Business
Phuket Finance: A time tested formula

PHUKET: A question I am often asked by clients, who do a bit of stock trading on their own portfolios, is how to determine the appropriate position size. Indeed, there have been studies that show that this aspect can be just as important as the actual security selection in the long run. The reason this is so important is that in short-term trading, as in many games of chance like roulette or blackjack, wins and losses tend to come in streaks. Back in the 1950s, a formula came out of research at Bell Laboratories that is still the backbone of the position sizing strategies for much of the investment world, and has even been slightly modified and applied to long term investing by such gurus as Bill Gross and Warren Buffet.
The formula I am referring to is called the Kelly Criterion. While I will include here for any fellow math nerds out there, you do not need to be one to incorporate the basic idea into your stock trading. You can use the basic idea to make it slightly more systematic than “I think I’ll buy 1,000 shares because it is a nice round number”, although there are some advantages to trading in round lots and not going into position sizes that are not divisible by 100 shares. Anyway, the formula is as follows:
For simple bets with two outcomes, one involving losing the entire amount bet (i.e the loss realized at your stop loss point), and the other involving winning the bet amount multiplied by the payoff odds (this could be a price target or your historical average winning %). The Kelly bet (see graphic) explaned is:
f* is the fraction of the current bankroll to wager;
b is the net odds received on the wager (“b to 1”); that is, you could win $b (and get a return of your $1 wagered) for a $1 bet;
p is the probability of winning;
q is the probability of losing, which is 1 – p.
In laymen’s terms, what this will yield is a proportion of your trading bankroll to risk on any one idea or trade, and this will be sensitive to the probability of a loss or a win. If you are a frequent trader, your own prior probability should be available from tracking your own success rate. Keep in mind that if you balance risk and reward, you can have a statistical edge even if you are only right 40% of the time. You simply need to make sure your losses are smaller than your gains by using stops and being disciplined enough to follow them.
The reason the formula works well is because as you experience a string of losses, each subsequent trade places less capital at risk, whereas during a winning streak, it edges up. The main thing to remember is that if you take your investment capital and allocate something like 10% as risk capital, you would only use that 10% as the bankroll in the above formula, not your entire life savings.
David Mayes MBA lives in Phuket and provides wealth management services to expatriates around the globe, focusing on UK pension transfers. Faramond UK is regulated by the FCA and provides advice on taxation and pensions. He can be reached at david.m@faramond.com or 085-335-8573.
— David Mayes
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Business
Governments & old media versus social media – who will win? | VIDEO

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

“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.
Business
Turbulence ahead for Thailand’s aviation industry | VIDEO

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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