Family Money: Sitting in Judgment - (Part
Managing director of Westminster Portfolio Services (Thailand) Ltd.
Last week we started looking at how most of us judge
funds based on past performance, generally against an index. We saw that
this can be misleading, and statistically, out-performance one year rarely
forecasts out-performance the next year.
In fact, to repeat my closing line of last week’s
article, research has demonstrated time and again that a fund’s past
performance bears almost no relation to future performance.
There are good reasons why this happens. One problem
for fund managers is that active stock picking is such a bad science.
Economists have shown that most of the movement of a share is due to the
overall performance of the asset class it belongs to. A manager can be
very smart at rooting out promising shares - but if the sector to which
the shares belong moves, so will the shares. Similarly, share earnings are
also strongly correlated to the performance of the sector.
Another factor is the “efficient market hypothesis”
which premises that in an active market that includes many well-informed
and intelligent investors, stock prices will reflect all available
information. If a market is efficient, no information or analysis can be
expected to result in out-performance of an appropriate benchmark.
The implications of the efficient market hypothesis are
profound. Most individuals who buy and sell shares assume the securities
they are buying are worth more than the price they are paying, and that
the securities they are selling are worth less than the selling price. But
if markets are efficient and current prices fully reflect all information,
then buying and selling securities to try and outperform the market will
effectively be a game of chance rather than skill.
Given that some funds do outperform, the implication is
that these outperform largely from luck rather than skill. Therefore
picking these funds is also largely due to luck, despite greater research
into rating funds.
Balancing your portfolio
One fund management expert counters that a proper
benchmark allows you to gauge market volatility. “The risk profiles for
all sorts of market sectors, from industrial goods to staples like energy
and basic commodities, are fairly predictable,” he explains. “They
also vary predictably against each other. Although returns from individual
sector funds will be hard to predict using a benchmark’s historical
performance, there is valuable information to be gleaned from the way the
overall sector moves. This is important in constructing a balanced
portfolio,” he says.
Another expert says that benchmarks are a “headline
indication” of what sort of investment fund you are getting into. When
building a portfolio it is useful to know that your fund is closely
following a particular index. This will allow you to have an idea of what
the ‘investable universe’ is like, and delineates the size of the
pond. A fund manager will use that information as a reason to dip in and
out of the pool in the hope of getting access to that particular risk
profile; investors can look to benchmarks to do the same.
Another reason to follow benchmarks is that if you know
that your fund or portfolio manager is pegged to a benchmark, you can be
fairly sure that you’re not going to get any major nasty surprises. But
within that straightjacket, intelligent managers have the possibility to
choose the right equities and potentially make a bit of extra return.
Indeed, some active managers, while generally acknowledging the
“efficient market” argument, say that certain corners of the stock
market allow clever managers to pick up extra return - and to beat the
Small-cap stocks are often seen in this category, as
well as more underdeveloped sectors such as emerging markets, where
greater “information” opportunities exist. The large-cap markets have
been analysed to death, goes the theory. Just look at the international
business news on TV! Small-cap stocks contain un-mined bits of information
that a shrewd manager can be the first to discover, and therefore exploit.
Are benchmarks irrelevant?
How best, then, to judge the performance of our
investments? In the long run, the average performance of developed world
stock markets has been just over 8% per year, bull and bear markets
combined. But over the last three years of stock market falls, both cash
and bonds have handsomely outperformed most equities and equity funds. In
this environment, whether your fund is benchmarked to the S&P500 or
another index has been irrelevant: it has simply not been a good time to
be in equities. Most of us have had our fingers burned, or at least
Until this extended stock market slide, many
bog-standard investment funds were returning 20% per year. In 1999, for
instance, the average US investment fund returned a little over 27%. The
average technology fund returned 135%. Investors were complaining to their
portfolio managers that they were “only” earning 40% on some funds.
Yet this is a fallacy of believing that stock market bubbles translate
into trend-busting performance over time. They do not.
Importantly, it is up to individuals to benchmark their
investments, not their fund managers. The current global slump should make
investors rethink just exactly what is the most suitable benchmark for
their investments, not the ones used by the professional fund managers who
will continue to flatter investments in the best light possible.
Instead of falling for this or that transitory fund
performance, which is rarely replicated in the long term, investors should
concentrate on building a balanced and diversified portfolio through
investments that offer low risk levels of return.
Your investment goals should focus on what you need to
provide for. This means investing strategically for the long run, not
whimsically or speculatively for the short term. Work out when you want to
retire, and how much capital you will need to provide for it
realistically, or when you need to pay school fees, and create a balanced
portfolio accordingly. That is the only sound reason to look at
Personal Directions: The day that you had
By Christina Dodd,
founder and managing director of Asia Training Associates
I would like to share some thoughts and words with you this
week concerning the way we live our lives every day and how we regard “the
day” that indeed allows us to live our lives. Without this precious time,
what would we do, what would we have ... what would we be? I wrote this
article that you are about to read last year and it touched quite a few
readers who confessed that it was a bit of a “wake-up call” and, for some
of them, one that was well overdue. Sometimes we don’t consider the very
special things around us, the very special people and the very special day we
“get through” every twenty-four hours. Time has been given to us for
certain reasons and it is entirely up to us as to how we best use it and gain
benefit from it. But like many special things in our lives we only appreciate
them when they are no longer there.
The Day That You Had...
“I was reading some motivational literature recently and
came across a passage that is very thought provoking and I think very touching
as well. It’s meant to be read or considered at the end of the day when we
finally have a few quiet moments to ourselves (probably the only few quiet
moments for most of us). It goes like this:
Have you made someone happy or made someone sad?
What have you done with the day that you had?
God gave it to you to do just as you would.
Did you do what was wicked or do what was good?
Did you hand out a smile or just give them a frown?
Did you lift someone up or push someone down?
Did you lighten some load or some progress impede?
Did you look for a rose or just gather weed?
What did you do with your beautiful day?
God gave it to you.
Did you throw it away?
Upon reading this I really wish I had a rewind or erase
button, don’t you! This rather powerful verse makes us think about every
single element of our day; how we behaved, what we said to someone, how we
looked at people, what we did and didn’t accomplish and so on. Whoops - it
gets a bit ugly doesn’t it!
It leads us to thinking: maybe we should have been nicer to
the young sales boy behind the counter; maybe we should have shown a lot more
interest in our son’s homework; perhaps we should have held the door open
longer to let the little old “lueng” coming behind us through, instead of
allowing it to slam in his face (we are all guilty of this universal behavior
and don’t say “no-one holds the door open for me!”). Perhaps, when it
all comes down to it, we should have put more effort into filling our day with
actions and deeds of value and meaning.
It leaves me also wondering then, would the better time to
read this verse be at the beginning of each day, rather than at the end? That
way you could be one step ahead couldn’t you! Do you think it would work?
The way we reflect on “the day that we had” is quite
interesting. Some of us I’m sure lie in bed with the lights out in our very
own private space and time and think about what went on during the day - do a
general overview. Some of us begin to think in earnest about what has to be
done tomorrow. That’s a good thing to do as it prepares us and enables us to
put activities into perspective. And some of us become locked into our prayers
and more often than not, within our prayers, submit a shopping list to the
fellow up above - with due dates to boot! What I am intrigued by and would
like to know is, how many of us at the end of the day say, “Gee God, thanks
for a great day” - and leave it at that!
It would probably be truthful to say that very few of us
end “the day that we had” with these particular words and thoughts.
Let’s be honest about it. I remember sitting and having quite a lively and
animated discussion with friends a few years ago about this very subject.
I’m not exactly sure how we actually got onto it, but we all had to admit
that before we went to sleep at night and when we were in prayer or thought,
we always seemed to be asking for something: asking for a task to be easy ...
asking for a problem to go away ... asking for something good to happen ...
asking to win the lottery! The list of requests is endless. I must admit that
we all felt pretty terrible about it. The number of thankful thoughts and
words at the end of our day were few and far between. Asking won hands-down.
We really do have to keep working at improving ourselves
don’t we! It’s tough being a good human being. We take so many things for
granted and one of them is time. We certainly take for granted the time we
have here to share with families and friends and to do something meaningful
with our lives. Perhaps it’s because we do not truly understand the value of
time and how precious it is until it is taken away from us - and then we go
into shock. Have you been there? I know I have.”
For more information on “personal and professional”
growth and development please contact me by email at christina.dodd @atasiam.com
and visit Asia Training Associates at www.asiatrainingassocia tes.com
We can cater to your specific needs and requirements and
tailor programs accordingly to ensure that objectives are met in full and that
our training brings the desired results.
Until next time, have a wonderful day!
The Doctor's Consultation by Dr. Iain
Corness: Will watching footy on the telly kill you?
by Dr. Iain Corness
Well, guess what! It can! That is according to a UK study
reported in the British Medical Journal, a medical paper not prone to
sensationalism like the UK tabloids these days.
Learned professors from the universities of Birmingham and
Bristol looked at hospital admissions for a range of conditions on the days
surrounding England’s 1998 World Cup football matches. Now if you are not a
footy fan, let me explain. This was when England was eliminated from the 1998
World Cup by Argentina in a penalty shoot-out. There was national pride riding
on that match to an enormous degree.
The multi-centre analysis looked at the number of
admissions for acute myocardial infarction (heart attacks), stroke, deliberate
self harm, and road traffic injuries on the fateful day and for the five days
after England’s World Cup matches, compared with admissions at the same time
in the previous, and following, years and in the month before the tournament.
The results are interesting. The risk of admission for
heart attacks increased by 25% on 30 June 1998 (the day England lost in the
penalty shoot-out) and the following two days. No excess admissions occurred
for the other conditions or on the days of the other England matches. No one
threw themselves over the cliff or jumped off the roof. They just clutched
their chest in pain instead. Individual analyses of the day in question and
the two days after the Argentina match showed 55 extra admissions for
myocardial infarctions compared with the number expected. These are figures
that you cannot put down to mere chance.
Now just in case you think this is some strange British
effect, an increase in cardiovascular deaths among Dutch men was associated
with the 1996 European championship match between the Netherlands and France,
with the Dutch on the losing end. So is it a football thing? The answer is one
of those brilliant medical Yes and No answers.
The scientific conclusion was that heart attacks can be
triggered by emotional upset, such as watching your football team lose an
important match; however, I must add that it had already been noted that
physical and emotional triggers, such as environmental disasters and vigorous
physical exercise, can bring on an acute heart attack.
Now let’s look a little closer to home - how about all
the “broken hearts” one hears about? Well, if you were to carry out this
study on heart attacks after marital break-ups, I think you would find the
same results. The condition did not get the common name of a “broken
heart” if there were not some physical basis to it.
So what can you do to avoid your heart attack? I do not
believe that banning telecasts of Man U or Real Madrid is a practical answer,
nor is joining a monastery so you don’t get involved with the opposite sex.
The answer is to make sure your heart is in good enough shape to withstand all
the stresses that another fumble by goalie Seaman could put upon it.
That requires your knowing your cardiac risk factors as
Cholesterol, Blood Pressure, Blood Sugar and whether you are obese. And how do
you find that out? By attending your cardiac physician and arranging to have
the tests done.
Do it before the footy match this next weekend - or before
your girlfriend takes off with the football player next door!
Dear Hellary (sic),
I have a new maid from up-country working in my house.
She is 16 and quite cute and knows nothing about life in the big city,
i.e. unspoilt by the night time scene. Her family are relatively poor. If
I wish to ‘adopt’ her, what should I pay her family? Is this legal? A
box of chocolates for your answers.
Dear Sure Thing,
First off, I may have been a hell-raiser in my
youth, but I sure as hell like people to spell my name correctly, if they
want me to be serious in my replies. It is Hillary not Hellary, OK, my
Petal? Now about your maid being 16 and “quite cute” - I am sure that
even you at that age were “quite cute” too, even though that seems to
have well worn off by this stage in your life. As far as taking this young
girl into your care, I would sincerely hope that you do not offer
financial inducements to an already impoverished family. Legal or
otherwise, poor or otherwise, they deserve to keep their daughter
“unspoilt by the night time scene” to use your words - especially
night times with old lechers like you. You may take the chocolates and pop
them you know where, Poppet!
I have read your chronicles for years, and had lots of
good laughs. Please continue the good work. So that my fellow Farangs in
trouble with Thai ladies do not lose all hopes, here is my true story. As
a young, unmarried, well paid executive in Bangkok during the fifties and
sixties, I have been victim of an uncountable number of Thai women,
including one adept of black magic who half-destroyed me. Farangs my
friends, beware, the less you believe in this sort of things (magics), the
more vulnerable you are, until I had what can be called a spiritual
experience, and my life changed completely.
Through friends, I met a freshly graduated nurse who,
having applied for a job at a US hospital, wanted to polish her English.
We were married two years later, and soon we had a baby boy. I wanted this
boy to have the same sort of education in Europe as I had, so I resigned
my comfortable, well paid job and we moved to Europe with the baby and the
cat, both taking turns to cry in the plane.
We stayed 36 years in Europe, had another four children
who are all university graduates by now. One hot August day I fell
unconscious and collapsed, and was taken to hospital, where I remained in
coma during three weeks. Showing her nurse diploma, my wife was authorized
to enter the intensive care unit. Day and night, hardly taking time for
eating and sleeping, she sat at my bedside, praying.
When I finally woke up from my coma, the head-nurse
told us that she had never seen so much love and devotion. Farang my
friend, good luck.
You have been lucky in more than one way, haven’t
you my Petal. What can I say, other than to wish you all the best for the
next 36 years here. It seems your family has been lucky too, but I am a
trifle worried that the cat was not mentioned a second time. Was the plane
trip too much?
We read all about the poor English and American
tourists (male) who find themselves heartbroken over another fruitless
romance with the local Thai ladies. Apart from the fact that none of them
seem to learn anything, but that’s a common problem with men anyway,
what about the life for us women in this country? There are many
professional women who are here on secondment, as well as those women who
come here to have a holiday. We have our needs too, Hillary. Are there any
places or people for us? Why do you not get any letters from women,
Hillary? Perhaps it is because we women have a better idea on what can be
achieved in this world, have our feet more firmly planted on the ground,
and when we do have a problem, learn to fix it ourselves? Hillary, you
have to agree, or admit you are one of “them”.
Admit I am one of “them”? Them what’s Petal?
Actually you astound me, Libby. Males have always been the ones who are
supposed to internalise their problems and we women are told to tell the
men that it’s alright to cry and let their feminine side come out a
little. Now here comes liberated Libby saying that women shouldn’t ask
advice or admit to problems of the heart, and if we do, we should
internalise it and fix it ourselves. The whole world really is upside
down! Sorry, Libby, I don’t agree with you at all. I think it is good
for men to have a shoulder to cry on. As for you, I can see you have a
perfectly balanced life - you have a chip on both shoulders.
Camera Class: Colour your world - and get great wall art!
Wall art is something any photographer can achieve, without
any special equipment or even special training (other than reading this article,
I suppose). The secret is in thinking colour, taking your time to compose and
then sitting back and letting your local photo-shop do the rest. Here’s how.
Take a look at the photographs with this week, and you will
soon see that these could have easily been taken by you. No tricky exposure
details either. Whilst I usually run my camera in ‘Manual’ mode, for this
exercise I let my 15-year-old Nikon do the work instead, sticking it on Auto
mode, just to see what would come out. If you can view this page in colour, you
will see that it worked fine. (Go to the web version of the paper and it’s in
These pictures were all taken on a trip to the flower market
in Chiang Mai, but any flower market anywhere would give the same opportunities.
What you are looking for is colour and the stall holders do that bit of work for
you too, by displaying large bunches of the same blooms. I do not profess to
know much about botanical species, but colour I can recognise!
Since you are again looking at ending up with these
photographs on the wall, try as much as possible to fill the frame with the
blooms. This means that you really must move in close. However, make sure that
you are not too close for the camera to be able to focus. With compact point and
shooters you may have to do some rough estimations of how close you really are.
With SLR’s you can directly see if you are in focus. While concentrating on
the blooms, do not forget to get a couple of atmospheric shots of people and
their purchases as well.
Having got your prints back from the photo-processors, select
the best ones and return to your friendly photo shop girls, with whom you will
be on first name terms by now, and get some enlargements done. 10 x 8 or 11 x 14
prints are not expensive, then get them mounted in simple thin frames and hung
on your wall. You have just produced “art” at a cost so reasonable, you may
as well make doubles and send them off as presents at Xmas.
Recapping - look for colour, move in close, select your enlargements and
don’t let the frame overpower the photograph!
Recipes from Rattana: Hor Mok Talay (Steamed seafood curry)
This is a very typical Thai dish and is generally on the menu
of all seafood restaurants. All the ingredients are available at the local
markets, though if you are not too fluent in the Thai language, take a native
Thai speaker with you. Although the recipe calls for sea perch, any white fish
Ingredients Serves 4
Prawns de-shelled, deveined 100 gm
Squid bite-sized pieces 100 gm
Crabmeat 100 gm
Sea perch sliced fillet 100 gm
Kaffir lime leaf finely sliced 1 tbspn
Coconut cream 3 cups
Fish sauce 2 tspns
Sweet basil leaves 2 cups
Shredded cabbage 3 cups
Red chilli thinly sliced 2 tbspn
Hor-mok chilli 2 tbspn
Pound the Hor-mok chilli into a paste and add 2 1/2 cups of
the coconut cream in a bowl and stir well. Add the prawns, squid, crabmeat, and
sea perch and stir gently to mix well, adding fish sauce to taste. Make a bed
of sweet basil leaves and shredded cabbage in the bottom of a large bowl and
spoon the seafood mixture onto this. Pour the remaining 1/2 cup of coconut
cream on top and sprinkle with chilli and kaffir lime leaf.
Place the bowl in a steamer in which the water is boiling and steam over
high heat for about 15 minutes. Remove from the steamer and it is ready to eat.
Dr Byte's Computer Conundrums
Several readers have written to me asking questions about
sending photos to family and friends using e-mail. For example, Outlook
Express and Eudora allow you to attach a photo (as a digital file) to an
e-mail and send it. But, some internet post boxes have file limits that only
allow files under a certain size. The Internet being what it is, can we get
around this kind of limitation?
The simple answer is to compress files, or in surfing
jargon, ZIP files and send the zipped file. Most internet users will have
come across Zip files at some time or other. But before I go further, I
should point out that another relatively simple solution is to split a file
into several smaller parts (see Dr Byte 3 March 2003 for more information
about this method). If you choose to split files, the receiver needs to know
how to re-assemble the parts.
Microsoft’s latest XP (and ME) operating systems
include built-in tools for managing compressed files in the ZIP format. With
the right click menu in Windows Explorer, XP users can easily create, open
and edit ZIP files. But Windows will not allow users to build self
extracting ZIPS, split ZIPS into multiple parts, or handle files encoded
with other compression algorithms (non ZIP). Fortunately the choices for
dedicated ZIP applications that do all these things and more, is better than
I first encountered ZIP problems in 1996 when a client
sent me a rather large file (the equivalent of 20 floppy disks) and it
clogged up my e-mail account for days. I not only couldn’t download the
file or any other e-mail stuck in the queue behind this file, but my e-mail
service got very upset too. When I eventually managed to get the file, it
was a single hand drawn sketch that had been scanned and sent as is. As a
result, I started to look around for better and more efficient ways of
handling large files and over the years have used several different
Its difficult to chose between the top three ZIP
applications: PentaZIP, PKZip and WinZip. You can use each via the right
click menu. Each can scan ZIP files for viruses if you have an anti-virus
software application installed (and I am sure you have!). In tests
undertaken by a leading technical laboratory, each zipped up 9 files (totalling
49MB uncompressed) in less than 30 seconds. PentaZIP lets you schedule when
you want to ZIP a file, but its more expensive than PKZip or WinZip and its
interface is more cluttered. Although PKZip edged out its main competitors
on the speed tests, each of the top three clocked in the test at under 30
seconds. PentaZIP is available from www.penta zip.com at a cost of $49
(approx 2,090 baht) direct download. This one gets my 4 stars.
PKZip is one of the oldest around and was the first ZIP
application I ever used (its seems a lifetime ago). In those days it was run
from DOS and you had to learn the commands to make it ZIP and UnZIP a file.
Today, PKZip’s real edge lies in its simple, spacious interface which
makes it the most intuitive of the top three. Unlike its competitors, PKZip
can protect secure compressed files, not only with passwords but also with
digital signatures and certificates - welcome extras for the security
minded. PKZip is available from www.pkware. com and is around $29 (approx
1,240 baht). PKZip gets my 4 stars.
WinZip has the same low prices as PKZip but has a fully
functioning free version which comes with a NAG Screen. It’s nearly as
easy to use as PKZip and the Wizard is reasonably easy to use. It scored
well on the zipping tests and won on the unzipping tests, taking just 11
seconds to unzip the 9 files. You can create self-extracting and password
encode zip files, which is a big plus. You can download the pay or the free
version from WinZip Computers Inc. at www.winzip.com WinZip also gets my 4
I was also impressed with the interface with OnTracks
ZipMagic. Download direct for around $39.95 (approx 1,710 baht). But this
utility took around 45 seconds to zip the 9 files and its expensive. You can
get ZipMagic from Ontrack Data International at www.ontrack.com and this
application gets 3 stars.
There are two utilities that offer alternatives to the
ZIP format. Stuffit for Windows, $29.95 (approx 1,280 baht) direct download.
What’s interesting is the Stuffit SIT format is widely used in the MAC
world and it’s helpful if you’re going to be working with Apple people.
The other alternative is WinRAR, $29 (approx 1,240 baht). WinRAR was very
effective with zip compression, but the RAR compression was slow, taking
over a minute to Zip the 9 files. Stuffit encoding into SIT format was very,
very, very slow, taking almost 8 minutes. Both support ZIP coding and were
able to zip files more quickly then Zip Magic. You can get Stuffit for
Windows from Aladdin Systems Inc. at www.aladdinsys.com - 2 stars - WinRAR
from Softronic at www.rarsoft.com - 3 stars.
Finally, if your looking to save a few baht and don’t
like WinZips free version, consider Globalscape’s CuteZip which is
available for $19.95 (approx 855 baht). CuteZip lacks many of the
conveniences provided by the top three, and it was by far the slowest at
compressing 49MB of files, taking more than 40 seconds longer than PKZip. On
the other hand, CuteZip can create self-extracting ZIP’s and split files
into multiple parts. These two abilities alone may be reason enough to use
this. You can download this from Globalscape Inc at www.cuteftp.com and gets
my 3 stars.
So just how much did each ZIP Zip? On average, PentaZIP,
PKZip and WinZip managed to compress 49MB down to just under 16MB. WinRAR
12.1MB for the RAR Version and 15.1MB for the ZIP version.
So next time you have a photo or three to send, ZIP it!
If you have any tips that you’d like to share, or any questions about your
internet or pc experience, contact me: Dr Byte, Chiangmai Mail.