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Finance: Oil volatility good for asset class

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Finance: Oil volatility good for asset class | The Thaiger

PHUKET: I used to write about the trend-following sector. Many of the funds I still use went decades with the steadiest performance in the investment industry, while still giving investors above-average returns.

Sadly, in the period of low interest rates and volatility following the financial crisis, the entire asset class has struggled. The steady year-after-year forward progress seemed to turn upside down and many funds were down three out of four years after having gone decades without a single bad year.

This year, however, it seems that they are back in a big way and the recent volatility in oil prices appears to have been one of the biggest causes. It doesn’t matter if the underlying commodities go down or up for this style of fund to make a good return, but there does need to be movement, and there certainly has been just that in the oil market as of late. At the time of this writing, the two major benchmarks are were off by about 38% from the 2014 highs that hit in June.

Many of the funds that had me just about at my wits’ end are finally redeeming themselves. Palm Trend Fund, for example, despite having a manager with an exemplary track record, had done nothing but go steadily down since I had invested any money with the group. Yet this year they are up about 50%, lifting my clients into positive territory no matter how unlucky was the timing of their initial investments. Man AHL Diversified, which had been going steadily since the 1980s without a losing year until 2009, after which it lost money four out of five years, is finally having another great year and is up over 27% for 2014 so far. Again, anyone who invested at any point in time during that bad period would be well into profit territory now.

The question many of my clients have been asking, and which I have asked myself, is: Does this mean the group has turned the corner and that performance will go back to the way it was prior to the financial crisis? It is impossible to tell, but as these things are cyclical and we are coming into increasing volatility, I expect the next few years to be okay. After what the sector has done this year, it is hard know what to expect out of 2015 but good years have often come in clusters for this asset class in the past.

One thing I do know is that this asset class provides an excellent hedge against any possible crash in the already over-inflated stock market. Trend following CTAs (commodity trading advisers) often post their best years when stock markets crash, so balancing out your stock portfolio with them is only common sense in my opinion. The world situation points to continuing volatility and uncertainty and as is always the case in life, it is better to be prepared for the worst and hope for the best.

There are many great funds in this asset class but also many horrible and risky ones.

Diversification is the key and many feeder funds allow access to some of the better managers at very low minimum investment levels. I will highlight a few of my favorites from time to time, but a general rule of thumb is that you want a track record of at least a decade and exchange traded assets which are liquid.

Also, stay away from funds that use too much leverage, as this can cause you sleepless nights in the inevitable draw-down part of the cycle or even worse. Stick to the proven managers who deliver a reasonable return.

I believe adding CTAs to a portfolio is the best way to balance out the high market risk present in most people’s stock portfolios at the moment.

David Mayes MBA resides in Phuket and provides wealth management services to expats around the globe, focusing on UK pension transfers. He can be reached at david.m@ faramond.com or 085-335-8573. 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

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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.

Keep in contact with The Thaiger by following our Facebook page.

Never miss out on future posts by following The Thaiger.

Continue Reading

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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