Family Money: Strategic Changes?
Managing director of Westminster Portfolio Services (Thailand) Ltd.
After a three-year slump in global equities and mixed
views for the future, investors have been re-assessing their portfolio
mix. The troubling question: what proportion should be allocated to the
various classes - equities, bonds, cash, property, and ‘alternative’
We have always known equities are volatile. In the good
times the lure of the upside dominates and the risks are all too easily
forgotten. It is only when high profile companies go bust and the indices
plunge, that the true significance of risk becomes apparent. And that’s
when panic sets in.
The higher the stock market rises, the greater the
downside risk. Three years ago technology funds were heavily promoted as
the bubble approached its peak, and for many, the short-term opportunities
totally outweighed the influence of rational investment analysis. Those
few of us who warned of impending disaster were laughed at, and ignored by
many - to their cost.
Now, however, investment institutions are trying to
develop products that will attract investors who have suffered the
volatile circumstances of the past few years. Old products, and some new
ones, are being wheeled out to tempt battered and bruised investors back
into the marketplace.
While returns on bank deposits have sunk to dismally
low levels, investors in long-term government bonds have been sitting
pretty. True, there are some deeply troubled countries, of which a prime
example is Argentina, where investors are foolish to rely on the
government’s creditworthiness. But in an environment of slowing economic
growth and declining inflation, quality government bonds, led by those
issued by the US Treasury, have thrived.
At the same time, though, some investors tempted into
corporate bonds by slightly higher yields have had their fingers burned as
credit risks have grown and once-glamorous, and apparently secure,
borrowers such as WorldCom and Enron have crashed.
The outlook now for government bonds no longer seems so
promising, as national treasuries around the globe are borrowing heavily
to support their lagging economies. In two years, for instance, the US
government has swung from a $200bn surplus to a $200bn deficit. Treasury
bonds that were in short supply may now become plentiful and, although
yields may rise for new investors, existing holders may suffer capital
True, there have been one or two defensive sectors,
including tobacco stocks and gold mines that have stood apart from the
general weakness. But we would have needed to be very smart and lucky to
have picked them out in advance. Now may be too late to jump on those
Real estate, in several countries, has performed well,
but we should be leery of residential apartments in the UK as attractive
buy-to-let propositions; the housing bubble has already reached
spectacular proportions. The current heavy promotion of properties bears
too much resemblance to how high-tech equity funds were being hyped three
years ago. I, for one, fully expect this bubble to burst quite soon.
Beware the hype
For many years balanced investment contracts such as
“with profits” and “guaranteed returns” from large insurance
companies relied on high returns on equities to top up the yields and
finance policy bonuses. But the slump in equities has hurt life insurers
badly, and many international companies are in trouble.
Some life companies are considering making more use of
the now huge markets in derivative contracts to top up yields. But in
hedging out known risks it is uncomfortably easy to encounter unknown new
Generally, hedge funds do not rely on forecasts of
overall market movements, and can perform well in falling markets. Some
have prospered. But in practice many do badly and quickly fold. Of most
interest are the various “absolute return” strategies. The aim is not
to beat a yo-yoing stock market in the short term but to deliver a steady
return each year without much fluctuation.
The current fad is for funds of hedge funds, which give
retail investors low level access to a range of underlying hedge funds
while diversifying risk. The basic rule is that diversification reduces
risks - but at the price of reducing returns. It is best to keep things
simple, as the more complex the investment contracts, the more expensive
they are likely to be, and hedge funds are the worst in this regard.
Retail investors are also being enticed with investment
products decorated with comforting words such as “guaranteed” and
“low risk”. Many of these sound simple in theory but aren’t in
practice. The charges are sometimes less than transparent and the fine
print bears close examination. The costs of going in may seem low, but the
costs of getting your money out before the end of the contract - which can
be up to 8 years - can be very heavy.
Tried & tested
Old-fashioned balanced investment strategies are coming
back too. The basic approach here is a mixture of bonds (for income and
low volatility), and equities (for capital growth) - the best of both
worlds, though it may also be seen as neither one thing nor the other.
Balanced investors would still have lost money in recent years (see
table), though less than equity punters. In the good stock market years,
balanced portfolios would have made far less money than straight equities.
The next step up is an active tactical switching
approach whereby every so often bonds, equities and deposits are
reappraised for value and risk, and the allocations rebalanced. But
history shows that it is fiendishly hard to get these decisions right:
even when good fundamental choices are made, bad timing can leave
performance horribly adrift for months or even years.
So we should view our portfolios as representing a balance between
safety and speculation. Somewhere out there are investment opportunities
which will pay off handsomely during the next few years. But even the
global investment industry does not know what or where they are, and few
of us have crystal balls.
Personal Directions: Head and Heart
By Christina Dodd,
founder and managing director of Asia Training Associates
The fact that we are endowed with intellect and the ability
to feel is proof enough that each has its rightful place in the scheme of our
lives. Favoring one or the other then, would suggest that we may be at a
disadvantage when it comes to making the right decisions.
During the week I was pleased to receive an e-mail from an
unknown reader of Personal Directions. This article – authored by John
and Melody Anderson - spoke volumes and impressed me with its simplistic
approach to a very real and acute problem that is – making the right
decisions. I thought I might share it with you as it touches on issues for all
of us as we make decisions in our daily lives, and as leaders make decisions
either in business or on the “world stage”, with consequences that we will
all have to live with.
The conflict between head and heart is well
known, for it is understood that as human beings, we are liable to favor one
or the other from time to time and become unduly influenced by the extreme
side of each. Head and heart though, are largely misunderstood and often a balance
of both will bring the most satisfactory results.
Heart is seen as the less favorable option if one is to be
influenced at all, for it is commonly thought that one makes more rational
decisions when operating under the influence of head. Allowing oneself to be
influenced by heart is regarded as foolhardy, for love is unreliable as a
motivator. In fact, nothing could be further from the truth.
Love, used as a guide for living one’s life, will lead to
100% success every time. Using one’s intellect may work some of the time,
but it is less reliable, less spontaneous, less flexible and much more clumsy,
with a less than perfect success rate.
Using intellect alone to solve problems or to handle
situations has many disadvantages. Probably one of the more obvious ones is
that in using intellect or head, the individual has to rely on past
experiences to guide them in new situations. This can have serious pitfalls,
particularly in situations where things may seem the same, but may in fact, be
different. Heart is the only reliable solution here because head cannot
anticipate subtle differences very efficiently, especially at these times when
things seem to be the same. However, with the use of heart an individual can
feel what is right and is not shaken by how things appear to be. As long as
they are prepared to trust to the feelings, success is assured.
The problems begin when head interferes with heart and
tries to take over the problem solving. This is very easy to do, because very
often, feelings cannot be explained or logically justified and the need to
explain can be very strong within us. It can often seem easier to go along the
road that has a suitable justification or reasoning, than to follow the
nebulous road of feeling and to not even know why you are on that road. Yet
once again, feeling is the only way to circumvent the confusion that intellect
can produce. There is one snag, however, and it is the snag that beats most
individuals every time. Trust. Without it, the information the heart offers is
almost useless. For it can easily be rejected out of hand, through the
interference of reasoning and other mechanisms of the intellect and many a
time the individual can let opportunity slip by.
Another more insidious snag is the confusion that can exist
between feeling rightness and allowing that to motivate us and the feelings
of revulsion and threat etc., that can result from a threat to one’s
identity. We might think at times that our feelings of revulsion are really
instinctual feelings that are telling us not to do something. In one sense
they are telling us not to do something, but for ‘impure’ reasons. This
can only adversely affect the individual if they allow the intellect free
reign to perpetuate the process. For the head performs a critical function in
this scenario. The feeling of revulsion may be there, but it is never felt in
isolation. There are always negative thoughts, justifications, reasons and
other variations present in the process, that ensure that we do not do
whatever it might be. A genuine feeling is never felt as a ‘don’t
do’, a ‘don’t want to’ or anything proceeded by a ‘don’t’.
A genuine feeling is always suggestive of affirmative action and is
therefore easy to distinguish. If there are reasons to justify not doing, this
impression is not a product of heart, but of head in tandem with identity.
And this is an important distinction. Head by itself is not
inherently destructive or defensive. When paired with a vested interest, a
hidden motive, a need for identity, however, it takes on a negative quality
all of its own. There is obviously a natural and right function for the
intellect, otherwise we might assume, we would not have it. And that right
function is to work together with the heart, free from identity in order to
help us prosper in life. We must use the head to create and investigate
options, communicate concepts and to generally enhance the functioning of the
We cannot rely solely on the heart as such, because
practicality requires that we use our intelligence to survive in life. We
cannot rely solely on the head, for we would be devoid of desire, passion and
the other emotional experiences that make life what it is. Put the two
together, with a desire for rightness and use them wisely and we have access
to a very powerful combination, with the potential to take us anywhere
we wish to go in life, with precision and with passion.
If you wish to talk further on matters of personal and self
development, or on matters that concern your business, the effectiveness and
needs of your staff, then please contact me at Asia Training Associates
– email: christina. [email protected]
For details on our programs and our company, please visit
our website: www.asiatrainin gassociates.com
The Doctor's Consultation by Dr. Iain Corness: Break Bone Fever
by Dr. Iain Corness
This ailment is particularly prevalent at this time, even
though we normally expect it at the start of the wet season. Why have you
never heard of this disease? That’s very simple - these days it is known as
Dengue Fever. Since there has been a Thailand-wide epidemic, I felt I should
write on this topic again, as it is potentially lethal.
This ailment was first described in 1780, when the name
Break Bone Fever was applied, following the principal symptoms of pain and
rise in temperature. The name “Dengue” did not come till 1828 during an
epidemic in Cuba. The new name was a Spanish attempt at a Swahili phrase “ki
denga pepo” which describes a sudden cramping seizure caused by an evil
spirit! So there you are! Amaze your friends with your new found knowledge!
However, let me assure you that the local brand of Dengue
Fever owes nothing to spirits, evil, bottled or otherwise. Dengue is caused by
a virus, passed on by a mosquito bite, from the female of the species Aedes
aegypti. This little blighter is most active at sun up and sun down and breeds
in standing water around your home, as it only flies 100 metres from the
There are actually four distinct Dengue virus serotypes,
and although being infected by one of the serotypes gives you an immunity to
that particular one, it does not give you immunity to the other three. This
being the case, it is theoretically possible to catch Dengue four times. And
that’s four times more than you want!
Dengue also comes in two distinct clinical types -
Classical Dengue and Dengue Haemorrhagic Fever (DHF). Taking the Classical
variety - 3 to 14 days after being bitten, the sufferer (and you do suffer,
let me tell you) will begin to experience fever and muscle and bone aches.
Over the next few days this gets worse so that even the skin is painful to
touch. The next stage is a skin rash and even a joint pain like arthritis in
some cases. It is interesting to note that Dengue Fever is the cause of
between 20-30% of all fevers in our national capital Bangkok. Being a virus,
the treatment is just to alleviate the symptoms, and paracetamol works well in
reducing fever and pain. However, despite no specific treatment, the outcome
is generally fine, although the sufferer may be very weak for a while after
On the other hand, Dengue Haemorrhagic Fever can be fatal -
so keep reading! It appears that Serotype 2 may be the culprit here, but for
some strange reason, Serotype 2 does not usually produce DHF unless you have
been previously bitten by types 1, 3 or 4. In addition to the symptoms of
Classical Dengue the skin begins to bruise very easily as the blood
haemorrhages into the skin. Children are also more susceptible to this than
adults. This also becomes much more of an emergency and is best treated in the
Intensive Care Unit (ICU).
With no specific drug to combat the DHF virus, the answer
in avoiding this ailment is to plan your defence against Aedes aegypti. This
is done by removing sources of standing water from around your home, flyscreen
windows that are left open and wear clothing which covers the arms and legs,
in conjunction with the application of anti-mosquito compound DEET. You have
been warned - I can do no more.
Our fifteen year old daughter seems to need money every
day, in fact so much so that my husband describes her as a machine that
runs on cash. The hand goes out when she is ready for school and usually
just as the school minibus arrives to pick her up. We do give her a weekly
allowance of 100 baht which is supposed to cover her whims and fancies,
but I think it is a bit low, but my husband does not agree. She has to do
her jobs around the house to get the allowance too. What do you think,
Hillary? Should we increase her allowance, and how do I stop the begging
hand at the door in the mornings?
Dear Worried Mum,
I am glad you have seen there is a problem here, and
the hand out at the front door is just the result, not the problem itself.
Honestly, how much does your husband spend on himself every day? Much more
than 100 baht, I am sure. Your daughter needs to be shown how to budget
and save, but her allowance does not give her enough to spend, let alone
saving any. You must know some of the other mums at school, ask them how
much their 15 year olds are getting. 100 baht a day would be much closer
to the mark I would feel, though Hillary is out of touch these days, but
you should sit down with your daughter and discuss her needs and divide
them up into items covered by the family budget (soap and toothpaste for
example) and those to be covered by her allowance (luxuries). Once she has
a budget to manage, she will not have to resort to subterfuge to get extra
money as the bus arrives. Get your “tight” husband involved in all
this too, and if he says he can live on 100 baht a day divorce him for
bare faced lying!
I live overseas and my father lives in Thailand. He
separated from my mother four years ago after many years of marriage and
Mum seems to be handling the situation OK. My problem is that I am due to
come out to Thailand this year for holidays (I come every second year) and
I do not really want to have anything to do with Dad’s new girlfriend. I
just don’t know how I can accept her and not feel that I am turning my
back on my very loving mother. What do you think I should do? I want to
see Dad, but not his woman.
Dear Daffy Daughter,
You have not yet come to terms with the situation
between your parents, have you my Petal? You have to accept that your
parents live separate lives and that it is perfectly OK for you to love
both of them as individuals. In fact it would be abnormal for you to be
otherwise. You want your mother to be happy and you should want your
father to be happy too. If that happiness involves his being with another
woman, then you must accept that too. If you cannot, then come next year,
not this. You never know, Dad could have a string of girlfriends by then!
Repair me to Dorking after yet another lovely vacation
in Pattaya. I discovered a buttercup and became her Stamen (margecups are
not my bag - oilseed rape too much). Only one small problem, her Thai
nickname was Nit. I could not possibly say “Hi Nit, love you Nit, no
forget you Nit” and so, Hillary, I decided to call her Hilary (sic)!
After Sir Edmund, the famous Himalayan teeter and totter merchant. Good
Whatever turns you on, I suppose. But Dorking?
Isn’t that where the Dorks come from? And just by the by, my Petal, Sir
Edmund’s surname has two “L’s”. He is like me, Hillary. Only
difference is I don’t climb mountains!
It is so nice to be back here in Thailand. The weather
is fabulous, the ladies are too. My only worry is just how do you make
sure you don’t get ripped off? I read so many letters from chaps who
have been fleeced, that it cannot just be a coincidence that this happens.
Is there some way to tell, early in the relationship? I intend staying
three months this time.
Dear Canny Scot,
You men amaze me! You are coming out here for three
months and want to know how to make sure you don’t get ripped off!
Surely that is quite obvious. Don’t give anyone anything and you will go
back to Bonnie Scotland with your sporran as tightly locked as it was when
you got off the plane in Thailand. However, if you want to have an
enjoyable holiday out here, just take the normal precautions if you are
going to invite anyone into your hotel room, don’t go leaving vast sums
of money around the place and secure your credit cards. It really is
common sense. A little rule of thumb - if you give a lady money to buy an
item and you don’t get the change, then change the lady!
Camera Class: Uneconomic repairs and Photographic Phun
The other week a keen amateur photographer wrote in with a
problem. “I have an old, 25 years I think, Pentax K2 which I need to have
overhauled as the shutter speed indicator moves sluggishly, I believe the
lubrication has dried up. I have tried firing the shutter at different speeds
for a long while but the problem is still apparent.”
This photographer has really done as much as he could under
these circumstances and it is time for a trip to the camera doctor. However,
what should also be looked at here is the economics of persevering with this
camera - after all, it is 25 years old at least. For example, would you bother
with a 25 year old car, or think about trading it in at that age, for a newer
(and better) one? My feeling in this case, is that if the repair quotation is
more than 1,000 baht it isn’t worth it. The old K-mount Pentax’s were good
cameras, but the technology and optics have been improved greatly since then.
Being a great believer in “good” second hand equipment
(see previous columns on how to buy a second hand camera) I would be going down
that route, rather than the repair one. With 25 year old cameras, that have had
a long history, there are other parts ready to wear out, as well as just the
shutter mechanism. A newer Pentax would have fewer problems, and give the owner
more fun in trying out its capabilities.
I think it is important to remember that “fun” is the
important ingredient in photography. If it isn’t fun - then don’t do it -
and that just about goes for everything in life! (Sorry to be so philosophic, so
early in the new year, too.)
One way to really have fun with your camera is seeing what it
really is capable of. And after seeing what it can do, being able to reproduce
the effect. This is why I keep stressing the Manual Mode in the camera, and
keeping a notebook. If you glue your SLR in the Automatic Mode, then you will
only get shots that are “average” in exposure - shutter speeds and apertures
worked out by the camera’s electronic brain, rather than yours. Stick it on
manual and experiment. That shutter speed that the electronic brain says is
incorrect, might just give you a wonderful emotive blurry shot that is an award
winner! Or if nothing else, worth blowing up and framing and hanging on the
wall! And by using your notebook, you will know just how you did it, and can do
it again, and again and again.
The annotations in the notebook should be simple jottings
like, Back-lit, Frame 1, f5.6 @ 1/30th; Frame 2, f5.6 @ 1/60th; Frame 3, f5.6 @
1/125th. When you go through the finished prints you will be able to see the
results of 2 complete stops of exposure difference. Sometime I will also jot
down the exposure indicated by the (inbuilt) exposure meter. Until you are
completely familiar with your camera, the little notebook will stand you in good
stead, for years if necessary.
You should never stop experimenting either. Some days you will amaze yourself
at what you can get away with! I mean photographically! For example, I tend to
take a large number of photographs at night, generally indoors but in low light
conditions. I set the flash on f5.6 and generally set the shutter speed on
1/30th, but to bring the background up a little more I will set the shutter
speed to 1/15th. This is in ‘camera shake’ territory, but the majority are
fine. Now I have found that I can fire off a couple of frames, right down to 1/4
second and still get away with it. OK, I will lean on a wall, or hold the camera
firmly against the wall, but the end results are looking good. In theory it
won’t work, but it does for at least 75% of the time. Try it yourself and see
Recipes from Rattana: Chicken soup with pumpkin
This is a traditional Vietnamese dish and entails the cook
boiling up 500 gm of chicken bones with chopped spring onions, skimming the
surface of the stock and then simmering for two hours and straining the
resultant stock through wet muslin. Or, you can just go and make up some
chicken stock from the dried stock cubes and boil it up with the spring onions.
I promise not to tell! This does make a hearty soup and an enjoyable change.
Ingredients serves 4
Chicken stock 1.25 litres
Spring onions, chopped 6
Pumpkin 500 gm
Fish sauce 1 tbspn
Salt and ground pepper to taste
Make up the chicken stock and add the chopped spring onion and bring to the
boil (or you can go boil up the chicken bones if you want to be really
authentic and you have two hours to spare). Remove the skin from the pumpkin
and cut into 1.75 cm cubes. Stir the pumpkin into the soup stock and add the
ground pepper and the fish sauce. Now reduce the heat and simmer for 3-5
minutes and serve, adding a little salt to taste if required. The pumpkin flesh
should be firm, but not hard. Serve in warmed bowls.