random finance

We met a friend of ours, P, for lunch at a Japanese restaurant he recommended. Good choice, the food was fresh and the location convenient for all. P said he bought a small apartment in the Ōta region of Tokyo, which is southwest of Tokyo towards Yokohama. So jealous!! I wonder if we can rent it from him for short visits.

riskreturn

We talked about current affairs, Brexit, property, where we like travelling to in Japan, and since he is a branch manager of a local bank, what investment products are good right now. He stayed on the conservative side, telling us about guarantee funds, life insurance based products, and mortgage funds. Have to do some reading on mortgage funds, not as familiar as I would like. I do know that they are supposed to be relatively low risk and generate returns a bit better than money market funds. They’re supposed to be more resistant to interest rate fluctuations–when interest rates are low, income from mortgages are low but underlying equities do well; when interest rates are high, equity markets tend to correct but mortgage funds have higher payments supporting it.

Red flags to watch out for in mortgage funds: where it invests, the type of underlying loans, entrance fee, exit fee, management fee, whether it pays all dividends or partial dividends.

My risk appetite is higher than this although I try to take a balanced approach. Anyway I should take a look at my investments, seeing how volatile the market has been this week. I’m not going to panic sell, because I’m not in need of any of those funds. But it may be a good opportunity to find some bargains.

what did i miss part 1

A few of the stuff that’s happened over the past 2 weeks during nano, part 1.

1. paradise papers

chi233fed

The Paradise Papers came out. Just like the earlier Panama Papers, this series of leaks showed yet again how the rich got richer and the rest of us got left behind. BBC summary:

The Paradise Papers are a huge leak of financial documents that throw light on the top end of the world of offshore finance…how politicians, multinationals, celebrities and high-net-worth individuals use complex structures to protect their cash from higher taxes.

The issue is, off-shore accounts aren’t strictly illegal. There’s some sort of competitve sport behind the idea of trying to avoid as much tax as possible. Show me one person who actively wants to pay taxes. But the flipside is, how are governments supposed to operate without taxes? If there are no taxes, there’d be no police, no sewage system, no healthcare. Oh wait, that’s exactly the thinking of the pro-busines conservative right. Privatise it all. Instead of paying the government, we pay corporations to provide security, sewage, healthcare. Sounds idyllic, except once profits come into it, imagine how much these corporations will charge, imagine the lack of oversight, imagine the lack of budget for non-essential functions. I’m no economist, but a completely free market depends on compassion and not just profit. Trickle-down economics is all smoke and mirror, unfortunately.

On the one hand I look at all the people and corporations being named–the Queen, Apple, Bono–and I feel zero sorries for them, because the world has gotten so unequal that any attention to the issue is good. On the other hand, I can’t help but think the real people to blame are the lawyers and accountants and financial advisers who thought of the schemes and the politicians who didn’t close the loopholes.

Unfortunately, there isn’t enough attention paid to this. Most people don’t have exposure to the shady world of off-shore accounts, and funnelling money to the likes of Bermuda and the Channel Islands isn’t illegal. But as quartz said, this touches on the question of:

the difference between the “letter of the law” and the “spirit of the law.”

We’ve reached the point when the world’s richest 1% own 50% of all wealth, and yet one US political party wants to further reduce the tax burden on the richest individuals and corporations. NYT:

The Republican tax plan would shift more of the tax burden onto those who can least afford to shoulder it and relieve those who are already starving the government of tax revenue. The Paradise Papers shine yet another spotlight on how the rich and powerful game the system to avoid paying what they would otherwise owe. The rest of us suffer for it. Why hand them even more favors?


2a. trivial tech stuff #1 — twitter now @280 characters

Twitter doubled its character limit to 280 per post. Can’t say I like or dislike it. All it means is a tweetstorm is now 10 posts instead of 20. Talking about tweetstorm, they are testing a new tweetstorm feature that will allow users to draft a series of tweets before posting them together all at once. Instant tweetstorm!

2b. trivial tech stuff #2 — most downvoted comment in reddit history

In reddit, users upvote or downvote posts and comments to improve the visibility of said posts and comments, to show support (upvote) or to indicate their displeasure (downvote). Technically, downvoting should only be for comments that don’t contribute to the thread. The most obvious example is spam comments, with dodgy links and gobbledegook text underneath a perfectly normal post or comment.

redditdownvotes

What happened over a very short 24 hour period was one comment made by Electronic Arts (EA) in response to a post about the microtransaction system of the game Star Wars Battlefront II got so many downvotes it smashed downvote records. The OP had a point, the game already cost US$60 or whatever it is to buy, then to unlock main characters it cost something like $80 on top, per character. I’m no gamer, but that sounds super greedy.

EA didn’t help matters by responding to the OP with a condescending comment full of rubbish corporate speak. As a result that comment received over 677k downvotes before it was locked. That’s far and beyond the most downvoted comment in recollection. Interesting that EA was responsible for a lot of downvoted comments too. They may or may not have listened to the feedback, shortly afterwards they reduced the cost to unlock the characters.

2c. trivial tech stuff #3 — new corporate font from IBM

Unlike Apple or Microsoft, IBM has traditionally used Helvetica. But since it’s not their own font, they’ve had to licence it from Monotype. Now they don’t have to anymore, with the creation of its own bespoke font, called unimaginatively IBM Plex.

ibmplex

I like it. Clean, modern, sans serif. Quartz called it a:

graceful hybrid of blocky, engineered shapes with natural gestures from handwriting.

What’s more, it’s not like frutiger or other pricey fonts, IBM has made it free to download.


3. john lewis christmas ad

Finally, some cheering up. John Lewis’ 2017 Chrismas ad debuted on the 10th of november. I’m furiously trying not to dwell on the fact that it cost £7 million, and how that could have been used better. Not my favourite John Lewis Christmas ad, but still very charming.

what Ken Cheng thinks about the new pound coin

Dave’s funniest joke at Edinburgh Fringe was awarded to Ken Cheng. The prize, now in its 10th year, is awarded to the best one-liner. Ken’s winning joke:

I’m not a fan of the new pound coin, but then again, I hate all change


Ken studied at Cambridge and was a finalist in the 2015 BBC Radio New Comedy award. Found an excerpt of his Fringe act. I thought it was…okay. I preferred his set at the NCA finals. Perhaps it’s the subject matter. Talking about ‘Chinese Comedian’ is not as funny as dissecting the phrase ‘Two Birds One Stone.’ The bit about laundry and the South African cricket team was funny, although it sounds funnier when delivered by a professional comedian.

poundcoin

Anyway, what’s up with the new pound coin. The specs, according to the Royal Mint:

  • 12-sided so easily recognisable
  • made from nickel-brass and nickel-plated alloy
  • has an image-like a hologram that changes from £ to 1 when viewed from different angles
  • very small lettering at the rims
  • grooves on alternate sides
  • a hidden security feature

The design combines the English rose, the Welsh leek, the Scottish thistle, and the Northern Irish shamrock which is pretty representative.

Reaction to the new coin seems to be mixed with most people, as Ken said, hating change. I think it’s quite cool, and if it stops conterfeiting, I’m all for it. I remember when the pound coin first came out and how people didn’t like how heavy it was. We’ve all gotten used to it. I checked my wallet and I have £6 in pound coins. Beyond October 2017 I’ll have to change them at a bank. Since it’s such a small amount, i may keep them as souvenir. I have some old 10p and 50p coins somewhere.

the end of an era

lloydsbranchclose

When I was at school, lower or upper fifth year IIRC, I entered a short general knowledge quiz. Those days, there was no internet so I had to write the answers on a postcard and mail it back to the organisers. I won £5 in a Lloyds savings account.

When I started at King’s, I opened a bank account with Barclays because they gave out all sorts of goodies for freshers and I didn’t qualify for those benefits as an existing Lloyds customer (I assumed, I didn’t ask). I closed the Barclays account shortly but kept the Lloyds account. I can’t remember whether I was already at Southampton Row when I was at King’s but definitely when I started working at Astra my branch was there. Even when I went to Imperial, changed jobs and left the UK I never moved branches. When I was back in London a few years ago, I still kept my branch there.

Lloyds, like many other banks, have been closing branches during the past few years. There was a big cull in 2016 and I wasn’t affected. Recently they announced 100 branches will close including Lloyds, Bank of Scotland and Halifax branches. This time I’m not so lucky, I just got the letter than Southampton Row will close.

Sigh. The end of an era.

It’s not so surprising, really. People hardly go to branches to conduct banking business anymore. Online banking, phone banking and simply using the cashpoint have all but taken over.

My account will move to 113 Oxford Street, with no change in sortcode. This is important as the sortcode is ingrained in my mind. According to google maps, the branch is at the corner of Wardour Street and Oxford Street. I can’t picture it, but it doesn’t matter. To be honest, I’m more likely to be in that area than Holborn so no big deal for me. It’s just for sentimental reasons that I lament the closure of the branch I’ve banked with for so many years. Best £5 they ever spent, all those years ago.

fearless girl

fearlessgirl
photo credit: Federica Valabrega

Advertising firm McCann New York placed a statue of a girl opposite the Wall Street charging bull on behalf of their client State Street Global Advisors. The statue, called Fearless Girl, was by sculptor Kristen Visbal and will be there for a week. The purpose is to bring attention, on International Women’s Day, to diversity and gender equality issues. She starts down the bull and plaque at her feet says

Know the power of women in leadership. SHE makes a difference.

State Street is refreshingly unusual in having 3 women on its 11-member board. Chief Marketing Officer Stephen Tisdalle:

She’s not angry at the bull — she’s confident, she knows what she’s capable of, and she’s wanting the bull to take note.

If only the rest of Wall Street is as enlightened as State Street. More than 80% of FAs are men and 25% of Russell 3000 index firms have no women on their board. I mean, has anyone been to the pit that is a trading desk? Sigh.

Come to think of it, I think my friend Larry went to State Street. I think he’s still there, global head of mobility.

nyc295bull

And another thing, they must have roped off the statues for photographers or the photographers got there early. When I was there last year, there were so many people taking selfies with the bull I could not get a proper pic at all.

at the banks

Bank day. Met sis at 10am at bank #2 and stayed there for over 2hrs. We had to open a joint account, a securities account, an investment account and close Papa’s accounts. There was a mountain of paperwork. Thought nowadays banks should be more automated, but there seems to be only more and more forms to fill in. The staff weren’t slacking, they had 3-4 people working on our case and it still took them to lunchtime to finish.

Lunch was at a conveyor belt sushi place. The set was nice, the sushi plates on the conveyor belt were barely touched, as most people ordered directly.

In the afternoon we went to bank #3. The staff there was also very helpful and there were also forms to fill in. We have to come back in about 2 weeks’ time after they sort out one of the bonds.

Long day and pretty tired. Bought meatballs and salmon from Ikea and took the bus home.

move to bond funds

In the spirit of “money doesn’t make you happy but it makes you less sad” I took a look at my bank account. There are these 3 investment funds I’ve had since forever, before I had enough money to open the account with my FA. A global growth fund, a European fund and a leisure fund focusing on hotels, airlines etc. Been sitting around for more than 15 years, it’s way past time to move them around a bit.

hsglobalfinance

The rep at the bank recommended two funds, both mainly bond funds. One has a regional focus and one invests in finance corporate bonds (holdings include Citic, UBS, Westpac).

FA is also moving some of my GBP to UK bonds. I usually like sticking with global equities but I don’t have a sense of how the market is going, it’s too volatile lately. The idea of a little monthly income is appealing.

#76: make a will

bbwill

Task #76 of 101.1001 is to make a will. This was a leftover from the 2007 challenge and something I should have done as soon as I bought the flat 20 years ago. It’s even more important now, with Papa gone.

I asked our neighbour, the same lawyer who did Papa’s will. He got it done quickly before I went on the US trip. I guess I could have written it myself, because it’s very simple but ah well. The will is now sitting safely in my filing cabinet. One fewer thing to worry about.

6 syngenta shares

syngentatender

So apparently I hold a grand total of 6 shares of Syngenta AG, the world’s largest crop chemical producer. I’m guessing, since the company was formed as a result of a merger between Novartis and Zeneca Agrochemicals, that somehow I got the shares by way of Astra when Astra merged with one of the former ICI companies to form AstraZeneca.

Why are the 6 shares relevant now? I got a 8-page letter from UBS telling me that this company CNAC Saturn (NL) B.V. has offered to purchase all outstanding registered shares of Syngenta AG, ie this CNAC wants to buy Syngenta.

There’s not a lot of googlable information. The best is on Syngenta‘s own website:

  • cash offer at US$465 per share plus special dividend of CHF5
  • proposed ordinary dividend of CHF11 to be paid in addition
  • offer equivalent to CHF480 per share
  • new shareholder will enable strategic continuity and long-term investment in innovation
  • future IPO intended
  • Syngenta will remain a global company headquartered in Switzerland

Does it mean I’ll get over US$2,000 for just 6 shares? I guess so, right? Wow. I’m not sure if I chose the right option, to take the tender in dollars rather than CHF. The offer is in USD, and since the news was announced, USD-CHF rates have fluctuated significantly, wiping billions off what the Swiss shareholders would receive. Yeah, I think it was best, to receive payment in the currency they are buying at. The question is, how will UBS handle the dollars? IIRC, my bog-standard personal account is not multi-currency. I only kept it so I can claim I have a Swiss bank account, albeit it’s the Switzerland equivalent of having a Lloyds or BoA account. Oh wait, I have those too.

write cheque, post letter

letter

When it rains it pours, right. Add to all the sadness and stress lately, the credit card thing is close to tipping me over the edge. The medical insurance I took out last week didn’t go through cos they couldn’t charge my credit card. Because the card is suspended after someone tried to use it at some US restaurant. The only other method of paying is by cheque. Cheque! Looking at my chequebook, the only cheques I write are for management fee. There are very few uses for cheques nowadays.

So everything will be done the old fashioned way. I’ll write a cheque and post it to my FA. Postage rates have gone up and I don’t have the right stamps so I put 2 of the old rate. Then I had to figure out where the nearest postbox is. I remember postal collection used to take place 3-4 times a day, now it’s only once a day. Just to show how much things have changed.

no credit card

creditcardlock

I was trying to pay all the Rates bills (parents’ flat, my flat, grandparents’ shops) that have accumulated online and got an error. Argh. Called card centre and found out there’d been some suspicious activity on my credit card. The bank had wisely rejected those but now the card is suspended. The customer service rep was helpful but a tad inexperienced / robotic, so it was tough to talk to her. Anyway, I’ll have to go to the bank tomorrow to change my address then have them send a new card.

In the meantime, no credit card. I only have one credit card per country, may be I should apply for a spare one.

my finances

I’ve been worrying about money. What will Mum and I live on? Do I need to go back to work (ugh)? Do I have to liquidate some assets? First order of business, get my flat on the rental market. The agent says nowadays tenants tend to negotiate hard and there are many time wasters. Sigh, see how it goes.

Saw my FA to sort out medical insurance and to make some tweaks so I’m more comfortable with my position.

finances201604

I haven’t done a total finance calculation for a while so it was time to do one. I’m less worried. I still need to create an income stream so I’m not dipping into my savings and investments constantly.

running around day 2

I need to get a medical certificate for the marathon, so I booked an appointment for a health checkup. It’s high time I had a checkup anyway. I very rarely go to the doctor’s so I was a bit lost about what to do. Basically the routine is go from one location seeing one nurse or doctor or specialist after another: take BP, take history, physical examination, blood test, EKG, chest x-ray, cashier. Went from LG1 to LG2 to 5th floor to ground floor of a 5 wing hospital. Argh.

Some of the nurses and specialists were nice. The one nurse ‘in charge’ of me was especially great. The doctor who did the physical exam I didn’t like. Not only was he completely without expression, it seemed like he was going through the motions. Plus he wanted to charge me local $500 ($65) for signing a simple medical cert. The checkup nurse pulled me aside and advised me to take the report and go to a family doctor. Well, she actually said my family doctor but she wasn’t to know I almost never go to the doctor. I have been to one near mm a lot of years ago, or I can use my sis’ doctor. Let’s see.

By the end of the tests I was hungry and thirsty–no food or drink (except a little water) allowed for 8hrs prior. So I quickly made my way to the nearest housing estate to have breakfast. Then it was neither here nor there. It was 11am, I was at the other side of town, I had an appointment at 2.30pm. What to do with the time. At the end, I went home. But better to spend 1hr getting home and having a cup of tea and relaxing than wandering around aimlessly for more than 3hrs.

The appointment at 2.30pm was with my FA, to sign some forms and talk about strategy in light of recent market downturns and the pound’s devaluation. I wanted to buy some more GBP since it’s so cheap. So we decided to take some profit in one of the USD funds and keep the GBP either as cash or in money market bonds. Then when GBP goes back up again, sell and repurchase other funds. We met a a coffee shop and since I hadn’t had anything since breakfast, the berry tart was my lunch.

noodleskale201602 barbaresco1996

Went over to sis’, she invited me for dinner. We had another vegetarian meal, this time of rice noodles and baked kale. I could have finished the entire try of kale myself. I brought over a bottle of wine from my collection–time to start drinking up my stash, in the new spirit of downsizing I going to work at reducing the size of my alcohol stash. This was a Barbaresco 1996 I bought in Verona when I was living in Zurich. It means that it’s been shipped 1.5 times around the world. The cork was a bit soaked and soft but I carefully took it out to prevent the wine from being corked. Immediately I could smell the fruit. Peppery, rich, fruity. Good wine.

Finally, the end result of another running around day. No real running, must go tomorrow. My right arm has a big bruise where they took a blood sample. It’s a sign of whether the technican is any good, I’ve had blood taken out with just a pin prick and no bruise. This time, it was quite painful when she was drawing blood (even though I’m not afraid of needles or having blood taken) and now there’s a 10p coin sized bruise. On my left side, I banged my little finger against something on the bus and it’s now swollen, feels bruised and I can’t bend it. Argh.

frugal, cheap, careful

ikeaknife365

It started, innocuously enough, with an ikea knife. My everyday utility knife broke, after more than 10 years’ usage. It was just a simple serrated knife I got at a supermarket, nothing fancy, the initial intention was a disposable knife. I have other knives, including a fairly decent set. I was still on the lookout for a replacement, because this utility knife is the one I abuse and not worry about it breaking. We were strolling at Ikea and I saw their 365+ knife, a small paring knife sized which could work. It was priced at local $100, around US$13. May be it’s because I got used to smaller numbers in europe but the number 100 (actually I think it was 99) seemed large.

It’s a good price for an everyday knife, but for some reason I was baulking at the price. Then mm suggested that she’s noticed this in me for a while, that I’m looking more at prices and opting out of buying whereas before I wouldn’t even have thought about the price.

She has a hidden agenda, which isn’t really too hidden because she’s flat out told it to me more than once. She thinks I should go back to work and earn some money.

I have enough to live on. I think even enough to retire and live on income generated by my portfolio. I don’t want to go back to the stressful work environment. But have I become too careful with money? She says that she has noticed this trend lately that’s why she doesn’t suggest that we go out as often. May be. If asked, I generally say I prefer to stay in and cook rather than eat out. Is that because I don’t want to spend the money or is it because I don’t think restaurants serve good food? Debatable.

I don’t really understand her accusation (okay, may be too strong a word but I felt it wasn’t said in a positive way). We just travelled around Europe for a month. After I recorded everything, we spent around US$160 per person per day, excluding personal spending and gifts. Including all flights, trains, car rental, hotels, food and sights. That’s pretty good, and I don’t think it’s cheap at all.

I didn’t buy the knife. May be I will, after I compare prices and quality at other shops. I don’t think it means I’m changed because I have no income. I just want an everyday knife I can use for the next 10 years. Sometimes I get allocated emotions and actions by other people (mostly mm) when the actual emotion / action is so much simpler. Sigh.

periodic table of stocks

periodicstocks

I was googling for images of the 2-line stock market ticker for LL cover when I came across this, a periodic table of the stock market. I get excited when I come across displaying information or ideas as a periodic table (or as tetris). In this one, the atomic symbol corresponds to the ticker symbol of the stock. Based on the NYSE and Nasdaq. So the top of group 6 is occupied by C for Citigroup. There are quite a number of blanks, but it’s pretty great anyway.

#78: money free weekend

chi233fed

Task #78 of 101 in 1001 is to have a money-free weekend.

Which is easy to achieve by simplly staying at home. There was enough food at parents’ place to last a while, and I made glazed chicken wings and ribs for dinner on saturday night. Instead of running outside I used the stationary bike. Most of Saturday was spent reading.

Sunday I did research for the April trip to Hokkaido with mm. Put all notes and links in an evernote notebook, including hotel details, maps, things to do, restaurants, bars and transportation. What I don’t like is you can’t print a whole notebook, you have to print individual notes separately. I printed them to pdf them combined them into a master pdf document. Our accommodation is finalised — start with 2 nights at a regular hotel in Sapporo, then 2 nights at 2 different onsens in Jozankei (5 mins’ walk from each other, so no problem with transferring), then back to Sapporo for 3 nights at an apartment I found on airbnb. It’s the first time I used airbnb, last time in Kyoto it was the more established homeaway/VBRO. Looking forward to the food there — king and snow crab, fresh sashimi, uni, salmon roe, even the famous sweet melons. And of course our visit to Yoichi distillery.

I guess not going out was a sort of cheat’s forced way of having a money-freen weekend. Then again I could have gone on an online shopping spree. And of course there’s the overhead spending — electricity, utilities, food already in the fridge. There are loads of other ideas, I like ideas such as having a cupboard potluck, organising one’s finances / house / junk, pottering around at home and generally doing stuff that is more relaxing and simple. We could all do with a simple weekend.

#77: build net worth calculator

finances201312

Task #77 in 101 in 1001 challenge: build a net worth calculator.

Personal finance websites talk a lot about calculating net worth and balancing chequebooks. I’ve always been a bit confused about why it’s such a big deal, and why it’s apparently so hard to figure out net worth. It’s a simple spreadsheet exercise. Add up assets, add up debts, take one away from the other.

Took me about an hour, to find all the statements or log onto bank websites. The only current liability is credit card debits waiting for the next statement. I didn’t include this because: a) trivial amounts and b) they’ll get paid once I get the next statement. Since it’s impossible to have the exact figure — statement dates, some investment accounts only report annually, fx etc — it will always be an estimate. Everything got converted to GBP and USD to create the sum total.

Data is summarised by currency and by subtotal of banks vs investments vs property. I don’t know what is an optimum ratio between cash and investments. Advisors say have at least 1 year’s worth of expenses available as cash, so I think I should move more cash to a safe vehicle to generate a return as opposed to it sitting there doing nothing.

superyachts, couponing

Watching a program about superyachts and a preview for Extreme Couponing comes on. Talk about extremes.

Those superyachts are all basically the same — 100ft+ monsters with multiple staterooms all decorated with shiny wood paneling and gold sinks, galleys that are larger than some people’s homes, and in-your-face opulence everywhere. The only difference is the number of electronic gadgets, jacuzzis and sun decks they have. Costs are measured in the millions of dollars. The ultra rich live in another reality as far as I’m concerned so I don’t think about them, except when these wealth display programs come on. Being rich is fine, but the obsession with displaying the wealth is a little unhealthy.

That’s why the preview for Extreme Couponing was so out of place in the middle of a program on the super rich. Can’t imagine any of those yacht owners couponing. People make fun of extreme couponers but mm and I can’t stop watching the program. Some of the couponers featured started couponing out of economic necessity, to make sure their families have food and household supplies they need, for as little cost as possible. Yes, no one would ever need hundreds and thousands of boxes of toilet paper or toothpaste, but if they can benefit the couponers, their friends and families and even the ones who donate the goods, then it’s all good.

Professor Robert Schiller, one of this year’s Nobel Laureates in economics, said that income inequality is the most important problem we are facing today. I’ve also been watching and reading about the documentary Inequality for All, which was a Sundance winner. There’s an hour long interview with Robert Reich, who presents the film, on democracy now and he talks quite eloquently and convincing about his cause. This seems to be a thought-provoking film, I hope I can find a dvd when it comes out.

Everyone has a different view on wealth and wealth distribution. Some people are richer, some are pooer; some earn more than they should, some earn much less. But the gap between the top and the bottom has grown too large, too alarming. It’s also a global, not merely American problem. What can those of us who fall smack bang in the squeezed middle class do? Individually, we are more concerned in the last few years in holding onto our jobs, to make our net income (which has been falling in real terms) go further; in other words to survive. I guess it starts with us being aware of the issue, and to acknowledge that income inequality is a problem rather than accept the argument the top 1% keeps rolling out, that the markets are always correct. Remember, the very people who run the markets are the same people who manipulate it to suit them. Mr Reich said,

We make the rules of the economy, and we have the power to change these rules

We need to better educate ourselves, and hold those we trust with these rules of the economy to strict standards and governance. We are all born and raised unequal, but something I fervently believe in, is that ethical standards should apply to all equally.

german possibilities

cruise0006strudelbeer

Met with my financial advisor about the state of my investments. Emerged from the meeting fairly happy. I did task her with investigating if I have enough capital to generate enough income so I don’t need to work. I think I’m okay, just about.

We are also converting a couple of my accounts to another platform, one that is more flexible, easier to use online and has more investment options. One of the options we talked about was to invest in some single company funds. The one she recommended was a Barings Germany fund. In the past, I could invest in pan-European but not just Germany.

Why Germany? It’s been voted the most positively viewed country in the world. Economic stability is first a foremost. As is frugality, organisation and just that particular German way of doing things. I probably won’t like living there, then again, I loved loved loved Switzerland and I was living in the German-speaking part.

financial health

ifast

Met with our financial adviser. Seems like my portfolio is improving from when the market crashed. Our FA had also moved to a new company so it seems to be a good move. Now that I’m back from my London sojourn, I’m thinking of whether I need to keep so much in GBP. The other alternative is to switch to EUR denominated funds. Also may be switch platforms to get access to a larger selection of funds.

buy EUR

gbpeur

So one of the first things RM said to me when we got to dublin was, “they use pounds here, right?” Snerk. Um, no. Which is why my EUR stash was dramatically reduced and I need to get some more for the bbmm Provence (and may be Brussels) trip. The rate has edged up, eurozone crisis and all. YTD average is 1.21, and it’s now around 1.24. I should go get some this weekend.

portfolio

chi233fed

I lost about 13% of the value of my US portfolio this year. Sigh. Since inception the cumulative ROR is about 18%, although it was up to 30% at one point. Not happy, but nothing I can do. The holdings are fine. I have mainly US large caps in this portfolio — apple, amazon, oracle, home depot. There’s some cash left over, which my FA suggests that we put to work. Hopefully this will remedy the situation somewhat.

This is just my US portfolio. I’m guessing the total hit globally is more than 13%.

i can’t live here

ukcpi

Despite actions to the contrary, with inflation at a record breaking 4.5%, astronomical taxes, killer housing costs and a net take home that feels like it’s been halved (I dare not do the analysis lest it becomes a self-fulfilling prophecy), I can only tolerate so much. I know I’m already very lucky, that my complaints boil down to how much less I’m saving and not that I can’t afford to buy food. Still am unhappy about this. And don’t start about work. In my mind I have dates and plans, preliminary at this point.

fund consolidation

moneygrowth

Today is the last chance to get an ISA for this tax year, so I made an appointment at my bank. Got my ISA for this tax year, and tomorrow apply for a new one for the next tax year, maxed out on both years. Shifted a couple of old, old ISAs to this account so they’re all managed under one roof. The investment questionnaire shows that I’m a progressive investor, which is one step down from adventurous and one step up from balanced. The progressive funds are 70%-ish equities, 15% commercial property and the rest commodities and bonds. Sounds about right.

I have yet to meet a financial adviser who wanted to do this, but one of these days I need a review of all my accounts in all the countries. Problem is most of my advisers are focused only on their countries or regions, and I don’t qualify for private banking. The good news is that I have good geographic coverage, now in all 3 major continents, so it should be fine.

fiver

fivepound

A five pound note, that’s all the GBP cash I have on me right now. Oh, plus some coins to total probably about ten pounds. I had to pay my rent deposit by cash, it was either that or go to the landlord’s agent’s office and pay by debit card. Cheques don’t seem to be a viable option anymore, which is okay by me, except when I don’t have a lot of cash on me. I can get more tomorrow at the cashpoint of course, but it’s a strange feeling, of having no money. Okay, not no money. Worse case scenario, i have a bunch of USD.

gs did not cause the financial crisis

I was following the nyt liveblog of the US Senate hearing on Goldman Sachs during the day. The bank is clearly on the defensive, and the senate committee members’ questions were smart and to the point. I’m thinking the headlines around the world tomorrow will focus on how GS was unrepentant and their statement that they didn’t cause the financial crisis.

My view of this is different from that of most people and, in this climate, probably considered politically incorrect and arrogant. No, GS didn’t cause the financial crisis. Nor Lehman or Bear or Citi or ML or AIG. Nobody could have predicted how bad and how long this crisis has lasted. The media portrays i-bankers as unethical and greedy. I’m not necessarily defending them, but there are certain aspects of the financial services industry that are unique. The pace and complexities. The unpredictability of the market. Comp structures.

Some of the comments in today’s hearing focused on how the bank sold derivatives that they were themselves short on. Um, that’s hedging. That’s how it works. Should those products have even been created in the first place? That’s the real question.

cheap brics

mcsibric

my financial adviser suggested switching into Chinese and Latin America funds. I’d already took the plunge in latin america last year, and the thinking is that since they are cheap now, it’s worth considering.

In this climate, it’s difficult to find sure investments, and the trick is to diversify without increasing the risk too much. Simon Hallett at Harding Loevner said in the new york times:

The risks in the world are in the U.S., U.K. and the fringes of Western Europe. Iinvestors are starting to get paid to take emerging-market risk. I don’t think the risks have gone up as much as prices have gone down.

I don’t quite buy into the whole BRIC concept, the 4 countries are totally different economically, politically and fundamentally. They’ve just been packaged together cos of some theoretical similarities, and how they have emerged (no pun intended) amongst their peers in their regions.

So I’m glad that we’re focusing on just 2 of the 4 BRICs. Russia is too volatile. As for India, I have quite a bit already in other investments, and India’s gotten more expensive lately. Sure, China is expensive too, but it’s always worth buying when the markets are down. Yeah, I just bought hsbc at 65.9, which is just over the 52 week low of 65.5. It might go down even more, I’m not that bothered.

MERshame

I stand here today and say shame to both the current as well as the former Directors who allowed this former CEO to wreak havoc on this great company.

Shame on them for allowing this former CEO to consciously and openly disparage Mother Merrill, throw our founding principles down a flight of stairs and tear out the soul of the firm.

Shame on these Directors for allowing this former CEO to rid the firm of thousands of years of experience. Shame of them for allowing this former CEO to surround himself with many people who did not have the perspective of other market cycles and the experience of time. Shame for allowing this CEO to surround himself with many people who did not share the same values that made us great and appreciate our winning culture. Shame on them for allowing this CEO to cut costs and businesses so severely and bluntly for the sake of short term earnings that he cut out future growth. Shame on them for allowing him to over leverage the firm and fill the balance sheet with toxic waste to create short term earnings.

Win Smith’s speech at the shareholders’ meeting that gave the go ahead for MER to merge with BoA, via here is the city.

Ouch, ouch, ouch. And a side of bitter much. He doesn’t name names but it’s obvious enough. To give him credit, it’s not sentiment that is new…he’s just put in words what many feel. And to take it away from it being a total personal attack, substitute Merrill with any Wall Street firm and it’s still true.

And that is the real shame.

no one is laughing at wall street’s silliness

dow

The headlines: Lehman Files for Bankruptcy; Merrill Is Sold.

It wasn’t unexpected. After all, we’ve had Bear Stearns and a bunch of US financial institutions fail. We’ve seen share prices for banks plummet. We’ve seen CEOs ousted, massive write-downs by otherwise safe financial institutions (UBS, Citi) and a very jittery industry trying to just survive through 2008.

The consumerist quoted this from bloomberg:

“We are unwinding what has been years of silliness in the financial markets, and the silliness is being vaporized as we speak, unfortunately with the stock price of a number of companies involved in it.’”

Notice no one is laughing at the silliness of it all?

Still came as a shock, for news on both Lehman’s bankruptcy and Merrill’s sale to BoA to hit in the same day. It’s no secret that I work in a financial institution though I’d prefer not to say where. This hits home big time and yes, I am personally affected by this (though, fingers crossed, not my job).

mer 1 yr

The blame game has already started. But for me, hoping that those who created, sold and mismanaged these toxic instruments will get their comeuppance is simply not realistic. For every million-dollar producer there are 10, 20, 30 back office staff — the IT technician who set up his 15 bloomberg screens, the settlements officer who cleared his trades, the payroll administrator who processed his salary. It’s the same junior employees, back office staff, innocent customers and beleaguered homeowners who will end up paying with their jobs, their mortgages and their lives, all without a fat bank account to break their fall. What justice is that?

#82 microfinance on kiva

kivavirginie

Because of Professor Muhammad Yunus and the Grameen Bank’s Nobel Prize, we’re pretty familiar with the concept of microfinancing. Lenders pool together to lend small amounts to the borrowers in mostly poorer countries who don’t have access to the traditional bank loan facilities. Over time, the loan amount is repaid. This is an good way to connect people who want to help with people who need help.

One of the more accessible organisations, and certainly one that fully uses the advantages of the internet, is kiva. Kiva describes how its members can participate simply as:

Choose an Entrepreneur, Lend, Get Repaid

A few months ago, around Christmas and New Year, there was so much attention (helped by coverage on Oprah) that there were a shortage of loans requested and lenders were limited to $25 each. Now that the year is underway and the New Year resolution fever died down, things are back to normal. I decided to wait at Christmas, and I find that it was a good decision.

Scrolling through almost 30 pages of loans reqested, the loan amounts requested were small (a few hundred dollars, not many over $1,000). Most of the purposes were to buy goods for resale, retail, transportation, construction, and home improvement. Some are near their target already. I was caught by the entry for a lady in Benin. I have to admit I won’t be able to point out Benin in a map, but it didn’t matter.

I put down $50. Payment is through PayPal (who doesn’t charge their usual fee for kiva). Kiva collects the funds then distributes to the Field Partner for further dissemination to the entrepreneur.

It felt good to be able to help someone. It’s a small amount for me, but if it can help make a difference, then I’m only too happy to do my part. Virginie Bahini, I wish you the best.

sharing in shares

finance crystal ball

I was looking at my categories and realise that I seem to talk incessantly about macs, web 2.0, travelling and food. I only have a handful of posts about finance — perhaps it being the newest category is a factor.

So what’s been happening on my financial front? Now that at NewJob I’m free to invest in the markets without getting Compliance pre-approval (ah, the wonders of being a non-sensitive person), I tend to keep an eye on the market much more during the day. Generally it’s reading articles and keeping an eye on certain stocks at marketwatch or the wsj.

I bought a few shares and subscribed to a couple of IPOs. I now have a bank, a dotcom and a property developer. Because I have a free overdraft (which I never used or bothered to cancel) I can’t use IPO financing and had to fund all the purchases using my account balance.

What’s IPO financing? Give an example:

  • My bank balance = $1,000
  • An IPO is to be launched with issue price $4 per share
  • This means I can buy 250 shares max

With IPO financing, I borrow money for a short time so I have enough funds to lock in the shares.

  • So I borrow $9,000 to make my available funds = $10,000
  • I can now apply for 2,500 shares

This is especially important when an IPO is oversubscribed, because the final allocation is usually dependent on number of shares subscribed.

Let’s say I am allocated 500 shares. This is quite reasonable for a popular issue. I still get more shares than I would have been able if I just relied on my own funds.

  • Total cost for the 500 shares = $2,000
  • The bank takes back $8,000 of the loan — this is the “extra” that wasn’t needed because I was allocated fewer shares than I applied for
  • I am charged interest, which actually comes out of the $8,000
  • The bank will expect repayment of the $1,000 it ended up lending me, plus the interest
  • In most cases I will sell part of my 500 share allocation to repay the loan
  • If the price on the first day of trade is more than $4, and I sold immediately, then I would have made a profit

IPO financing is basically a leveraged finance product. It’s well used in consumer brokerage and is a good way for the general public to invest in IPOs that they may not otherwise be able to, due to share allocation rules.

There’s a big downside of course. All sorts of risk when investing in shares, and now it’s amplified because of the larger number of shares in the picture. The investor is also relying on: a) it being a bull market; b) over-subscription for the shares and most importantly c) the share price going up.

There’s talk about the dangers of a recession, or at least a downturn in 2008. With the sub-prime mortgage fiasco, high oil prices, and a weak dollar that doesn’t seem to want/need to strengthen, it’s definitely time to be careful and not get caught up in the IPO craze. Am I bad for wanting a bear market? Share prices will fall and I have cash-in-hand.

I have a colleague who works at the e-trading desk and she has 17 monitors (yes, that’s right) in front of her. She was showing me what each screen is for. It’s fascinating. Long long long time ago I turned down a 2-in-1 chance to be a research analyst at an investment management house. There are days when I have a tinge of regret, thinking about how my career might have ended up.

communal property

Bonuses were announced today, hence the rich banker joke. From here is the city news.

A rich banker and his wife are having dinner at a very fine restaurant.

A stunning young lady comes over to their table, kisses the banker, says that she’ll see him later, and walks away.

The wife glares at her husband, and demands to know who it was.

“Oh,” replies the banker. “That’s my mistress.”

“Well, that’s the last straw,” says the wife. “I’ve had enough. I want a divorce.”

“I can understand that,” replies the banker. “But remember, if we get divorced it will mean no more shopping trips to Paris, no more wintering in Barbados, no more summers in Tuscany, no more BMW in the garage and no more yacht club.”

Just then, a mutual friend enters the restaurant with a very attractive young female on his arm.

“Who’s that woman with Giles?” asks the wife.

“That’s his mistress,” says the banker.

It all goes quiet … “Ours is prettier,” she finally replies.

booking travel

I’ve kept bank accounts and credit cards in all the countries I’ve lived in, the reason I give myself is so that I can have access to cash through ATMs should I visit. Now, I’m doubly glad, reading about the idiocy of british airways is. They won’t sell you a ticket over the web if you don’t have a credit card billed to the country you are flying from.

You can buy over the phone (4x the price) or via an agent (2x the price) but you get ripped off.

It’s not the first time, friend of mine tried to order something through the Disney catalog in the US only to run into a similar problem cos her credit card billing address is in a different country as where she wants the stuff to be delivered to.

It’s a well known fact, a roundtrip ticket on BA from London is cheaper than the one way. So, London to Zurich for a week can be as cheap as £92 return, yet one way it’s £386. I mean, what? How idiotic.

I have total trust booking my flights through swiss or cx websites, but that’s about it. Don’t trust ba.com at all.