Books 01 (May 08 - Oct 08)

Re: Books

Postby la papillion » Wed Sep 10, 2008 12:58 am

Hi sidney, I think yes. The idea of using a triple A bond rate is to compare the returns of the individual stock picks to a less risky alternative, so as to weigh the opportunity cost of having such a company in rather tangible terms. As such, I think a localised application of this will be the risk-free (well, almost) SG treasury bonds. I think the bond rates over 10 yrs is around 3-4% currently.

You can see the bond rates here:

http://www.sgs.gov.sg/sgs_data/data_dailysgsprices.html

But of course, the rule of thumb had to be changed a little to accommodate. I find it useful to use STI market returns instead of long term bond rates. STI long term market returns is around 6-8%.
An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return - Benjamin Graham
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Re: Books

Postby sidney » Wed Sep 10, 2008 1:22 am

Many thanks la papillion
Tempered.
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Re: Books

Postby millionairemind » Wed Sep 10, 2008 2:45 pm

Just finished reading When Markets Collide by Mohamed El-Erian. Here is a biography of that author in case anybody is interested.
Hidden Content:
Mohamed A. El-Erian is a managing director and a senior member of PIMCO's Portfolio Management and Investment Strategy Group. PIMCO is one of the leading global investment management firms, with over $500 billion of assets under management. El-Erian serves on the firm's seven-member Investment Committee and its three-member Partner Compensation Committee. In addition to his firm-wide responsibilities, he leads the emerging market portfolio management team, overseeing $28 billion in emerging markets strategies for institutional and retail clients. He also manages $3.3 billion in total return portfolios, which have broad investment mandates, as well as credit blend portfolios. He has oversight responsibility for the firm's corporate, short-term, and mortgage teams with assets totaling over $200 billion. El-Erian publishes regularly (including a monthly market analysis), interacts with leading academics and investors around the world, and meets with the firm's largest and most sophisticated clients.

He joined PIMCO in May 1999, after working at Salomon Smith Barney/Citibank in London, where he was a managing director heading the emerging markets economic research team from January 1998.

El-Erian previously spent almost 15 years with the IMF, having joined the institution in 1983 through the "Economist Program." At the Fund, he worked on a range of country and policy issues, serving in several posts including deputy director of the Middle Eastern Department and adviser to the First Deputy Managing Director, Stanley Fisher. He participated in negotiations for IMF-supported programs in Africa, Asia, central Europe, the Middle East, and the Western Hemisphere. He also worked on Fund-wide and international debt policy issues.


Here is the book summary from the back cover in case you are interested.

Hidden Content:
When Markets Collide is a timely alert to the fundamental changes taking place in today's global economic and financial systems--and a call to action for investors who may fall victim to misinterpreting important signals. While some have tended to view asset class mispricings as mere “noise,” this compelling book shows why they are important signals of opportunities and risks that will shape the market for years to come. One of today's most respected names in finance, Mohamed El-Erian puts recent events in their proper context, giving you the tools that can help you interpret the markets, benefit from global economic change, and navigate the risks.

The world economy is in the midst of a series of hand-offs. Global growth is now being heavily influenced by nations that previously had little or no systemic influence. Former debtor nations are building unforeseen wealth and, thus, enjoying unprecedented influence and facing unusual challenges. And new derivative products have changed the behavior of many market segments and players. Yet, despite all these changes, the system's infrastructure is yet to be upgraded to reflect the realities of today's and tomorrow's world. El-Erian investigates the underlying drivers of global change to shed light on how you should:

Think about the new opportunities and risks
Construct an appropriately diversified and internationalized portfolio
Protect your portfolio against new sources of systemic risk
Best think about the impact of central banks and financial policies around the world
Offering up predictions of future developments, El-Erian directs his focus to help you capitalize on the new financial landscape, while limiting exposure to new risk configurations.

When Markets Collide is a unique collection of books for investors and policy makers around the world. In addition to providing a thorough analysis and clear perspective of recent events, it lays down a detailed map for navigating your way through an otherwise perplexing new economic landscape.


The book is divided into 8 chapters. I especially liked Chapt 1 and 2 - Aberrrations/Conundrums and Puzzles and How Traditional Resources Failed Us.

When Markets Collide is about when the markets of the future collide with the markets of the past.

In Chapt 1, he talks about how the inverted yield curve posted a signal (instead of a noise) back in 2006 but markets kept going up when the yield curve inverted. He talks about the Global Payments Imbalances and the role of developing economies. A discussion and emphasis was placed on emerging economies with their SWFs as a stabilizing force in the financial markets.

Sovereign wealth funds (SWF) are created when nations have a savings glut. This is happening with oil rich nations like Saudi Arabia and UAE (Abu Dhabi). Norway, South Korea, China, India and Russia also have billions to invest. All total, there is around $10 trillion in SWF’s around the globe. El-Erian explains that in the past this money has piled into US treasury bonds. In the future, it is likely to be invested in stocks and real estate as the SWF’s seek returns that are similar to large institutions and college endowments. This trend is likely to be very positive for the return prospects of global stock markets.

Chapt 2 deals with the failure of IMF/World bank as a unilateral institution to help solve this problem. One interesting thing I took away was to pay strict attention to the US-3 month Libor-FED funds Rate to determine the extent of credit crunch in the financial system. It is currently at 0.82. Which is similar to what we say back in Aug07 and Dec/Jan 08.

He talks extensively about structured finance and how the speed of innovation in structured finance is causing problems to our financial system due to its complexity and our financial market's regulatory inability to oversee this change. Basically, the plumbing system is inadequate to take out the flooding in the basin :D

There is a chapter on Asset allocation which is not really new if one has been in the markets and reading alot about this kind of info.

El-Erian mentions three circuit breakers to economic pessimism and gloomy scenarios.
1. Policy makers around the world seem willing to intervene to keep financial markets stable.
2. Large pools of cash in SWF’s and an underexposure of SWF’s to risk assets.
3. The breakout of emerging economies provides the global economy a degree of resilience that has been
lacking in the past.

The last few chapters talk about the new secular destination and how to get there.. with suggested changes to the Global institutions like the IMF and Improved Risk Management.

A book that is mentioned multiple times is The Black Swan by Taleb (which I recommend too but is a little dry). He touches on what he calls The Fat Tail on the left side of the distribution and the impact of the highly improbable.

All in all, it is a good read. It's kind of like reading 10 copies The Economist back to back on the current crisis :D
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Re: Books

Postby millionairemind » Thu Sep 18, 2008 8:06 pm

Just finished reading Discover Your Inner Economist by Tyler Cowen. He runs a website called Marginalrevolution.com. A little background on the author. The book is available from NLB.

Hidden Content:
Tyler Cowen is the Holbert C. Harris Professor of Economics at George Mason University. He received his PhD in Economics from Harvard University in 1987. He is also the director of the Mercatus Center at George Mason University. Many of his academic writings focus on the economics of the arts, the economics of celebrity, and the globalization of culture. He has written for The New York Times, The Washington Post, The Wall Street Journal, Slate.com, the Wilson Quarterly, Newsweek, and numerous other media outlets.

The blog he co-writes with Alex Tabarrok, www.marginalrevolution.com, was called one of the four best economics sites on the Web by the Wall Street Journal and the number one economics blog in the world by BlogPulse.com.


Here is a quick review on The Economist

TYLER COWEN tugs popular economics in the direction of self-help: how you can use simple insights and intuitions from economic theory to get more of what you want. The dust jacket of his book promises tips on love, work and dentistry, and that's only the start. There are suggestions for improving your reading habits, surviving torture, getting the dishes done at home, collecting fine art, going to the cinema, giving to charity and ordering food when eating out (at an expensive restaurant, “If it sounds bad, it probably tastes especially good”).

If you didn't know that Mr Cowen was an economist, you might take him for a psychologist. The version of economics advanced here has nothing to do with algebra or interest rates. It is economics in Ludwig von Mises's formulation of a “logic of choice”. How do we decide what we want? How do we know what other people want? If we can make a bit of progress on those two fronts, says Mr Cowen, we can probably improve the quality of our everyday life. …


It is kind of like self-help on Economics and how you can use incentives to better your life. There is a chapter on food and where to find the best food available (its not in the high priced rental areas). He even devoted 3 full pages to the hawker food in Singapore ;)

Tyler Cowen explains that those of us who enjoy unique and tasty flavors in our meals should avoid restaurants located in fancy shopping malls or on major thoroughfares.

These restaurants must pay high rents to occupy such locations and, therefore, they need customers in high volumes. Because these restaurants must appeal to large audiences, meals there will be more predictable and bland than those served in restaurants located off beaten paths.

So if you're hankering for dinner at a restaurant featuring bold or unusual tastes -- at a restaurant that serves ethnic dishes that are truly authentic -- you'll have better luck going to a Chinese or Ethiopian or Cajun (or whatever ethnic variety you crave) restaurant that is located on a side street or in a suburban strip mall. With lower rents to pay, such off-the-beaten-path eateries are more likely than are restaurants in high-rent locations to cater to serious foodies.

Choosing a restaurant is just one of many important and surprising insights offered in Cowen's book. The most interesting insight for me is that bygones are not always best treated as bygones.

One interesting parable he offered was what makes certain country diplomats (like Egypt and Nigeria) have lots of parking ticket violations with impunity within NYC (diplomatic impunity) whereas the diplomats from Canada/Norway having literally no unpaid traffic violations as well as the least no. of violations.

It is an entertaining book if you like Economics, which is best described as Dismal Science. :lol:

Of course if you only have time for a book on Economics written by Economist which has nothing to do with interest rates but daily stuff, I highly recommend Freakconomics ;)

Currently just started on the following 3 books
1. The Rules of Life
2. The Pursuit of Happyness
3. 7 Steps to lasting Happiness.

Waiting with great anticipation for NLB to deliver George Soros The New Paradigm for Financial Markets and Trade Your Way to Wealth by Bill Kraft. Both on reservations.
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Re: Books

Postby millionairemind » Sat Sep 20, 2008 7:17 pm

Just finished reading The Rules of Life by Richard Templar. Here is a book summary.

Hidden Content:
Think about the world’s happiest, most contented, most fulfilled people...How’d they get that way?

Is it their genes? No. Money? Absolutely not. It’s about the small choices they make, every day.

Things you can do. Things you can change.

It’s about what they know and you can learn:
The Rules of Life.

Here they are:

100 personal, practical rules for dreaming, planning, living, loving, and overcoming even life’s toughest adversities...

For knowing what matters... learning from experience...using your intuition... changing what you can...de-stressing... staying younger... getting stronger.

Read ’em. Learn ’em. Live ’em.

You’ll feel better. You’ll live better.

You’ll be a better friend, partner, parent, child, human being.

You’ll do it: one small, simple step at a time.

One step a day, every day. Starting today.
Introduction xi
Part I: Rules for You 1
Part II: Partnership Rules 105
Part III: Family and Friends Rules 141
Part IV: Social Rules 171
Part V: World Rules 201


The 100 rules are interesting. Each rule is about 2 pages long and with a short essay and summarized point.

Examples of rules are as follows:
1. If you are going to be a friend, be a good friend.
2. Throwing Money at a problem doesn't always work (somehow this reminds me of certain gahmen) :lol:
3. Treat your partner better than your best friend.

Between this book and The Rules of Work by the same author, I enjoyed the latter more.

Personal take - this book is more of a feel good book and asking you to be your better self and hold yourself to a higher standard. Easily said, but not easily done. But we should always try :)

I like the section on parenting best. One of the rules was "Let your kids mess up for themselves, they don't need any help from you". My wife probably should read this one... :)

Available at NLB.
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Re: Books

Postby blid2def » Sat Sep 20, 2008 7:22 pm

Rule 0. (inspired by the Parenting quote) "Let people mess up for themselves, they don't need any help from you". But hey, if you can milk some dollars writing a book pretending to help them, then by all means, go ahead!

Sorry, haven't read the book, but I just couldn't resist. :D
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Re: Books

Postby millionairemind » Sat Sep 20, 2008 8:53 pm

grandrake wrote:Rule 0. (inspired by the Parenting quote) "Let people mess up for themselves, they don't need any help from you". But hey, if you can milk some dollars writing a book pretending to help them, then by all means, go ahead!

Sorry, haven't read the book, but I just couldn't resist. :D


Should it be :"Let Wall Street mess up for themselves, they WILL need help from you, the Treasury"? :mrgreen: :lol: :lol: :mrgreen:
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Re: Books

Postby kennynah » Sun Sep 21, 2008 2:46 pm

rule -1 : one becomes what one reads sufficiently, choose what you read carefully....
Options Strategies & Discussions .(Trading Discipline : The Science of Constantly Acting on Knowledge Consistently - kennynah).Investment Strategies & Ideas

Image..................................................................<A fool gives full vent to his anger, but a wise man keeps himself under control-Proverbs 29:11>.................................................................Image
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Re: Books

Postby LenaHuat » Sun Sep 21, 2008 6:32 pm

Juz read "The Wisdom of Your Face" by Jean Haner. Very good writeups + excellent fotos to illustrate her points. I always encourage young adults to spend some time learning how to read faces. The skills help U to select bosses, friends, co-workers, domestic helpers etc.

Examples :
A large mouth reflects the importance of relationships.
A small mouth can indicate less of a need for many relationships.
A pointed inner canthus shows a 'sharp tongue'.
A hooked inner canthus shows the potential to be vicious in communications.....Get this book from the NLB :lol:
Please be forewarned that you are reading a post by an otiose housewife. ImageImage**Image**Image@@ImageImageImage
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Re: Books

Postby la papillion » Sun Sep 21, 2008 11:42 pm

Haha, I learnt body language when I was young. Now, I find it very useful in my work :)
An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return - Benjamin Graham
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