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Finance: Dodge a crash with right investment

Legacy Phuket Gazette

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Finance: Dodge a crash with right investment | The Thaiger

PHUKET: For those of you who have been reading my columns for some time now, you probably know that I am not the biggest fan of the stock market at the moment. You may think I am an idiot because I have spent years waiting patiently for the next crash while the markets continue to march on to new highs.

The reason for this is that I understand the cyclical nature of markets and know portfolio performance has been proven in study after study to have more to do with asset allocation than security selection. What that means in plain English is that it is more important to be in the right kinds of investments, depending on where we are in the longer term business cycle, than to pick the next Google, Alphabet, or whatever they are calling themselves at the moment.

The major asset classes fall under two types, traditional and alternative. Traditional assets basically include stocks and mutual funds, as well as bonds and bond funds and cash and money market funds. We could get a little more technical but the main distinction is between these types of investments and ‘everything else’, which brings us into the world of alternative investments. Of these I like to distinguish between those with liquid, exchange-traded assets and those with illiquid assets such as properties.

At the moment, my favorite asset classes are cash and money market funds, short duration bond funds and trend-following futures funds. I may sound like a broken record, but having a bunch of cash ready to deploy will make a big difference in how you view the events that are as certain to come as the daily setting of the sun. If you are heavily invested in stocks, a crash is a terrifying thing. If you are out of the markets and sitting on a pile of cash, it is the most amazing buying opportunity.

The same thing goes for bonds. If you are in long term bonds as interest rates rise, you will be stuck holding them until maturity. And it will be even worse if you are in a fund and the losses get
realized because of the redemptions from other investors. However, if we do see the bond market crash quickly, this would also represent a once in thirty years buying opportunity, rather than a crisis.

Trend-following futures funds are another asset class that tend to do well in bad times, and lately they have been doing well again even when things are going well. Of course I would stick to the bigger and better well known funds like Man AHL, Winton, and so on, but a portfolio spread between cash, short term bond funds, and trend-following funds has done pretty well over the last few years, with low volatility overall and very little downside risk relative to the stock market.

The conditions are still far from ideal, especially for retirees, but the three asset classes I mentioned together have proven the best way to deal with the current situation for those who rightly want to avoid the risk of a stock market crash. The idea of having a bunch of money in cash is counter-intuitive for many, but there are times when it is the right thing to do and right now is one of those times.

David Mayes MBA resides in Phuket and provides wealth management services to expatriates around the globe, focusing on UK pension transfers. He can be reached at david.m@faramond.com or 085-3358573. Faramond UK is regulated by the FCA and provides advice on pensions and taxation.

— David Mayes

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Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

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Governments & old media versus social media – who will win? | VIDEO

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Governments & old media versus social media – who will win? | VIDEO | The Thaiger

We look at the recent changes made by the Australian and Indian governments to except control over the world’s biggest social media platforms. India has issued strict new rules for Facebook, Twitter and other social media platforms just weeks after the Indian government attempted to pressure Twitter to take down social media accounts it deemed, well, anti social. There is now an open battle between the rise of social media platforms and the governments and ‘old’ media that have been able to maintain a certain level of control over the ‘message’ for the last century. Who will win?

The rules require any social media company to create three roles within India… a “compliance officer” who ensures they follow local laws; a “grievance officer” who addresses complaints from Indian social media users; and a “contact person” who can actually be contacted by lawyers and other aggrieved Indian parties… 24/7.

The democratisation of the news model, with social media as its catalyst, will continue to baffle traditional media and governments who used to enjoy a level of control over what stories get told. The battles of Google and Facebook, with the governments of India and Australia will be followed in plenty of other countries as well.

At the root of all discussions will be the difference between what governments THINK social media is all about and the reality about how quickly the media landscape has changed. You’ll get to read about it first, on a social media platform… probably on the screen you’re watching this news story right now.

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The social media giants in battle with ‘old’ media and world governments | VIDEO

The Thaiger

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The social media giants in battle with ‘old’ media and world governments | VIDEO | The Thaiger

“The rules signal greater willingness by countries around the world to rein in big tech firms such as Google, Facebook and Twitter that the governments fear have become too powerful with little accountability.”

India has issued strict new rules for Facebook, Twitter and other social media platforms just weeks after the Indian government attempted to pressure Twitter to take down social media accounts it deemed, well, anti social.

The rules require any social media company to create three roles within India… a “compliance officer” who ensures they follow local laws; a “grievance officer” who addresses complaints from Indian social media users; and a “contact person” who can actually be contacted by lawyers and other aggrieved Indian parties… 24/7.

The companies are also being made to publish a compliance report each month with details about how many complaints they’ve received and the action they took.

They’ll also be required to remove ‘some’ types of content including “full or partial nudity,” any “sexual act” or “impersonations including morphed images”

The democratisation of the news model, with social media as its catalyst, will continue to baffle traditional media and governments who used to enjoy a level of control over what stories get told.

The battles of Google and Facebook, with the governments of India and Australia will be followed in plenty of other countries as well.

At the root of all discussions will be the difference between what governments THINK social media is all about and the reality about how quickly the media landscape has changed. You’ll get to read about it first, on a social media platform… probably on the screen you’re watching this news story right now.

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Never miss out on future posts by following The Thaiger.

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Business

Turbulence ahead for Thailand’s aviation industry | VIDEO

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Turbulence ahead for Thailand’s aviation industry | VIDEO | The Thaiger

When the airlines, in particular, were asking the government to put their hands in their pockets for some relief funding in August last year, it was genuinely thought that international tourists would be coming back for the high season in December and January. At the very least local tourists and expats would head back to the skies over the traditional holiday break. And surely the Chinese would be back for Chinese New Year?

As we know now, none of that happened. A resurge in cases started just south of Bangkok on December 20 last year, just before Christmas, kicking off another round of restrictions, pretty much killing off any possibility of a high season ‘bump’ for the tourist industry. Airlines slashed flights from their schedule, and hotels, which had dusted off their reception desks for the surge of tourists, shut their doors again.

Domestically, the hotel business saw 6 million room nights in the government’s latest stimulus campaign fully redeemed. But the air ticket quota of 2 million seats still has over 1.3 million seats unused. Local tourists mostly skipped flights and opted for destinations within driving distance of their homes.

As for international tourism… well that still seems months or years away, even now.

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