SHOULD I VISIT THE AIRPORT TO PREPARE MY FLIGHT DEPARTURE?

Point being to prepare and rehearse your departure in advance - make sure you have all the covid and other new rules right and know where to go.

The airline booths are half empty. It's hot-booths now, no flights for your airline today? Then no booth and no-one to ask.

Airports are half empty, if that. You can only walk one way round, of course, it's all social distancing. So walk backwards.

You risk being stopped by finger-twitching Security because you are not a passenger that day. But stay - you can talk your way out with reassuring chit-chat.

Try to get into the covid test centres. If travelling on day D, go to test centre D-2 or miss your flight. So arrange your test wellin advance and find out where the Centres are. Last minute at the airport will probably be an even bigger rip-off. Pay for all the tests - can be really a lot money - do you really need to go?

No-one at the info desk. No info desk. No-one to answer questions. Check gov websites for your countries of departure and arrival.

But you know what, sometimes you have to have a break from your uncaring care home.

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WHY COMMODITY PRICES ARE SURGING

You don't need to look far to see why commodity prices are surging and there’s the prospect of demand for some natural resources exceeding supplies for years to come. Some leading investment advisers now say that we’re in the early stages of another “super-cycle.”

Factors to consider:

Demand

1. Share price action 

From March 23 to May 10 this year, big run up. Biggest customer, China, responds with all manner of clever detailed actions to knock back price. Since demand is increasing as far as we can see into the future, this tamping can only be short term. Copper has doubled in last year, for example.

2. Covid bounce-back

3. Batteries and energy-transition metals

For storage especially Lithium, wind turbines, electric vehicles. Energy-transition metals, copper and platinum group metals for example are now a pinch point because limited new supply.

Green demand - copper.

4. Paris 2015

The data shows a looming mismatch between the world’s strengthened climate ambitions, US rejoining, and the availability of critical minerals that are essential to realising those ambitions.

Means political pressure. Decarbonization could cost more than is currently estimated and will be a structurally inflationary force for some time.

Is political pressure a good thing for investors?

5. Biden's billions

The Biden administration views covid as an opportunity to pour money into its favoured interests – voters, welfare, public services.
The recovery package it has already forced through Congress was for $1.9 trillion. It’s asking for $3-4 trillion more.

6. Much greater and relatively stable demand. Copper is the new oil, but no equivalent to shale. 20k tonne by 2025?

Supply

1. Miners not investing

Despite this boom, technology metals, such as cobalt, copper and lithium, are set for particularly large deficits.

Not investing because investors want dividends, not wasted investments as in last decade of boom pre 2012 which led to bust.

Capital spending this year is set to fall by 6% among major diversified mining companies and 10% among copper miners, according to analysts’ consensus. Mines typically take 10 to 15 years to develop.

2. Emerging imbalances

Between supply, stockpiles and demand have eventually this last year adjusted balances in favour of higher prices. Inventories are low. Covid has disrupted supply chains.

3. Resource quality

Is declining. Eg Chile copper 30pc grade contraction these last 15 years.

Profits

1.  Rolling in lolly  

$140 billion ebitda Rio BHP Glenmore cf 44b 2015.

2. Weakening dollar, in which contracts are written raises prices and profits.

Investor demand

1. Inflation

Commodities as hedge against inflation.  Risk-off now means commodities-on. Ie commodities decorrelate, like before 2008.

2. Long memories are wrong memories

The LME metals index, a gauge of metals trading in London, fell 50 per cent over the  five years post 2011 tank. The market capitalisation of London’s five largest listed mines fell 75 per cent.

But that was China coming out of max demand for industrialisation. Now, with the energy transition, demand will be worldwide. Investors had better think again.

3. Healthy balance sheets

Mining companies are also more disciplined and focused on shareholder returns than they were ten years ago. After a near-death experience in 2014, when the sector was left struggling to service debts piled up in the boom years, balance sheets are in much better shape.

4. Dividends and Valuations

Yields around 5% with excellent cover and rising revenues earnings and profits.

DCF on current Income projections make miners fairly valued. But analysts will revise these valuations when the factors listed above are seen in play, giving many years of double-digit TSR.

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THE TROUBLE WITH TAINTED MONEY

Is there tain't enough of it

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PRINCIPLES OF APPROPRIATENESS

Some Rules :

#1 The Principle of Value

Can buy at sales price less than intrinsic value.

Aim to sell at above intrinsic value.

IV for property = annual rent / yield (quick and dirty solution.)

Intrinsic value is equal to the present value of all its future incomes - dividends for a share, rents for a property.

#2 Principle of Conservation

Understand why things are as they are before making it better.

Eg, a wall might keep in central heating or keep out cooking smells

#3 Principle of Relative Spending

Spend commensurate with quality. Eg for property. For rung one property, rung 1 rehab. Rung 5 property, rung 5 rehab. Not rung 5 spending on rung 1 property. Not appropriate.

#4 PRINCIPLE OF THE NEGOCE

Any concession you need something in return.

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JULY 1ST WILL BE A FLOP

It is likely that few will attend the grand reopening party in Phuket on July 1st, in just a few weeks, bringing further humiliation to Thai authorities.

Covid related restrictions abound across the planet, meaning only those with a serious need visit other countries - businessmen, diplomats, perhaps those seeking cures.

So it is unrealistic to expect even an uptick in foreign tourism under current covid waves and defending restrictions. And domestic tourism is of little interest, even without covid - the numbers are potentially there, but not the money.

Tourism is (was) a fifth of the economy, seven million plus Thai people count on tourism for a living, making this industry of great importance especially to poorer Thai people. 

Dreams of replacing lost GDP and employment with the electric vehicle are absurd : at best, the e.v. will be concentrated in the Pathum Thani area, while tourism is nationwide.

What is to be done?

It is pointless trying to remove or refine restrictions for a July 1st 2021 opening. It discredited and humiliates Thailand. Despite ministers' words, there has been no marketing.

All effort should be bent on a reopening for high season 2022. Not wasted on a July 21 distraction.

The objectives are 90% of the entire population vaccinated, the existing tourism assets preserved and upgraded, a test-trace-treat project up and running, a public awareness program mask-space-hygiene, field hospitals.

To re-open tourism requires all local people vaccinated, a vaccine passport, deals with principal departure countries over health cover, a government-backed compensation scheme covering cancellations (the ex-national carrier is in bankruptcy), clarity and stability on testing (antigen preferable to pcr and timing),  internal travel restrictions.

Without this credible program of government actions, Thailand is likely to lose its tourist industry and - worse - the backing of international investors and its o

wn people.

The govt must focus on the medium term and put its hands in its pockets.

PS

Cheapest PCR tests

https://j.mp/3vX3AhW

Best travel insurance

https://www.which.co.uk/news/2021/05/coronavirus-what-it-means-for-your-travel-insurance/

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PUT TOURISM IN A COMA AND FOCUS ON THE VIRUS

https://thethaiger.com/hot-news/tourism/thailand-focuses-on-international-but-needs-domestic-tourism#comment-383625

The author has framed this piece round the idea that the govt (TAT) has focused on hopelessly trying to revive intl tourism in the midst of a pandemic, while - he argues - the focus should be on domestic.

It is just a story. 

What the author doesn't say is that the economy runs 20% on the foreign currency from intl tourism and you simply cannot replace that slug from within the domestic economy. Never mind that domestic tourism would only infect the whole country. 

If Thai strategists were to follow his advice, and succeed, what are his proposals for generating the other, say, 10%? The electric car?

It is true - and has been often remarked - that expecting intl tourism in the midst of this pandemic is a madness.

What could be done is to hibernate the industry (it is now in large part destroyed) by upgrading assets and retraining staff; and to focus on defeating the virus.

Had the govt spent a bit of its foreign reserves on improvements and vaccines, it would come out ready for a bumper high season 2021/2

The objective should be to hibernate the industry and race to defeat the virus, after which the industry can be re-animated.

Not waste resources trying to squeeze ordinary Thais, with low incomes and already high debts.

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IMPROPER GOVERNANCE

Should begin by saying that in normal times, I am a supporter of the monarchy and the BBC.

In this case, we see Bashir - model journalist -  exposed as ambitious, greedy and dishonest.

We see The BBC - the nation's broadcaster at home and abroad - as corrupt and evasive.

We see Prince Charles - future King, husband and father of two little boys - as pompous, selfish and irresponsible.

And ultimately we wonder why the Queen - who grants the BBC its Royal charter - is still out to lunch on the century's most important family crisis.

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CHINA - QUADRUPLE DIP

https://is.gd/graSwy

Rod writes 

A view i have held and spoken of for 20 years. The danger is that a state organised as China will seek to deflect the inevitable domestic upheaval against and threatneing the hegmony of the CCP by foreign 'adventures'. Prepare for world war 3. 

Reply

The strategy is a big big fireworks party for 2049, so maybe you're right about war.

China is trying to clear the gun rails this decade, in preparation.

But it's a war it will lose. And more likely if it starts to seriously challenge the USA, its a war the US will start. The US will never never, but never, tolerate a rival, not even a regional hegemon.

The real risk to world peace comes from a US bent on converting the world to its model of Liberal democracy. 

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CAPITALISM

The capitalist market is something in which we live all the time, it’s the water we swim in, it’s given us all the things we take for granted.

It’s a great machine for inventiveness and ingenuity, but it presents two really serious problems.

One is dirt, it produces filth and pollution. The other is that it produces huge and unacceptable levels of inequality. 

The job of politics is to clear up the dirt and reduce the inequality. Politicians are there to listen and develop a blended response that sustains the market while dealing g with these downsides.

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THE NEW INQUISITION

Free society is finished if we fail to resist this new Dark Age of unreason

With the old arguments over, we’re living through an era in which rational debate itself is rejected

Janet Daley aged 76, 15 May 2021 • 1:00pm

Many years ago someone who was not remotely sympathetic to Communism told me that he dreaded the collapse of the Soviet Union because the Cold War balance of threat between the two superpowers was the only thing preventing global chaos. If the USSR ceased to exist, he said, what would follow would be endless outbursts of nationalist territorial disputes and terrorist adventurism. What was then called the Third World (because it was outside the two main power blocs) would no longer be bribed and bullied into some kind of order by the competing interests of East and West and so would be abandoned to its own anarchic ends.

That may or may not have been a sound analysis. You may feel, looking at the Middle East and Afghanistan, that there was something in it. But there was an even more cataclysmic consequence of the end of that almost century-long ideological confrontation between the communist bloc and the West which we are living through now. The Cold War which dominated the politics (and culture) of the twentieth century was not just a military confrontation, it was an argument: a substantive, sometimes cynical but nonetheless genuine, disagreement about how people should live. To engage in it – even to understand it – required knowledge of basic principles, an ability to marshal evidence, a willingness to enter into debate.

In the West where it was legally possible to converse about these things, there was ongoing and very serious discussion of the merits of capitalism and private enterprise vs state ownership of property and a command economy. Occasional fits of repression, or attempts to suppress such debate, would flare up but they never really succeeded in extinguishing the fundamental notion that this was, by its very nature, a conflict of ideas which had to be examined on their merits.

Now that great argument is over. Totalitarian communism is either utterly discredited (as in Russia) or persists in name only (as in China where it has been replaced by totalitarian state capitalism). Both of those nations have more or less reverted to their ancient traditions of tyrannical rule without too much resistance from their populations. It is in the West where the vacuum has caused the most trauma.

In the void left by the absence of that huge, all-embracing disagreement, what has emerged? A rejection of rational dispute itself, a retreat from reasoned debate, of arguments that follow from first principles, of defending a conclusion with evidence or paying due respect to conflicting viewpoints: in short, a culture war in which no ground can ever be given.

Marxism and capitalism in their original doctrinal forms had grown directly out of the Enlightenment: the whole point was to construct political and economic systems that would be beneficial to the majority and which could compete for general approval. Both were corrupted and distorted by human frailties but their idealistic intentions were based on theories and values that could be articulated and defended. As indeed they were, so extensively and exhaustively that people, not infrequently, changed their minds – were converted or “turned” in the case of intelligence agents.

What has replaced all that? Public discourse does not consist of competing arguments any more: it isn’t a proper discussion at all. It is a diatribe in which one side tries to destroy, or prohibit, or totally suppress the other. We have returned to a Dark Age where reason and actual disputation are considered dangerous: where views contrary to those being imposed by what are often nothing more than activist cults can be criminalised. Not only must those who now hold opinions which breach orthodoxy be banned but historic figures who could not possibly have anticipated current social attitudes must be anathematised strongly condemned as well.

Where have we seen this before in the West? When religious authority determined the truth and could prohibit any dissent – when books that might lead to subversive, unacceptable thoughts could become prohibited texts forbidden to anyone not given specific permission to read them. By an extraordinary irony, the Vatican’s list of prohibited books, the Index Librorum Prohibitorum (which was only abolished in 1966), included two great Enlightenment thinkers, David Hume and John Locke, who are currently under attack by the new Inquisition which seeks to root out any historic connection with the slave trade.

What is significant is not the modern views that are being propounded but the way they are being enforced. The question is not whether you approve of these opinions but whether you accept that they must not be questioned, subjected to examination, or disputed. Much has been said about the “illiberalism” of what now presents itself as liberal opinion but what is happening goes way beyond simple intolerance. It is a return of something no thinking person expected to see again in the rational West: the banishment, or the hunting down, or the deliberate ruination, not just of explicit opposition but of coincidental association with a tainted position.

This isn’t so much the Middle Ages – which had its own high standards of intellectual rigour even when it was condemning Galileo for heresy: it is a kind of enforced blindness to the process of reason. As a result, the only arguments that may be permitted are about detail within the orthodoxy: do trans rights take precedence over those of biological women? Which forms of speech for describing contentious identities are permissible? How far back must historic guilt be traced?

So we are arguing about how many angels can stand on the head of a pin. What is worse is that once you have devalued argument and evidence, you have no defence against superstition and hysteria: the lunatic conspiracy theorists and the social control fanatics have as much legitimacy as anyone.

This new Dark Age, with its odd combination of narcissism and self-loathing, is a threat nobody saw coming. If the institutions that should resist – universities, the arts, and democratic governments – fall before it, the free society is finished, defeated more resoundingly than it would ever have been by the old enemy.

Do you agree that we are living through an era in which rational dispute and reasoned debate are being rejected?

Andrew Marr replies

Mr Marr continued: "There are many privileges of working at the BBC, including the size of the audience and all of that, but the biggest single frustration by far is losing your own voice, not being able to speak in your own voice. 

"What I could say safely is that I think we are going to go through a period of politics - the next 10 or 20 years - much more turbulent and much more interesting and testing and challenging then anything we have seen in the last 10 years, which have been big enough. 

"I think it will be very, very hard for people like me to carry on being completely neutral and completely sotto voce all the way through that.

"At some point, I want to get out and use my own voice again. How and when, I have no idea."

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NO WORRIES, WE'RE PROTECTED

This is the Jami An Nur Kramat Mosque in Bekasi. And this was Idul Fitri last Thursday.

I guess in a few weeks the virus will have cleansed this corner of West Java of its human infestation.

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TRUST TO LUCK AND ANECDOTE

Should we dig our heels in over all this government interference with our age-old liberties?

It is very true that One Nation Toryism can look and feel like Totalitarianism. That dictators are those who got away with our liberties. Values and the urns are supposedly the nation's defence, but we feel herded by the media and govt legislation  We don't believe we will ever reach green pastures anew, they are propaganda mirages.

To the conspiracy theorists, it is also true that mRNA could edit up your DNA, which is the flip side of a cancer cure. I haven't read the warnings here, but I'd be a bit surprised if government were unleashing a planned extinction of its own people, or even sections thereof.

When the PM talks about using common sense in our social interactions, "common sense" isn't something that springs from the ether, it is the result of guidance drawn from  experience and controlled experiment....the domain mostly of scientists. 

Most sane people would heed government public service advice rather than trust to luck and anecdote. Most people would imagine this is government returning our civil liberties now the war's been won.

Having said all that, trusting in the common sense of the common person, a friend died recently after 10 days on a ventilator. He thought the threat from covid was rather overblown, considered the vaccine was unproven, was a carefree social type. It was as much the emphysema as the covid that killed him.

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WHATS GOING ON - MARVIN GAY

https://www.bbc.co.uk/programmes/m000vwtl

https://youtu.be/H-kA3UtBj4M

https://youtu.be/3qxDWoCsvTM

This has got to be one of the greatest albums ever released. 

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HARTLEPOOL

It would be a very different story if they'd drop The Woke, the Marxism and the Remain. It is possible while remaining true to the socialist idea of equality and solidarity.

And some flag-waving and British pride would help them.

One detail: when Karmer bent his knee everybody knew he was a fake and a loser.

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WHAT IS THE VALUE OF TOURISM IN THE THAI ECONOMY?

At an average spend of $2,800 per visitor, an annual 40 million visitors, generate 110 billion dollars or 22%, of the 505 billion GDP economy.

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BEST INDEX FUNDS FOR GLOBAL TRACKERS

Best Index Funds for Global Stocks, Part I

Part I - Strategy

(Part II - Setup

Part III -Operations)

Background

Strategy

Tilts

Modern Portfolio Theory

Strategic allocation rules

“Core and satellite” portfolio design

Screen for compliant ETFs

Summary

Background

Without enough knowledge or time to make a sound call, some investors nonetheless try to pin the tail of a stock they hope will outperform, on the donkey of all stocks in the market. The alternative is to find one fund for exposure to all global equities. Why only one fund? Why global? Companies, sectors and country markets go up and down but we do not have the knowledge or time to understand this and we cannot predict the future. So we diversify as broadly as possible to protect our capital and the good investments will cancel out the bad and hopefully we can benefit from rising markets wherever they occur. 

Passive investing is a strategy for minimising stock dealings with all its risks and costs. It is a cheaper way to hold a bunch of stocks that represent the overall market. It is a way to build wealth gradually but surely. All the information is already in the market, in the form of the price, so there is no benefit in trying to time the market or identify which stocks will outperform. But we believe that over time, in the long run, markets will rise and because we do not know when or where, it is better to be “in” than ”out”.

https://www.ig.com/uk/trading-strategies/what-are-the-average-returns-of-the-ftse-100--200529

Rather than trading securities, we buy an index to the target market. An index is like a ruler that measures overall market activity. The index is normally worked out by taking the average price of the basket of securities, as they move up and down each day, but weighting by the market-capitalisation of each company (“market cap.” is number of shares times the share price).

A way was found to buy and sell the index and it is called an Exchange Traded Fund or ETF for short. Today, indexes, in the form of ETFs, can be bought and sold like stocks and shares.

Strategy

ramin.nakisa@pensioncraft.com

https://youtu.be/8qLgw4FS6wI

Tilts

On the one hand, we want to cover all risks and opportunities with a global ETF; on the other, we have ideas about which markets will do best. Which markets - developed or emerging? Or which country? Or sectors of the economy - eg Tech or Finance or Basic Materials, favourites at the time of writing. Or even single stocks, why not Tesla or Legal and General?

Maybe we want to filter by company size, as measured by its market capitalisation (=number of shares times share price) – large, mid-cap or small.

Or look for particular types of company. Growth or value, or a blend of the two? This is a Morningstar style classification. Growth stocks are companies that have not yet reached full potential. They are investing a lot, probably in something new, but still producing little in the way of earnings. Value stocks are mature companies typically dishing out at least half their net earnings in dividends as they have nothing better to do with their profits. By discounting those future earnings to a present value (the “intrinsic value”) and comparing that to the share price, we can say if the current share price undervalues the company.

Or screen for “momentum” stocks, where recent share prices are making higher highs.

The idea is to reduce risk through diversification while outperforming a standard benchmark for performance, such as MSCI’s All Country World Index, ACWI. The goal is to achieve above-average returns with below-average risks.

Modern Portfolio Theory 

MPT says you could combine asset classes of different risk profiles to obtain above-average returns compared to your benchmark such as the FTSE All-share, all for an average level of risk. So ETFs for emerging and for small-cap indexes with a global large cap ETF, where the sum of the parts is a more efficient use of your capital, in terms of generating higher returns at lower risk, than the three ETFs held individually because you are on “the efficient frontier”.

Pro’s and con’s

• No market timing: of course you can time the markets, but do you have the knowledge, time and emotional distance?

• Easy to implement: MPT can produce a balanced portfolio ready for long-term growth with only occasional rebalancing needed (if you are more trader than buy-and-hold, you may want to consider more tactical approaches involving technical and fundamental analysis as well as market sentiment, eg I am interested in “sector rotation”, holding a certain amount of cash in anticipation of a decennial crash and buying more stocks during the recession to hold till they return to pre-recession levels).

• Lower risk: diversification means spreading investments across assets that are not positively correlated (though this is increasingly hard to find), so protecting from changes in the market.

Strategic allocation rules 

An investment selection governed by MPT might be a portfolio of ETFs following these strategic allocation rules: 

• 40% large-cap stock (index) for bedrock

• 10% small-cap stock for outperformance

• 15% emerging market stock for outperformance

• 30% intermediate-term bond for shock resistance

• 5% cash/money-market for opportunities.

Though one global equity tracker and one or two satellites that might vary, is enough. 

It is still important to periodically rebalance the portfolio to bring it back to its original asset allocation, keeping your holdings in sync with your investment goals, avoid overweighting certain assets and following the maxim “sell high, buy low”.

“Core and satellite” portfolio design 

One way to think of a global equity fund strategy based round these characteristics is as a version of “core and satellite” portfolio design. Most of our money is in a core global equity fund, around which can optionally circle more specific funds such as : 

• Emerging or Developed market EM or DM ; or country. 

•Company capitalisation – Large, Mid-cap or Small. 

•ESG or non-ESG because maybe we favour companies with green governance statements in their Mission Vision Values statements – Environment, Social and Governance or ESG.

So, these might be the "tilts" that you specifically wish to give to your portfolio. If that tilt does work out, good for you, and if it doesn't, then that it is not so serious as most of your hard-earned is in the safe (you hope) core.

Fact is, most of us are pretty useless at choosing these tilts and so all the money in a global equity fund would be perfectly OK.  You can still make the high-level choice between developed and emerging markets, or developed markets ex-US (EAFE: Europe, Australia, Asia, and Far East), or maybe add a tilt for a covid-free Europe you expect to emerge.

Screen for compliant ETFs

Having developed a strategy for maximising returns over the long term, while respecting our values, we will then be in a position to (1) find compliant ETFs, (2) evaluate their charges, (3) consider their risk-return profiles. (4) Also spot funds all tracking the same index, so here the only differentiator would be the fund’s ongoing management charges. 

The advantages of this core-and-satellite strategy are:

• Preserves your capital by stopping you from trying to pick "winning" stocks and instead focusing on winning themes

• Reduces your time and reduces management and commission charges

• Improves risk-returns through portfolio diversification.

Summary of Part 1 and look ahead

In sum, we are going to look at which index and what markets to track. We will consider the risks and returns of each. Then we will identify particular non-correlating ETFs and mutual funds that could meet the chosen strategy and the charges they make - that will be Part II - Setup. And once we are in "run mode", we will look at Maintenance of Operations.

Part I - Strategy

Part II - Setup

Part III -Operations

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HOW TO MAKE SENSE OF A CHANGING WORLD

Keep calm, put things in context and remain curious.

The trouble is that people are reverting to opinion and feelings and prejudice and superstition. Yet progress over the last 300 years has come from the scientific approach - fact or data driven, open-minded yet skeptical

, experiments with repeatable ie provable conclusions:

• Observation
• Question
• Hypothesis
• Experiment
• Results
• Conclusion

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