Family Money: UK Property: Risk Matters
By Leslie
Wright,
Managing director of Westminster Portfolio Services (Thailand) Ltd.
After a year of high market volatility, steep market
declines and high-flyers like Enron and WorldCom crashing to earth,
investors are finally starting to realise that risk matters.
During the halcyon days of the late 90’s, clients
would blithely say they could accept risk, without appreciating that
‘risk’ can equate to ‘loss’ in volatile market downturns. Just
look at the TMT sector - down more than 70% from the euphoric highs at the
beginning of 2000.
In the wake of such stormy market conditions, risk is
very much in investors’ minds nowadays. To serve today’s nervous
clients, financial advisers and portfolio managers must be able to
identify, measure, and incorporate risk into every aspect of the wealth
management process.
Many advisers are new to thinking rigorously about
risk, and the ethical ones dedicated to providing clients with ongoing
“best advice” - as opposed to those who are concerned only with how
much commission they will make today - are facing increasingly difficult
risk management questions when advising clients. What is “best
practice” in risk-aware financial planning? What kind of risk matters
most, and how does one measure it? How important is risk information in
designing a portfolio for a client?
Understanding your risk profile
The majority of my firm’s clients are retired or
about to retire. Their accumulated capital is all the money in the
kingdom: they can’t go out and earn some more. Hence prudence dictates
that this nest egg should be conservatively invested. But when asked:
“How much risk can you accept?” in the late 90s most investors
indicated they were medium-risk investors. This was because their
risk-aversion profile (‘RAP’) was driven not by emotions let alone
common sense, but by their need to provide sufficient money to maintain
their lifestyle. This was their primary - and in some cases only -
financial criterion. This meant producing an above-average income from
their capital, which in the heady days of the late 90s was perfectly
feasible.
But to produce their target income they were willing to
expose themselves to the higher risk that inherently accompanies a
long-term capital-growth portfolio - when really they should have been
limiting their risk to an income-producing portfolio, and adjusting their
lifestyle to what such a portfolio could realistically provide them. Now,
after the slides of the past 30 months, many of these investors’
risk-aversion profile will be quite different - although it shouldn’t be
because it’s a fundamental, like IQ.
Regardless of market conditions, an income-producing
portfolio will be inherently conservative, comprising mostly cash,
money-market funds and bonds, with perhaps some with-profits funds. Traded
endowment policies (TEP funds) can form a useful non-volatile portion of a
conservative portfolio. The portfolio is designed to conserve capital
while producing a modest income stream.
A growth portfolio is designed to do what is says:
produce capital growth. It will consist predominantly of equities, spread
judiciously, with some in narrowly focussed or specialist sectors, plus
perhaps some hedge funds, and some high-growth bonds. The objective is to
produce long-term capital growth, and ride out the inherent volatility
along the way, making strategic adjustments to the portfolio as market
conditions indicate.
Over the longer term, a growth portfolio has
historically outperformed an income portfolio by a wide margin. But in the
short term, or periods of negative equity growth such as we’ve
experienced in the past 30 months, a growth portfolio may well show a
negative return - at least on paper until you cash it in or the markets
recover.
However, our retirees want the best of both worlds:
above-average growth and the ability to draw down an income from it. Some
even misunderstand the concept entirely and talk about ‘interest’
earned from their capital-growth investment. You earn ‘interest’ only
from a bank deposit, not an investment portfolio, no matter how
conservatively stanced it might be.
Setting your risk goalposts
Some clients come to see me and start talking about
this, that or the other fund they’ve read about or heard about (or been
recommended by some other adviser), and want to use this that or the other
fund as the basis of their portfolio, which they then want me to monitor
and manage for them. Many financial advisers will say “Yes, sir” and
start writing up the paperwork. Away goes the client, happy that he’s
been taken care of according to his wishes. According to his wishes, yes -
but probably not according to his needs!
The fundamental question that every investor should ask
himself before making an investment decision is: why am I considering this
investment? Is it for, a) strategic longer-term capital accumulation or
conservation, or b) a short-term whimsical flutter, or c) because it
sounds interesting and has a nice brochure? If either b) or c), can I
afford to lose the money?
Before thinking about the components of a portfolio,
the risk profile of the portfolio has to be decided upon - and that
depends to a considerable degree on the risk-aversion profile of the
client, which has to be appraised objectively with the client, and
mutually agreed. How much risk can the client accept? How much risk should
the client accept, given his financial goals & investment criteria?
This is comparable to the doctor who will ask questions
about a patient’s health and medical history before making a
determination and writing out a prescription or recommending a course of
action - as distinct from a pharmacist who will be happy to sell you
whatever you ask for, with no responsibility attached for the results.
Would you rather have your financial health taken care of by a doctor or a
pharmacist?
Personal Directions: Seeing the bigger picture
By Christina Dodd,
founder and managing director of Incorp Trining Associates
How are your powers of observation? Poor, average, good or
very good, or do you even know? Could you describe what the last person you
saw was wearing? It makes you think, doesn’t it?
I did a rather impromptu exercise with a group of sales and
customer service managers recently who were participating in one of our
communications programs. We did an activity in which we invited several
outsiders to act as customers making complaints as well as wanting to make new
purchases. After the activity was over and I had reviewed each trainee’s
performance, I asked each one of them to describe several aspects about the
customers they had just spoken to and met. I asked them to recall each
customer and to then describe what they were wearing, their physical
appearance, and their mannerisms.
Well - they were all startled! The room was silent and
mouths fell wide open. They had all focused so intently on the customer and
handling the respective situation that they forgot to open their field of
vision slightly further to encompass the whole picture. Handling the customer
is “knowing the customer” and taking in everything that is possible about
them and then locking it in place in your mind. Yes - it takes application -
but it’s worth making it a habit and doing it for every customer because it
can only add value to your customer relations.
Effective communications which embrace how to listen, how
to think and how to speak are fundamental to successful interaction with any
customer, or business aside, with anyone in fact. Listening - the greatest
silent skill; thinking - forming a logical argument; and speaking - getting a
message across using the proper words and tone form the basics of
communication. But it’s also important to fine tune your abilities and
powers of observation to connect with the customer so that they become a
picture in your mind when you have to contact them in the future.
As I said, this is not only important in business but it is
something that is necessary in our daily lives. It doesn’t mean that you
have to stare at others to study what they are wearing or what peculiar marks
are on their faces, or whether their socks match or not. It means that you
should have a certain amount of regard for those people you meet and speak to,
and you should be looking at the larger picture instead of just concentrating
on one or two elements of the experience. It shows that you are alert and
focused and prepared.
Getting back to the group in the communications program,
each of them tried to recall what the customers were wearing and so forth, but
after some time, they realized that they were just grabbing at ideas and could
not accurately remember very much at all. They asked for a second chance at
the activity and so I said I would set it up later on. In the meantime, I
invited two of my colleagues to take the next sessions and afterwards, I asked
the group what my colleagues were wearing and could they describe their shoes.
(This was a real conversation stopper!) It caused huge amounts of laughter and
some objection because they were expecting a special activity in which to do
this and to have prior knowledge or warning. I asked them to really persevere
and to take time to go back over the last two hours and to recall the
information. Surprisingly they could, with a bit of thought, prodding of
memories and some collective discussion.
This exercise was a powerful one for all concerned in the
program. They left the 2-days with heightened awareness of what it is to
“know the customer” as opposed to just how to “handle the customer”.
They realized for themselves just how helpful it can be in forming
relationships and building upon them and how observations such as these can
give greater insights into the fundamentals of communications.
Of course if you are dealing with customers on the
telephone it’s a little difficult to observe them in the same way you would
if they were sitting in front of you. So this is where listening skills come
into play in a very big way. Listening is a vital skill and being able to
communicate effectively on a personal level or a professional level starts
with being a better listener.
The main thing to remember is that hearing does not equal
listening. Hearing is a physiological process that involves the reception of
vibrations by the delicate structures within our ears. Listening is a
psychological process that involves the interpretation of what we hear.
Hearing is passive - it takes no effort on our part, while listening is active
- it takes effort and a willingness to tune in.
So how do you start improving your listening skills? The
key is to actively focus on your listening behavior and to start eliminating
behaviors that lead to poor listening. These negative behaviors would include
things like:
* Mentally jumping to conclusions before the other person
has finished speaking (how many times a day do you do this?)
* Focusing on how the person communicates rather than what
is being communicated
* Starting to think of a response well before the other
person has finished a thought
Being aware of such behaviors, and actively trying to
eliminate them is a major step towards being a better listener and a better
communicator. This means being able to observe and to utilize feedback from
the person you are speaking to. Being a good listener also helps you to
develop your speech because it allows you to gain skills in analyzing messages
and retaining information. It is a continual process of communication
enhancement.
Needing to fine tune your communications skills? For more
details about how Incorp can assist you or your staff to develop these and
other business skills, please contact me directly by email at christina.dodd @
incorptraining.com or at Incorp Training Associates in Bangkok Tel: (0) 2652
1867-8 or Fax: (0) 2652 1870.
Until next week, have a great week!
The Doctor's Consultation by Dr. Iain Corness: Sex and the satisfied worker
Did you know there is an Asian Federation of Sexology? I
didn’t, till an article was pointed out to me coming from the Singapore
office of the international news agency, Reuters. Apparently founded by an
earnest gentleman called Emil Ng, himself a sex therapist, he addressed a sex
conference recently in Singapore. Participants at this conference were even
quoted as having said that they may have found a pleasurable way to boost the
dropping world economy. In spite of Reuters strict standards, I am quite sure
that was a misprint. It obviously should have read “drooping” economy,
surely!
According to our Emil Ng, healthy sex lives make for happy
workers who will in turn create a more robust economy. “Sexual health is not
just about absence of diseases or dysfunction ... it is about the ability to
enjoy sex,” he is reported to have said at the conference. “This will
improve the whole nation’s well-being and productivity,” he opined. If
this is the case, Thailand should have become a member of the G7 super-powers
by now. (Or would that make it G8?) Or perhaps that honour would just go to
Patpong Road Bangkok, with sub-committees at Nana Plaza, Walking Street
Pattaya and Kotchasarn Road Chiang Mai.
Oh if it were only that simple! To boost the economy there
would be government run Sexual Enjoyment Clinics (SEC’s), hopefully covered
by the 30 baht scheme and open 24 hours, staffed with sex therapists who would
make sure that you left with a smile on your face and a deeply rooted urge to
improve your productivity (as soon as you got back to work and had a little
lie down to get yourself in the mood again). However, unless I am highly
mistaken, these clinics are already in existence, but are called Massage
Parlours or similar. Mr. Ng would be pleased! Unfortunately, these are not
covered by the 30 baht scheme, this I am sure of!
Despite all the smiles and sniggers, I’m afraid I am a
disbeliever. I consider all this to be bunkum. I am sorry if I have been a
long time coming to the point, but just where do these people get their data?
I fully realise that Emil and his ilk are “professionals” in the field,
while I have managed to remain as a rank amateur, but let’s try and be a
little bit scientific about this. Firstly, have you noticed that you are more
productive at work after a night on the nest? Or do you spend more time
daydreaming?
Now I know that one’s personal experience represents a
scientific study of one, but if enough “one’s” out there band together
we can get some useful statistics. So I did a quick straw poll in the office
and came up with (sorry about that, no pun intended) five stating that it made
no difference and three saying it drooped (sorry, dropped) their productivity,
and yet all eight respondents claimed to have enjoyed the prior evenings
experience.
So where are we going wrong? Well, again according to Emil,
“When your economy is down, sexual activity will be lower, not because of
sexual problems, but financial problems. This is a vicious cycle.” Sorry
Emil, I reckon that when the economy is down, warm evenings at home remain the
cheapest and best form of “entertainment”. What do you think?
Agony Column
Dear Hilary (sic),
Every time I come to Thailand I titter too much.
Because platformed Thai ladies teeter and totter too much. Any remedies
for excessive tittering? What can I do? P.S. I am a Stamen, not a Petal!
Mistersingha (sic)
Dear Mister Singha,
Tittering is not a problem here in Thailand, as the
platformed ladies are not generally of the B cup runneth over variety,
other than those who remain a tittering tribute to the skill of their
cosmetic surgeons. PS I am a Hillary (double l), not a Hilary (single l),
Petal, sorry - Stamen. By the way, you do realise that a stamen is a dork
shaped object found in a flower, don’t you?
Dear Hillary,
I have no problems with women in this country. They
treat me well. I enjoy being with them. I have never been cheated. Nobody
has asked me for gold chains. My maid has not stolen from me. She comes to
work on time every day, just as I insisted. My girlfriend wakes up on time
and makes me breakfast. She has not asked me for the car keys and then run
off with the car. Her mother’s buffalo is very well. Her brother has not
fallen off his motorcycle. I cannot understand why all these people who
write in to you have so many problems with the local females. Since I
don’t, is there something wrong with me?
Happy
Dear Happy,
Hilary Is so glad that everything seems to be just
fine and dandy in your life. You certainly seem to have everything (and
all your women) under control. However, in answer to your question, yes
Hillary thinks there really is something wrong with you - or why are you
writing to Hillary? Is it to show the world just how smart you really are?
Or are you a control freak and need me to tell you that what you are doing
is OK? I distrust your motives, Happy. But don’t worry, your time will
come, my Petal! You cannot keep Thai women ‘under the thumb’ for ever!
You have been warned.
Dear Hillary,
I am getting married to my Thai princess and am fraught
with worry. The problem I have is the same as Hitler’s (I only have one)
when we discussed taking her back to the UK she expressed a desire for
kids. I don’t know if this is possible. I am also hearing more stories
of farang getting ripped off - I only send her ฃ100 per week and I
am worried she might ask for more. I have agreed to pay 200,000 baht for
her dowry and send her mother ฃ50 a week. Will my princess be
disappointed when she discovers I am firing blanks? Should I look for
another who does not want kids? My friend says they want a kid as security
a sort of extra hold on me is he lying?
Adolf
Dear Adolf,
Talk about crossing bridges before you come to them!
Hillary has it on good medical authority that only having “one” is no
bar to procreation. The other “one” is just for balance, it seems!
However, I do question your degree of total commitment to this union.
“Should you look for another” you write, in the same breath as
describing your fianc้e as “my Thai princess”. Reading between
the lines, I think your princess would be more disappointed if the money
tree were dropping blanks, rather than you. Forget about this marriage -
you are not ready for it. Neither is she. On second thoughts, since you
are so free with your money, what about marrying Hillary? I don’t need
children, but the money would come in handy!
Dear Hillary,
I must start by stressing the point that this is a true
story. After having a very enjoyable three month stay in Thailand earlier
on this year I returned back to England to start back at work. During my
time here I met a very nice Thai lady who was great company. We kept in
touch and she then asked me if I would lend her 2000 pounds to help her
out with a few business problems she was having. I duly did this and she
promised I would be repaid in full on my return in November. Within two
days of my return I was paid back down to the last penny. The point of
this letter is to give some positive news about financial arrangements
with Thai ladies. I have heard some very negative stories about the Thai/Farang
relationships, how about this one being talked about?
Greengrass
Dear Greengrass,
The point that should be understood here is not just
that a Thai lady repaid a debt, but that any person during a three month
stay could meet someone who was honest enough to do this, irrespective of
nationality. I doubt if I would be happy lending two thousand baht (let
alone two thousand pounds) to someone I did not know for a long time. I
believe you have been lucky, Greengrass, but I thank you for showing there
is good and bad in all societies. There are probably just as many
foreigners who have been ripped off by one of their own, than by Thai
ladies.
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Camera Class: Pictures of people - especially girls!
by Snapshot
In Thailand are some of the most beautiful women on the
planet. Of course I have not personally noticed this, but I have been told by
‘professional’ women watchers! And if you believe that you’ll believe
anything!
Women have been the most popular subject in “art”, be
that painting, scribbling on walls or photography. Did you know there have been
more books written about “How to Photograph Girls” than any other
photographic texts? In many countries they even run week-long courses on the
subject. However, stick with Harry Flashman and I’ll show you how to sparkle
up your ‘girly’ snaps in one five minute read! I have photographed countless
hundreds of ladies for calendars and portraits over the years so here’s some
simple concepts to make your portrait taking easier, and make the end results
very pleasing for both the subject and the shooter.
 The first rule with all amateur models is to get your subject
to relax. If your favourite lady is standing rigidly to attention, I can
guarantee that the end result will not be pleasing. When photographing Thai
people in particular, it is even more important to get them relaxed and happy,
as they do tend to “stand to attention” with arms held straight at their
sides, looking as if they are on army parade. One of the reasons why
professional models get paid so much is because they know how to stand in front
of the lens.
The pose to avoid at all costs is the subject straight on to
the camera. This is unfortunately the commonest pose - but it is the most
un-glamorous pose as far as women are concerned. Here’s what to do to get over
this problem. Start by sitting your lady in a chair, and then turn it 45 degrees
away from the straight ahead position. Now ask her to slowly turn her head and
look at the end of your camera’s lens. Look through your viewfinder - see? It
looks better already, doesn’t it! Now ask her to gently raise the shoulder
closest to the camera and smile. Guess what? You are starting to get a
“glamorous” image.
That basic pose can be modified by turning to the left as
well as to the right, shoulders up or down, open mouthed smile or shy grin. Each
shot will have a different look. Try to get the subject relaxed by talking to
them, cracking jokes or anything that will get them to relax. Even in the
workplace you can get good shots - see the photo of the nurse on duty this week.
Just don’t photograph the lady straight on!
For these sort of portraits you do need to make the
subject’s head fill the frame. Keep the top of the hair just inside the top
edge of the viewing area and the lower edge should keep the shoulders in the
frame. In other words, if you don’t have a telephoto lens, walk in close.
Now many of you would like to be able to produce that
“romantic glamour” portrait. The trick here is to use gentle, soft lighting
to avoid harsh and unflattering shadows. One super little trick to take shadows
away from under the chin, nose and eyes is to open out a newspaper and place it
in the sitter’s lap. The reflected light will gently lessen the dark shadows.
Stand back and look at the subject while an assistant takes the newspaper away
and see the difference.
Another trick used by the professional glamour photographers is to “back
light” the subject and then reflect light back into the face with gold foil
reflectors. The gold imparts a very “warm” and flattering colour to the skin
(especially with our Thai ladies). The reflector will also be picked up as small
highlights in the eyes, which gives sparkle and an “alive” feeling to the
portrait. Since the lighting is coming from behind the subject, you can even use
a “fill-in” flash to gently light the face as well.
Recipes from Rattana: Sambal Spicy Chicken
This is adapted from an Indonesian recipe using an ingredient
called Sambal ulek. This is in fact a chilli paste, made by pounding 20 red
chillies and 2 teaspoons of sea salt in a mortar and grinding until it makes a
paste. It can be stored in the refrigerator for 2-3 weeks, however, commercial
Thai chilli paste will be an adequate substitution. It is, as the name
suggests, a spicy dish. Pork may be used instead of chicken, but avoid cooking
too long or it becomes tough. This is best served as an appetizer.
Ingredients Serves 4
Chicken breast fillet skinless 300gm
Sesame oil 3tbspns
Chopped onion 3
Garlic chopped 2 cloves
Ground ginger root 1 tspn
Chilli paste 1 tspn
Lemon juice 3 tbspns
Fish sauce 1 tspn
Water 3 tbspns
Cooking Method
In the wok heat the oil and add the onion, stir-frying until the onion is
transparent. Cut the chicken breast fillets into bite size pieces. Add the
garlic to the onion in the wok and then the chicken pieces, quickly stirring
until the chicken changes colour. Do not overcook. Add all remaining
ingredients, stirring well for one minute and then allow to simmer over a low
heat for two minutes. Serve hot.
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