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WTF – “What The Future Holds” Event Summary

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WTF – “What The Future Holds” Event Summary | The Thaiger
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PHUKET: Professor Steve Keen is often quoted as saying that the only people who believe they can see the future are fortune tellers, economists and God, and that, while he’s sceptical about fortune tellers, he knows for a fact that economists are deluding themselves, often with appalling consequences.

Managing clients’ hard-earned assets shouldn’t be based on an individual assumption of what the future might hold because, unless God decides to set up an asset management company, no single view is able to predict the future with certainty.

Therefore investment management starts with risk management – how much volatility is an investor willing to stomach? To how great a loss, from the top of a market to the very bottom, are clients prepared to expose themselves? Once we know that, we can start the process of building bespoke portfolios tailored to each client to reflect the optimum blend of assets – the ones that in the very worst imaginable scenarios will perform within that client’s own tolerances but which in the reasonably expected outcomes will deliver the highest returns that the risk constraints allow.

There are no good stocks or bad stocks, or good asset classes or bad asset classes, merely an optimal blend of assets for each client that won’t exceed that investor’s worry threshold. The returns that are generated are an output that reflects that blend within the capital market conditions that then prevail – they can’t be controlled but risk can and should. This approach has driven our success over the years, helping our clients to achieve positive returns in difficult years like 2008 and outperform over the cycle.

When asked at the “What The Future Holds” event in Bangkok this week about how to invest in the current economic climate, Steve Keen advised that academics don’t have huge pots of money to manage; best-selling author Richard Duncan favoured agricultural land (such as in his native Kentucky) along with US residential property. MBMG AM CIO, Paul Gambles recommended a highly diversified portfolio, constructed around individual risk appetite and at most risk levels holding a significant proportion of cash, managed to squeeze every ounce of yield out of it, poised and ready for what could be the greatest opportunities of a lifetime, along with cautious allocations to non-US listed global stocks and to judicious property exposure. Although valuations are high, he favoured Southeast Asia over developed markets but cautioned that a much stronger US Dollar is “almost inevitable” at some stage, although it’s hard to be certain as to when, making patience one of the key components to any portfolio right now.

The event focused significantly on the US economy and US capital markets simply because America is home to the world’s largest economy, main capital markets and greatest financial experiment in history – namely the stimulus policies aggressively pursued by the Federal Reserve and Treasury Department, which have driven US consumer debts to levels much higher than in the 1930s. However portfolio allocation and economic analysis require a global focus as what the future holds may well be different for each asset class and in different regions despite the close linkages between them. In fact such linkages are often responsible for the inverse relationship between assets that is so important to the diversification and risk management processes.

At the event, Gambles, Keen and Duncan all expressed concerns about levels of global debt and the high risks that such debt holds for the future. Gambles foresaw a range of possible outcomes, mainly comprising the following:

  • QE will work; creating exit velocity growth and real inflation that will outstrip and devalue debt (this has never worked before).
  • The global economy will ‘turn Japanese’ and we’ll suffer lost decades while the debt slowly and painfully endures – except that this isn’t an outcome, just a long transition to an outcome
  • Some kind of re-set or event – a default, actual or effective, or the kind of event that ended the Great Depression, i.e., WWII

Each outcome will create huge risks and opportunities – it’s impossible to know which outcome will prevail or the timing but awareness of these possibilities allows each investor to position for the full range of outcomes, according to their individual risk profile. It’s not about investing into a particular asset in anticipation of a single outcome. It’s about constructing risk-adjusted portfolios using asset matrices that can withstand the most unfavourable outcomes.

Duncan’s central premise was that, since 1945, the world has been dominated by ‘creditism’ – “we see all economic and capital market activity ultimately driven by credit. This is a manipulation. It’s not capitalism.” His scenario mainly anticipated a binary outcome.

Either the economy continuing to grow with QE being invested in a way that is more efficient – new technologies, green energy etc – investing a further $5trn into productive sectors will generate adequate sustainable growth to fix the debt problem over time or a Japan-style lost decade or several lost decades will follow.

Keen focused on extreme levels of private debt seeing the economy right now as another accident waiting to happen – probably in the next 2-5 years. It could be just another recession in a long-term cycle of going nowhere for the next couple of decades, Japanese-style, but Keen also worries that social pressures, especially in Europe, could lead to the kind of austerity conditions that brought Hitler to power in the 1930s and led to WWII.

The range of outcomes and the risks inherent in each one only serve to reinforce our convictions about highly personalized risk management with diversification, a coherent outlook and patient pragmatism to the fore.

Keep checking the Phuket Gazette’sbusiness pages for the latest local and national business news updates affecting Phuket and Thailand. Alternatively, join our Facebook fan page or follow us on Twitter.

MBMG Group is a multi-award-winning professional advisory practice that provides sound and impartial advice to assist private, corporate and institutional clients in protecting and building their hard-earned wealth. For further information, visit www.mbmg-group.com.

— MBMG Group

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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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