Cloud Nine by Deyao

Risk, Uncertainty and Change

2012-02-26T01:38:00.001+08:00

Firstly, I'm happy to resume my writing here with lesser time I have these days. There's concept of chefs in France which states they "cook for themselves", meaning putting up a perfect dish is more important for their satisfaction than their customers. Does it apply to me? Maybe. I have seen some people, who have so much to do in life with so little time, and still being able to dedicate some time to share some of their thoughts and knowledge. I admire these people and I think they have set a good example.

Risk and Uncertainty. These two words appear the most often when the economy is weak or when markets are performing poorly. When things are better, most us ignore these two words. Understanding the significance of these two words can help investors manage risk and limit losses.

Today in the beginning of 2012, we’re approaching 4 years since the collapse of Lehman Brothers, the catalyst which transformed what it seemed just a US subprime mortgage crisis into a full blown global financial crisis. As I mentioned in one of my earlier posts, we are no longer speaking about problems on a corporate scale like the failures of financial institutions, we are now speaking on a national scale involving governments with unsustainable debt and trillions of dollars. 4 years on, wouldn’t the problem be solved or at least is going to be? The ugly truth, it has worsened.

Globalisation and capitalism opened up countries and people like never before, the world is now more connected than ever. International trade, travelling, technology and cooperation between countries have made the world “smaller”. An email gets sent to anywhere in the world in same amount of time, people know as much of what goes on in another country as their own and people are travelling outside their country seamlessly these days.

Many years ago, people quoted “When the US sneezes, Asia catches a cold”, showing Asia’s dependence on the world’s largest economy. With even closer economic ties today and having US and Europe “falling sick” at the same time, shouldn’t be Asia be on a prolonged illness leave? The ongoing problems in US and Europe today are not ideal, Asia is definitely better off with them dong well. But something has changed dramatically over the years, the emergence of Asia as the new economy. The demand, growth and money in Asian and has propelled Asia forward in the midst of this global financial crisis. Jim Rogers said France dominated the 1800s, UK dominated the 1900s and Asia is going to do the same in the current century and beyond.

All the uncertainty present, is it still a good time for investing? The answer is simple, investing never ends, ever. I’m probably not as bullish as I was a few years back but that doesn’t mean investing stops even for a day. For people like Warren Buffett, a down market just means buying more. For people like Robert Kiyosaki, it doesn't matter as long as there is cash flow.For investors and potential investors, what is the next step to take now? Just a brief recap before that.

Another year of extreme volatility hit the markets over the last year, especially during August/September where the EU was struggling to come up with a plan with many countries needing a bailout. Debt ratings were slashed and yields were hitting record highs. And if that wasn’t enough, US lost their coveted AAA rating. You don’t even have to go very far back, that was good investment opportunity then, the panic caused excessive selling and prices took a huge dive. If you would have bought some then, you’d probably be looking at a return of at least 20%, not bad for a 4-month return. Periods as such have repeated on numerous occasions and it really presents good buying opportunities. You don’t have to be an expert to know it will continue to happen again in the future.

One of the greatest strategies ever was popularized by Warren Buffett and Benjamin Graham. The buy and hold strategy has worked tremendously well for Buffett because holding stocks for a long period allows the market to appreciate the value Buffett identifies. What if the market tanks? Buffett seldom sells, and when he sells, it is not because he thinks the market is going to tank. Buffett only sells when a stock no longer fulfills his strict selection criteria like his famous 'margin of safety' and comparative advantage. And when the market really tanked like it did in 2008, Buffett bought even more. Berkshire might not give the best returns in the market today, but the lessons are relevant and this approach has been successfully carried out for more than 60 years (Buffett’s career).A lot of people think Buffett has lost it. Read THIS. Technology stocks outperformed Buffett in the decade ended 2000, but who had the last laugh? Buffett called for a 'buy' even before the financial crisis bottomed out, was he right, you bet he was.

Dealing with the current economic climate is very challenging, periods of high volatility can even shake the seasoned investor. Hence, managing portfolio risk is very important. In simple terms, you don’t want to be caught out by unexpected events. Regardless whether the market is going much higher or is heading to another recession, you must be prepared for it.And yes it means you have to always be ready to respond the changes.

One of the most important ways is to view your portfolio as a whole, rather than focusing on each item. Your portfolio works as one and thus it is very important to adjust asset allocations and diversify it to suit your risk. This might take a few books to explain so it’s really up to you to enhance your understanding of this. A typical finance graduate might have learned this, but would have probably underestimated the importance of asset allocation and diversification. I have to be honest I never quite paid attention in class and now comes the time I am catching up on it as well. The few important words to take note; systematic risk, idiosyncratic risk, correlations and diversification.

Following the changes in the world economy, financial markets, political scene etc is quite a handful to do. Constantly learning and adapting on the go is pretty tough but there’s very little excuse because these are the inputs you need to improve yourself to make decisions. Investing is a skill, much like a game of tennis or golf. It’s the hours you put in, the effort you make and of course the motivation to succeed that takes you further. The way Nadal, Federer or Djokovic hits the tennis ball solidly with the highest level of precision and accuracy, didn’t just take a year or two to accomplish. Malcolm Gladwell wrote you can be an expert in anything if you put in 10,000 hours. If you’re still young, that might seem possible to achieve a lot more in life. If you’re not-so young, you’ll value your time even more.

There’s not many things in life as important as managing your finances. Like a garden or a pet, the extra care makes a difference. The world is moving really quickly these days, last week’s news is old news already. Like I wrote in my earlier posts, the rules of the game has changed whether you like or not. My boss told the division recently, change or be forced to change, and it’s not pleasant when you’re forced to change. It really sums up the world we live in today, it's changing very rapidly and you don't want to be left behind. Thanks for reading.

If you don’t like change, you’re going to like irrelevance even less - Eric Shinseki

~deyao~

Robert's Case for Real Estate and Capitalism

2011-12-08T12:59:00.000+08:00

Financial education is just like a recipe, some people are willing to share it and some people refuse to for various reasons. Some people are afraid if they share them, they might 'lose' their exclusive-ness. Only with some exceptions, sharing your recipe is usually beneficial.

Robert Kiyosaki has been generous enough to share his story with the world. Some people ONLY see the side that Robert is making tons of money selling his books, games, seminars and other various products, and those are the people who may lose out in the current world of the information age and capitalism.We live in the world where capitalists or entrepreneurs thrive and lead, not realising this would be a huge mistake. These are the people leading the pack of being extremely wealthy because they are 'current'. Robert in most of his books explained the old theories of going to school, getting a job, buying a house and saving for retirement, he has made it clear not being 'current' is causing millions of people to lose out. Robert's books have transformed the way millions of people think and if they were all lies or a false marketing plot, he would be broke and his books would no longer sell. Today, he is one of the world's bestselling authors.

There are people who discourage me from sharing powerful tips and advice, but if a person like Robert can take the time to do it, I guess I can spend a little time sharing what I know. Ultimately, Robert is trying to bring changes through different means as it is shown not one man nor one country can make a change to this world. Leaders of the world be it Barack Obama or George Bush, can only do so much, the rest is up to the people themselves. You can have Steve Jobs or Bill Gates as your mentor, but if you don't have what it takes, you won't succeed. Many people view leaders as salvation and hope for the future and not knowing it is themselves who will determine their future.

This post will discuss on the investments people make and whether they are taking into consideration the four perspectives (earlier posts). Also, I will write about why Robert prefers real estate over other classes of investments.

In finance courses, we learn to diversify out portfolios. It means we minimise or eliminate the firm-specific risks and only expose ourselves to systematic risk. We protect ourselves by making sure we have the best risk-return trade off. One of the biggest mistakes most investors make is diversifying over one asset class; paper assets. When the financial crisis happened in 2007, being 'diversified' or not, most investors were wiped out. Robert questioned the education the world was receiving because despite the principle of diversifying over stocks in different industries, investment grade bonds from around the world and mutual funds who are supposingly one of the best diversified investments, investors lost when the markets went down. So how can it be diversifying if it didn't protect the investor when markets headed south?

Despite numerous successful investors like Warren Buffett and Peter Lynch, there are pitfalls in equities. First of all, I would like to note I've seen equities make fortunes for many people and I personally like equities. There are millions of people today whose wealth and retirement depend on the performance of the equities market. Doesn't that sound risky? In the event the market performs badly, the investor goes from rich to poor or his/her retirement plans gets postponed indefinitely, or until the market recovers, which is never a certainty. An investor usually has no control over the markets, and allowing it to determine their wealth and retirement is just plain risky and not logical. How about investing for the long term? Many people in the world recommend doing this but it may not be the best advice. Robert noted the lost decade from the 2000-2010 where the returns on the stock index was close to zero. Although the market MAY have a good decade ahead, there's still a big argument why equities may not be the answer to growing wealth and certainty. On a side note, the next recession might not be far away. For the case of equities, the wealth of the richest people in the world have grown tremendously over the last decade (despite the market returns), showing that success can achieved through knowledge, foresight and good decision making.

Next, you don't need to be a mathematician to know it is harder to gain after a loss. If you lose 50% of your money, it takes a 100% return to break even. If you lose 75% of your money, it takes a 300% return to break even. How can an investor take this huge risk of losing? I must note losing more than 50% is not hard in current market conditions where the markets are full of volatility and probably edging to another downturn. So think about it, how much of your wealth and savings for retirement are being determined by the equities market? Relying solely or highly on equities is too risky for anyone and believing the market will always perform the long term is being naive.

Capitalism has changed the world, it created entrepreneurs and capitalist who used their intelligence to become extremely wealthy. Many people know Thomas Edison as the inventor of the light bulb, but less knew that he was very wealthy. People wouldn't be surprised when they know this because capitalism rewards people who are unique and people who bring new ideas to the world. The big downside to capitalism is the increasing gap in wealth. We see the world improving with so much new technology and breakthrough but rich are getting richer and poor are getting poorer. People who do not understand the rules of capitalism are being left out and only education will help them get back on track. There were two simple illustrations by Robert which delivered the message.

The first was the monopoly game. The lesson was the game is won by owning more properties than anyone and NOT by collecting $200 each round. It's very straightforward, the people who own the properties are the ones who win eventually not the people who grew on the $200.

The second was being the different side of the table. On the interview table, most people only think about BEING the interviewee, not the interviewer. This is because the education system is creating employees rather than employers. Most of us think of getting hired rather than hiring people.

The Real Estate Advantage
Robert loves real estate because it made him a big fortune. He doesn't dislike other classes of assets, he just prefers real estate. One reason being real estate fulfills his debt, taxes, inflation and retirement argument.

Debt
Real estate is probably one of the few investments financial institutions are willing provide finance. The important thing about debt is, it is "NOT your money". The biggest upside is being able to undertake investments while not being wealthy. Although this is subject to knowledge and experience, creating a portfolio of good debt generating positive cash flows is the key main advantage.

Taxes
As I wrote in my previous post, earned income in the form of salaries and wages are the most highly taxed because of limited deductions available. In real estate, the cost of financing and costs relating to the property can mostly be deducted, thus having to pay much lesser in taxes.

Inflation
In the current world of stimulus and quantitative easing, money is worth lesser by the day. The prices of everything is going up. Although the theory of prices of real estate only going up has been completely dispelled, investing in real estate remains one of the best hedges against inflation. Real estate being 'real' reduces risk of owning 'money' which is no longer money. Higher inflation also lead to higher rents.

Retirement
I have mentioned on the uncertainty on depending on equities. Robert has proven real estate is able to ward off the uncertainty during tough market conditions. His strategy has worked through the financial crisis and is doing even better today. Robert chose his real estate which would be in demand in any market condition namely the energy sector where demand does not significantly slow. During the crisis when credit was frozen, people could only afford to rent houses. This put Robert at an even better position where he could even raise rents, increasing his cash flows and adding more real estate to his portfolio. This might be many people's answer to securing retirement.

Taking everything into account, it still does not mean real estate is the investment for anyone. Furthermore, like equities, not all real estate are equally good investments. Robert also notes it is a fantastic time to own houses in America because interest rates are at a record low, housing prices have dived and most importantly, it's a good time to get a deal on financing. For the rest of the world, whether the economy will worsen or not, investing should still be on the menu. For real estate, it's all about hard work doing research and improving your knowledge. Not having sufficient homework done can make a very good piece of real estate becoming a bad deal. Thanks for reading.

~deyao~

The Food Experience Part 2

2011-11-30T00:46:00.001+08:00

My short stay in Sydney and Melbourne was very memorable, and a lot of it will be because of the food. The two cities were different in many ways but were equally wonderful . Sydney gave me the impression of a big and busy city while Melbourne was much smaller but had so much to offer. I was at some pretty amazing places and it was a tremendous experience. There's so much more I could have actually done in both cities, the people living there should be feeling very fortunate.

I'll start off with Sydney, the place with the most awarded restaurants in Australia.

El Loco, Surry Hills
If you want to taste some exceptional Mexican food, El Loco is the place to be. Located in the food haven of Surry Hills, El Loco is the best Mexican place I have ever been to. Although the crowd is a bit of an issue, the other side of the coin indicates this place is awesome. The hot dog, corn chips with guacamole and salsa, tacos and Torta sandwich was simply amazing. What a high benchmark to start off the trip

Gelato Messina, Darlinghurst and The Star
As if El Loco didn't already made my day, Messina made it memorable. Mind my frequent using of the word 'best' because Messina serves the best Gelato I've eaten. What I really like about this place is the creation of so many flavours that were rare in terms of Gelato. Their selection was exceptional, with more than 30 flavours available. The salted caramel,pandan coconut and blood orange sorbet were the highlights, but there were so many more I would have love to try.

Sydney Fish Market, Pyrmont
In terms of types and varieties of seafood, this place is the best in Australia. We had some really nice sashimi and a delicious dish of huge prawns with noodles. There were so much more things to try like oysters and lobsters. It was Australia's seafood at its best.

Adriano Zumbo, The Star (also in other locations)
Masterchef made famous Adriano Zumbo created some of the most mouth-watering and difficult desserts on the show. I had to try his famous macarons and his Ssnowmanorr which was the final pressure test of the first Junior Masterchef. Although I got the lychee feeling instead of the original pear, it was quite a treat. It was certainly an appreciation of the delicate and skillful techniques to create this dessert. It didn't blow me away, but it was really good.

Bird Cow Fish, Surry Hills
This place wasn't planned but was an alternative to the very booked Toko next door. It turned out to be a good choice. My highlight was the beef brisket on special and the sword fish.

Kopitiam, Ultimo
If one of my friends had visited this restaurant, I don't think he can ever leave Sydney. Kopitiam represents Malaysian food at its best. The thing about Malaysian food is its diversity and combination of different cultures. Kopitiam is definitely a place for some authentic Malaysian food. My picks would the the chicken rice and claypot rice drop noodles (low see fun).

Black Star Pastry, Newtown
Located in a cozy and narrow street of Newtown lies one of the best patisseries. Many people would not imagine having watermelon in their cake but this place made it possible. Their Strawberry Watermelon Cake with Rose Cream was exquisite.

Max Brenner, Ultimo (also in other locations)
A heavenly place for chocolate lovers. Had some delightful waffles and ice cream. Not far from San Churro though.

Harry's Cafe De Wheels, Woolloomooloo (also in other locations)
It was on top of my list to try on what I reckon now to be the best meat pie I ever had. I knew this place through Anthony Bourdain's No Reservations and it was always kept in memory. Meat pies are something really hard to differentiate. It has to be so different and special. Well, Harry's did it. I had their signature Tiger, which had beef, mash potatoes, mushed peas served on a pastry topped off with beautiful gravy. It definitely isn't your typical Mrs Macs, it was one hell of a meat pie. I even expected to pay more. I heard their hot dogs are really good as well.

Baroque | Bistro Bar Patisserie, The Rocks
I knew this place through French Food Safari, which is a brilliant program. I had to try their macarons as shown on the program. I expected it to be good and it was. On a Sunday afternoon, located with a beautiful view of the markets and good weather, it was terrific.

Pancakes on The Rocks, The Rocks
Rewarding our efforts on crossing the Sydney Habour Bridge, it was time for some pancakes and pizzas. It was the prefect place as it rained as well. Pancakes and pizza was really good.

Melbourne
The Visit Melbourne site describes Melbourne as a maze of hidden laneways, opulent bars, exclusive restaurants and off-the-beaten-track boutiques. I would consider this place one of my favourite cities. The restaurants, bars, cafes, shopping, markets, lanes, sports and a host of others makes this city a world class destination. So here are my favourite places to eat in Melbourne.

Bratwurst, Queen Victoria Market
It's another place I knew through Anthony Bourdain's show. This market is huge to the extent we took awhile to find this place. Bratwurst is a German term describing the sausage and how is it made. Overall we had some good sausages with different flavours, it was quite satisfying.

Brunetti, Carlton (also in other locations)
Brunetti had the largest range of pastries and cakes I have ever seen. We had some delicious tarts, cakes and a very good canned lemon drink. It wouldn't fall into the 'best' category but still a place worth visiting.

MoVida, 1 Hosier Lane, Melbourne
One word to describe this place, "Wow". This place absolutely knocked it out of the park, it was just sensational. This is the best place I've been to in Melbourne and clearly the best Spanish restaurant I have visited. It certainly isn't considered fine dining but it is more than capable of turning into one. We had the anchovy, croquetas and lamb breast for tapas. For raciones (bigger than tapas), Air-dried wagyu, octopus with chorizo, beef cheeks and seafood stew. We had some lovely sorbet for dessert. One of the top restaurants in Melbourne, no doubt.

Chin Chin, Melbourne
From MoVida onwards, things didn't improve, well it couldn't because it was that good. The Chin Chin column deserves some respect so I'll stop mentioning MoVida. Chin Chin serves very delicious Thai food. The ambience is really nice, it certainly did not look like a Thai restaurant. We had a really good Pad Thai and soft shell crab.

P M 24, Melbourne
Another unplanned visit as we needed to wait for several hours for another restaurant (see below). Philipe Moucel is one of the most respected chefs in Melbourne for his work in several Michelin star restaurants around the world and has worked under the legendary Paul Bocuse, the father of Modern French cuisine. P M 24 opened in December 2010, and is one of Melbourne's top modern French bistros. On the upside, we actually ate in this restaurant, the downside, we didn't go for the mains. The restaurant had a fantastic layout and wonderful ambience. We had the pistachio souffle, creme brulee and Canele de Bordeaux. The people there might have had a very few encounters with people ordering dessert at 6.30pm and this was one of them. The desserts were very special, the Canele de Bordeaux stood out. We even saw Philipe himself!

Mamasita, Melbourne
We waited about 4 hours for this place. Was the wait worth it? For a first timer, yes it was. It was a highly recommended place and its queues were already there at 6pm. The food did compensate our wait, it is one of the best Mexican restaurants I have been to. But the Mexican award will remain with El Loco for now.

Cumulus Inc, Melbourne
Our last day in this wonderful city, one of my friends was not leaving till he had his breakfast. It was a really good first meal of the day and it was one of those places that gets your day going. Definitely worth a visit. Cumulus has a rating of 15/20 which is the same for MoVida.

Notables
Passion Flower, Melbourne -A really nice place for desserts and ice creams. Really liked the green tea ice cream.

Places on Lygon Street - We would have visited more places if we had more time. Carlton Espresso was pretty good.

Places on Degraves Street - Some great places for coffee and food.

Melbourne, oh Melbourne, I had a fantastic time. Oh damn, I just thought of the hotel. I can't go on, I'm going to miss it even more.Lol. Cheers to the states in the east!

~deyao~

The Food Experience: Perth

2011-11-27T19:58:00.001+08:00

If there's a few things I love about about Australia, it would be the food. Contrary to most people missing Asian food while living abroad, I really enjoyed all the different types of food in Australia. Food with so much difference influences from the Middle East, Europe and of course Asia, there was so much to try without having to leave the country. . During my time Down Under, I got to experience and appreciate all the wonderful produce the country had to offer and of course all the wonderful restaurants that left a big mark on my taste buds that I can never forget. I had such a big opportunity to dine in some absolutely fabulous restaurants during my time in Perth and my short stay in Sydney and Melbourne. I will share my experiences in some of the best places I've ever eaten in.

Perth is one of the most livable cities in the world and is situated in Australia's largest state, Western Australia. Although Perth's eastern counterparts do offer more variety and is a comparatively bigger dining scene, Perth should not be discounted as insignificant. Here are some of the best places I have been (not in any particular order)

Hong Kong BBQ, Northbridge
If I have to name the best Chinese restaurant taking into account taste, consistency and value, HK BBQ will be the one. The ambience is great, presentation is nice and their food distinguishes them from most of the other Chinese restaurants. The fish, meat and vege dishes are delicious and I haven't found anything I've disliked.

Yu, Burswood
Yu comes second for Chinese restaurants. Ambience and food is excellent. It has been awhile since my only visit but I can remember it was a good meal. In terms of value for money, HK BBQ is much better.

Prophet, Victoria Park
I never tasted Lebanese food before I had Prophet. And Prophet made it clear I have missed out on one of my favourite cuisines I never knew. Their kebab skewers, rice in different spices and bread are an absolute hit. Their use of spices and lentils leaves their food without a substitute.

Tony Roma's, Perth
A global franchise recognisable in almost every country but this was the first time I tasted such delicious pork ribs. It still remains the best pork ribs I ever had. Generous helping with nice sides as well.But do mind the waiting and booking policies.

Jus Burgers, Subiaco (also in other locations)
The name says it, it is all about the burgers. It's serves the best burgers I know today. The doc may recommend its competitor Grill'd, but Jus Burgers would win the culinary award. Their various beef, fish, chicken and lamb burgers have perfectly grilled bread, patties and quality sides.

Amuse, East Perth
The Good Food Guide's annual awards 2011 ranks Amuse as the top restaurant in Western Australia. Knowing that, I feel privileged to have dined in this restaurant. There is no menu, they only have a 8-9 course degustation. The venue doesn't look very posh from the outside or even the inside, but its food speaks for itself. Amazing was spelled over every course. Texture, flavour, taste, balance and technique was top draw. It was the first time I tasted kangaroo meet and hopefully the last. French cuisine is one of the most respected in the world and Amuse showcased the best of it. It's was pretty costly meal, however it will cost you a lot lesser than Vue De Monde or Jacques Reymond.

Rockpool Bar and Grill, Burswood
Owned by the renown Neil Perry, this place is home to the best steak I've had. I wouldn't guarantee it will be everyone's favourite, but I've never eaten a better steak. There's a few reasons their steak is one of the best; good beef, dry aging expertise and perfect cooking. Their sides were exquisite as well. It's fine dining at the highest level and to top it off, having the best wine list in Western Australia. On the downside, it's probably the most expensive steak you'll eat in your lifetime (but it's not out of reach).

Little Creatures, Fremantle
This is one of my favourite places in Fremantle. The Modern Australian restaurant is located in the brewery itself and it needs no mentioning Little Creatures is the name of its beer. Apart from its signature beers, this place serves up very good food. The chili mussels, pizzas, nachos, chorizos and much more are my favourites.

Ciao Italia, South Perth
Just by looking people lining up at 5.30pm waiting for the restaurant to open pretty much tells the story, their food is excellent. I reckon it is the best Italian restaurant in Perth. Pizzas, pasta, chilli mussels and tiramisu are just sensational. A taste of their carbonara or squid ink pasta will leave you very satisfied. It's a wonderful place if you don't mind the long queue everyday, slightly pricey pasta and narrow sitting arrangements.

Other Notables

Clarence's, Mount Lawley - I celebrated my birthday there and it was fantastic. The food was good, the ambience was cozy and the service was good as well.

La Galette de France, various locations - Home to delicious almond croissant and super macarons. Their almond croissant is one of the things you need to try before you die.

Barrett's Bread, Nedlands - A wonderful place for good breads, sandwiches, pastries and cakes. The standout for me is the pistachio tart, which is one of my favourite cakes/tarts of all time.

Corica, Northbridge - One of the prides of Perth for THE best apple strudel. I don't know what else to say because it is simply the best. The amount of people leaving Perth with at least a box of them in their hands is a pretty good sign.

Good Fortune, Northbridge - Duck is seldom on my order list, but I'm more than happy to eat their roast duck.

Dragon Palace and Royal Seafood, Northbridge - People from Hong Kong say you don't have to look any further for some good Dim Sum because the ones here as just as good!

Infusion, Perth - One of my friends loves this place for their excellent coffee. I tried it once and I have to agree. Definitely a place for coffee lovers.

The Quarie, Hammond Park - Possibly the best restaurant in its postcode. Has a nice bar and serves decent food. Nice building as well.

Places to consider which I have not visited for food

The Loose Box, Mundaring (French)
Andaluz Bar and Tapas, Perth (Spanish)
Must Winebar Restaurant, Mt. Lawley (French)

That's it for Perth, the city that has come a long way. It will always be a very special place for me. Cheers to Perth! Next up, Melbourne and Sydney.

~deyao~

The Third Factor: Taxes

2011-10-08T17:04:00.002+08:00

Links to the first two parts.
Part 1: Inflation
Part 2: Debt

It took me such a long time to finally complete part 2 and now here is part 3. This posts is will be relatively short because I am not going into detail of what you should actually do. It's like most of my other posts, I like to give you the idea of something and hopefully you would take that idea and make something out of it. A memorable quote I read awhile back

“Give a man a fish, you have fed him for today. Teach a man to fish, and you have fed him for a lifetime"

People like Robert Kiyosaki, Napoleon Hill and Warren Buffett gave me the power to make decisions and take control of my destiny. It was never a 'do this and do that', it was more of a 'what do you think you should do'. The power you gain today will carry you for the rest of your life and to acquire power it takes a lot of effort and determination. The sooner you learn how to 'fish', the sooner you will gain power.

A lot of people (including myself sometime ago) see taxes as something we pay to the government for the income we earn. We know we need to pay goods and services taxes, income taxes, medicare levies, duties and many others. What we do is we determine how much taxes we owe and pay it, end of story. Furthermore, we got our professional advisers to make sure we pay our taxes according to the law.

Tax systems differ in every country but the main function of a tax system is to redistribute wealth. Every country has an inequality of wealth problem among its population and the tax system functions to reduce that gap. So the wealthier people get taxed more than the less wealthier people.

This posts is NOT about what constitutes to income or deductions. It is about understanding the tax system well enough and to be able to exploit the opportunities under the law (Quoted from the definition of tax planning). Are we talking about the loopholes in the tax system? Not really. It is more about exploiting the parts of the tax systems which benefit particular groups, and doing it legally of course.

Like how Robert points out, individuals are the most highly taxed in the most of the countries and has the least incentives. In Australia, the highest marginal tax rate for individuals is 45% and for companies it is generally a flat 30%. That already shows an incentive to have your own company. Most personal incomes have limited deductions available and thus contributing to a higher tax payable.

Most of the time, individuals rely on their after-tax dollars to invest, which means the amount remaining after paying taxes is all they have to invest. Worst still, the investments do not take into account the cost of capital, which is the money forgone to undertake that investment. For example, the individuals do not get a tax break on the cost of using that money to invest. This means growth of investments are limited because eventhough investment returns are quite high, the base of investment is not large enough to capitalise on the high return percentage. To increase that base on investment, it requires leverage/debt.

Example 1
An individual earns $100 in salary income, pays 30% in taxes, leaving $70. $70 is invested and gains 10%, which increases to $77. After taxes on the $7 dollar gain, the individual is left with $74.90. You can see the individual gets taxed twice in the process.

The individual has paid $2.10 in taxes for the $7 gain which comes back to the 30% in taxes.And this relies on the salary of the individual.

Example 2
An individual borrows $70 and invests it at a 10% return. Assuming the cost of borrowing is 7%. $70 + $7 (gain) - $4.90(cost) = $72.10

The individual pays $0.63 (30% of $2.10) in taxes for a $7 gain.

The big difference between the two examples is the advantage of leverage. Example 1 shows the usual situation of how individuals use after-tax dollars to invests. The individual pays taxes at every level of income. Example 2 illustrates how an individual uses none of his/her money to invest and pays less taxes by getting a deduction on the cost of borrowing. Of course the cost of borrowing decreases the net profit of the individual, but the fact is the individual is using none of his/her own money to earn income. The lesson here is the tax benefits of using leverage.

I have to note again using leverage increases risk and every investor should consider their risk profile, investment and knowledge before taking on debt.

On a much simpler side. Australian residents should know the tax consequences of investing in real estate and equities as they are the most common. In real estate, there are tax benefits of taking on debt, main residence exemption, first home owners grant and claiming of various expenses relating in maintaining the property. If you pay close attention to the available deductions, you could be saving a lot in taxes.

For equities, it is important to understand Capital Gains Tax (CGT) and franking credits. Tax rates vary for individuals, companies and complying superannuation funds. Some gains may be entitled for a discount capital gains if conditions are met. Franking credits are credits attached to distribution by companies for the taxes they have paid for. Franking percentage varies on different distributions and investors should take note of this. Franking credits can reduce taxes and are entitled to refunds.

Although I said there were limited deductions to individuals, it is still worthwhile to take advantage of incentive when you have a family and children. Items such as the medicare levy surcharge, self-education expenses, family assistance (paid parental leave and baby bonus) and others could save individuals and their families hundreds a year.

For business owners, there are many special concessions for small business owners and rules for carry forward losses. These are the various benefits the government tries to assist businesses. Businesses create jobs and that is good for the economy and that being the reason businesses get more benefits from the government compared to individuals. There are many tax incentives for business owners so if you take time and understand them, it could again save you money.

I will understand if people find it hard to understand tax consequences at the start because of unfamiliarity of terms and facts. But the fact that taxes are such an important part of wealth it will be worthwhile spending the few hours learning it because of the simple fact it can put a lot of money back in your pocket. Having a tax consultant will be beneficial, HOWEVER, you STILL need to understand the facts and process yourself to be able to take advantage of tax benefits. Your tax consultant is here to make sure your tax return is in accordance to the tax laws not with the purpose to give you tax advice based on your financial position and investment profile.

Before I end, I would like to reiterate how saving some money here and there can make a difference. The compounding effect is significant when money is rolled over, over time.

'Real estate, tax laws and debt does not make you rich, it is the knowledge about them that makes you rich'
~deyao~

The Rebuilding Begins

2011-09-30T01:40:00.001+08:00

15 years into the job, Arsene Wenger would have thought he would have dominated Europe at least once and being English champions a few more times than he currently has. But things has not turned out the way he wanted and he probably faces his toughest time since his arrival. This season, he does not have the experienced leaders to carry the team forward and he just lost few of his biggest players in the team.He suffered the heaviest defeat in his entire reign and the club's worst start in almost 60 years is not a statistic he would like to be associated with.

Majority of us gooners would call this transfer window a disaster, we've lost our best players and the players we brought in is far from the quality of players we sold. The scouts, CEO and negotiators have to take most of the blame because we had the entire summer to work with and most of the work was done not more than 3 days from the transfer deadline. The early signs are already bad, our performances has been far from convincing and the team's confidence is lacking. The finances of the club has been the biggest story this summer, our club is operating under a tight budget meaning we cap salaries and we don't spend much on transfers. We've made lots of money over the last few seasons with the sale of several players and yet this continues this season. It's by far our biggest selling of players in a season and we can no longer deny being a 'selling club'. It's not a pretty sight for Arsenal fans having to go back to the starting line over and over again. At the end of the day, the stadium is pretty much the biggest item in our financials but without building the stadium, the club cannot compete in the long term. This is not a short term sacrifice for 5 years or even 10, it might take 20! Can we really carry on like this, selling players season after season and having negative spending ....AND 'trying' to competing for honours. It's ridiculous no matter how you look at it.

To the positives, there's still quality in the team without Cesc and Nasri. Gervinho, Arteta and Frimpong have already shown they can galvanize this team.Gervinho looks a threat every time he goes forward, he can provide and as well take a goal himself. Arteta is the most important signing, he becomes the playmaker in the team. He has the experience in the league and I believe will play a big part in the season. Frimpong looks like the midfield hard man we've been looking for in a long time, he might not have the height of Vieira, but he surely has the muscle and aggression.Rosicky has put in some decent performances and could bizarrely have one of his best seasons, fingers crossed. Ramsey will have his biggest season yet and Wilshere's absence will only mean more games and experience. We might not have a clear leader on the field but the experience of Van Persie, Arshavin and Benayoun will bring some much needed strength during tough games. We've got options in attack as well, Chamakh and Walcott could very well deliver 20-25 goals between them. More good news? We've got our new signings in Ju Yong and Alex Chamberlain who could also contribute to the score sheet throughout the season. Ju Yong has the experience and has already scored a few for his national team. Meanwhile Alex scored a scorcher in the Carling Cup and has impressed for the England Under-21s. Plus, if Arsene gets it right, we got Ryo Miyaichi to deliver us some surprises. If the offensive players get it right, it might be a better season than most people think.

In the defence department, I am less optimistic. We effectively only signed Mertesacker. Jenkinson came in for Eboue and Santos came in for Traore.Koscielny, Djourou and Squillaci remains the biggest liabilities in my view. Koscielny hasn't made the grade I feel when it comes to defending against better teams. Djourou has not improved much and his concentration and alertness has been questioned on many occasions. Squillaci just isn't a good defender at all, nothing else to say. The defence needed a lot of strengthening this summer but there's isn't enough improvement overall. Sagna, Vermaelan, Mertesacker and Gibbs being the back four is probably still acceptable, but it is the understudies who are just not good enough when required. This is Arsene's single biggest error of the transfer window, if we had signed even one more centre back it would have made the difference.

Title aspirations

I have always been optimistic with this team I have supported more than half of my life, but this is the very first time I am less optimistic about competing for the league. The reality is we are rebuilding time after time when a big players leave and I'm not sure when it will end. The squad we had last season were maybe 2 players away from being really excellent. But things happen in life, one cup final lost, injuries and lost of morale caught up on the team.It's going to be even more difficult this season so the minimum would be again be a top four finish.

Roundup and Predictions
I've never got this right ever because I don't like Man Utd winning the title and I think Arsenal are better than they are.Lol. Anyway, here's an overview of the title contenders.

Man Utd
They are by far the favourites this season despite them losing a few players to retirement. They've done very well in the transfer market and their start to the season has been breathtaking. Their new players are blending in very well and they have some exciting players coming back from a loan spell like Cleverly and Welbeck. I believe they are biggest favourites again and it is their title to lose.
Best position: 1st
Worst position: 2nd

Chelsea
It's hasn't been a very high profile transfer window but Chelsea has splashed almost 60mil pounds on Mata,Lukaku and Meireles. It's a significant year for the blues in addition to the signings on David Luiz and Fernando Torres in January which totaled 70mil pounds. They have also got Sturridge back who did really well on loan last season. They have the most experienced squad in the league but with a higher than average squad age. A new manager too who could well make things more exciting. Chelsea is definitely right up for it this season.
Best position: 1st
Worst position: 3rd

Man City
Money does make things happen and they certainly make title contenders. Man City will probably make their biggest ever push for the title as long as I can remember. They have got one of the most powerful squads in Europe comprising of the best talents in the world today. They have the players to make it happen and it is up to them to mix and match a winning team every game. However, their lack of experience playing with each other would be the only negative. It's a very impressive line up, Aguero, Nasri, Dzeko, Tevez, Silva, Milner, Yaya Toure, Balotelli and many others. This team will be contending for the title this season.
Best position: 2nd
Worst position: 4th

Liverpool
Liverpool are back in business all because of one man, Kenny Dalglish. Since his return to the club, their fortunes have changed dramatically. Despite the sale of Torres, 'King Kenny' has transformed the club capable of challenging for trophies again. The arrival of Suarez and Carroll has been a breath of fresh air for The Reds. Summer also saw the arrival of Downing, Adam, Henderson, Bellamy and Jose Enrique. This has strengthened the team tremendously and this is also due to the support of their new owners. It's definitely a stronger Liverpool side this season but I feel it's one season too early for them.
Best position: 3rd
Worst position: 6th

Arsenal
I've never lost hope on this team but realistically I have yet to be convinced the team can do it.
Best position: 2nd
Worst position : 5th

If the math is done by averaging the best and worst, my prediction will look like this.
1) Man Utd
2) Chelsea
3) Man City
4) Arsenal
5) Liverpool

The top four is exactly how it finished last season. It's a big season ahead and we'll see how it goes.

~deyao~

She's electric, she's the current running through my veins

2011-09-03T01:19:00.003+08:00

Just when I thought the my days of blogging about any of the Next Top Model series was over, I am excited to be writing it about it again. When I looked back at my posts on ANTM and BNTM, I didn't think I could ever reproduce any of those things again. Maybe it's because my interest had changed or I have evolved from it. Every post I have ever done came from a sudden inspiration I got from somewhere and often it is a spur of the moment. To make sure I carried it with me, I wrote it on this blog. To write about the same thing I wrote about 2 years ago would be really different. I went back and saw my Next Top Model posts I wrote previously and I was surprised how I wrote them because I wouldn't write them that way if I did it today. My last post about BNTM was more than two years ago.

After a tremendous Britain's Next Top Model Cycle 6 (2010), it has brought me inspiration to write about it again. America's Next Top Model is also hitting new highs in recent times but it lacked that catalyst to get me on the keyboard to write about it. BNTM 6 was just fabulous to watch, full of excitement, humour and surprises.

Just a recap, I started off with Cycle 3 where the stunning Lauren Mccavoy deservingly took honours. Cycle 4 saw Alex coming on top and Cycle 5 saw a determined Mecia edging out Sophie. Cycle 5 started off a bit dull and boring, but things picked up eventually and I really liked it in the end. The quarreling and bitching did put me off a bit during the course but as things got more serious, the quality improved and it was really entertaining. Cycle 5 also was the last for head judge Lisa Snowdon and Huggy Ragnarsson. Milliner Louis Mariette was new to the panel but he wasn't the ideal judge for me. A tribute to the judges for a fantastic show. Overall, it was well worth watching.

Now to the new BNTM 6, reformed and elevated. New judges, new theme and new auditions. From the left: Grace Woodward, Julien MacDonald, Elle Macpherson and Charley Speed. A brief intro, Grace is a fashion stylist and creative director to many huge fashion magazines. She seemed really straight and mean at the start but she became likable. Julien is a top British designer who has worked at the best fashion houses and biggest models in the business. He is not afraid to give you his opinion. 'The Body' Elle Macpherson is one of the world's most famous supermodels ranking on the same level as Naomi Campbell, Linda Evangelista, Cindy Crawford and Christy Turlington. All I can say she represents the best of the fashion industry. And lastly, Charley is a male model who has worked with the top fashion brands in the world and started at the age of 17. No photographers on the panel this time around. There is a surprise international destination (revealed below). The episode where it was revealed took me on a ride and it was just exhilarating. I was absolutely caught out just when I thought I've seen it all.

Now, straight to business, my favourite contestant Charlotte Holmes. I did have a previous favourite named Charlotte as well, but I like the current one more. I was hoping she would finally overcome the challenge of "the pretty girl can't win"(She has entered a few beauty pageants). She did extremely well right till the end and having her on the show was probably the highlight of the series. Her gorgeous face, bubbly personality, constant smile and determination was to die for. I forgot to mention she's so hilarious and I don't know what it is about her, but I just laughed every time she reacted to something. All I can I say I was thoroughly impressed. She proved so many people wrong by having so many good photos, winning challenges and booked job after job. Elle's reaction to her leaving tells the story how highly she rated her. Elle said:

'I realised afterwards that it was because a lot of comments made about Charlotte - too commercial, too smiley, not fashion enough, too curvy - were the types of comments I heard early on in my career.When she didn’t make it through to the final three, it felt like a part of me was rejected.'

Her versatility proved a challenge to high fashion but I don't think she could have done more in her part. She might not make it to high fashion in the future but there's so much she could still do. It's not often you get such a 'cool' contestant on a show like her. She was up for it the entire time and personality did bring her very far. She's probably one of my all time favourite contestants. Charlotte does some modelling nowadays and also works as a tv presenter. She is so talented and I can't wait for career to blossom, really happy for her. Here some of her shots from the series.

Photo of the week. Shot in Alicante, Spain. Top draw. Reminds me of Adriana Lima.

Revlon photoshoot.

In the Norwegian glacier . Negative 4 degrees with a dress made of bottles.

Shoot in Bukit Cahaya, Malaysia! Nice shape, one of her best shoots.

Charlotte: Bring on the rugby boys!

Shot on the roofs of one of the buildings in Kuala Lumpur.

What a journey for Charlotte on BNTM. She didn't need to win the competition to make it big in the future, she just has it in her. And her progress since the competition has showed that. I'll end it here with some of her pictures I found and some of the other contestants from the Cycle 6. Cycle 7 has already started, who knows, I'll be back with more.

Other contestants

Joy

Malaysia shoot.

Toughest conditions ever.

Beauty shoot

Tiffany

One of her strongest.

She manages to make the axe look heavy.


If her hair stayed this way, things would be so different.

Alisha

Her softness finally showed.

For a finish. Here's an interview of Charlotte with Superstar Magazine with photos from it. Now you can see why she's so funny.

Charlotte will be hosting BNTM Live which is coming soon. Can't wait to see it.

The title is part of Example - Won't Go Quietly which was played on the show and I thought it was a perfect description of Charlotte . I guess my inspiration of this post is quite obvious.

Back with Next Top Model
~deyao~

The Clash with the Champions

2011-08-27T02:25:00.002+08:00

It's turbulent times at the moment at the Emirates which have seen so much happening at the club with little being good news. In the last few weeks we have seen the departures of our captain Cesc Fabregas and one of our best players Samir Nasri.A rocky start to the new season with a goalless draw at Newcastle and a defeat to Liverpool. Suspensions to Frimpong, Song and Gervinho has further added to our woes.Injuries to Wilshere, Diaby, Gibbs and Squillaci has stretched the team to its limits. The biggest news this season is obviously our progress to the Champions League proper.

Our start to the season does not get any harder with the trip to Old Trafford. Man Utd are clear favourites to win this. Man Utd are playing really good football, winning their games and have a very strong squad competing for honours again this season.On paper we certainly look like we're heading for defeat but as history has shown, football is unpredictable.

Regardless of what the form book says, we're definitely up for the big match. Our last game against Man Utd should not be forgotten, and yes we did it without Cesc. And just a reminder at that time Arsenal's season was practically over and Man Utd had to win all their games to win the title. Can the win against Udinese be a catalyst for the upcoming matches? I really hope so because we should really start winning now.

I have been very frustrated by Arsene's transfer policy because I have not seen major strengthening to the squad, only days left and I can only hope.I have to be honest we're not in our best shape to face the champions this weekend, but we still have the quality to make an impact and get a result if we do our part. The odds are stacked heavily on us but that shouldn't concern or affect our determination to win the game.

This is a fantastic chance for us to get our season started and with less pressure on us as an away side, let's pull off some surprises. Come On Gunners!

~deyao~

Good Luck Cesc

2011-08-15T22:39:00.004+08:00

The last time a big player left the club as I long as I can recall were Marc Overmars and Theirry Henry. Ironically, they both went to Barcelona. It has been a long battle for years to keep Fabregas at the club and one day we knew we would have to give in eventually. It happened this year but it didn't come to our surprise.

Cesc was handed the longest ever contract ever awarded to any Arsenal player (8 years), simply because he was one the best the club had ever seen. His vision and remarkable passing is world class and as good as you can get these days. Even his goal scoring record is admirable. I've used many words describing Cesc over the years on how good and important he really is and he deserves every one of it.

When Patrick Vieira left in 2005, he left a large void. He was the physical presence, the leader and the steel of the midfield. We never really replaced the hard man in midfield ( I have to note Alex Song has emerged recently). Arsene Wenger took the gamble and played Cesc straight away, not as a 'natural' replacement but as a replacement. Cesc played more games at his age compared to any top footballer, got to work with some of the biggest players and his invaluable experience he carries with him today is largely due to the Arsene's tremendous belief. At the age of 24, he has played 303 professional games for the club and that's more an average of 40 games a season since the age of 17! Him being the club's youngest captain also shows how far he has come.

Maestro, talisman, captain and heartbeat are just some of the words Cesc has earned over the years. Every Arsenal fan will be gutted to lose Cesc at this age although we were prepared to lose him eventually. We did make a big compromise on the price tag and we have always lost on that aspect because we respect players wishes to leave. He is easily worth 10 million pounds more. Although Cesc winning the Champion's League may be against our interest, hopefully he will achieve the success he deserves. But of course we would have liked his success to be from North London.

It is a great loss to the club, no doubt about it. Arsene might not look unhappy in front the media but he will be extremely disappointed inside that one of his biggest unearthed talents is leaving. Despite this, no one individual is bigger at the club and the show has to go on. The club has always faced big name departures and Cesc will go down as another. The club has been on a trophy drought but our belief is stronger than ever and that will carry us through. We respect Cesc's decision but we got to respect ourselves and continue fighting for the club.

Thank you for your outstanding contribution Cesc, you will be missed.

~deyao~

Part II : Debt

2011-08-07T18:30:00.006+08:00

Debt

This is a continuation from Part 1

One of big problems in the financial world today is debt. It would be very foolish not to take note of debt because the havoc it's causing is affecting every country,even now. Because of the "creative" people in financial world, we have come across some "crazy" debt instruments and the failure of people to understand these products has caused a great deal of problems. A brief introduction, how to we take on debt or borrow. We usually borrow money from banks or other financial institutions and that is the most common way. For large institutions like corporations or governments, they are able to borrow by issuing debt. One party borrows, pays it back in the future plus interest. It all seems like an easy equation but what if the borrowing party can't pay it back? And what determines the riskiness of the borrower?

Debt is such big word that occurs at many levels and sometimes people do not see the entire picture. Borrowing and lending occurs at different levels. It can be at an individual level, a business level or a national level. Understanding debt at these levels is crucial.

Before we get there we have to understand what exactly influences the interest rate on debt? If we would like to borrow money, rationally we would like it at the lowest rate, right? But different kinds of debt give you different rates? But why the difference? One big word any borrower and lender needs to know, and that's RISK. From two extremes, the interest on credit cards (18%) and interest on a home loan (6-7%) are different. Why such a big difference, especially to a person who is going to pay the loan back anyway. The answer...risk. One of the simplest explanations is the debt on credit cards are unsecured while a home loan, the (house/asset) is secured by the lender. If a person goes bust with a credit card debt outstanding, if the person has no assets, the lender (or the issuer of the credit card) would probably write off the debt as unrecoverable. If the a person defaults on a home loan, there are safeguards in place as the asset is secured and the lender could take possession of the asset and try to recover the loan amount by selling it. A home loan is probably the lowest interest rate loan known to individuals, because it is least risky to the lender.

There are many other debt instruments available in the market and to keep track on all of them is impossible. So what I suggest is to know the ones that are frequently used.Another important thing to understand to risk and return trade off. Yes, everyone knows you need to take on more risk for a higher return. But what people sometimes overlook is whether they are compensated SUFFICIENTLY. If you've done some finance, you would have come across the efficient frontier which tells you having a portfolio on the frontier would give you an efficient portfolio (maximising returns for a given level of risk). The model is normally used for stock returns but calculations for debt or stocks are alike and it is directly applicable. So when a corporation or financial institution borrows money from you for a higher interest rate than the normal rate, does it include a risk premium and it is sufficient?

One of the best examples of a risk premium is insurance. You pay a couple of a hundred dollars a year of premium but when there's an accident or claims, you get back a lot more than the "premium" you pay. One friend asked me awhile back, how is the insurance company going to make any money in that case. Well, firstly, the insurance business is very profitable business because they have done the math in terms of estimating claims. They charge premiums based on probability calculations. One thing people fail to remember is when we buy insurance on a building, car or health, it just lowers your risk financially. You won't actually HOPE or EXPECT your building to burn down or your car to get into accident right...So the bottom line is the premium an insurance company charges you more than compensates them for the risk they are taking on (repaying claims). So here you go, the insurance company is more than compensated for the risk they are taking, hence they will be profitable. So on the other side (which is us) buying and paying the premium, we are under-compensated right? Technically yes, but it would be extremely foolish not to buy insurance to reduce risk of loss.

There are many types of debt instruments that are available to public. Debt is normally classified by its duration, short term or long term. Just a clue, when there are words like money market, bills or notes, they usually mean short to medium term. When we talk about longer term debt, you should be seeing the word bond.

Just a rule of thumb and referring to the principle of risk and return, when they are instruments that offer higher returns than the risk-free rate, there will be a risk premium, which is the difference in the price of the instrument or the interest rates paid by the instrument.

Good Debt vs Bad Debt
This section is probably the most important in my view. Debt or leverage is probably the most effective way of growing wealth. The general view is that we should reduce the amount of liabilities (debt) we have, but that should only happen in the case of bad debt. Bad debt are debts that do not generate a net benefit while good debt are debts that will generate a positive benefit. Bad debt are things like credit card or personal loans which do not provide any financial returns.I've actually written about this before in my previous posts so I won't go too in detail.

Leverage or taking on debt allows investors increase risk which achieves potentially higher returns. For example if you want to own an investment property, are you going to save up until you have ALL the money required to buy that property? The answer is no, it would take too long and you would lose out on the potential rental income.The most effective way is borrow a portion of the value of the property and start renting it out immediately. If you worked the numbers out correctly financially then you would probably have an investment with a positive net present value which means you have added value to your wealth.Debt is probably the most common tool used to get rich if managed intelligently. Leverage is also used with many other instruments to increase the potential risk/reward. For example in shares, investors may use margin loans or contract for difference (CFDs) to increase risk. Other instruments such as futures contracts involving commodities and foreign exchange can also be levered to increase risk.

The Debt Crisis
If this post didn't mention about the crisis the world is GOING through, it would be ignorant. The global financial crisis (GFC) started from the subprime mortgage market where banks handed out loans recklessly to home buyers who were borrowing more on rising housing prices. The outcome was the housing bubble bursting where people struggled to meet their repayments and flooded the market with their houses. 15 months after the start of the GFC, Dubai went into trouble. Why? They had too much debt. Building artificial islands in different shapes are cool but how did they do it when they were not even producing oil. They were optimistic on becoming a global hub, conditions were wonderful at that time and banks were more than happy to lend. The result, disaster.

In May 2010, the European debt crisis began. And most notably Greece was was in trouble. They were on the verge on default which would have disastrous for the European Union and most notably the euro (currency). The bigger countries in the EU bailed them out but the story won't end there. Spain and Portugal had their credit ratings cut at that time. What are the significance of these events? Well, didn't we learn sovereign (government) debts were riskless in finance. That assumption no longer holds and we have to be extra careful when evaluating debt we are buying. Yields may be 9% or higher, but this includes a very high portion of risk premium which is the risk of default (non-payment).

Credit Ratings
In finance courses we are taught credit ratings allow us to value a company or a country's debt. A company with a high credit rating can borrow money at the lowest rate, vice versa. So with a AAA (highest) rating, we would think the instrument is pretty save. But, an event has changed the complexities in the already extremely complex world. In April 2010, Goldman Sachs were charged for fraud in issuing one of their products. They basically repackaged subprime mortgage backed securities and sold it to the public as a AAA product. These securities were far riskier than an investment grade instrument. How did they do it? Long story short, it's fraud. Investor's lost more than a billion dollars, Goldman got away with a song (not sure it was even a couple of million dollars). To make matters worse, Goldman was trying help an ally offload these securities. Investors were defrauded and they get nothing in return. Goldman Sachs employees? They shared a pie of $14 billion worth in bonuses, how nice of them. Those investors could have been anyone, the lesson for investors is to be extra careful when evaluating securities they buy because when it comes to money, anyone could have an incentive to take advantage.

Debt Crisis in 2011
2011 might not be the year of an economic recession but it is the worst year since the GFC. Debt problems in the America and Europe has caused lots of uncertainty and economic growth has slowed. The debt crisis which surfaced in 2010 has again caused problems to financial markets. Many considered Greece a small country and brushed off the significance of their decline. With the leading countries in the EU combining, there was little fear Greece couldn't be rescued. But today, Greece is very certain to default. The other countries in trouble are Ireland, Hungary, Portugal, Italy and Spain. These countries are not that small and the impact of these countries defaulting could be massive.Italy has the third largest economy in the EU. Compared to the GFC where the US government were bailing out banks and companies, now we're talking about bailing out COUNTRIES!.It's not going to take billions of dollars but trillions of dollars! It's an ongoing issue today which would take a lot of sacrifices to resolve. A lesson to take from this is even government debt which were generally risk free are no longer the case. And the simplest principle of not spending more than you earn is evident in every of these countries.

More recently, America's credit rating of AAA was slashed for the first time. This is because the government has failed to manage its debts properly. They have raised the debt ceiling numerous times and they have not done enough in reducing their spending. America's debt to GDP ratio is heading to 100% and is the world's largest debtor. So how safe is American debt? Can it still be considered a risk free asset? There are also definitely long term implications to the US Dollar as the world's reserve currency.Even the debt of the world's largest economy is getting riskier, it's definitely important to pay close attention.

~deyao~

New signings and arrivals

2011-07-26T02:05:00.009+08:00

It's less than 2 weeks away from the opening of the new season and a month until the transfer window shuts. I've always done a few previews before the season starts and this will be one of the parts of the season preview. It will be mainly based on Arsenal except the final one which I will analyse the contenders for the season.

In short so far....Arsenal has been a disappointment in the transfer market. Manchester United has flexed their muscles early on and done all the work at the start. They look really settled and there's still a small chance they may nick a possible transfer of a midfielder, namely Wesley Sneijder.

We were promised a busy summer transfer window and so far it has completely fooled everyone. Regardless of ANY big surprises Arsene Wenger or Gazidis tries to pull out in the coming weeks, it can hardly compensate the fact that any new arrival should be given the maximum time to integrate with the team in pre-season. If a potential signing is not from England, there's even more reason to have done it earlier.Based on the two arrivals, business is far from being done.

There are more speculation of players leaving than players coming in this close season. We've got Clichy and Denilson leaving the club and very certain departures of Bendtner, Almunia and Eboue. Losing Clichy is a big blow regardless how to look at it, 25 year old for $7m, how on earth did this happen.

On the arrival front, we've got new signings in Gervinho and Jenkinson. Again, it hardly shows any conviction for a title push.Gervinho was barely targeted by any of our rivals and Jenkinson came for $1m. That takes net spending so far to 11m + 1m - 7m = $5m. Man Utd has already spent $55 million, a staggering 11 times more.

We need a defender, we need a defender, we need a defender. Our centre back positions were hugely vulnerable last season,not to mention for the past few years and it has cost us success for years. Only Vermaelen is a decent quality centre back we can depend on and I would have expected business to already be done sometime after July 1. But No, we missed out on Phil Jones, somehow were not interested in Roger Johnson, made no bid for Christopher Samba, put in a half hearted bid for Gary Cahill,made no contact for Scott Dann and put in a big lower than last season bid for Phil Jagielka. Can we take things a lot more seriously Mr. Wenger? That defence has been a calamity and disaster for awhile now, we've conceded so many late goals and lost so many points for that.It makes me really angry the more I think about it. Squillaci, Koscielny and Djourou being in the first eleven is not going to win us anything.

And we go to the biggest stories of the summer, the possible departures of Cesc Fabregas and Samir Nasri. Cesc obviously has the desire to leave because he loves where he came from but somehow decided to leave there many years ago. This protracted saga is not doing anybody good and I finally give in, if Barcelona meets out valuation then we should let him go. But there's still every reason to buy a new player to show some ambition, not wait until we sell Cesc and clubs taking the advantage of us having a warchest and inflating prices of our targets. We love you Cesc but your constant desire is negatively affecting the morale of the club, we wish you all the best if your potential employers do come through with the money.

The next issue is really embarrassing. Our player of the season only has one year left to run on his contract (Nasri). How the fudge did everyone in the club not lift a finger and tie him down earlier. His good form was in the first half of the season and didn't anything occur like offering him a new contract? This puts the club in an absolute dilemma, selling him throws the club into more uncertainty or the option of losing him for free next season sounds absurd financially. The club is willing to lose $23million pounds just to show ambition. Why waste that kind money? Buy someone now and let him go if he doesn't want to sign. I really thought it was a smokescreen like Wayne Rooney where the saga ran its course and surprise,surprise he signs a new contract a few days later. Nasri's case definitely isn't the same, the issue of him leaving has been here for awhile and that matter hasn't resolved in a comfortable time period. There's surely something happening in the background and it doesn't look good.

On the arrivals front, apart from the two new signings, we've got some players promoted to the first team and some coming back from going on loan.

1) Carlos Vela
All Arsenal fans can remember of him is his commendable record in the Carling Cup where he has scored some wonderful goals. His lack of contribution in other competitions has put a question mark over his future. I was actually quite excited when he signed some 6 YEARS ago, but like many huge 'potentials', Vela certainly hasn't proven it. It's most likely his last chance to shine and I hope he does.

2) Armand Traore
When he first made an appearance in the first ever Emirates Cup back in 2007, I was extremely happy with what I saw. He was only 16 but he played like he was 20. He had the pace and was very calm with the ball. Few years on, he hasn't yet broke into the first team. His key strengths are his attacking runs and crosses but there are still doubts he has the defensive qualities required for a full back. Arsene Wenger not making an acquisition for a left back clearly signals the revival of Traore as he will be the main understudy to Gibbs. Lots of unfulfilled potential again and I really hope for the best. Not many players going out on loan ever makes a comeback, he is one of the few.

3) Emmanuel Frimpong
Emmanuel was clearly earmarked to be in the first team last season, only to suffer a season ending injury which was a huge blow. He is probably a straight replacement for Denilson in the middle of the park. Still young without much experience, I would prefer not seeing him making more than 20 starts.

4) Henri Lansbury
His goal against Spurs in the Carling Cup last season will have a part in every Gooner's mind. He has been named many times on the bench for the first team but mainly for the Carling Cup but rarely for the League. He does look like he has a good future ahead of him. Again, the lack of experience is going to make him not such a valuable asset to the team. Another player coming back from going out on loan. He was close to being sold just a few weeks ago but Arsene decided against it in the last minute. Another player with a final lifeline..

5) Craig Eastmond
Yes, he went out on loan too. I did remember him making his debut in the centre of midfield and Arsene told the press he liked Eastmond because he was intelligent. He does not appeal on the physical side of things and this worries me a lot because when we get dominated in the middle of the park, we're always doomed. I'm less optimistic on Craig, with Song, Frimpong, Ramsey and Diaby already occupying those places. It may not be a surprise if he does get sent out on loan.

6) Ryo Miyaichi
Sorry, it's getting a bit repetitive at this point about players coming back from being on loan. I've seen Ryo make appearances in the Asia tour and Germany. And also judging by Feyenoord's comments about him, he seems like an exciting prospect. I hope he gets the work permit to play though.

At the moment, the current squad may not finish in the top four. Champion's League football has always kept Arsenal at a minimum acceptable standard of being a respected top European team and our earnings are highly weighted on this lucrative competition. There has been rumours on potential arrivals. At the moment, the more probable concrete ones are Juan Mata from Valencia, Phil Jagielka from Everton and Costa Rican Joel Campbell. If we do get these three players, it probably still won't win us anything but a top four spot might seem more likely. I can't believe the club is considered to be out of contention for the league, it's just very disappointing.

The other rumours are Gary Cahill, Karim Benzema, Eden Hazard and a few others. They are quality players but I don't think it will happen to be honest.

If the three players are to join the club with Cesc and Nasri staying,it just might be a surprise to everyone. There's still time to do some business in the transfer window and I really hope lots of good news is on the way.

The next post should be about the contenders for the League and I'll probably include a wrap up at the close of the transfer window. There's so many big moves that have already taken place and it will be interesting to see how the next few weeks unfolds.

~deyao~

Supermodel Miranda Kerr

2011-07-17T21:44:00.010+08:00

I've probably have not written about Miranda Kerr before, but after learning so much about her in the last few years I've been really inspired by her life and have become a big fan of her.

Miranda Kerr was born in a small in town in Gunnedah, New South Wales, Australia. Although she shot to fame at age of 14 by winning a competition and appearing on the cover of Dolly, she has faced many rejections along the way before becoming Australia's most successful model. She's the first Australian to be part of the exclusive group of Victoria's Secret Angels and is the face of Australian upmarket retailer David Jones. In recent years, she married movie star Orlando Bloom, created her own line of products Kora Organics, released her first book Treasure Yourself and of course she's a mum to her recently newborn Flynn.

I've been a fan of Miranda for a few years now and I've become a close follower these days. Apart from being a great model, she's a huge inspiration to so many people and her perspective to life admirable. Her determination, personality and journey to success has become really good example to many people, including myself.

Below is video of her recent interview.

Treasure Yourself

~deyao~

The Self-Sustaining Model

2011-07-03T00:51:00.008+08:00

When Arsenal CEO Ivan Gazidis spoke to the AST a few weeks ago, he mentioned about Arsenal's self-sustaining model many times. In simple terms, he was describing the corporate side of things, which is to run and grow the business on its own. Football is not just about winning trophies, it's also about making money so that the success could be sustained in the long term. You can win the league but if the club is insolvent, the likelihood is the club's future will be in doubt, players will be sold, points will be deducted and the club could go down for a long time (Leeds is a good example and luckily their fortunes have changed in the last few years).

A self-sustaining model is a business model that relies entirely on the business' operations and retained earnings for growth. In Arsenal's perspective, the business grows by the profit it makes from football which includes TV rights, gate receipts, sponsorships, merchandise and others. This is in comparison to the other extremes like Chelsea and Manchester City, whose businesses are built on the wealth of their owners. They sign very expensive players, pay top wages and expect fast results. Do their business' make a profit? Unlikely. With exception of Man Utd and Real Madrid which have much higher revenues, even top tier clubs like Arsenal do not make anywhere near that much profit to cover those big signings like a 50m Torres or a 32.5m Robinho. But teams like Chelsea are able to service their debts and continue to make extravagant purchases as long as their owners are happy to pump more funds into the business. The high level of spending can't continue in long run but in the next few years the billionaires from the Middle East and Russia still have large buffers in their coffers, which will not stop them from continuing their transfer market frenzy.

Obviously if these owners continue to lose money year after year, they might be fed up and could sell the club, which 'rich' clubs are at risk of. But the owners are mostly quite intelligent people who are aiming to tap the growing revenues of football clubs, thus they are willing to spend these huge 'outlays'. Chelsea and Man City's spending in the transfer market has changed the game entirely. They might not be financially efficient in terms of a "return on investment ratio", but they have transformed into a top footballing clubs in Europe. Money does make things happen, but is this what the football world has become today?

The Cost of Winning

Football is a sport and the aim is to win. Clubs should do all they can to win, but does it mean "all they can"? Real Madrid has spent mind-boggling sums of money to recapture the title of European Champions, but they have not done it. Player after player, manager after manager, payouts after payouts. They should be going bust by now right, they have only won 1 trophy in the last 8 years! But NO, they are the richest football club in the world and today they are still spending huge sums of money. What does this mean? Real doesn't need to win to become rich and famous. But does wealth make a football club great?

To another Spanish club Barcelona. A cabinet full of trophies, sensational players and tremendous quality of football, but stricken with 400m of debt? Considering all the prize money, TV rights and their popularity, they are in truckloads of debt! And they've got no stadium debt as well! A winning club but in poor financial state, is this admirable and ideal?

One of the biggest conflicts Arsenal's supporters have with the board is whether Arsenal should do 'more' to win trophies. Is the aim ENTIRELY to win? The fans seem to think so and I would kill to see Arsenal win a trophy to be honest. Is the benefit of silverware more than offset the cost of obtaining it? If Arsenal spent 50m, will the DIFFERENCE of winning the league compared to being in top 4 be enough to cover that 50m? If winning does not cover that cost, why win (in the context of running a business) ? This is a business issue and so far there's no perfect answer to this. Had Arsenal won trophies over the last few years, Arsenal could say they have the best football with the best business model and everyone can shut it. Unfortunately Arsenal only has a good business model with no results on the pitch. As mentioned, football is a sport and it is about winning, so is Arsenal a complete failure? If judged on silverware, Arsenal are worst than Portsmouth, although they are relegated, they have more silverware than Arsenal in the last 6 years. Is Arsenal worst than Liverpool who has not finished in the top four in the 2 years running but managed to win the Champions League in 2005?

The Balancing Act

It's an absolutely fcking torture to be an Arsenal fan. We've got issues in ownership and we got stadium debt to add to our woes. We are so close every year but we lack the few percent to pull through. Although the change in ownership is not changing the club's financial state, the stadium debt in costing us 20m a year. There's the extra money we could have had for transfers, instead it's used for servicing the debt. How long more will it take? If the sources are correct, it's another 20 years! But in the larger perspective, we've needed a bigger stadium for a long time to capitalise on growth and to compete with other top teams. It can also be said we are unlucky compared to the other clubs which already have larger stadiums. In the short term, the stadium obviously has not 'broke even'. It is still costing the club more than the additional revenues generated. This means our transfer spending is reduced by this. In the long term, probably when revenues grow much higher or at worst when Arsenal pay off the stadium debt, that is when we could fully realise the benefits of the investment. It's a painful wait unfortunately.

Our extremely lower level of 'net spending' in the transfer market has been the most popular causal variable to our lack of success. I have to admit there is truth in this as the team has not replaced the big players it has sold in the last few years. The manager has made some gambles trying to develop youth and buying unknown players, financially it has been great, but in terms of success, it has been a big letdown.

The club's attempt to balance success on and off the pitch has been a failure. We've tried to work around our limited resources (transfer funds) but it hasn't been enough for success. Many would agree Arsenal are doing very well and being very efficient in terms of achieving what they have with so little money, but the measures of success in the world of football is trophies, and Arsenal hasn't got any to show for.

Is it time for Arsenal to start splashing the cash and possibly compromising the club's finances to please the fans and critics? Should Arsenal change the way they measure success towards winning trophies? Of course ideally Arsenal would want to be able to achieve success with their present finances, but time has gone and this plan has failed. Is it time for Arsenal to take a step back in terms of their pride of having a self-sustaining model and deliver trophies even though it is not beneficial financially?

There are a few solutions

1) New investment. Arsenal could get a new owner or the present owner to inject cash in the club to facilitate transfers to buy more experienced players. This would turn the current model on its head but could finally deliver silverware.

2) Be even better at what they do. Arsenal has an extremely tight purse string and they spend very prudently. The solution here is to uncover more and even better talent (like Fabregas) and buy players that has not been noticed. Disadvantage... still sticking to the old policy which is currently not working.

3) Change the manager - Wenger has done extremely big things for the club and it hasn't occurred until more recent times he doesn't quite deliver as well as he used to. His strategies in transfer dealings and style of football has epitomised what the club stood for in the last 15 years. It's clear things are no longer the same as they were used it, is his time finally up?

I would love the discuss the possible transfers this season but I'll leave it here. This post is about the balance of success in terms of a business and footballing capabilites and I can only hope the club can find a solution and balance to this that includes silverware.

On a lighter note, Arsenal supporters should be proud to have a supermodel supporting the club (I was definitely not using a model to coincide with my title).Thanks for reading.

~deyao~

2011: Caution

2011-04-01T22:48:00.003+08:00

I haven't written any finance topics of late, maybe because I haven't found inspiration. Now with a moment of it, I thought I start typing. The market in 2009 was brilliant, indices in the world doubled and wealth grew for many. 2010 had also a good run but indices lagged and the 'market' did not really perform. In Australia, resources companies have been the clear winner and financials were no match over the last 12 months. The ASX 200 is currently not much different from October 2009.

In my predictions last year, I was very bullish on stocks predicting 5500 for the All Ords and 11000-12000 for the Dow. I was quite a big way off for the All Ords but I was close on the Dow. The Aussie index has been a a laggard compared to the rest of the Asia Pacific indices. It was easy to be bullish after the huge rally in 2009 but as 2010 showed a slow down in market performance, my view is cautious for 2011.

QE2 by the Fed has been a key driver for the markets in the past months but this 'artificial' flood of money is going to wear out soon and markets will take a big turn, in my view. Billions of dollars are flooded in the market to support prices everyday, when it stops there can't be a good outcome. A third QE is not an option according to many experts. The Japan earthquake did stop markets for a few days, but after that Dow has only been in one direction after the few days of panic. It was a big buying opportunity and many stocks have rebounded since.

Since the GFC in 2008, money has been flooded in the market as though they cost nothing. Trillions of dollars have been poured in the market to avoid a deeper recession. Some say it had to be done, but the truth is it would have better off letting it collapse. To 'artificially' keep the market afloat is no different from avoiding the truth. The US economy is loaded with too much debt and the solution of the Fed to stimulate the economy is spending itself out of it. Where's the money coming from again? Debt. I call it a vicious cycle and until someone puts a halt to it, Americans have to fear for their future. The dollar is going to weaken further and inflation will be next for the economy.

Signs of caution in 2011

1) Higher oil prices
We know higher oil prices is not good for the economy because inflation will affect growth. Remember I said last time, oil prices only benefit people who own it, the rest of the people like us pays. The spiraling oil prices would indicate the first sign of a slowdown, in the worse case, a recession. Higher oil prices are also due to the unrest in the middle east, but the reason does not matter, the price does.

2) The ending of QE2
QE2 will end in a few months and there's no more money to keep driving the Dow. If prices are to revert to their fair values, we could see a major correction.

3) More defaults from Europe
Although it sounds like the debt problem has been solved for the big European countries, I am not convinced at all. The amount of debt they have to raise is staggering and the probability of another Greece story may not be far away. Debt ratings have a been slashed for a reason, a higher probability of default.

4) Lower growth from China
China grew at record rates even during the last recession for most of the world. The tightening of policies and increase in reserve requirements will definitely slow the economy down, but in my view, is a really good move in the long run. Short term pain for the world, but keeps in the bubble of housing from growing. There is a bubble in housing based on the record rise in prices but it is still within control at the moment.

Opportunities in 2011

The mood I have is cautious but there's still money to be made in the market. Stick to stocks with very good fundamentals and growth rates and of course invest in sectors that provide huge growth opportunities in an inflationary environment. I haven't mention there has been outstanding performers in the market over the past year and they haven't been contrary to history. Fundamentals are drivers of stock prices and they will continue to be . Market indices are there to show the performance as a whole but outstanding winners do not need any guidance from market indices. If they are good, they will perform.

Jim Rogers have been bullish on commodities since the 1980s and he has a few points to take from. This is not a new point but definitely invest in businesses that leverages on the demand from China. Japan is rebuilding after the disaster and there's no doubt they would need lots of materials as well.

And lastly, keep doing your homework and keep a closer look this year.

Invest for the future
~deyao~

Players Arsenal need to sell

2011-03-16T00:01:00.007+08:00

Last summer was probably one of the best clear outs to freshen up the squad. We have not improved vastly but the team is much better. But even before the season ends, it is already clear some players are not up to par. The team is good but not enough to win silverware. We have players who are fives and sixes who are not winning quality. I don't usually do this but it is about time.

1) Denilson
He has shown some promise here and there but he simply doesn't fit in the team well. He has scored some good long range goals but his impact on the game is very disappointing.He lacks defensive capabilities and on many occasions, pace. His short range passing game is definitely not versatile or good enough.

2) Tomas Rosicky

He arrived with such a good reputation and after scoring some screamers in the 2006 World Cup, Arsenal fans thought he would be the next Pires. He only scored a handful of goals and compounded by the misery of being 18 months out of the game, he has never lived up to his potential. Lacks defensive capabilities and does not have the pace to compensate his lack of physical presence. He has returned and played more regular football nowadays but the quality he has shown is far from expectations.

3) Manuel Almunia

Despite some heroics on a few occasion, he does not have what it takes to stand between the Arsenal goal, let alone wear the number 1 shirt. In short, too many errors by any standards and that has cost the team very dearly for the last few years.

4) Lukasz Fabianski

Also another big potential player when he arrived. Has shown amazing shot stopping capabilities. But when given the chance in cup games, he has squandered them. Although he has not played enough games to prove himself, there's little hint he is good enough after some very costly errors. Lacks the imposing figure too.

Players on the verge (Should still be given one last chance)

1)Sebastien Squillaci

He may have just arrived, but based on his performances so far I will give a 6.0. He has not improved the defensive situation much despite being at his peak and has loads of experience. His lack of BPL experience and age makes him not an attractive player to keep.

2) Nicklas Bendtner

He may have scored some good headers and a couple of impressive hattricks, but he is still very far from being a top player. Although still at 23, he has not shown enough for that age. Has admirable ability to pick out passes and being a threat in set plays, but I am still doubtful he is good enough. One more season perhaps.

3) Carlos Vela

Made a massive contribution in the Carling Cup over the last few years but nothing in the league. Needs to have a good contribution in the next season or he is out.

The list might seem short with 7 players. But imagine if those 7 players were replaced by world class players. It might not be within our budgets but the conclusion here is we need make more changes if we are going to improve.

~deyao~

One Last Chance

2011-03-14T21:40:00.006+08:00

Awhile back when 19 year old Neill Mellor scored the winner in the last minute against Arsenal, I was heart broken. My dad who sat beside me told me in a dialect, 'You can't win if you don't lose'. I have taken that quote with me since. In the last few years, Arsenal have lost big time and every year I would think, 'OK, next year will the year'. But... it has been such a huge disappointment. Since our last trophy, 3 cup finals and a couple of runner's up positions in the league is all we can show. Silverware? None at all.

Does Arsenal deserve to win anything? With Wenger's incredible belief in youth, a sound financial record and years of effort put in, isn't it about time?

Well, first of all the competitive world does not compensate losers by letting them win. Arsenal don't deserve a trophy just because they haven't won any for the past few years (I'm reluctant to state the number of years). Has Arsenal done enough to deserve a title?

The results are always a fair reflection overall on how a team has performed. Unfortunately, Arsenal have not come on top for a very long time. I can understand the frustration sometimes because of injuries and a tight budget. Injuries to key players over the past few years have dented chances of silverware. If Van Persie was fit last season, the outcome last season would have been so different. With so many injuries over the last few seasons, it's really tough to accept. Vermaelen has been injured this season, no doubt we would have done a better job defensively had he been at centre back. Blame it on luck? We should never, but it has been the case.

When the media suggested Arsenal were gunning for the trophies on four fronts, I knew realistically it would have been two, tops. The signs this season have been really mixed and there has been numerous poor performances. Being two goals up against Spurs at half time and losing the game was a terrible signal. Four goal lead squandered to Newcastle almost signaled the end of out title ambitions had another result a couple of hours later been the opposite. Although the poor performances in cup games didn't count as much, it showed the team were lacking the winning quality ; winning when you're not at your best. And when the crucial cup final came along, we had decent chances but we failed to earn our luck.

The story of a gooner for the past years have been a major letdown. This season hasn't been much different to the last. Last season we were on track to win the title with a very battered squad. With the determination and drive we were very close to making it. Although the end of the season league table did not depict how close it was, the killer blow was one Kevin Phillips goal right at the death. The run in meltdown has been a pattern for a long time and we absolutely can't afford another. The odds are again heavily stacked on us. The growing treatment table list is definitely not helping.

I don't believe in excuses although injuries have been hampering Arsenal for years. Right from the Henry, Pires, Diaby, Gilberto days we had them out for months on some occasions. As an Arsenal fan, you just fear the next injury because it has happened so many times. We've heard out for the season too many times so please gives us a break. Vermaelen just made the list yesterday.

I really don't care what is going on in the dressing room or the treatment table, the aim is to win. It's time for players to stand up and be counted. It's time for players to give it their all and play their best football until the end of the season. It's time for players to clear their heads and look forward. No team is a clear favourite this season so it is definitely one opportunity we cannot miss. There is still chance for salvation this season.

It's going to be a challenge but we really need this.

~deyao~

Key Factor:Transportation

2011-01-29T14:08:00.004+08:00

It's another 9 years till year 2020 for Malaysia to achieve its 'developed' status. Personally I don't think we will make it but a few years later won't do us much harm. Driving for the past few years and being able to compare the transport system with Singapore and Australia, Malaysia has got one hell of a mountain to climb. Infrastructures are not yet in place and the transport system needs major changes. I'm sure politicians who recently went to visit the Hong Kong MTR would learn a lot and I hope they have done enough of their homework. We think politicians are the best people to take us forward but that is not true. Well, regardless whether they know better or not, here's my 10 pointers to implement to even get a chance for 2020.

10. Road Signs

For a country with resonable living standards, our road signs are below par. Wrong signs, missing signs, broken (incomplete) signs to semi-visible obstructed signs. There has to be changes to this. It's really a shame how motorist have to guess directions at times where signs are supposedly be placed. Some signs are covered by trees and some do not continue showing a destination after some time. There needs to a body to oversee this.

9. Bus Stops

Proper bus stops are lacking in the country and the laws allow buses and taxis to stop as they like which is dangerous for both the motorists and the passengers of these vehicles. There needs to be proper bus stops which are sheltered and safe for users. And there must be rules for proper stopping places for buses for convenience and safety.

8. Taxi System

There has been a recent reform to the taxi system where fares have been reviewed and more taxis and using the meter. The increase in fare was necessary for taxis to continue to operate with rising cost. However, there still will be taxis who are reluctant to use the meter or refuse to take passengers to certain destinations. This is still a huge problem for the taxi system. CVLB has to place certain laws pertaining to this to protect users from unfair behaviour.

7. Local Carmakers

Perodua has outshone Proton in the last few years and this comes to show Proton is even losing out to a local counterpart. The protection given to local carmakers should gradually be lifted to increase the efficiency of these companies. The quality of local cars have barely improved and people are already prepared to fork out extra for a much reliable Japanese car. The motor vehicle industry is a growing one and if they don't improve, they will continue to lose market share and eventually become unprofitable. The country has given the carmakers more than enough support in terms of sales and protectionist policies. All they have to do is make a decent car, which they have yet to.

6. Airport

A world class airport costing billions of dollars and thousands of trees, but it is under-utilised. Although there has been growth in passengers coming through KLIA, there's still big opportunities for more airlines to fly to KLIA. Our neighbours are running at capacity and there more passengers to accommodate, so please do something about it. Budget traveling has emerged in the last few years and LCCT has failed to accommodate the spike in passengers,. Govt has to make sure "KLIA 2" will be large enough to accommodate the growth of AirAsia and the other budget carriers. There must be proper and sufficient personnel, systems and infrastructure to make it work.

5. Port Klang

Singapore has the second most busiest port in the world and every one of those ships still passes Port Klang. Our location is not a disadvantage at all but our personnel has been a letdown. A potential source of large revenue if managed properly. The corruption that is happening is not an issue to discuss here. The location on the Straits of Malacca is unbelievable and we have just gave billion ounces of gold to our neighbours .

4. Learning programs

Malaysian drivers are known to be one of the worst and some blame has to be put on the learning programs. It needs to tougher, stricter and more transparent. Programs today do not create competent drivers on the road and this will deteriorate if not reformed. The only way is to completely overhaul the program and taking developed countries as an example. A safer road can save millions of dollars a year, not mentioning lives.

3. Road conditions

Potholes and damaging surfaces create hazards for driving. This will waste millions of dollars a year on repairs. Starting from major roads, there needs to certain materials laid under the roads to prevent potholes from reoccurring. Patching up pot holes every time they occur will only temporarily solve the problem and money will be spent wastefully every year. Open your eyes govt, why does other countries not have this problem, there must be something different.

2. Enforcement

Having a police officer pull you over is not such a scary or a lesson for many, in fact, it has become a joking topic over dinner conversations. Did you last hear how your friend got away with speeding or using the emergency lane? How much did the person pay? You know what I am talking about. Drivers simply feel they are bulletproof from the authorities because when the time comes they will get away with a slap on the wrist. This problem comes from all the way up to the highest levels of government. Change can only come from the top and this is not something that can happen with little effort.

1. Public transportation
Why are there so many cars on the road? Well, why not take the public transport? Oh yeah, there aren't available in my area or it will take me too long. The public transportation state is in a mess and this is probably what we should be having about 10 years ago. In simpler terms, we are 10 years behind. There should be one company running the service like in most countries and it is closely monitored by govt authorities. Now there are few bus operators overlapping each other. A timetable is unheard of and the information available to the public about transportation is limited. The KTM is a dinosaur,trains break down now and then, the bus services needs a major overhaul and the current level of service is very poor. With the cost of materials going up, it's going to be even harder to improve services.

Implications of good transportation

1) Less cars on the road, less congestion.

2) Less consumption of fuel, less outflow of national income and exposure to rising fuel prices.

3) Improves efficiency of businesses. Higher turnover rates for logistics, lower cost, which affects 99% of businesses. Less time spent on the road, more time spent working, more goods and services produced, higher GDP....

4) Lower expenditure on cars, which lowers national debt.

5) Encourages tourism.

6) Lower expenses on repairs due to accident and road conditions, less outflow unnecessarily, lower premiums on insurance, more money for everyone.

7) Increases the attractiveness of the economy due to efficiency, more investments perhaps.

8) An indication of a developed country?

9) Less money to AP holders , won't that reduce c_ _ _ _ _tion?

10) Less motor vehicles, less pollution.

It doesn't take a genius to know what I just wrote. Politicians are supposingly the most capable people to manage the country, well we all know it's not true at all, but at least do something right for once, for the country.

~deyao~

Make or Buy?

2011-01-20T15:15:00.022+08:00

I learnt about this question awhile back doing management accounting and I felt this question is one of the best questions to ask yourself when making a decision. For example, you need a bicycle, make or buy? We mostly likely do not have skills and knowledge to make a bicycle so it's most likely we buy one. You are planning for dinner tonight? Eat in or out, make dinner on your own or buy it from somewhere. There's infinite examples when it comes to make or buy so I hope you get the basic idea.

A friend recently asked me why do I buy stocks/shares rather than start up a business? It came to my mind immediately it was a make or buy question. Starting up a business not only requires capital, it requires other attributes such as knowledge, management, research etc. It's certainly is not beyond a person to start a business but it is going to have a certain degree of risk. Until a person has the expertise to manage risk, the normal person usually buys. Unless you can make dinner for yourself, you do not have a choice.

Warren Buffett once said buying stocks was no different from buying a business. When you are buying a stock, you are essentially acquiring ownership of a business. Buffett as you know is a guru of buying, making his fortune in companies such as Coca-Cola, Kraft, Johnson and Johnson etc. He is one of the best examples when it comes to buying and he proves that you can actually succeed by buying. He looks for businesses with great potential and undervalued according to his analysis and buys them. His knowledge for his insurance business should also be noted.

Not every division of a great company is the best. And when it came to a video website for Google, it never took off like its other products.Google Video was nowhere. Google is the leader in the internet world and they have some of the most genius creations, but they couldn't create a successful site for videos. What did they do, they bought. They bought the world's most popular site for videos, YouTube. They paid a large sum of money for it, but it was a site they just couldn't match so they bought them out.

How about making? We've seen thousands of people creating their own companies and eventually growing them so huge and listing it in public. Robert Kiyosaki calls them the ultimate investors, people who create companies where the public wants a slice of it. People like Robert himself, Donald Trump, the Walton family (Wal-Mart), Larry and Sergey (Google) and soon to be Mike Zuckerberg (Facebook). An important term people like them like to be described as, entrepreneurs. I know there are many other prominent people I've not mentioned but you get the point. They are the king of making. Using their talents and hard work they created business worth billions of dollars. Think about Microsoft, eBay , Amazon etc, just imagine how far they can go from starting from scratch. People like them make companies and the rest of us buy them. We may not "make" a listed company one day, but rewards of a successful business can be very substantial.

So make or buy?Still a difficult decision. In terms of risk, it's a big debate. By having your own company, you decide everything that goes on and the business risk will be known and managed by yourself, there is no information asymmetry . The big question mark is expertise. If you have the expertise of making a bicycle which will cost less than the one at the shop, it should be a "make" decision. So do you have the capabilities and talents to carry out the "make" decision.

Having the expertise in buying or making can make you a lot money either way so understanding the key factors and differences is important when deciding. When you're buying a business and the business is not run by yourself, 99% of the time you would be facing agency cost. Agency cost occurs when interest of management is not in line with shareholders (owners) of the business and this will be a 'cost' to the shareholders. When you're buying a publicly listed stock, you generally do not have much control over the business and you are just hopeful the company in run properly by management and value is added to your investment.

As I mentioned, information asymmetry occurs and this can be a cost to shareholders. Management in a company generally will possess some "inside information"(non-publicly available information) which can be used to make money for themselves. Although there are laws preventing such actions, people who use this information still have means to get immunity in the form of disclosure. As a shareholder, value can be lost because insiders trade ahead of everyone and this takes a cut out of the potential profits of shareholders.

Although there are mechanisms in place such as corporate governance and employment incentives to align the interest of management with shareholders, agency cost will never be eliminated completely, which means the wealth of shareholders are transferred from them. Corporate governance has become a bigger issue lately with the collapse of big corporations, but this cannot fully solve the problems of agency especially when the directors are managers themselves or there is a lack of independence in the board of directors and management. More accountability is placed on the duties of directors but this does necessary reduce agency cost because it acts more in a form of punishment rather than being a deterrent. Thus shareholders will have to bear that risk and cost.

Almost all corporations give their employees the option to own the corporation's shares to motivate the employees. It will lessen agency cost but things like employee benefits, bonuses and perks are still coming out the pocket of shareholders. So are you comfortable with that happening?

Is agency cost minimal enough to overcome when "buying", that's probably an important question you have to ask yourself when making the decision. If you think management places too much interest on themselves, then "buying" would not be a good investment decision for you. There are many people who don't think management act in the best interest of shareholders and they stay away from the buy option. So it is up to your analysis to decide whether you can "trust" the company's management to run YOUR business. One of Buffett's most important steps to deciding on his investment is meeting with management. It is true he meets with management to see whether they are capable and dedicated enough to maximise the value of his investment. Lesson: He buys beyond the fundamentals of the business.

To succeed in your finances, you cannot avoid the make or buy decision. Some people avoid this decision completely and work for life. For the benefit of yourself, it's time to ask yourself, make or buy.

~deyao~

Encounter With the Catalans

2010-12-21T01:07:00.011+08:00

We screwed up in the group stages and we knew we were going to pay for it. Schalke would have been the most favourable team, followed by Bayern, Real then Barca of course. We will be playing an even stronger Barcelona team with the addition of David Villa who may well do more damage than Zlatan. It's not a pretty sight to be torn down by Messi and co. and seeing the Special One's Real Madrid receiving a 5-0 drubbing is neither an encouraging prospect for any opponents of Barca.

Right after the defeat last time around, Wenger acknowledged Barcelona were by far the better team and he would look to the transfer market to improve the squad. 8 months on after the thrashing at Nou Camp, are we a better team? We've got Squillaci, Koscienly and Chamakh added to the team, but is the outcome going to be any different...

Barcelona has a team of World Cup winners with their players competing for top individual honours, while Arsenal at times look like a team waiting for Cesc to pull the strings. The fact that Barca has a very mature team that has been working together for many years, winning the Champions League on twice in the last 5 years and is probably the best team in Europe. Messi, Villa, Iniesta, Xavi...the list goes on.

The most important thing for Arsenal is not start the game defeated , which is absolutely crucial. Memories of the first half at the Emirates and the second leg in Nou Camp would haunt us for a long time, but we have to put that aside and play 2 wonderful matches. Put this in simple terms, it would take an amazing effort to beat Barcelona over two legs. I am not that confident of a victory, but I have the belief if we play our best football, we can show Barca they are not invincible.

My 10 pointers for Arsenal to win the game

10. No silly goalkeeping errors
We have error-prone keepers at the club and we have to work with it. But on the day, we can't afford to concede goals due to silly mistakes.

9. Have Vermaelen and Squillaci as center backs.
Vermaelen hasn't featured much this season, and the key is for him to get a good run of games before the showdown. A very dreadful Silvestre played in Nou Camp last season and it was very painful to watch Arsenal not closing down players quick enough.

8. Rest some players in the prior match
Fixtures indicate we play Wolves and as much I like to win the league, the Champion's League is a big priority as well. It's one of the best opportunities to create history so it's pivotal for Arsenal to have fresh players on the pitch. It's a huge source of revenue for the club too.

7. Force long range shots
This might not be such a good idea if you think of the quality of the Barca players. Iniesta, Xavi and Villa are not exactly the most physical players in the game, and if we could out-muscle them and limit their plays to long range shots, we stand a chance.

6. Samir Nasri
By far the best player for Arsenal this season and playing his best season so far. Time to step it up against the world's best and prove yourself.

5. Go on the offence
We've seen on many occasions how Arsenal prefer to sit back in big games, this must change if we're going for mission impossible. Our defence is not the best I've seen which means goals are going to be conceded. This leaves attacking the only way to win.

4. Win the first leg
We got one hell of a beating at in the first leg last time out, but we were not outscored. There must not be dominance so early on by Barca and we need to win by two clear goals if we we stand a chance.

3. Full-backs on Messi
Sagna and Clichy have a half each of responsibility to guard Messi. It's going to be the toughest job in football, but if the Barca are going to be stopped, Messi is the number one target.

2. A successful 4-5-1 formation
If goals are going to be the theme in the two games, we will be outscored. The only way we are going to win it is by clamping down on the Barca midfield which is the obvious strength of Barca. Alex Song is going to be the most important player in the middle of the park, and he has to try to close down as much of the plays from the centre. Arsenal are not going to score many goals in this formation and thus need at least one clean sheet. Chamakh may be deployed as a lone striker, and he too has to be at the top of his game.

1. Have Cesc Fabregas over two legs.
Our captain, our inspiration, he is going to be the man giving us a chance of victory. We need him over two legs and we need him fit. It's going to be a very tough Nou Camp return, but he still has a lot to prove and there's no better time.

Two teams with similar styles of football. Barca are clear favourites from the start but Arsenal may have also been their toughest draw possible. We've beaten Real Madrid (with Zidane) and at that time World champions AC Milan in the competition before, so it's going to a big battle to bring us down. With our swift and scintillating style of play, we are going to do whatever we can to win this. Come on Arsenal!

~deyao~

A Different November

2010-11-30T00:58:00.003+08:00

I am home! It's been 8 months abroad and I am happy to be back for the next 3. Still trying to finish up my post of Debt but I'll do a much easier topic to write on, football of course. It's been a tough November for Arsenal, we were almost winless at home.

Are the signs good? It's been very mixed...very indeed. We should have qualified for the knockout stages in the Champion's League a couple of matches ago and but we are needing a final game to progress. Our games against Shakhtar and Braga have been disappointing and it has done us no favours. We are likely to end up 2nd which technically is not a favourable position. On the League front, we had 2 big away wins against Wolves and Everton, which at that time was a big step forward after the unexpected defeat to Newcastle. But after that was a very hard to swollow defeat to great foes Spurs. Being an Arsenal fan, there's no worst team to lose to other than Spurs. We have had an impressive streak of unbeaten games against Spurs over the years but to finally surrender it under such circumstance (being 2-0 up) was really hard to take. It was huge London derby where we could have been top of the table that day, but unfortunately Spurs had the better half and outscored our first half heroics. It was a day that also saw the return of Gallas which had a hostile reception as well as Spurs announcing their intent on make a challenge for the title. With the likes of Defoe, Bale, Van der Vaart and Modric, Spurs made the most of their very talented attacking artillery and made the comeback. We Gooners would need to live with this defeat and the fact our bitter rivals may be finally showing they mean business after years of unfulfilled promises (overtaking Arsenal). I personally admit I could see Spurs progress since last season when they beat Chelsea and brought the title race all the way to the final day. They then qualified for the Champion's League and now they have even qualified for the next phase.

Now a critical analysis of the team. The defence remains the biggest worry for the team. We have kept very few clean sheets and conceded some silly goals. Goalkeeping hasn't been impressive either and for me it is an unsolved problem since the start of the season. As much as I would like to think Almunia or Fabianski is good enough to stand in goal, they certainly have made too many costly errors. Fabianski has shown he is a good shop stopper but he really struggles dealing with crosses and physically tall attackers. I am still adamant we need a better keeper. Djourou, Squillaci and Koscielny has shown promise in some of their appearances, but there's still room for improvement and hopefully that learning curve is not going to cost us more points. More clean sheets is the very next priority.

For the midfield positions, Nasri, Wilshere and Song has been outstanding so far. Nasri is having his best season so far, is scoring goals and making a big impact in games. Wilshere has done some deputising in the place of Fabregas which probably is the most important position for Arsenal. With Cesc struggling with various niggling injuries and threat of playing too many games, this has limited his appearances. Wilshere has stepped up big time for the team, he passing and plays has been really outstanding. Looks like the three match ban has made him an even better player! Song is going to be a sought after player with his performances these days. He not only does the defensive work, he sets up attacks and even scores some goals. Walcott and Denilson has only started to come back their injuries and hopefully things will pick up in December. Arshavin has been a major disappointment this season, he has scored some goals but overall he has only been a shadow of the player he really is. But, he did show a good display against Villa and was the player on that day, a sign of improvement? Cesc and Diaby look to spend the next few weeks on the sidelines, we need to step up in a very important December.

Chamakh has ruled in the scoring department. With Bendtner and Van Persie only just returning from injury, Chamakh has taken on the responsibility and what a debut season he is having. Chamakh's height and speed has really contributed to many of his goals. Plus giving "200 percent"will inevitably bring more goals.

There's an extremely important final game for the CL group stage coming, plus a visit to Old Trafford and a home game against Chelsea in the upcoming fixtures. It's going to be a hectic fixtures list in January as well. Let's move to the next gear Gunners!

~deyao~

Taylor Swift: Journey to Fearless 3 hour Special

2010-11-14T13:03:00.009+08:00

I just completed the 3 hour special about Taylor Swift's journey and her tour. I still got a final exam paper coming up but I don't want to wait any longer because I might not be writing this if I postponed it.

The special mainly showed how she went on tour and the back scenes on how she made it happen. I've watched many documentaries and read tons about her, but watching one of her concerts remain on the "waiting list". It may not happen soon but the 3 hour special was a wonderful insight on her tour which lasted about 15 months. Her journey is something looked upon millions across America and the world. Her lyrics are 'embedded' in people and it simply shows her song's impact on her listeners. It was another tremendous story about a talented musician trying to make it into the music business.

In the beginning, it showed how she convinced her family to move to Nashville to pursue her music dreams. At an age of 11, somehow she did it and credit to her parents for giving her the opportunity to. Ironically, she got spotted in the same venue where her idol Faith Hill also got noticed. Some humour to the story. After she played in that venue (a cafe), a man walked up to her, asking her to be part of his record label. At the time, she was with a big record label but they were seemingly unwilling to offer her a record anytime soon because she was just 14 or 15. He contacted her a few days later and said. "There are good news and bad news. The good news is I want you on my record label.The bad news is.... I don't have a record label yet". And it was sort of destiny, Taylor had such a bright future ahead and this guy saw it in her, the rest is history.The then little known Big Machine Records has now got Taylor Swift selling millions of copies for them. What a story. Introducing Scott Borchetta.

And more recently, Taylor again mentioned how Big Machine Records gave her the freedom of doing whatever she liked on her new album and how she was very proud to be representing them. Obvious reasons why they trust her, she sells half a million copies on the first week.

The special also included full length performances for her concert in Houston. The first hour had You Belong With Me, Tim McGraw, Fifteen,Teardrops On My Guitar and Our Song. The second, Today Was A Fairytale, Love Story, Hey Stephen and Tell Me Why. The third, Fearless, Forever And Always, Picture To Burn and Shouldve Said No. I was pretty thrilled to be seeing the inside of a Taylor Swift concert. I must say she sounds a lot better than many of her performances on awards and tv shows. It's just an incredible experience for people who attended her concert.

Taylor's efforts in the making her concert possible was also just wonderful to watch. How she chose her dancers, designed her stage, customised the effects and arrangement and most importantly how she made her fans feel that more important to her. There's a lot to mention. Go watch it to find out.

Her band and her mother's influence and support was another key involvement in Taylor's career. Her mother was every supportive of what she does and follows her on the road to all of her shows. And like how Andrea (her mum) says, not many people Taylor's age would want to hang out with their mums, but luckily her daughter does. It sets an inspiring example for teens today and Taylor should be extremely proud. She has the coolest people in her band as well and the intimacy of the band was something people could only wish for. Each and every one of them are special in their own way and they are like family to Taylor. It is closest thing to a fairytale for an artist, working with people who actually are your most important people in life.There was a moment in their last show where she said "I trust you..".Again showing how far they've come.

There are not many people I admire in life and particularly not anyone younger than me. But hats off to Taylor, she has become an idol for millions of people and setting the best example for them. She has won Grammy awards at the age of 20 and there will be no stopping her doing more. Speak Now is a just a fabulous album I can't wait to write a review about soon. Ending with some promo pictures and video from the special.

Taylor Swift's 'Journey to Fearless' on The Hub

Taylor Swift | Myspace Music Videos

~deyao~

American Debt

2010-10-31T03:01:00.004+08:00

My post on debt is still in the making and will not be done in at least a month. I came across this article talking about why America is technically bankrupt. And...the printing still continues.

Neil Reynolds - The scary actual U.S. government debt

Boston University economist Laurence Kotlikoff says U.S. government debt is not $13.5-trillion (U.S.), which is 60 per cent of current gross domestic product, as global investors and American taxpayers think, but rather 14-fold higher: $200-trillion – 840 per cent of current GDP. “Let’s get real,” Prof. Kotlikoff says. “The U.S. is bankrupt.”

Writing in the September issue of Finance and Development, a journal of the International Monetary Fund, Prof. Kotlikoff says the IMF itself has quietly confirmed that the U.S. is in terrible fiscal trouble – far worse than the Washington-based lender of last resort has previously acknowledged. “The U.S. fiscal gap is huge,” the IMF asserted in a June report. “Closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 per cent of U.S. GDP.”

This sum is equal to all current U.S. federal taxes combined. The consequences of the IMF’s fiscal fix, a doubling of federal taxes in perpetuity, would be appalling – and possibly worse than appalling.

Prof. Kotlikoff says: “The IMF is saying that, to close this fiscal gap [by taxation], would require an immediate and permanent doubling of our personal income taxes, our corporate taxes and all other federal taxes.

“America’s fiscal gap is enormous – so massive that closing it appears impossible without immediate and radical reforms to its health care, tax and Social Security systems – as well as military and other discretionary spending cuts.”

He cites earlier calculations by the Congressional Budget Office (CBO) that concluded that the United States would need to increase tax revenue by 12 percentage points of GDP to bring revenue into line with spending commitments. But the CBO calculations assumed that the growth of government programs (including Medicare) would be cut by one-third in the short term and by two-thirds in the long term. This assumption, Prof. Kotlikoff notes, is politically implausible – if not politically impossible.

One way or another, the fiscal gap must be closed. If not, the country’s spending will forever exceed its revenue growth, and no one’s real debt can increase faster than his real income forever.

Prof. Kotlikoff uses “fiscal gap,” not the accumulation of deficits, to define public debt. The fiscal gap is the difference between a government’s projected revenue (expressed in today’s dollar value) and its projected spending (also expressed in today’s dollar value). By this measure, the United States is in worse shape than Greece.

Prof. Kotlikoff is a noted economist. He is a research associate at the U.S. National Bureau of Economic Research. He is a former senior economist with then-president Ronald Reagan’s Council of Economic Advisers. He has served as a consultant with governments around the world. He is the author (or co-author) of 14 books: Jimmy Stewart Is Dead (2010), his most recent book, explains his recommendations for reform.

He says the U.S. cannot end its fiscal crisis by increasing taxes. He opposes further stimulus spending because it will simply increase the debt. But he does suggest reforms that would help – most of which would require a significant withering away of the state. He proposes that the government give every person an annual voucher for health care, provided that the total cost not exceed 10 per cent of GDP. (U.S. health care now consumes 16 per cent of GDP.) He suggests the replacement of all current federal taxes with a single consumption tax of 18 per cent. He calls for government-sponsored personal retirement accounts, with the government making contributions only for the poor, the unemployed and people with disabilities.

Without drastic reform, Prof. Kotlikoff says, the only alternative would be a massive printing of money by the U.S. Treasury – and hyperinflation.

As former president Bill Clinton once prematurely said, the era of big government is over. In the coming years, the U.S. will almost certainly be compelled to deconstruct its welfare state.

Prof. Kotlikoff doesn’t trust government accounting, or government regulation. The official vocabulary (deficit, debt, transfer payment, tax, borrowing), he says, is vulnerable to official manipulation and off-the-books deceit. He calls it “Enron accounting.” He also calls it a lie. Here is an economist who speaks plainly, as the legendary straight-shooting film star Jimmy Stewart did for an earlier generation.

But Prof. Kotlikoff’s economic genre isn’t the Western. It’s the horror story – “and scarier,” one reviewer of his book suggests, than Stephen King.

~deyao~

Drowned in awesomeness

2010-10-27T15:14:00.004+08:00

I got two weeks of studying coming up but because of another breathtaking album by Taylor Swift, I can't help but spread the word. It's only my second day listening to it, but it has surpassed my expectations. No surprises the lyrics are again based on true stories but I really feel she has stepped it up another level. Fearless was one hell of a album, generating more album sales than any other albums at that time. Now Speak Now is set to break more records, I am very certain of that. Any doubts can be put to rest because Taylor has done an amazing job for this album.She has clearly shown she has matured and become even better over the last two years. 14 tracks on the original version album and a few others with acoustic versions on the deluxe version (red cover). For her fans, it's another incredible treat. The way she connects her stories into music is quite amazing. If you take the time to get to the meaning of the songs (she wrote every song btw) and at the same time get drowned in the excellent instrument arrangement, it won't be hard to understand why she is right on top in the industry.

~deyao~

Turning Point?

2010-09-16T20:54:00.006+08:00

It was a slightly mixed morning, I streamed Arsenal v Braga without audio and bad video quality but I was well compensated with some beautiful football.

The summer transfer window dealings had a much better impact than I expected. I thought back on all the transfers made and I just realised Arsenal signed their first striker since Adebayor way back in 2006. It has taken sometime to fine-tune this team and Arsenal supporters have gone through very painful trial and error lessons of sub-par players. It was not a very impressive lineup of signings to start with but the impact has already been felt.

Arsenal can no longer hold on to mediocre players and this transfer window we got rid of most of the underperforming players. Players like Gallas, Silvestre, Campbell and Senderos who are either way past their prime or who simply aren't good enough have been 'weeded out'. They've given some exceptional performances during their time but their consistency were lacking and it has cost us on many occasions. And now we got Koscielny and Squillaci. Straight into the frame of the first team against Braga. One has CL experience with Sevilla and the other is making his CL debut. It wasn't the toughest test we could expect but not to concede a goal was a step in progress. The defence hasn't settled really well yet as a whole, but I would expect things to only get better. When Vermaelen returns, he can partner either one of them. Koscielny has made a few errors, although it hasn't cost us points, I could already see him improving by the week. He has moved to the toughest league in football and for his level of adaptation at this point I'm quite satisfied.

We played without Van Persie, Bendtner, Diaby or Walcott yesterday. But we lacked no firepower really, Fabregas, Nasri, Chamakh and Arshavin combined was so lethal we could compete with any top team. For Arsenal to have the whole team back and not achieving anything this season really makes no sense to me. There's enough talent in this team for sure.

Notables. Fabregas was a big notable yesterday. He probably played his best game this season.I'm really glad the patient buildup towards full fitness has gone well. He was such a maestro in the game, he showed the world once again what an extraordinary player he is. I don't want to be thinking whether his days are numbered. To see him playing at such a level in an Arsenal shirt is one of the most pleasing things I could watch today. His passing, vision and control in the game was something very rare in today's game. The Catalans are finding more reason to get their hands on him and the Arsenal board are probably thinking every day how is this 'fairytale' going to last. To me it is unreal he actually stayed, I anticipated disaster, considering his heart was already back in Catalunya, I thought it was more likely he didn't stay.

Seeing this
and this

That happiness in my heart was indescribable. Having Cesc playing for Arsenal is something you cannot put a any dollar amount on. For him to stay on and still play at his best will earn him lots of respect from the fans.

Another few notables are Jack Wilshere and Alex Song. A few people realise Jack made it into the Arsenal first team at the age of 16. It was definitely for a reason, he is really talented. Still a lot of learning to go but he is making the starting line in CL, that is quite a statement. That incredibly instinctive flick/pass to Chamakh just made me watch in awe. He plays very similar to the departed Fran Merida, and I am feeling a lot better now.

Alex Song was a master in midfield in the match and over the weekend against Bolton. The 2.5m signing from Bastia 4 years ago is showing the exactly why his move was made permanent after a loan. Possession wise he was just superb, it was exactly what you would have expected from a defensive midfield. Feeling better without Flamini, yea...

And also, Chamakh who continues his scoring streak. First goal by his foot? Haha, a stat there.Played in the CL last season and was in familiar territory. Showed his athletic abilities and his mould into to Arsenal style is almost in place.

Good start again this season...I'm not looking very far but I am expecting a lot more this season.

~deyao~

Miss Inspirational

2010-08-27T03:20:00.008+08:00

I've been re-inspired again, all thanks to the extremely inspirational Marié Digby. She made a short "movie" named after her album Breathing Underwater. It was primarily to describe how she actually wrote her album, how the songs came about. I did remember her mentioning about the sequence of songs throughout the album and the way she presented it in the movie explains many unanswered questions. The videos are based on a true story and to be able to get an insight on this was a great feeling for a big fan like me. She may not be a big star in music but her songs has appealed to many people. Her songs has played a very huge role in my life over the past few years and it has become a part of me. Marié is one of the people I draw a lot of character and passion from and I am really glad her songs has made an impact like she intended to.

After watching the "movie" (made of 17 short videos), it reaffirms everything she has always tried put in her songs. Her drive and passion for music is remarkable. It is not a typical movie but just an illustration of her songs from the album. You get to experience her many acoustic versions of her songs which sound so much different from the original version. Overall, the videos also shows her difficulty during the start and also the people who exists in her songs. I forgot to mention the movie was directed by her too.

The best thing is the videos are absolutely free for streaming on the ABC website. Refer to the picture above for the sequence to make you don't skip any videos in between.

Go to this URL to check the movie out
http://abc.go.com/watch/clip/music-lounge/FK_lilith

The videos were released over the course of the Lilith tour which consists of only female artists. The tour is created for a good cause, Marié was a correspondent for the tour and she got to meet many big artists. She wrote about her experience on the website below.
http://forums.abc.go.com/abcontheroad

Although I haven't written about her in awhile, it is no indication I've lost touch. I'll most probably write about her again when she has new music or an album coming.

Some pictures to end.

♥

Jap look?

Not sure who are the rest
Marié's precious Misty.

♥♥ Marié
~deyao~

SUPER Albums on the way

2010-08-23T02:00:00.011+08:00

Tomorrow marks the release of Katy Perry's "Teenage Dream" album. Her sophomore album is no doubt going be absolutely fabulous. Her first two singles of this album has already done wonders on the music charts. After a successful first album, this album is poised to hit greater heights.

Next is probably the one I have anticipated the longest. I've waited very patiently for this, about 3 years. She has top spot for the best album I've ever listened too. It's no other than the exceptional Sara Bareilles. Her first album just blew me away. From the lyrics, composition to arrangements for her live performances, it was just incredible really. It's her second headlining album titled Kaleidoscope Heart. Although her first single King of Anything has not quite done a "Katy Perry", this album is destined to be tremendous. It will be out on September 7.

And finally to cap it off, there's no better artist to do it. Competing in the ranks with Beyonce and Lady Gaga in the music scene, there's only one artist right up there. It's the very talented and beautiful Taylor Swift!! It's approaching 2 years since her release of the record-breaking album, Fearless. Fearless was a global phenomenon, selling countless number of albums worldwide. Her "Fearless" tour sold out in minutes in every venue. It would take a book to describe Taylor. Her impact on the music scene has been immense and she's transformed into one of the world's biggest artist. Her upcoming album is titled "Speak Now" and her first single "Mine" has already been on the airwaves. October 25th is the release date for her album.

It's really exciting especially as the albums are released so close to each other. Looking forward to some awesome music!

~deyao~

First Thoughts on the Opening Game

2010-08-16T17:24:00.006+08:00

Arsenal had a big break last night. Rosicky could have scored at late but Arsenal could have conceded a penalty to Fernando Torres. Arsenal were favourites at the start but disappointed throughout the match. The fact that Arsenal didn't come out with enough desire to win showed. There was no urgency and no spark in the game.

It was an exciting line up to see. Chamakh, Koscielny and Wilshere all making their first starts for the club.Chamakh used his height to pressure Liverpool but he rarely troubled. He had relatively good touches on the ball and I have no doubt he'll do even better next week. Koscielny had a good start for a first match. Although Arsenal conceded, I think we could see he is up for the challenge. I was delighted to see Wilshere make the starting line up, but Mascherano and Gerrard kept him quiet. Another step to establishing himself into the first team I guess.

Notables. Nasri was influential in many of the plays, showed quick movement and passing. Stuffed up two good free kick attempts but looked more confident than ever. Eboue played good passing as well but never really threatened offensively. Rosicky made a good impact after he came on and almost scoring.

Room for improvement. Arshavin looked completely out of sorts for one of his favourite fixtures based his goal tally at Anfield. I am still not convinced with the crosses from the full backs Sagna and Clichy. Everytime there needs to be good ball in the box, the crosses were disappointing. Almunia should not have been beaten at his near post. He doesn't convince me that he is capable of being number 1.

Impact of Fabregas, van Persie and Song
Arsenal missed these three players yesterday. There was no direction in the flow of the game. Arsenal were passing their way to nowhere at times and it is not something they should be doing. Van Persie never quite settled in the game. Had Song played a part in the game, Arsenal would have held more possession and allow more attacking plays.

We couldn't afford to lose the first game of the season and we didn't. I am not sure about the fitness of the absentees but I would love to see more firepower next week. It's going to be against a Blackpool side who made headlines with their thrashing of Wigan. There definitely must an improvement to this result next week.

~deyao~

Fantasy Premier League

2010-08-10T23:54:00.005+08:00

It's another year already...I could still remember writing this post for last year.
As usual I've created a league in in FPL. Feel free to join.
The league code is 660423-152905

The dateline is 14 August 1100 GMT so make sure you get your teams registered by then.

~deyao~

The season is starting

2010-07-27T23:29:00.012+08:00

31 August represents a very important deadline for football clubs, it is the last day for clubs to sign new players or sell. It would be 4 months of non-activity after that. The new season of the Premier League starts again in less than 2 weeks!

It was quite a wonderful winter break with the World Cup starting the night of the last day of exams. I've watched many many matches and I couldn't be more pleased. Although I expected Spain to be contenders but I never wanted them to win. One of the reason is Spain being made of almost entirely of Barcelona players whom are pursuit of Fabregas. One way to see it is Barcelona are a tremendous team and even a player like Cesc may not make the starting line up. But you could see the impact Cesc has the moment he comes on, he is one hell of a player. He is intelligent, quick and his vision is top draw. There are countless reasons Barca would want Cesc but Barca too got realities of their own, finances. They didn't build a stadium or get taken over, but yet that pile of debt is so huge. They had to borrow 120 mil to pay their wages. Well, it is not a cheap team to maintain. Most of them are World Cup winners and they had Ronaldinho for some time and his wages would have been very close to 200k a week.

Football is a sport for entertainment and it is also a business. We have seen over the years many clubs run into financial trouble like Leeds, Newcastle and most recently Portsmouth. When you have trouble with your finances, it affects the business too. If the club goes into administration, points get deducted and the club is forced to sell top players, the end result won't be a good one. Arsenal is one of the most talked about teams when it comes to winning vs finances. Arsenal are arguably the most well run club financially in the world. But in contrary they have won nothing in the past 5 years. The interesting fact is, although winning nothing, the club's financial health is still that good. Here's a few reasons why.

Reason #5 Arsenal have not been taken over
Many of the clubs being taken over very very huge in asset base base but when compared to their debt, it is not a pretty sight. Man Utd might have a asset base of nearly 1 bil, but having debts of 700m which has increased since the takeover in 2005 has certainly got the fans very mad. Imagine the financing cost involved.
This article illustrates the not very pleasant situation.
http://www.goal.com/en/news/9/england/2010/05/28/1947511/exclusive-manchester-united-spent-40m-refinancing-debt-following-

There's a very big reason why many fans and the Red Knights desperate in getting the Glazers out the club.
Many people are wondering why a change of owners is a bad thing. Well don't the names of the shareholders just change ? Normally that's what happens. But not in this one. What the Glazers have done is a leveraged buyout in finance terms. What they have done is the borrowed a very large sum to acquire the club and at the same time use the club's assets to secure the loan. How does it benefit them? They don't have much upfront cost. Won't they lose as well with the huge financing bill? Number one, how much can they lose if they put so little capital in club. Number two, if it takes 50 years to pay off the debt, it won't matter, the business pays off the debt itself. Who loses? The club loses overall because finance will be tight and players need to be sold over time to fund huge loses. The exact same problem has occurred at Liverpool and that situation is much worse. For Chelsea, the debt levels are also pretty high but the Roman injects money in every season, making things look rosier than it is.

Reason #4 Low wage rates
I shouldn't actually be using the the word "low" because the wages are still pretty high. In general, Arsenal do not pay exorbitant wages to anyone. Anything above 100k is extraordinary. I believe only Cesc commands that level at the moment. The lack of big names also contributes to Arsenal's lower wage bill. However in recent article I've seen, it is not significantly lower. But a million or two a year goes a long way.

Reason #3 Youth
The most controversial policy I have seen adopted. It has shown glimmers of what the future has in store for the club but that has been all. Youth hasn't brought the silverware. But it has kept Arsenal out of the overpriced transfer market.

Reason #2 Stadium Revenue
The Emirates Stadium has been a curse in terms of trophies but financially it has been a great investment. Matchday revenues has been at record levels with season tickets in shortage. Accommodating 50% more spectators than Highbury, a club like Arsenal would need it. But Wenger's role in consistently delivering Champion's League football has been the main reason Arsenal could afford it.

Reason #1 Buying Cheap & Selling
When it comes to value seeking, Arsenal are champions. They have bought many players at a very cheap price and turning them into world beaters. Nothing at Arsenal cost more than 16 mil which was paid for Arshavin. A season of buying in Real Madrid is probably equivalent to more than 5 years of transfers in Arsenal.

The only way you could ever make money is selling. Although it sucks seeing players leave the club, the amount of money Arsenal has made over the years is quite amazing. Henry, Vieira, Adebayor, Anelka, Toure and a few others easily made the club over 50 mil. You don't usually see anything like this anywhere else.

The Transfer Market so far.....
The most aggressive team by far this summer has been Man City. They were extremely close to making 4th place last season. The big names they have got are David Silva, Jerome Boateng, Yaya Toure and very likely Mario Balotelli. It's over 100m spent so far. Mancini has only one chance to achieve a top 4 position and his signings has drawn a lot of attention. Are they going to be serious contenders? In the attacking part of the game, they've got oversupply of talent and I can really see no reason for more transfers. But their problem last season has been the defence. Although their defence is made up of quality players, somehow it was one of their biggest downfalls. Only Boateng has come to the picture in terms of the back four, has Mancini done enough? I think he needs one more.

The Big 3 (although Spurs are in the top 4, they still haven't deserved to knock Liverpool out) has done a great deal of transfers. Man Utd only adding Chris Smalling and Javier Hernandez. Despite the loss of Ronaldo, they had quite a decent season. This probably prompted Fergie to continue with his current squad. Despite their age, Giggs and Scholes has been admirable and extremely influential in the team. They surely will play a big role again this season, but Fergie has to know it won't last. Nani and Valencia have stepped up last season and this has most likely satisfied the manager's line up.

Chelsea has been really quiet, only big name has been Benayoun. No offense, but I am not sure Benayoun is good enough for the team. I don't see him lasting more than a season. I am really sorry. Overall I don't think the champions need any more players and all they could do is keep up the good work. They are close on signing Ramires recently but again I am not sure to what extent this Chelsea team is getting much better.

Arsenal has freshened up their squad. Letting under-performing and mediocre players leave during the summer. Campbell, Silvestre, Gallas, Senderos and Eduardo all departing. They haven't done the job up to a certain standards and I had no problems seeing them leave. My concern would be on the defence. Only one signing after 4 exits. Wenger needs another 2 defenders at least, they only have 3 centrebacks now. Ater conceding 4 goals against Barca and 3 against Wigan, Wenger has to know he has a massive gap to fill. The addition of Chamakh rules out any potential strikers. The return of Aaron Ramsey and Jack Wilshere would also rule out any potential midfielders. Overall I am still not convinced we got "our" man to score the goals. I would like to see another striker come in. If RVP is sidelined, Bendtner leads the front and that is no way going to create enough goals. I am still not quite satisfied with the sort of firepower to do a lot of damage when attacking, oh well, I can only hope. Wenger has to sign at least 2 players or the fans would go another season suffering. Oh man...

Forecast
I always got lots of predictions wrong. As much as I didn't want Spain to win the World Cup, I gave a genuine prediction they would make it. It's always a tough job for anyone to predict football. So many views and only a few will get it right. I am quite confident the top 3 last season will have no problems staying in the top 3. Top 4 is going to be a four way playoff this season. It is more open than ever. Man City, Liverpool, Spurs and Aston Villa. It would be against the odds but the knocking on the 3rd place door would take place this season. My biased but hopeful prediction for the top 4.
1. Arsenal
2. Chelsea
3. Man Utd
4. Man City

Neutral prediction
1.Chelsea
2. Arsenal
3.Man Utd
4.Man City

Risks
There are a few risk the predictions would go really wrong. I am not buying myself any insurance going with the winners year after year may not be realistic.
Goal scoring machines - Rooney and Drogba were top scorers last season and there will be heavy reliance on them again this season. Rooney had a slightly painful end to last season and a woeful WC, can he charge it up again?. Berbatov has to step for Man Utd with more goals, plus Nani and Valencia must notch up double figures in the league itself. Anelka,Lampard and Malouda must also keep up the scoring.

Integration - Man City's integration is really important. They got a host of talent in the squad but can Mancini make them a team? The predictions are heavily relying on this.

The fitness of Torres - His fitness hasn't be good enough over the past year .I see him scoring when he plays but this could be a tough season with the lack of talent in the team.

I'll leave it here and we'll see what the new season will bring . Till the next time. Ta!

~deyao~

The 4 Factors In An Australian's Perspective

2010-06-19T18:30:00.015+08:00

I haven't written about any personal finance topics in awhile, all thanks to my course structure. Anyway, it was quite the semester I anticipated. At least I knew what I was getting into and the consolation was I didn't freak out that often. I have a well deserved break now and here's one of the first few things I am doing.

I did some really interesting subjects this semester and although I went through quite a tough time doing them, I walked away quite happy. Hopefully I could somehow part some of the things I've learnt and make my writings better.

I've been wanting to write about this topic for a very long time and I finally have the time to. Robert Kiyosaki wrote about how every single person should understand the 4 factors. If they didn't they would never improve financially. He wrote his books particularly to help the Americans, whose financially well-being has been below par. But the rest of the world benefited too, people like me. He wrote about the 4 factors that made people poor. And I really felt the same after reading it and I thought it would be important to spread the message. Since he wrote it in an American context, I thought probably I could do one for an Australian's perspective.

The 4 factors by Robert are Taxes, Debt, Inflation and Retirement. He mentioned the majority of the people heard of these words before and knew what they generally meant, but they didn't know the impact of these four factors. The reason that convinced me to write on this topic was because these four factors took the most money out of people, legally. For the working class, what is the percentage these four factors take from your gross pay check? If it is below 20%, then I think you shouldn't be worried. But if it is anything above 40%, I think it is important to take note.Just imagine, before you can spend ANY amount from your pay check, 40% is ALREADY GONE. Some people just accept it and carry on with life as usual thinking they could do nothing about it, but for the people who believe something can be done and look at ways to improve their situation, they could be on their way to saving lots of money by just doing things not much differently.

First of all, I would briefly cover the four factors and some important points to note. It would take an entire book to give a comprehensive guide. What I hope to achieve is to point things to the right direction and hopefully by taking your own initiative to understanding these four factors further, you could improve financially.

*Half way through typing this, I just realised this post would be too long. So I am writing the factors in 4 parts (posts).

Inflation

The first factor is Inflation. Definition, a rise in prices in just about anything. You and I hate inflation because we have to pay more for our bills. We dislike paying more for fuel, groceries and it makes any future investments more expensive because prices keep going up. Inflation hurts the value of our money because 1 dollar today might not buy you the same thing one year later. A brief economics explanation. A rise in price is generally due to a fall in supply or an increase in demand. So which way is it? I would say both factors are evident. A fall in supply seldom occurs unless we're talking about a resource with limited supply, but a growth in demand I would say is due to economic and population growth. In short, if there's growth, there is inflation.

Australia is one of the handful number of countries in the world with a positive a 'real interest rate'. A simplified calculation is the Interest Rate minus the Inflation Rate. If it is positive, it means money is still outgrowing inflation which is still good, vice versa. If it is positive, do Australians still need to worry? The answer is yes. And the next question is obvious, it is why?

One of the reasons is if interest rates are at 4.5% and inflation is at 2.5%, you're looking at a real interest rate of 2%. Especially for people whose interest payments keep them afloat in retirement and people who hold mainly cash, 2% is a below average return. Inflation is also known as a 'silent tax'. It takes money from you without your "permission". For example, oil prices rise, you pay more at the pump, no questions asked. The pump owner sure didn't keep prices down to please customers, simply because people will pay it anyway. What if oil prices go crazy to levels back in July 2008, you would have no choice again but to "surrender" more money for fuel.

The effect of rising energy prices is huge, it trickles down to almost every section of cost of living. From housing, food, transportation and wages. Inflation destroys an economy if it is not kept in check. Growth becomes pointless if inflation grows faster. The central banks increase interest rates to curb inflation, but high interest rates is not necessary a good thing, ask borrowers that.With high interest rates, cost of financing increases and growth slows as well.Inflation threatens our cost of living, so who benefits and what can we do?

When it comes in inflation, only a small group of people in the world benefits. People who own resources/real assets. When oil prices rise, only oil producers benefit and the rest of the world loses. People who own real estate, they don't mind if house prices rise because they would gain. Imagine the wealth transfer. People who don't own any real assets, have their wealth transferred to people who do. In Australia we're talking about a huge mining boom, but how much of that wealth is actually transferred to the general population. If you don't own the mining companies, you don't benefit. If you're waiting for the government to make sure the benefits are spread across the country, this would awhile and I'm not sure how much 1 person would receive after dividing it among 20+ million people.

Inflation can a big problem, especially for people who do not own real assets. The solution is simple, you can own more real assets, earn more money or achieve a higher return on your investments. In the long run, earning more money at work is going to be difficult and achieving a growth in returns over time gets harder. Therefore, owning real assets would be the best option.

In short, inflation happens if growth occurs. As individuals, what happens to prices is out of our control. But the fact is we know inflation will happen and just by looking at inflation data for the past few years, we know inflation will not stop happening. If inflation is controlled well within comfortable levels then it is fine, but if it takes a few spikes many people will suffer. As individuals there are no certainties in economic conditions. Although Australia is a big producer of commodities, the benefit to the country as whole is only concentrated to the people who own these resources. If the price of coal or gas goes up, the owners make more money and our bills get bigger numbers. To deal with this inflationary environment, the best thing in my view to do is to hold inflationary assets; assets that benefit from inflation. I am not saying go get a house or buy stocks because everyone's financial position is different. What is best for yourself is look at the assets to you have, anticipate inflation and see whether you would be better off, worst off or maybe be unchanged. If there's room for change then make some changes in your allocation.

The next few topics would be more linked to an Australian's perspective. Inflation is a bit general to everyone so I haven't got anything specific. Hopefully the next few posts will make up for it. Thanks.

~deyao~

Jay is Back !

2010-06-18T18:24:00.005+08:00

Jay is back with a wonderful album titled "The Era". I've heard it a few times and overall I am delighted to listen to Jay's music again. Another tremendous attempt to mix some new material without compromising his style. Really love it.

He mentioned about his interview with CNN on how he couldn't converse in English. So I checked it out and it reminded me how he has inspired the world with his music and being a role model. The video are split to four parts.

~deyao~

Last of Cesc?

2010-05-21T00:04:00.014+08:00

In 2000, Overmars and Petit, two tremendously important players, left for Barca. Overmars had a horrid time and Petit returned with Chelsea only after a season.In 2005, Patrick Vieira, captain for Arsenal, left for Juventus in search of more success. He was 29, showed signs of decline and was never quite regained his majestic control in the middle of the park. In 2006, Robert Pires left and Dennis Bergkamp retired from football. Pires was arguably the best winger in the world in 2002. Since the horrific injury that ended his season and chances of a World Cup appearance, he was never back to his best. When he left at the age of 32, he was no longer pacy and he struggled for fitness.He could no longer regain his peak. Dennis retiring was less painful as he was way past his prime at that time.In 2007, captain of Arsenal, Theirry Henry bid farewell after 8 years of excellent service. He was Arsenal's top goalscorer and one of the best ever seen. However, his final season was painful to watch. Plagued by injuries physically and emotionally of losing two of the biggest finals (World Cup and Champions League) in his career saw his season end prematurely and having a lowest scoring total in many years. He left for Barca and did win the CL ,but again, his best days were behind him.

By the time now in 2010, I've seen numerous departures and I've remembered everyone one of them. I still remember in 2000 when the internet was still relatively new, I read the title on Soccernet ;"Overmars -I'm off to Barca". It was really painful at that time even as a 10 year old. When Thierry left, I was also deeply saddened because he was in my view, an Arsenal player for life with no exceptions. At the end, Thierry had an ambition of his own and we respected it.It is really heartbreaking to see good players leave, moving on after that many transfers still creates a lot of uncertainty when seeing a player leave.

For the third time, an Arsenal captain is linked with a move away. This time it is Cesc Fabregas. Undoubtedly the best player on the planet in his position. His maturity and unbelievable talent made him the youngest Arsenal captain in history. Only 23 this year. This possible transfer might be the most painful transfer an Arsenal fan could EVER experience. Cesc is the heartbeat of the team, he makes things work and he delivers very consistently. His vision in passing is phenomenal, he strikes the ball well and his winning attitude and determination is just spot on. And there is no coincidence his name in short means 'Fabulous'.

Does He Deserve To Leave?
Cesc signed an 8 year deal in 2006, the longest contract ever awarded to an Arsenal player. The duration of the contract signaled that even only being in his 2nd year in the senior team, he showed so much promise for the future and created every reason to tie him down. The only other contract I've seen of that length is Lionel Messi and it also contains an exit clause amounting to 150mil euros. And Yes, it is simply because he is too good. Arsenal has been trophyless for the last 5 years, nearly winning on a few occasions, but nearly winning and winning itself is a huge difference.

I would be frustrated if I were him. He is running the show and performing a level higher than everyone else and as a team, he achieves nothing in terms of silverware. The Arsenal team is an extremely good team. But in the reality of football, it doesn't matter how good you are, you need to end up first and only first. 2 seasons ago, Man Utd and Real Madrid won the title on goal difference. In the recent season, Chelsea won the title by a point. Thats how close it has been. Well you can't blame competition for failure and if you have title ambitions you need to be the best. Arsenal have simply failed to be number 1, that mattered. 4th in the Champions League and 3rd in the League, it still doesn't matter. Football is cruel, be top or you're just like any other team.

Who's To Be Blamed?
There can be no fault put on Cesc because he has simply given everything. Is Wenger to be blamed? Well he is the person who brought in Cesc. Like many things in life, someone creates something and in the end that same person messes things up. Similarly, Wenger is held responsible for bringing in Cesc and he would be again responsible if he decides to leave. We all know Wenger developed a project based on transforming young players into world class superstars. But the truth is, Wenger has overestimated the abilities of his youngsters and that's why he has failed to deliver. The understudies of the first team are mainly players who can deliver when being called upon but if they are required to start every game, the inexperience and inconsistency kicks in and points are dropped.

I've been a huge critic of Wenger's transfer policy and I still am. The fact that Cesc is in the league of his own may not necessary be a good thing. There are only two players in his league, Arshavin and Van Persie. And how many games have these 3 players started together, any amount more than 15 would be unlikely. And how many games are there in a season? About 60, and it is clear why Arsenal has failed to win anything. When they play together things go really well but suddenly one or two of them are missing the team struggles. Injuries are one side of the argument, but the real argument is why on earth a team like Arsenal has no other top players to deputise them when needed. Wenger's transfer policy is to be blamed and he could only blame himself if he loses the best player in his team.

A Less Fab Future
Cesc has no doubt been pulling the strings for years, he has kept Arsenal within the comforts of playing Champions League football. The battle for Champions League football finally took a turn this year, with Spurs emerging the "intruder" to the big four. Securing Champions League football hasn't been something Arsenal could take for granted in the past few years. In 2006, Arsenal miraculously edged out Spurs on the last day.In 2009, Villa potentially led by 8 points in March, only to lose steam after. And finally this year, Arsenal needed to avoid defeat on the last day to secure a valuable 3rd place which guarantees a position in the CL without having to qualify thru a preliminary round. Remember there's still Man City, Aston Villa and Liverpool, all potential suitors for the CL spots. It only gets harder.

It is going to be a potential catastrophe for the club if Cesc is to depart. Although Wenger has tried to built a team around him, it certainly hasn't turned out to to one of champion's quality. I am not sure there is any player I know that could even attempt to replace the club's inspirational captain. It truly it going to be unthinkable if Cesc is to depart. There is no way I feel Wenger could even try to mount a decent challenge next season without him. It's almost too hard even with Cesc, without him would be make it impossible. Worst case, Cesc could spark the biggest exodus yet with Wenger the next possible candidate on his last year of contract.

Last Straw Efforts
I am sure everyone at the club is trying to persuade Cesc to stay. But according to the press and uncertainly portrayed, it seems like Cesc has almost made up his mind. Nothing would happen until after the World Cup but after that fear is there as long as the transfer window is open. But what about Cesc's gratitude to Wenger? I feel this is the only reason he stayed on, his career exploded all because of Wenger's gamble in youth. But has Cesc done enough? I would say there is no limit on how much you have to repay your gratitude to someone but there's also comes to a point you have to think what's best for yourself. It is really unfortunate Wenger has not develop more 'Cesc-quality' youths in his time and it probably is one reason he is thinking about leaving. The odds are against Arsenal, of all teams Barca is the likely destination. The thought of going home to where you first came from, seems like quite an easy decision. Despite this, Cesc has a very strong mind and character and he must be thinking about his decision every day. Whatever the decision is, I am very sure he is smart enough to do the right thing.

As an Arsenal fan, there's absolutely no chance you could let this happen and for the best interest of the club, Cesc just has to stay. I am not sure to what extent Cesc has made up his mind, but Arsenal could really struggle without him. Wenger's leverage over Cesc is diminishing over time and the prospect without Cesc is something no Arsenal fan would want to think about.

~deyao~

The Continuing Drought

2010-04-25T21:31:00.005+08:00

Before I vent out my frustration again about this season, I've read this from Piers, an Arsenal fan himself, whose weekly articles are great to read.

Piers Morgan - Time to join the big spenders, Wenger, or it will be time to say goodbye

Since the shocking, embarrassing, disgraceful capitulation of Arsenal's season at Wigan last weekend, I've been feeling so dangerously enraged that I didn't want to write about my team at all today - for fear I'd say something reckless and over-emotional again.

But having recently demanded that Rafa Benitez be fired (Liverpool should just get Roy Hodgson - he'd cost half the money, spend a tenth of the cash, play better football and desist from the incessant whining that 'Bizzo' persists in) and Sir Alex Ferguson stand aside for Jose Mourinho before it's too late (after Inter's sensational demolition of Barcelona, I'd say United have about two weeks to get him now before Real Madrid pounce), it would be journalistically remiss and cowardly of me to now avoid the yawning problems in my own manager's backyard.

Arsene Wenger is now facing the biggest crossroads in his Arsenal career, of that I am certain.

Five years without a trophy of any kind is simply too long for a 'Big Club' and everyone at the Emirates knows it, including Wenger himself, because he's not a stupid man. In fact, he's probably the smartest manager the Premier League has seen.

Year after year since he unceremoniously - and, in my opinion, way too speedily - dismantled the Invincibles team of 2004, we've heard the same excuses: the team's in 'transition', the young players are 'maturing', glory is 'very close now'. Yet here we are, half a decade after the youth experiment began and we've ended up with nothing again. Not a sausage. Not even a Carling bloody Cup.

Eighteen months ago, I suggested in this column that Wenger should stand down, sparking an unprecedented furore from Arsenal fans. It was like a devout Catholic calling for the Pope to stand down, you just don't do it. And anyway, Wenger deserved more patience than I'd given him until that point. But are we really any nearer a winning team now?

Part of me says that with a fullstrength team, we are. That inopportune injuries to key players like Robin van Persie, Andrey Arshavin, Cesc Fabregas, Alex Song and Theo Walcott kept us from fulfilling our potential this season. But another part of me isn't so sure.

I watched us getting hammered by Chelsea, Manchester United and Barcelona, with pretty strong sides out. Not just beaten, but thrashed.

Real men against boys stuff. And all this after a January transfer window when Wenger bought nobody apart from Sol Campbell. I've been saying for two years, like most Arsenal fans, that we needed a new goalkeeper, striker, and midfield hard-man. Wenger ignored us all, persisting with the hapless Manuel Almunia in goal, relying solely on the keen but naive Nicklas Bendtner up front throughout van Persie's lengthy absence, picking weak links like Denilson in the middle, and the clunk-footed dinosaur Mikael Silvestre at the back.

Either he did this because all the Arsenal boardroom chatter of £30 million to spend was nonsense. Or he did this because he's obstinate and believed he didn't need to.

One thing's for sure, though. This cannot go on. Something has to give. Are Arsenal's board misleading fans about the funds available, in which case they must now say so?

Or do we have the money and, if so, the board must now order Wenger to spend it this summer and spend it big. Because the reality is that to get the right players in the current market, he has to.

I'd break the bank for Fernando Torres and Steven Gerrard. Both will want the Champions League football that Liverpool can't offer them and both would be magnificently complementary partners for Van Persie and Fabregas. And in goal, I would go for Shay Given, consistently the safest pair of hands in the country.

It's time Wenger stopped priding himself on being Mr Prudence and played the game that all his biggest rivals are playing. Otherwise this great man, who has achieved so many amazing things in his 13 years at Arsenal, will reach the end of his contract in 2011 with six consecutive years of failure on the second half of his scorecard. And if that happens, I believe he will either walk away or he'll be asked to.

Article originally from Daily Mail

~deyao~

The Percentage Game

2010-04-24T01:17:00.015+08:00

Person 1: Any tips on stocks?

Person 2:How about Rio Tinto.

Person 1:How much is it?

Person 2:About 80 dollars.

Person 1:80 dollars? That's too expensive.

The questions is...how can Person 1 tell it is expensive? Well, if Person 1 didn't know much about the stock, he/she is most probably wrong.

That example above is probably one of the most frequent situations I have encountered. There's this theory that large and 'expensive' stocks are priced at high absolute amounts. To a certain extent it is true most of the larger companies today have share prices that are well above $10 (In America or Australia). But in terms of value, what does that absolute share price tell us?

When 1 does not equal 1

I am very sure many people know this but there are through my experiences who still make the same statement which is most certainly not true. One example. Exxon Mobil today trades at $68 and Chevron trades at $82. Two companies which are in the same industry practically doing the same thing. Which stock is better valued? Many people will jump right into Chevron, well because it is "cheaper". Is Chevron better valued? The answer is you cannot make any conclusion at this point. Why? The share price itself tells you NOTHING! It is preposterous how people make conclusions from the share price itself.

First of all, Exxon is a larger firm than Chevron. This means if the share price does indicate the size of the firm, it is BY CHANCE. Secondly, which firm is more profitable? Does the share price tell you anything about this, absolutely not! Before I move on to my next point. What if I told you Exxon Mobil makes $1bil a year in net income? Does this tell you anything? Again the answer is NO.

Why not, isn't $1bil a LOT of money?Yes it is, but to Exxon, is that amount good? The answer is you need a COMPARABLE amount. Comparing to earnings of the last few years is a good start, but comparing it's rate of return to market/industrial estimates is what really matters (This will be discussed later).

Alright, the real story is Exxon is TWICE as huge as Chevron in market value, has a higher profit margin than Chevron. And also, Exxon made $19bil last year. So did you get fooled by the previous $1bil earnings? It does sound really good but it means nothing unless you make a meaningful comparison. Exxon is LARGER and is MORE PROFITABLE but yet it's share price is lower. A well-informed investor would know Exxon has a superior finances but it is not the only factor on choosing a stock.Lesson, the share price amount tells you NOTHING.

Hypothetical example (which is unlikely to happen in reality unless for a very good reason). Chevron has 2 bil outstanding shares and trades at $82. Let's say the firm does a stock split of 2 for 1. This means for every 1 share held, the shareholder will now own 2 shares. It will actually be called a bonus issue in reality but the "bonus" is free shares in numerical terms but not free money. This means Chevron now has 4bil number of shares outstanding which is double the amount. What will the new price be? Theoretically, the price will be halved to $41 because assuming the firm's value did not change overnight, the price of its shares should not be different. But due to the split (which does not affect a firm's value), 2 shares will equal to the value of 1 share before the split, thus being priced at $41.

Now after the split, Chevron is "cheaper" compared to Exxon in absolute share price. If you still haven't understood the fundamentals, you would have thought what a wonderful opportunity it is to buy Chevron because it has gone down in price by 50%. If you read the few paragraphs before this, you would have known $41 for 1 share now is NO DIFFERENT to $82 for 1 share before the split. This means in the world of finance terms $41 EQUALS $82. The value of each share before and after the split are the same although they are priced differently. From now on, when you look at share prices, just remember they mean NOTHING when compared in absolute terms.

Percentage Matters

Percentage allows us to make meaningful comparisons. You can own a huge company, but if it does not make money, no one wants to buy a stake in your company. We live in a percentage game. Percentage returns matters a lot more than absolute returns. Whether Chevron is priced at $82 or $41, if the share price falls/rises by a certain percentage, that is what matters. Whether the movement was $1 or $10, the percentage change is what you should be looking for. From the previous example above, had you used a percentage return for let's say return on assets. You would have known a $1bil profit for Exxon is actually a terrible return. $1bil sounds good but it's not.

So if you were interested in buying into a managed fund, what are the relevant questions for you to ask? Plain simple, what are the returns you would expect as a percentage of your your investment. If the fund has not been outperforming the market itself and it has high exposure to equities, that is probably a negative sign. As you can see I've created another question, what are the returns relative to the market? That is probably one of the most important questions.

I have not been particularly good when assessing fundamentals of companies. But just a few ratios that are important. Return on Capital, Dividend Yield, Operating Margin and Historical Earnings. These ratios will allow you to make meaningful comparisons when assessing a company's financial. On the technical investing side I am even less knowledgeable actually. But what technical analysis does is it goes beyond the fundamentals to assess a company. Analyst usually plots graph of historical prices and compares it to market's return, volume and other indexes to spot trends to determine target prices, resistance level or to time the market's trend. I'm not going through these techniques as I don't know much for now. Maybe in the future.

The main point is knowing what the share price means and ways to actually determine share price value.

Rio Tinto, Exxon Mobil and Chevron does not make you rich. It is the knowledge about Rio Tinto, Exxon Mobil and Chevron that makes you rich.

~deyao~

Conspiracy of the Rich

2010-04-17T01:44:00.003+08:00

I came across this video and it probably gave the best unbiased explanation of the causes of the financial crisis apart from Robert's. The conspiracy is as clear as true and it is happening right at this moment. The US Congress is talking about a financial reform but the painful truth is you just can't rely on anything that has got to to do with politicians. It's up to you to educate yourself and not lose money to "scams" and "lies" of the govt.

Visit msnbc.com for breaking news, world news, and news about the economy

~deyao~

Is China all good?

2010-04-13T01:52:00.006+08:00

China has been by far the fastest growing country in the world. A GDP of 8% during the financial crisis was just admirable. Everyone says it's the next big thing (well it already is), it will lead the world economy, it will overtake US one day? Well, I definitely won't doubt it may all happen. But when it comes to China we hear stories about its lack of transparency, pollution, human rights problem and it's absolute desire for growth at all cost. Will these problems catch up on them in the future? I came across this article which gives a brief highlight on the less rosier side of China.

The China Bubble - Greg Hoffman

Edward Chancellor, a member of the asset allocation team for Boston-based GMO and, interestingly, the author of a recent Financial Times piece on Australian property, is a financial historian and bubble expert.

His 1999 book, Devil Take the Hindmost: A History of Financial Speculation, examined past speculative manias. Perhaps you've read articles comparing the tech boom and 1990s' bull market to tulipmania in 1630s' Holland.

The difference is that Chancellor was making that comparison before the tech bubble burst, some years before Alan Greenspan claimed it was futile trying to predict bubbles at all.

Chancellor's timing may have been fortuitous. To accurately predict something once might mean little. To repeat the feat perhaps means something more.

His next major piece - Crunch time for credit: An enquiry into the state of the credit system in the United States and Great Britain - included this prescient paragraph:

''The growth of credit has created an illusory prosperity while producing profound imbalances in the British and American economies...When credit ceases to grow, the weakened state of these economies will become apparent.''

That report was written in 2005, years before the credit bubble burst. Chalk two up to Chancellor.

Third time lucky?

He's now turned his attention to China, a fertile ground for his fertile mind. Released last week on the GMO website, China's Red Flags is split into two parts.

Crisis checklist

Section one identifies speculative manias and financial crises, offering a checklist for those trying to identify bubbles in advance of their bursting. Chancellor offers 10 criteria for what he calls ''great investment debacles'' over the past 300 years (the report explains each in far more detail);
1. A compelling growth story;
2. A blind faith in the competence of authorities;
3. A general increase in investment;
4. A surge in corruption;
5. Strong growth in money supply;
6. Fixed currency regimes, often producing inappropriately low interest rates;
7. Rampant credit growth;
8. Moral hazard;
9. Precarious financial structures;
10. Rapidly rising property prices;

Although all these criteria need not be present in order for a bubble to be present, you can see where Chancellor's heading: not-so-subtly steering readers towards his own conclusion. In section two he takes each factor and applies it to the case of China.

Ponzi scheme

His conclusion is alarming; The very factors that have allowed China to grow so rapidly over the past few years despite the global slowdown - an investment boom, a credit boom, massive increases in money supply, moral hazard and risky lending practices - are all factors that investors and the mainstream press feel they can safely ignore because China is growing so rapidly.

After the past few years, we should all understand the potential negative implications of such major imbalances. But there seems to be general agreement that a ``build it and they will come'' approach is warranted in China because it keeps growing rapidly. There's a Ponzi-like element to the circularity.

Chancellor is concerned that China's high GDP growth is no longer a function of impressive natural growth. Instead, growth is being engineered to achieve high GDP numbers. It's producing a system that's unsustainable and prone to collapse.

This, in essence, is Chancellor's argument:
- Investors are adopting an uncritical attitude to China's growth forecasts;
- Because of the way local officials are incentivised, it's likely that migration of the population from country to city is much further along than the official numbers suggest. So when you hear of another 350 million internal migrants arriving in cities by 2025, many of them are actually already there;
- Hence, future productivity growth will be much more reliant on efficiency gains than urbanisation. China's record in this area isn't at all strong;
- Beijing imposes GDP growth targets on local governments. Thus, ``GDP growth is no longer the outcome of an economic process, it has become the object''. `When the allocation of resources, whether at the corporate or national level, becomes all about ``making the numbers'' then poor outcomes are to be expected';
- In 2009, Chinese fixed asset investment contributed 90% of total economic growth (an incredible statistic and a natural consequence of the previous point);
- Significant overinvestment is present in many areas. For example, capital spending in the cement industry increased by two-thirds despite capacity utilisation running at an estimated 78%;
- The efficiency of investment (incremental GDP growth for each additional unit of investment) is trending downwards towards wasteful levels;
- Interest rates have been kept way too low for decades, sparking economic growth but also imbalances and bubbles;
- China's enormous foreign exchange reserves are not necessarily a plus. As Michael Pettis pointed out recently, only two countries have previously accumulated such large foreign reserves relative to global GDP - the United States in 1929 and Japan in 1989. Oh dear;
- The Chinese stockmarket is in bubble territory. Last October, a new Nasdaq-style exchange opened in Shenzhen with 28 new listings. The minimum price rise (the laggard of the 28) rose 76% on the first day. Price/earnings ratios averaged 150;
- The residential property market also appears to be in a bubble. In Beijing, the house price to income ratio has climbed to more than 15 times, versus 9 times in Tokyo in 1990;

I've heard dozens of arguments on this matter. About half of them completely brushes of the bubble theory. Dr Doom Marc Faber predicts a high chance of an economic collapse for China this year. The fact the prices especially real estate has gone through the roof and the presence of dangerous lending practices could cause disaster. The lesson here is not about correctly predicting whether China takes a fall, but not to be completely certain about the future of China. Aussies take note.

~deyao~

TV Theme Medley

2010-03-28T20:53:00.006+08:00

I actually had a post planned out for this month but really haven't got the time. We'll see on on the Good Friday weekend. Here's a video my sis showed me. Thought it was quite amazing. Hope you enjoy it if you haven't seen it before. Have a nice day! It's the same person in the video btw.

~deyao~

Starting with a Plan

2010-02-26T15:36:00.006+08:00

Typing this on my new keyboard, yay it feels good! Based on the past few months, I posted only once every month and I think it could be like that for awhile, well at least there's still something. Just an update on uni, I am boarding an "aircraft" this semester and it's going full swing for 5 weeks, transits for a week and goes full throttle again for the next 8 weeks. I hope I will survive. But anyway, despite the coming up busy-ness, I'll try my best to keep this blog updated. It has changed to a completely different blog in the past year because things have changed for me and this is what is happening for me.

It's already coming to the end of February, so have you planned for the year yet? Well it depends on what are you planning for. For instance, if its work, you barely need to do anymore planning after spending majority of your productive time there every weekday and sometimes on weekends. If you're studying like me, it's all about doing the usual tutes and assignment and then going through test and exams. It still requires planning, but for the coming few weeks at least. I used to do new year resolutions way back many years but not anymore. But at this critical stage of life for me, I'd probably need to put a lot more importance on certain matters.

It's another personal finance topic today and it focuses on making your wishes come true. It's about making a plan. If you're about to start in the job market, making plans now would do you good. Ok, I'll keep it simple. It's all about improving your financial well-being, nothing else. Are you doing anything to improve your financial well-being? It doesn't matter what financial position you're at now, it's about continuously improving that position. One of the best ways is to create a financial goal. I've mentioned this before.
A financial goal can be "I want to a have a million dollars in 15 years", "I want to pay off my house in 5 years", "I want to retire at the age of 40" or "I want to double my returns every 5 years". Well, there are many other goals in life we would want to achieve other than being wealthy and it is equally important you have a plan to try to achieve them.

So think of a financial goal, time frame can be anywhere from 1 to 10 years. Well every goal definitely involves reaching a certain amount. I suggest you understand compounding interest and annuity to set your targets. Learn about different instruments that will help you achieve a better return than the cash rate, at least.

Turning a person who doesn't really understand money into an investor takes a lot of brainwashing. Good brainwashing of course! The fact that many people in this world today have the wrong perception about money or don't understand how money really works is hurting their finances. A few perceptions that you should get rid off.

Wrong Quote 1)Debt is Bad (Again Rich Dad gave me the idea)
There's probably very little positives you can take when looking at stacks of bills that are due in a month, every month. But there's good debt and bad debt you should learn to differentiate. Bad debt are debts that continuously drain resources from you, just like credit card debt and mortgage of a house you live in. Those are liabilities that you have to cut down or eliminate. And then there's good debt. Debt that makes you money. As in my previous post, debt is leverage. You can buy something with less of your own money. Most commonly, we are always referring to the famous example of real estate. The fine distinction of investing in real estate is its steady cash flows. Having sufficient and steady cash flows will give you enough money every month to repay your loan and assessments. And that is how debt does you good. It's still a liability in the balance sheet, but when you net off the amount with the cash flows into the current assets, you see the benefits.

Right quote: Accumulating debt is fine as long as it is good debt.

2)"The only way I can be richer is getting a pay rise".
This quote is also very common among the working class, highly depending on their pay rise to be improve their financial position. Well I've written about this before. It is simply is too risky to depend on your paycheck anymore. And the increase in wage rates are barely fighting off inflation. The solution is to generate income from other sources. Rich Dad's Cash Flow Quadrant is probably the best book for this. For a mere USD $10, it's dirt cheap to learn about generating alternate forms of income while still keeping your job.

Right quote: I need to generate at least 2 forms of income.

3)"I can't afford it"
Changing the way we say things can also improve our actions. The choice of words we pick is also highly important. Negative statements like "I can't afford it" needs to go and be replaced with more positive and optimistic one like "How can I afford it?". So ask yourself this question when you think of making an investment. Actually all the other quotes are the quotes to avoid.

4)Investing is risky.
Well, I've had many times come across people telling me this when I recommended them investing. And many of them are still unconvinced, maybe one day they will be. I've written on many occasions that investing is like a skill. Robert says its similar to flying a plane. You can't fly a plane no matter how many books you read about it. And you don't fly and land like a pro in your first few attempts. The secret is out, all you have to do is educate yourself and do it. High risk, higher returns? Let me give you something better. When you educate yourself financially, you can earn higher returns and you can lower your risk.

Right quote: Investing is not risky, being uneducated is. (Quoted from just about every book written by Robert)

5)Leave money matters to the experts.
In a world whereby there are so many people desperate to make more money and totally motivated by money, how on earth could you hand over your money to someone? If you haven't learnt your lesson, read about Bernard Madoff and Allen Stanford. See how people have their fortunes wiped out by so called "accidents" and "bad judgments". The fact is people who work in the finance field may not be as smart as you think they are, obviously I don't mean to offend anyone (even myself), but there are also really good ones. The truth is, despite being in the finance field, not all of them can give you good advice. People are profit-oriented, why would they want the best for you, generally. Whether you're a doctor, lawyer, architect, engineer or a student. If you are willing to invest in your financial education, you can outperform at least half the people who claim to be experts. Don't rely on anyone! Take over your finances NOW! So if its even possible, please brainwash yourself.
With planning, many things can happen. If if you don't achieve the 1 million dollars in 15 years, maybe you might take 17. But that would be better than not planning at all. Everything starts small. From the first budget you did or the first cash flow statement you prepared. It's definitely hard to imagine a few thousand dollars becoming a few hundred thousand dollars. But with a well thought of and realistic plan, those fortunes you have dreamed about might not be that far away.

Right quote; This is my money and I should take control over it.

"Knowledge and composure are two important aspects of a good investor. Being a good investor not only improves your financial well-being, it also improves you as a human being"~deyao

A Very Important Term

2010-01-29T23:56:00.013+08:00

It took me a few weeks to really understand what this word meant. I knew the definition of it in terms of accounting but I never knew this word was that powerful until recently. Robert Kiyosaki no doubt has done me one of the biggest favours I could ever ask for. The fact that I am lucky to be able to connect with his books also gave me the word I am about to talk about today. He mentioned it is the biggest distinction between the rich and poor. Everyone of you know this word but it has brought greater meaning to me in the last few weeks. The word is LEVERAGE. Originating from the word lever, which allows you to gain an 'advantage'. Scientifically we use the lever concept to help us do something by using less resources. In accounting/finance terms, leverage is associated with borrowings which allows us to pay for something using less of our own money. And in other context, leverage is something you gain advantage from and gives bargaining power. Robert gave the simplest definition to understand, "doing more with less".

First of all, the concept of leverage I will discuss about today is not about persuading you to borrow money or taking a margin loan. And I promise you I am not about to introduce you some leveraged product to invest in. What I am focusing on is more of why you need leverage and the importance of it. Let me give you the simplest examples to understand the concept of leverage I am trying to talk about. Two people work eight hours a day, but one earns more than the other. Why? One of them has more leverage. Another example, two students study for 20 hours prior to the exam. One does better than the other. Why? Leverage. In investing, two people buy the same shares at the same time at the same price, one makes a higher profit/loss. Why? Leverage. I hope you haven't got sick of the word yet. In short, people can gain leverage in the easiest known ways, doing more and working harder than the others. All of us have 24 hours in a day, the people who are at the top spend those 24 hours better than anyone else. Now you know why your boss works less hours than you but gets maybe a few times your pay, your boss has leverage!!

I hope you have gained a different dimension to word by now. So what does this mean for you? What can you do? As always I am just trying to open up people's minds just a bit more so they can benefit from it. I would be happy if anyone could actually understand what I've written. It make complete sense to me but it may not to the next person.

This is partially an investing topic, but before I proceed, I would like give you the answer to this question. What is a person's biggest leverage ? Well, there's no doubt about this answer, it is your mind/brain. Your brain can do wonders if you really explore and it is truly your biggest leverage. I am not talking about being smart or stupid, it is the way you position yourself and your nature of approach. I've always believed that with the right attitude and approach, there's really so much a person can do. I am not going to discuss what type of attitudes are right or wrong, but just keep in mind every time when you're doing something, make sure you give yourself the opportunity to make it. Your mind is practically the thing that makes EVERYTHING work, it has to start from there. Any hint of success comes from that very first thought in the mind.

Gaining Leverage
There are many ways to gain leverage, it may come from obtaining a new skill, new knowledge or anything that can enhance your return on something. For example,if you are a builder, if you are able to build both commercial and residential buildings, then you got leverage as most other builders may only do one. In terms of knowledge, some people take two degrees or further on postgrad studies for the same reason. Gaining leverage in terms of being more employable.Financially, there are hundreds of ways to make more money. You can start an online business, do a part-time job, work on weekends or you can make some investments in various instruments. Referring to my to my last post, I mentioned about generating other forms of income. Considering the working environment and the commitments people have today, it is really hard to do a second job or work on a part-time business. For example in a developing country like in Malaysia, working till late night and on weekends are common sights. At the end of the month, if you receive a good pay cheque, it compensates, but what if that pay cheque is insufficient and you simply do not have time anything else?

One of the important characteristics about investing is it gives you leverage. You AND your money are working at the same time! And that is doing more with less. The part whereby I feel investing is very attractive is because it doesn't take you much time and it is extremely convenient. With the internet and a phone, it is more than enough to do some investments.

Stages of Investing

At the beginning, we know very little or almost nothing about making investments. One of the best source of information is the business section of the newspapers. That will tell you a lot about economic news and corporate happenings. Even if you find it hard to understand at least read some of it. And when you come across similar news or terms, there's when you start to take more notice and understand. The internet has also ample of financial news available.

At the same time, I would recommend some personal finance or investing books which will tell two very important things. One will tell you why to invest and how to go about it. The investing books will tell you a lot about history and trends. I believe history is one of the most important part of an investor's guide. This is simply because number one, history tends to repeat itself. And number two, making sure you don't make the exact same mistakes that have been made before. For people who don't take note on history, they will make unnecessary errors and would waste some time making corrections. If you take note of history right from after the Great Depression at least, you would have seen a lot of trends through numerous economic and market cycles. And that will probably save you from making the most common errors. It's sort of a fast track.

The starting I would say is the most tedious part, learning everything from zero and having the difficulty of trying to understand something very different. And as I said many times, once you cross that starting part, your opportunities are endless. You could choose to "specialise" in certain classes of investments or you could try and do a few at the same time. Once you built your foundations, this is the time where you can see the benefits of investing in terms of your time.

The maintenance stage, is the time whereby you spend about 15 minutes catching up on news and movements everyday. That's just about how much time you need a day. And maybe once a month, spending about a few hours evaluating your portfolio and probably learning from a new book.

Will I Lose Money?
In investing, losing money is similar to making mistakes. To be brutally honest, making mistakes is the best education you will ever receive. Yes, you may read as much as you can about things to avoid doing, but the truth is you can never avoid making mistakes . But the biggest consolation is that it will be the one step along the way to succeeding. Donald Trump lost a lot of his fortune before recovering and making it even bigger. Robert Kiyosaki failed a FEW times before actually succeeding in his business. And even the great Warren Buffett made some silly errors along the way like selling too early or buying on spiraling prices (ConocoPhillips). Making mistakes and building from it is an evident success story for all.

Something You Should Know
I learnt this recently I do agree with the writer. There's a misconception in people when their share prices fall they haven't incurred a loss until they SELL it. For people who believe this statement I advise you remove this misconception immediately. Here's why.

You have $1000 and you bought 1000 shares for $1. If the share price falls to $0.90, the value of your investment is $900. Have you made a loss? YES! The fact is whether you keep the stock or sell it for cash, your net worth is $900. If the share prices returns to $1 tomorrow, it's another case because that has hasn't happened. But what has already happened when your share price fell is that you've already made a loss. Please don't live in denial. So next time DO NOT be FOOLED about not making a loss by not selling.

So what does it mean? My biggest gift for you today. Only hold stocks that you think will give you the best return from this point of time. Let's say the price of your share fell, ONLY IF you feel when it recovers it will outperform the others should you KEEP it. If you feel you've made mistake, sell it and buy something better that could give you a better return from this point of time. Remember!! The moment your share price fell WAS the time you made a loss NOT the time you sold it.

Leverage is the ability to do more with less

~deyao~

Will The Bull Market Continue in 2010?

2010-01-02T17:13:00.008+08:00

This is probably one of the most asked questions in the financial world today. Traders and investors are all so eager to find out whether the market will continue to sustain the incredible bull market since March 2009. Will it happen? I have a prediction. But you have a prediction, analyst in Wall Street have their predictions, big timers like George Soros, Jim Rogers all have their opinions. All these predictions combined can range from one side to the other, meaning no one is right for sure. But does it matter? I'll get to it a little later.

In this post, I am not fully writing about forecasting the financial markets or the economy in 2010. But as always, whenever I come up with something valuable to share I'll do it. I'm not sure how much more of these "educational" posts I can continue writing but with the world moving at a faster pace and in different directions more frequently than before, I'm pretty sure there's no end to learning. It's taken a few months of planning and compiling this topic in my head, trying to figure out how to summarise things so that it won't take much time and understanding to read. And for the ending, a short paragraph on the outlook for this year,

About 20 years ago, with job security, it was enough to provide people with comfortable lives. With a job, everything is taken care of. Flash forward to today, job security no longer gives you that comfort margin,it has shrunk significantly. In many cases your job/work is just enough for you to keep a minimum portion for savings and the rest for paying expenses, leaving you with almost nothing. Reason for this, wages has not kept up with inflation and the purchasing power of money has continued to tumble. In growing countries with negative real interest rates, placing money in money markets will cause people to continually lose out.Who are the ones least affected? The upper class. Here's why. Economics 101 taught us income distribution is determined by ownership of resources. The more resources you own, the richer you are. And because many people in the middle class lack any ownership in real estate, businesses or investments, they are unable to outpace inflation. The people in the upper class who own the majority of the resources are able to consistently keep ahead of inflation and in best scenarios PROFIT from it.

RELYING ON WAGES IS DANGEROUS
First of all, like I mentioned previously, a lot of what I have written is through reading and personal opinions. I don't expect anyone to believe me entirely.
I've just mentioned the huge enemy "inflation" that erodes the value of money. Now looking at the situation today, in terms of wages how many percent of the employees make the big bucks?I think I could relate to one of Rich Dad's lesson's ,the 90/10 rule. It says 90% of the money is owned by 10% of the people.I don't have the official figures, but I think it could be a very similar proportion if a number is put on the distribution of wages among the entire working class. What does this mean? In simple terms, all other factors constant, if you don't earn a high wage, you are financially at risk.

Now who earns to big bucks? Top management of course, directors, CEOs, outstanding individuals. Look at football for example, we are so envious of footballer's salaries as many of them earn at least $50k a week! We saw the best part of things on the front pages and we forgot to turn to the back pages. There are 20 clubs in the Premier League, let's say 15 clubs are able to pay those staggering wages and 5 clubs from the other 6 leagues in Europe can do the same. That makes a total of 45 clubs. If there are 20 players in a team, that makes 900 players in the world that could make those sort of money. How many people play football to make a living? If the 90/10 rule is true , there are 90000 people playing football for a job. But wait, all the people in South America, Africa and Asia only summing up to 90000 people? It is an underestimation. I think I won't be far off saying top 5% of the footballers make 90% of the money. This concept also applies in the corporate world, only the top few percent make the big bucks. Lesson of the day, it is a rat-race out there and you shouldn't put ALL your hope on making the big bucks.If you're in, congratulations, if you're out,it's time to do something about it.

THE LINE BETWEEN BEING POSITIVE AND REALISTIC
In life, you always have a draw a line at one point saying, that's the most I can do or that's the limit. This should not be confused as being negative. Continuing on the issue of making the big bucks. In reality, many of us work the hardest and do the best we can. We don't limit our success and should always try to do one better than before. We must always try to keep a positive attitude and that will get us very far. But even being positive in the real world also requires limits. There are things we must accept we can't do or have very small chance or succeeding. Again don't relate this to being negative or quitting because this is being realistic. We all have to accept the fact that not everyone is will get the big bucks in the future. I can always aim to become CEO one day but I have to accept the possibility it might not happen. That's being realistic. You can plan to study in Harvard from the age of 8 and there's a high chance it might not happen. In relation to wages, there's a possibility we might not get right up the pyramid or earn $200,000 a year.And if we lose our jobs, what happens? How do we pay the mortgage, bills and bring food to the table.Is there enough savings to even last you a few months?The idea I'm trying to bring here is all of us need a supplementary plan to help us generate other forms of income. The idea is basically is lowering the risk of depending on your monthly paycheck. Most of Robert Kiyosaki's books will help you on this.

CASH FLOW AND CAPITAL
If you have alternate forms of income, cash flow will be definitely be better and raising capital will be easier. I asked myself, if I needed money to buy a real estate, is there another way do go about other than a bank. In a business there are two most common ways of raising capital, debt or equity. If I as an individual is trying to avoid a lot of debt and is unable to issue equity, what other choices do I have? Assuming we are on our own, I simply haven't found a feasible way for financing other than debt. When you are in need of money to fund a lucrative investment you'll realise if your bank account does not have that amount, you got no way. Unless its a piece of real estate, the bank may be unwilling to lend you any money. This means you're on your own and you got to find a way of making more money. And I suggest is the need to build a base of assets producing cash flows as soon as possible. The positive cash flow will give you the more opportunity and freedom depending on the size of your base. The bigger picture, if your base grows to a certain level of size and is able to consistently generate stable cash flows, financial freedom is awaiting you. Definition of financial freedom? The ability of not requiring to work another day in your life. Well to reach financial freedom requires a lot of additional work and effort. And one more important factor, it requires time. How much of it depends on your performance. Some people take 15 , 20 years and even more. And in many cases, some take till retirement age. And this brings me back again to my brief mention of time value of money. The longer time the time you have, the higher the time value of money. Every day is time value, banks pay you interest on your deposits right on the exact date, if they were to accidently pay everyone 1 day earlier, they would have lost a lot of money. If you are 20 years old and haven't started investing, its not bad news, you've got a lot time ahead of you. But the fact is, you started at the age of 15, you money would have gained an additional 5 years of time value. Warren Buffett started at the age of 12 and he said he wished he started at 7.It might not seem a lot now, but when you reach a age maybe 10 years before retirement, that 5 years would be priceless.

Well, suddenly I've thought of something else to write on my next post. Robert uses this word to distinguish rich and the rest. It took me sometime to really understand what he meant. So I guess I'll leave it to the next post. Now for an outlook for this year.

Bull Market or Bear Market?
I've learned in the past that both market conditions are out of my control and so I've got to work with it. Knowing this factor, it means the rest is down to myself. For this year, if the bulls were to match the all time highs of 2007, it would require the same degree of push like in 2009. But my opinion, choppy recovery with the danger of inflation would test central banks in the world to raise interest rates. I won't doubt the Dow will push through 11,000 or even 12,000 by the end of the year. In between, I'm seeing a few periods of consolidation but an overall trend of an increase. Commodities and energy prices will have a positive year meaning inflation has caught up again. Danger of a bear market? A huge downtrend below 9000 is not likely and I believe the bulls have not done all the dashing yet. Authors Stephen Leeb and Donna Leeb's oil indicator suggest that if oil prices does not break $100/barrel, there is little danger of a bear market. In Australia, interest rates will continue to rise approximately near 5% which is considered neutral stance. A weakening Dollar will lend support to higher commodity prices and the All Ords will no doubt break 5500. In Malaysia, the gradual lifting of sugar and petrol subsidies will bring inflation to higher levels. The removal of subsidies which I believe will happen before 2014 will be excellent in the long run. I'm not sure how the govt. will decide how to award subsidies in the coming months but it is a move in the right direction. In the coming years GST will also contribute to additional cost to the people. But liberalisation also does a country well, AFTA (Asean Free Trade Area) will bring the cost of many goods down, softening the blow of inflation. We would even see cheaper cars in the coming years and this would be a wake up call to the inefficient portion of the country. The move to promote efficiency and liberalisation will definitely be a good move in the long run. So the final word, an upward trend but cautious growth.

~deyao~

Delayed results

2009-12-31T10:23:00.006+08:00

There has a few cases (maybe half) in the past when predictions of mine have gone wrong, but it hasn’t been all bad actually. Recently I recalled predicting the 2008-2009 season to be a very close fight for the top four spots because of the emergence of Aston Villa which has showed strong promise for the past few years, Manchester City with their new wealthy owners and their ability to sign top players and a very un-Arsenal prediction of Spurs getting their breakthrough….plus Liverpool being under threat for their top four position. But the prediction went the opposite direction. Liverpool became Man Utd’s biggest title threat and could even have won it had Rafa not had his shocking rant at Fergie. Spurs and Man City didn’t quite make the grade last term and Aston Villa had a horrible ending to the season, surrendering 4th and 5th spots towards the end despite being in a very strong position in March. And of course, I didn’t predict Man Utd to win the title but at least I kept things open as long as Ronaldo was still in the team.

Would I concede it was luck? Maybe a little. But to my astonishment, those predictions last season are quite on the dot at the moment. The big four plus Villa, Spurs and Man City are only separated by less than 10 points. Even if things turn by quite a bit towards the second half of the season, this season tells a story that the ‘gap’ between the 4th and 5th is completely diminished. I wouldn’t bet against Liverpool making the top four but they will have one hell of task with what they have right now. A slightly out-of-form Gerrard and a not completely fit Torres spells disaster for Liverpool and Aquillani barely making a few appearances is a big problem. The unconvincing defence was one of the least of their problems previously, but it is a one to solve now. Rafa has to save his job in the coming months.

I didn’t realize until yesterday how huge January and February was until I had a look at the fixtures list. In short, in the two months, we play Bolton twice, play Aston Villa, Man Utd, Chelsea and Liverpool . Oh ya, I forgot to mention a “mini detail”. From 27 January till 10 February, we play Villa, Man Utd, Chelsea and Liverpool……….wait for it…………..CONSECUTIVELY!!! And we also resume our ‘quest’ in another competition called the Champions League right after going through those explosive ties. The traditional plotting of the run-in towards the last 10 or so games will not be fully applied this season. It is the next two months which will indicate whether we would finally be genuine title contenders. The aim now is to reverse the defeats against Chelsea and Man Utd and once again get another over Liverpool and Villa. A lot of football will be played plus the reopening of the transfer window in the next 24 hours. We should be getting a striker as Van Persie will not be playing any part in this campaign. It will be interesting to see whether we will get a goal-poacher to finish moves of endless creativity from the midfield.

Last time out, I wrote about Arsenal having the great opportunity this season and was immediately was dealt a huge blow with defeats to Sunderland and Chelsea. But it has been a good December and Arsenal are in the exact same position I have been hoping for, in striking distance. I have so much faith and hope over my lifetime as a fan of this club and I pray hard for this very special team to eventually succeed. There is no better time to do it and even the optimistic Arsenal staff has penciled the date for a possible meeting at the Bernabeau in May. Let the 2nd half of the season begin!

Happy New Year everyone!!!

There will an ANTM post which is on the verge of completion and another investing topic which has another dimension to it.

~deyao~

The Petite Cycle

2009-12-30T00:07:00.008+08:00

When was the last time I blogged about Top Model? That was a really long time ago. I use to blog a lot about the shows I watched. But sadly, Top Model went downhill, Prison Break ended, Grey's Anatomy wasn't great. After one of models I quite dislike won, I decided it was time to take a break from the show. I was disappointed with the lack of excitement the show used to have and I no longer had the urge to find out what was going to happen next. But I picked it up again this year and I had to catch up on the previous cycle I missed. Writing about it after such a long time shows signs the show is just above par again. In such a short time, America's Next Top Model has created its 13th winner. It's a terrific achievement for Tyra Banks and the producers. Here's the winner of the 12th cycle Teyona with her winner's shoot!
The 12th cycle proved to be quite good, with at least 3 of the others very capable of winning. However, this was one cycle which had no one being consistent all the way, even Teyona screwed up her commercial. The very nervous Allison was really very close to winning it as well. Her progress was unbelievable and she almost made it, almost. Her walk improved tremendously and she was a big contender. At the end of the day, it was't her eyes who pulled it off, it was her desire to win that did it. Her few bloopers in the competition made me laugh quite a few times. She wore an attire twice to judging, said another photographer was the best she has worked with in front of Nigel and told Tyra she was pretty right after she shot her. It was so hilarious when she gives the "oops" look. Anyway, here's her shot for the Covergirl commerical.
The shot below was inspired by Brazillian Carmen Miranda.
Till now I haven't got to the topic of this post yet. Cycle 13 is the first cycle in Top Model history which only allows participants with the height of 5'7 and below. Petite is the reference given to models of that height. Previously, only models with a certain height are only chosen unless they prove to be significant exceptions. This cycle is so different, it opened the doors to people who thought they could never make it because of their height. And yes, anyone taller than 5'7 was not allowed in the competition. This cycle was a real breakthrough, it gave hope to people who thought height was an absolute must. Just like a black model, who some perceive to be inferior, has to work extra hard to keep up with the "natural" models. This cycle emphasised on trying to elongate the height of the models through posing skills like pointing their toes and positioning themselves to deceive the camera. It really works, some poses make you look extra tall in front of the camera. And if you go wrong, you might look exactly your height. No winner is going to be announced in this post, just the few good ones. I actually do have a bit of a memory loss this cycle because I had about 1 month pause in between.

So firstly, Brittany

At the start of the competition she was my favourite and she fared pretty well. The picture on the right was one of her best (can't remember the theme). The one on the left, was not quite there as you can see she doesn't look taller than she is (Look at Nicole's shoot below). She is really pretty in person but her mediocre personality didn't spell superior to the judges . She didn't win this cycle but her early showings caught my attention.

I like this picture because of the very strong face.

Next, we have Laura!!
She is arguably one of most likeable contestants of all time. She is right up there with Kahlen of cycle 4 and cycle 7 winner Caridee. In terms of personality and humour, she really is one big winner. Coming from a country background, her job back home is castrating bull testicles!! But she is no where near old fashion and her bubbly personality makes just makes people love her . She has a few funny moments like wearing her grandma's sewn dresses. Some of them are really funny. Even the judges, knowing some was really not appropriate for judging, made it a laughing matter at the end. Battling dyslexia at the same time, could she really do commercials? Well, you should check it out.
Here are some of her pictures.

I really can't remember the theme of this picture.

The theme of this one was sort of martial arts. Each contestant gets to choose their weapon of choice. This photo is really good. The way she lengthens herself using the weapons is quite genius.

I only have two words on my mind when I see this photo. "SPORTS ILLUSTRATED". I wouldn't be surprise to her in one of the spreads in the future. This shot was just brilliant.

Then we have Nicole.

In terms of taking wonderful pictures, this girl delivers picture after picture of stunning quality. Personality wise, not impressive, but you wouldn't find a reason not to like her. She struggles quite a bit on the runway though. But overall, could she pull it off ?
A few of great pictures below.

Now this one makes her look tall. The lengthening factor this cycle mentions so much about. How does she look ? Six feet?
And also the weapon shoot.

Next up is Jennifer.

I never really fancied Asians after the disastrous Gina appeared in cycle 6. But Sheena made quite an impact in cycle 11 although she didn't exactly get to the top 3. Her personality took her pretty far. At auditions I was thinking...another Asian....I get things wrong on many occassions on Top Model and this one was one of them. Jennifer was a shining star in this cycle, she took great pictures and her personality made her likeable. She didn't have that strong character and confidence of Sheena that sometimes annoys people. Jennifer also battled with her left eye muscle which had undergone surgery before. But she learned how to cope and not make that weakness show on pictures. She did really well at the end.

Next up we have Rae,

The first time I saw Rae, I saw a lot of drive in her during the audition. A young mother at 21, he gave the impression of being a serious contender. Her stunning features gave her a real edge especially in the beginning. She did work really hard in every photoshoot and delivered some gorgeous pictures like the one below. But towards the 2nd half, her inability to stand out from being good to very good made it hard for her to stay. Even her bubbly personality was just not enough.

And lastly, we have Erin

The youngest in the competition at 18 but her competitiveness is something to watch out for. In one of the challenges, she was so aggressive until some of the other girls were upset with her. She's sometimes criticised for not being mature enough for the competition. But she doesn't let anything get in her way and she certainly shows a lot of it in the competition. Her very strong look is something the judges love and true enough in judging, it was too hard to eliminate her. Two pictures of her below.

It has been quite a comeback for ANTM. The signs of improvement has surely got me back on the show's side. Although there are rumours Tyra has lost touch with ANTM and is focusing a lot more on her talk show. I would say she is still doing enough to keep the show alive, the petite theme was certainly a great idea. Also former contestants of Top Model being able to breakthrough the modelling industry is surely great encouragement for Tyra to continously develop models from her show. And the fact that Tyra became world known for her modelling over the last 20 years, I don't think her passion will die off anytime soon. So for now, it will be till Cycle 14 in the usual March.

~deyao~

Cashflow

2009-12-01T23:30:00.005+08:00

Cash, which is essentially money, is a very powerful tool. With cash, you have the highest degree of liquidity and you have the power to do many things. How powerful your money is depends on how well you are able to grow it. If you have lots of cash, most of the time it is a good sign, but keeping too much cash may not be smart to do. We all know the importance of cashflow, but when it comes to investments, some people tend to overlook it. Today, I am not going to emphasise a company's statement of cash flows, but YOURS!

If a company is cash-rich, will you put money into it? Not necessary. If a company has many contracts and projects, would you? Most likely. Cash/ Money is as earlier mentioned, powerful if you can grow it. If you place your money in the bank today, you might get a 3-4% interest payment a year. Your cash is growing, but the fact is, it is quite little and everyone can do it.

I mention Rich Dad very frequently because I have learned a lot from his books. One of is his most valuable topics is defining an asset which I believe in. If you have read his books, he always mentions that assets are things that put money in your pocket and liabilities are the opposite. And the famous example is classifying your house as a liability. Your house or property is placed into the asset column of your balance sheet according to accounting principles. But is your house really an asset? People get very irritated when being told their house is a liability because they put so much effort into buying, building, furnishing and everything. And their biggest argument is, "I bought my house 10 years ago at $200,000 and now it is worth $400,000". That argument is sort of valid, because you can sell it for more which puts money in your pocket. And that is if you sell it!

Appreciation in real estate prices is very important when we buy one. But the fact that we can sell it for more might not be such a good criteria for deciding whether it is a good investment because we got no place to stay if we sell our house!!! If you have used the Net Present Value (NPV) calculation before, I think you will realise why. Assuming perpetuity, if you draw the timeline from time 0 to probably 60 years of your house. So at time 0, you bought the house, negative $200,000 plus some renovations another negative $50,000. For time 1 onwards, you got maintenance, upkeeping, council rates and interest on loan. Guess what, the entire timeline is NEGATIVE ALL THE WAY!! The NPV is a huge negative.Is that a big liability or what?? Indeed, the negative cashflows from time 0 to infinity tells you the house you live in is not an asset, but the opposite. Just like a car as well, a huge liability till the end, but as we need those two to survive we got no choice. If the investment does not generate positive cashflows, it probably isn't an investment or asset.

I know very little about real estate, but I will always remember the rule of positive cash flows. I know it might seem hard, but I've seen it happen on many cases, When investing in real estate, make sure you are generating positive cash flows from the investment. It means your rent income must at least be able to cover the expenses and repayments. It is tough to do if the perccentage of the loan of the real estate is high. That is why, you need to at least try to put a larger downpayment to ensure your cash flows are positive subsequently. And this is when real estate becomes an asset/investment. Rich Dad asked Robert in one of his books. "If all your real estate generates a positive cash flow, how many can you own?". The answer was simple "As many as I want to".

The NPV rule is quite a simple rule to use and it is very evident it is very accurate. It uses cash flow to determine whether an investment is good. The dividend-discount model is one of the few used to place a value on stocks, estimating future cash flows. As for speculators who trade frequently to make capital gains, it is also applicable. If you sell your investment for a higher price than you paid for, its NPV is most likely to be positive (time value factor). Rich Dad's asset definition also fits. If you sell a stock for a gain (assuming no dividends), you put money into your pocket and that makes it an asset. It is a bit ambigious in this case because you only classify the stock as an asset after you sell it.

This may be my last post in awhile because my holiday is just about to end. I think work will take most of my time. This post is really easy to understand for many, but its power of application is the powerful part. I hope this post and my previous few builds the foundations to investing successfully in the future. Thanks for reading :)

~deyao~

Somebody to Love

2009-11-27T22:19:00.003+08:00

Video wasn't that good but the song is.

~deyao~

The Great Opportunity

2009-11-18T13:50:00.014+08:00

An Arsenal fan would tell you it has been forever since we last saw any silverware. Season after season with a few cup semi-finals and finals along the way, it has been the story in short. For the past few years, having even a little sniff at the League would be an overstatement. Yes we have not been close enough to make a decent challenge. The memories come pilling in when we were winless after Eduardo had that horror injury. We were top of the league on that day, but we surrendered everything as if we were held at gun point. Then came some form of redemption earlier this year when we were in two cup finals. We were beaten quite comprehensively by Chelsea and Man Utd. But they were the team with all the good foundations and stability and the result was predictable. Arsenal just got back captain Fabregas and the now departed Adebayor for a handful of games before the encounters, and when it came to defining the best to second best, Arsenal were declared the pretenders.

Summer's gone and we are well into the new season, we lost two of our top players and only brought in one replacement. When a person sees such "progress" at the beginning of the season, there would be more reasons to write us off. "In Wenger we Trust", even I was getting a bit agitated by the lack of signings and was starting to lose confidence. However, I knew the team we have was a lot stronger that what people would have imagined. Without the injuries to this current team, we might have saw a much stronger campaign last season. I looked into the team again, Fabregas,Diaby,Van Persie, Arshavin, Eduardo, Rosicky, Nasri, Walcott, Bendtner and a few that are not far away. I saw each and every one of them being signed and playing their first senior games . Not all of them are world-class as people would put it, but they formed a team which is like no other. When you watch this group of players with that much of talent waiting to explode on the training ground everyday, you just couldn't betray what you just saw. Thats Arsene Wenger for you. He believes that the waiting is over and he just might get it right this season.

Crossing my fingers on more injuries after Van Persie's, if the team stays fit, the challenge this seasons turns a lot more serious. We are in a pretty good position right now, but November and December will be the biggest acid test on our resolve. We've lost points to Man Utd and potential top four team Man City. We've passed a somehow large test of Spurs but it comes to Chelsea in the fortnight, who are regarded as the biggest threat this season. We also got Liverpool who must return to the top four spots in a hurry. With Ronaldo departed, Man Utd are having a bit of a problem trying to recreate what he has done. The star-man Rooney desperately needs support and they need something in January or else they just might find themselves in an uncomfortable position.

Chelsea are the top team with all guns blazing, but they just might be slightly battered for the game against Arsenal. Terry, Lampard and Drogba might miss the crucial tie. Arsenal are battered as well, missing Van Persie and Bendtner. So who comes out on top of "Battle of the Battered"? Chelsea are still not short of firepower with Anelka, Ballack Joe Cole, Essien, Malouda and Kalou. Arsenal have the rest of the team back. A win would be a boost to both teams in a very significant way, Chelsea extending their lead on top or......a new leader on top of the league? The game is worth 3 points like any other game, but both teams are desperate to get one over the other. Both managers have everything to prove especially Wenger. With the position both teams have put themselves in this season, fans might get to see their team reclaim the title back to London. A win would give more than just a morale boosting or bragging rights, it could that little stepping stone along the way to once again bring back the trophy Chelsea has not seen for 3 years and Arsenal for 5 years!

Chelsea inflicted the heaviest defeat on Arsenal in the new stadium last season and you bet Arsenal would have every incentive to win this one.

~deyao~

Risk and Diversifying

2009-11-16T23:31:00.007+08:00

Is investing risky? The answer is yes if something is anything but risk-free. People come out saying investing in certain investments are risky, but why would they consider it risky? I will be using shares as an example today to explain risk. It is very clear that when we take higher risk, there is possibility we will be rewarded accordingly.

In general, why would we consider something risky? It may be because its outcome is very uncertain, hard to predict or even out of our control. This is exactly the same when you evaluate shares. We think it is risky when it is hard to make a good prediction that comes out right most of the time.

Okay, I have to use some financial terms, but I will put it in the simplest way. There are two types of risk a company/business faces, internal and external. It's pretty common right? Which risk is harder to evaluate? I would say the external risk because the external factors are the ones we lack control of. Internal risk are called firm-specific risk (only that particular firm faces that risk) and external risk are called systematic risk (all companies will face this risk).

To evaluate risk is not complicated, if you have some accounting knowledge, you've already know more than half of it. In accounting we use ratios to determine the well-being of a company. We use profitability, liquidity and solvency ratios. First of all, what is the worst thing that can happen to a company? I would say going bust or bankruptcy. How probable is a company going to face the worst? Well, we use liquidity ratios like current ratio and quick ratio. As most people would know, these ratios tell us whether a company is able to pay off its short term debts with its liquid assets. If it is yes, then the worst is unlikely to happen short term.

Secondly, can the business meet future obligations like interest payments in the long term? Well we use the interest cover ratio. Technical definition is"Measures the ability of the company to meet its fixed interest obligations. It equals the earnings, before interest and tax, divided by the interest paid". Usually there is a rule of thumb about 5 times as a comfortable level.

Then we also see whether a company is highly geared/financed by debt? Well it is quite obvious a company with high gearing faces a higher risk of repayments. And if the company defaults on them, they might be wound up/declared bankrupt. So there is the use of the debt/equity ratio, which calculates what proportion of assets are financed by debt/borrowings. There are many good companies which are highly geared, so it no real indication whether it is a good company or not. And we also have the earnings stability ratio to tell us whether earnings are stable enough to pay off debts and maintaining the level of dividends . Many shares are priced based on their dividends so any fall in dividends may indicate the company may not be performing well (assuming the same dividend payout percentage). And that's all for firm-specific risk. Based on the company, independent of external environment, is the company risky to invest in? Those are the few ratios that will tell you that.

And now, an equally important part, the external risk/systematic risk. Economic conditions make up most if the systematic risk any business faces. From inflation, commodity prices to consumer spending. So since every firm faces systematic risk, will it be sound to ignore it? Of course not. Everyone IS affected, but the magnitude of that effect varies across companies. In a recession or boom, the healthcare sector thrives , but does this happen to the energy sector? No, energy sector usually is cyclical which means it fluctuates according to economic activity. So is the healthcare sector less risky than energy sector? If you look at the sector as a whole then YES!. How do we measure it? The most common ratio is Beta. It "Measures the stock prices sensitivity to fluctuations of the market as a whole. A beta greater than one indicates greater volatility, and a beta of less than one indicates lower volatility, than the market". So in short, the higher the beta, the higher the risk. If the beta is 1.2. Then it means the stock is more responsive to market conditions than normal. If the market rises by 1%, then on average that stock will rise by 1.2 %.

So if an investor wants to achieve above average returns and has high tolerance for risk, a high beta stock would be ideal. If a person is risk adverse and just wants to protect capital, the person should choose a low beta stock/investment. This is also why people buy gold and silver, these metals have beta close to zero and thereby the investor is unlikely to lose any money in any market condition.

You want a higher return, then you need to undertake more risk. It also means you need to be able to withstand large swing in prices. If you can watch your holdings fall by 50% and not panic, you are ready to invest . This was one of Buffet's quotes. But think about this, if a stock has a high beta, when market conditions are poor, you get to buy it lower than it should be, and when things turn better, you get to sell it higher than it should be (compared to a stock with beta of 1). In the long term, historically, stocks head upwards, and if you are a long term investor, there is every reason you should be holding/buying a high beta stock.

In my case today, I try to achieve an above average return. This means I take a more aggressive approach. I only buy up to 5 stocks which I think are the best through my analysis. I believe if you want to outperform the market, you need the best firms in your portfolio. You can pick the best 10 or 20, but why not best 5 ? This is just a personal opinion which in my case hasn't proven to work yet but I think it makes good sense.

There's another case of diversifying. We are encouraged to diversify to reduce risk. There is nothing wrong with doing that. Have a thought about this, if you identified the top 50 firms. How many of them would you buy? Would you buy 30, 40 or all 50 firms? The most aggressive method is obviously buying ONE firm, because it is simply the best and will outperform any other company. But the problem is , it is not quite sound to put all your money in one stock (although technically right). In this case I recommend up to 10 stocks for a portfolio. The return of the top 10 firms will of course give you a better return the top 50 firms. You should remember, if you diversify risk, this would almost certainly lead to diversifying away your returns. If you seek very good returns, I would say buy up to 10 shares. If you seek security, you can do a mixture of high beta and low beta stocks and you can go up to any amount you like but just keep in mind of brokerage fees for each trade.

I think I am done with this post. Sorry I think I jumbled around the word shares/stocks/firms/business/companies, but they actually mean the same thing. I hope this helps solve some questions about risk. Please tell me of any errors you think I could have made. Again, everything are mostly based on what I went through so there could be cases that I am wrong. Anyway, I hope this was informative for everyone. Thanks for dropping by!

~deyao~