts. There are many types of this (depending on how
far your face has fallen!). Major procedures can take up to 5 hours in surgery
and require a general anaesthetic and an inpatient stay of up to 4 days. Minor
procedures are done under local and you may be able to return home on the same
day.
Lip Surgery, both thickening or thinning of protuberant lips
can be done as an out-patient procedure. This takes up to 2 hours and is
performed under local anaesthesia.
Mammoplasty - increasing or decreasing the size of the
breasts can take up to 4 hours in surgery and requires general anaesthesia and
an in-patient stay of up to 4 days. These days, saline implants are generally
used, though the ‘dangers’ with silicone implants were more imagined than
real. For many women these operations can give them a new lease on life, ending
many years of embarrassment and psychological trauma.
Liposuction. This is a relatively new form of cosmetic
surgery where fat cells are ‘sucked’ away from the tissues under the skin
and requires general anaesthesia. This is the most common cosmetic procedure in
the USA, followed by breast enlargement and nose jobs.
Surgical excision of fatty apron or scars. This is not as
easy as it may sound and normally requires general anaesthesia and an in-patient
stay of up to 4 days.
Punch graft hair transplants. This is a lengthy procedure (5
hours) but is carried out under local anaesthesia. 500 punch grafts will fill in
an area 9 cm x 9 cm and a 2 day spell as an in-patient is necessary.
Learn to Live to Learn: What’s so special about the English National Curriculum?
with Andrew Watson
I would strongly suggest that any curriculum
that calls itself ‘National’ reflects certain value systems of the country
in question. These values can be economic, social and political and can be
broadly referred to as ‘cultural values’.
‘Culture’, for the purpose of this article, is understood
to refer to a way of life which is shared by the majority of the members of a
specific group. Through culture in this sense, all of the experiences of life
are understood.
On this basis, it appears critical when discussing a national
system to consider the implications of learning and understanding through
specific cultural eyes. This seems especially pertinent when a national
curriculum is in place in an international school. How relevant can a national
curriculum be?
I am now delighted to promulgate a complete fallacy,
literally promoted by many international schools around the world. I am
referring to the ‘British Curriculum’, something which doesn’t actually
exist. What international schools who advertise this anamorphosis are actually
offering is the National Curriculum for England (NCE) and a
modified version of it at that.
Before the emails come flooding in, I am aware that the main
reason given for using the sobriquet ‘British’ is as an essentially
epithetic marketing tool. ‘British’ is a brand name.
A weaker argument is that because schools are using the NCE
in an international setting, it has ceased to be the NCE and has somehow
metamorphosed into an as yet ill-defined hybrid.
Devolved government in the United Kingdom has brought
educational autonomy to Wales and Scotland (the Scots have always enjoyed more
independence in this regard). The Welsh have their own Baccalaureate Programme
and their national curriculum includes mandatory Welsh language classes - an
excellent example of how a national education system can be utilised to not only
reflect the culture from which it emanates, but to reinforce it. In Wales,
language, indisputably the voice of culture, is kept alive.
I think that two questions are particularly relevant.
Firstly, what is the NCE? Secondly, how relevant is it to children in
international schools in the region?
The NCE has many positive aspects to it and some wonderful
sentiment underpinning it, but it has been given a ‘good political kicking’
for twenty years or so and has emerged battered and bruised, as a mechanism
designed to ‘raise standards’.
The concept of ‘standard raising’ brings with it
essentially contested ideas which are rooted in political ideology. Thatcher’s
philosophy of managing education was unapologetically market and business
orientated. Schools were encouraged to reinvent themselves and apply business
practice to management.
What didn’t really happen though, was any nurturing,
encouragement, or orientation towards this new direction. The bureaucratic
burdens of teachers became unbearable, with assessment following appraisal
without remuneration.
At the same time, the rights of parents and students were
reinforced and those of teachers seemingly undermined.
The good news is that the NCE sets out clear, full and
statutory entitlement to learning for all pupils. It determines the
content of what should be taught, and sets attainment targets for learning.
Questionably, it has done a great deal to bring
professionalism and efficient delivery to the classroom by determining how
performance will be assessed. An effective National Curriculum gives all vested
interest groups, teachers, pupils, parents, employers and the wider community, a
clear picture of the knowledge, understanding and skills that young people should
be able to learn at school.
The NCE is also designed to enable schools to meet the individual
learning needs of pupils and encourages them to develop a ‘distinctive
character and ethos’ reflective of their local communities.
In terms of how relevant the NCE is to children in this
region, the answers to this question go right back to the heart of what
international schools are, claim to be or pretend to be. Let’s take a
Humanities subject like Geography, for instance. A school delivering the NCE
will have (or should have!) resources pertaining to the subject content of the
curriculum that will naturally reflect the country which has given birth to the
curriculum. Textbooks talk about Europe and England and the United Kingdom. In a
multi-national classroom, of what value is the study of these remote and foreign
places?
The answer to this is very important because the education of
your child needs to be relevant for it to be interesting, exciting and
stimulating and it relies on the imagination, creativity and dedication of the
teachers delivering the subjects to make it so.
If the material of the NCE is to be made relevant to
international environments, it seems clear that it needs to be significantly
adapted to suit its client base. If this means that resources can be used to
compare what it is like in Europe and England and the United Kingdom, without
prejudice, to Chonburi, Thailand and South East Asia, then some good can come of
it.
Local, regional and global perspectives are to be encouraged.
Studied in isolation, as a parent I would find the NCE difficult to justify. As
a teacher and manager, I wouldn’t countenance it.
 Heart to Heart with Hillary
Dear Hillary,
I have enclosed an article from a British newspaper that I thought you might
like to read. Fondest regards.
Mel
Dear Mel,
Petal! How can I thank you enough for the clipping from The Sun newspaper? I
must admit I have never read this publication, but it does look as if it
would be very suitable for cod and chips. As they say in the business,
“News today, chip wrappers tomorrow.” However, no doubt some Wally
do-gooder has probably decided that it is illegal, immoral or fattening to
wrap fish and chips in newsprint and that has been banned too. It is for
reasons such as these that many of your countrymen have come here to live, I
am sure.
Dear Hillary,
I am trying (with little success) to persuade my wife that we should
consider selling up our house in England and move to Thailand or at least
consider this as an option when we retire. We normally come to Thailand
twice a year for holidays. My wife is a demon for sunbathing and I have
caught the golf bug, so obviously Thailand suits us both. My problem is
persuading “she who must be obeyed” that a permanent move to Thailand is
an excellent idea. She is of the opinion that she would soon get bored and
there is little else for her to do other than laze around by the pool or on
the beach. Can you offer any advice on how to persuade her that a move to
Thailand would not necessarily be boring? Any advice or ideas on how to
persuade my wife to move would be gratefully accepted.
In a previous column you were asked about why there were
so many golf tourists in Thailand. You quite rightly pointed out that there
were many wonderful courses and they were considerably cheaper than
elsewhere in the world. You forgot to mention the wonderful smiling caddies
who just carry on smiling no matter how bad you play. It really is a golfing
paradise.
Golfing George
Dear Golfing George,
UK or Thailand? It’s a lay down misere, surely!
However, let me look at what could be keeping her in the UK. With us women
folk, Petal, there are often hidden agendas that you men just do not realize
or even consider to be important. There may be more to it than ideas of
boredom. What about these for starters? Children? From your letter I presume
that retirement isn’t all that far off, so they should all be grown up.
Grandchildren? Perhaps. Her own parents? The security of having the house in
the UK versus the “uncertainty” of life and ownership of real estate in
Thailand? These are all issues that you should explore. As regards boredom,
ask any of the members of the various ladies clubs if they are bored. Run
off their feet more likely. I suggest that next time you come over on
holidays get your wife to contact them and see where that leads. You will
find the listings in the newspaper.
Dear Hillary,
I notice that most of the letters you get are from farang
males who are complaining about what has happened to them in the bar scene.
Surely they must see that there is a big difference between that side of
life in Thailand and the other side? Or are they really that short-sighted?
If they were only to look past the end of their noses they would appreciate
that there are some truly wonderful girls out there. I have been married to
my Thai wife for six years now and there has never been a bad moment in all
that time. She is beautiful, intelligent (a qualified book-keeper) and
caring. I do not have to change the locks on my doors or worry that my suits
or my anatomy will be slashed. She does not need gold ropes to hold her in
the marriage, or motorcycles, or houses. We have a partnership and mutual
trust. Why don’t some of these men look for the “good” girls?
Long-sighted Stewart
Dear Long-sighted Stewart,
There may be lots of reasons, and most of it is down to
the old supply and demand situation. It may be that the supply of “good”
girls is much less than the demand, so the single males gravitate to the
“good-time” girls, of which there is a more than adequate supply. By the
way, Stewart my Petal, bar scene farangs are generally not looking past the
end of their noses - it is some other part of the anatomy they can’t see
past. Look after your wonderful wife and buy her plenty of chocolates and
champagne (you can send the champagne to me if she doesn’t drink) and
continue to build on your mutual trust. Thank you for a most sensible
letter, and for showing some of the others a more sensible approach to life
in Thailand.
PC Blues - News and Views:
Merry Christmas from PC Blues
IBM PC sold to China
The IBM PC had its 21st birthday a few years ago. The
first IBM PC model came out in 1981, running the famous Micro$oft Disk
Operating System, DOS, and thus laying the foundation of the greatest
software company in the world.
IBM has now sold its PC division to a Chinese
company, Lenovo, for what seems the remarkably low price of 1.8 billion
USD. They even included the rights to the term ‘IBM PC’ for five
years. So next time you think you are buying a Chinese copy, just check:
it might be the real thing.
There is little profit to be made on PCs these days,
but the PC division still accounted for 9.2 billion USD turnover last
year. Some say that they could have got more money by selling to
Hewlett-Packard, or to NEC. However, IBM came away from the deal with
shares in what was already the largest PC manufacturer in China. Lenovo
moved its global headquarters to USA, so as to be close to IBM. This all
gives IBM a major entry to the future Chinese market, a very valuable
position.
They have also, almost incidentally, cut their ties
with Intel, the largest manufacturer of CPUs and other chips. Intel was
already struggling to stay ahead of the opposition (AMD, et al), and it
will now find its position precarious indeed.
An HP Chinese copy
HP has started selling a PC in China for 3999 Yuan
(483 USD). Interestingly, the operating system installed is FreeDOS -
not a Micro$oft product. (See www.freedos.org for this handy system)
Serious users will presumably upgrade to Linux. Window addicts might
install a Chinese copy of Windows XP (but see below).
Micro$oft generosity
It is Christmas time, the season of goodwill and all
that. I have searched hard for something nice to say about Micro$oft.
Micro$oft has always been concerned about the number
of pirate copies of its software. In an attempt to reduce this, it is
offering an amnesty to all owners of pirated Windows XP. If you are in
doubt of the provenance of your operating system, just let Micro$oft
know, and they will replace dodgy ones with real ones. But NOTE: this
offer is only good in the UK, and only for Christmas. They say they will
consider the response to their offer, and may extend the amnesty to
other countries.
This is good for people who want to use Micro$oft
products, and good for Micro$oft too. Micro$oft get to increase their
known customer base, and hence their target market for Longhorn. They
also recover some of the ground lost after the release of their last
service pack upgrade. That service pack was programmed with the codes of
the principal pirated copies - which it refused to upgrade.
Unfortunately, an number of innocent customers found their systems had
been build by unscrupulous manufacturers, who had pre-installed pirated
versions of Windows XP, and these customers found out when they tried to
install the service pack.
Happy Christmas for
Firefox
The number of downloads of (Mozilla) Firefox have now
passed 10,000,000. Their market share is now over 20%. In January this
year, the Internet Explorer (IE5 plus IE6) share was over 84%: it now
lies at 71.7%. Penn State ITS has stopped using IE, citing security
issues, in a move affecting 80,000 users.
By contrast, the Windows XP share is just under 60%,
and rising. Linux languishes at 3.1%. Other windows systems (Win98,
2000, NT) amount to 30%.
What do you want for
Christmas?
Sony have just started selling their PSP (PlayStation
Portable) - in fact they sold out in the first day (12 Dec). If you
don’t know what it looks like, Lik Sang have taken one apart, and you
can see the pictures at http://www.lik-sang.com/psp.html. There is also
a review there.
Or, if you have a lot of money, you might like a
solar powered submarine
(www.rpi.edu/web/Campus.News/features/120604-robots.html).
Psychological Perspectives: We’re a diverse group, they’re a different sort: Reflections on “us” and “them”
by Michael Catalanello,
Ph.D.
It is with mixed feelings that I return
this week for a holiday visit to the country of my birth, the United
States. The joyful feeling in anticipation of reuniting with family and
friends around sumptuous holiday feasts is mixed with the uncertainty of
confronting an environment riddled with social and political unrest.
As most are aware, there exist sharp divisions in the
U.S. at the moment, seemingly organized around differing positions on the
U.S. led war in Iraq, but spilling over into an array of other social
issues, such as gay and women’s rights, civil liberties, public health,
the environment, and security.
Open discussion and debate of such issues is an
important and necessary feature of a free and democratic society.
Nevertheless, much of the discourse one hears seems extremely emotional and
divisive, emitting more proverbial heat than light. One group accuses the
other of being unpatriotic or worse. Reflecting upon this state of affairs
got me thinking about what social psychologists tell us about the processes
involved in the categorization of people into groups, and the way that we
form attitudes and impressions toward members of such groups.
The social groups to which I refer spring from
categories like gender, race, nationality, political or religious
affiliation, sexual orientation, educational and occupational background.
We have many such groups: males, females, Asians, Africans, Jews, Gentiles,
Christians, evangelical Christians, atheists, agnostics, gays, straights,
lesbians, bisexuals, conservatives, neo-conservatives, liberals,
libertarians, Republicans, Democrats, Independents, blue collar, white
collar, doctors, lawyers, Indian chiefs, the “haves” and the
“have-nots.”
The categorization of people into such groups seems to
come quite naturally to us, and serves an important need of ours to
understand and make sense of our world. There are undeniably very real
differences between people. Furthermore, people do share important things
in common with certain other people. Our social groups often consist of
people with real commonalities, and the members of such groups can differ
markedly from non-members in certain respects.
In addition to real differences between group members
and nonmembers, there are invariably differences that exist only in the
mind of the perceiver. Thus, for example, if all I know about you is your
occupation, I might infer certain things about you that turn out to be
quite accurate. On the other hand, there are some things I might assume
about you that are, nevertheless, inaccurate. This is the process referred
to by social scientists as stereotyping: the act of associating a whole
group of people with certain traits.
Social scientists who have investigated this process
have suggested the notions of “ingroups” and “outgroups” as useful
in understanding how stereotypes work. “Ingroups” are the groups with
which you identify, such as your country, your religion and your political
party. Those with which you don’t identify are “outgroups.” Making
such distinctions, we then predictably display certain biases toward
members of ingroups and outgroups.
As might be expected, we display a strong bias in favor
of our ingroups. In addition, we exhibit a tendency to view members of
outgroups as being more similar to one another than members of ingroups,
the so-called outgroup homogeneity effect. Americans, for example, tend to
view people of Chinese, Japanese, Korean, Thai, and Vietnamese origin as
similar, while the members of those respective groups perceive sharp
distinctions between themselves and those representing other Asian ethnic
groups. Likewise, Thais use the category “farang” to categorize
non-Asian foreigners, although we Americans tend to view ourselves as quite
different from Australians, Africans and Europeans, and have no similar
category in our language. Further, we Americans typically perceive regional
and social groupings among ourselves, distinctions which may not be
perceived by foreigners.
It seems likely that this outgroup homogeneity effect helps to magnify
the perceived differences between the views of members of contemporary
political groups, and to obscure possibly broad areas of commonality and
agreement between groups. Perhaps by developing a greater awareness of such
biases in our perception of ourselves and others, we can better find common
ground which unites us as members of one group, the human family.
Dr. Catalanello is a licensed psychologist in his home
State of Louisiana, USA. He is a member of the Faculty of Liberal Arts at
Asian University, Chonburi. Address questions and comments to him at [email protected]
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