Regular features from December 2004 108th Issue

Time is Money

Last Month we looked at Barclays Equity Index going back to 1945 and how well equity investments have performed over long periods.

There is little doubt that equities are a dangerous place to be, in if you have a short investment horizon. But if you have ten or more years before realizing your investment, equities will generally come out on top with one big proviso. You really do need the psychological equipment to handle the bleak downturns then equities will surely bring. It's been my experience that there's no free ride; anywhere in life.

This Month I came across the past history of the Standard & Poor's 500 index.

This index has not suffered a loss in any 15 year period going back to 1926.

This basket of the 500 large cap U S stocks with dividends reinvested delivered average annual gains of 11.3% between January 1926 and December 1999 easily beating inflation the No 1 enemy of investors.

If we compound 11.3% each year in real money terms what does it mean?

A US$1,000 investment in the S&P 500 in January 1926 would have grown to US$2,845,628 to day

But not many of us invested US$1,000 in 1926 and are still running around Hua Hin with nearly 3 Million bucks. The point of the illustration is to make a case for sticking in there.

A more realistic scenario to make the point is the following.

Had you invested US$10,000 in the S&P at the end of December 1989.it would have begun ominously. Stock prices had crashed in October 1987 but the benchmark Dow Jones Industrial Average clawed its way back over the following year. By the middle of 1990 the Dow had risen well above its precrash levels. But as the US economy slumped into recession, the market tumbled sharply losing roughly 20 percent between July and October 1990.

After that the tide turned.

For much of the next eight years the stock market never looked back. The $10,000

which had ridden roughshod in the early years by December 1999 was worth $53,243. Another proof that time is money

Of course it's easy being wise in hindsight. The wounds of a 20% downturn on your portfolio in real terms at the time of the fall is forgetting about your grandchild's education forgetting about that new holiday home and if you're elderly a more modest retirement than planned.

Even though we are familiar with the investment benefits of staying in the market how many of us who say invested $1 million in 1989 would have sat tight when we had lost $200,000? If we had of course we would have had a nest egg of over 5 million 10 years later.

I'm making this point so strongly because I know that not all of us are equipped to handle these crippling losses.

Look at these two scenarios.

You are given $1,000. Choose between (a) a sure gain of $500 or (b) a 50% chance to gain $1,000 and a 50% chance to gain nothing.

Question 2 You're given $2,000 Choose between (a) a sure loss of $500 or (b) a 50% chance to lose $1,000 and a 50% chance to lose nothing.

Look closely at the problem. The possible outcome from each situation is the same but how the question is phrased can influence your decision Richard Thaler of the University of Chicago maintains that we avoid risk to capture additional gain but we will take a risk to avoid a loss. These two questions if answered honestly seem to illustrate that.

The bottom lines when all the little games are over is how well will you sleep at night after a 20% drop in your portfolio. You might have the dream of increasing your wealth in the future but remember you could loose another 20% in the next month.

Past historical performance is a great guide but the guarantee of future performance is never there in equity markets. Think hard and long before jumping in. If you choose equities make sure you have the time and the stomach for them.

For further information on this article please contact Jerry at info@swissinvestcenter.net or visit his website www.swissinvestcenter.net

Mag's Page, the Pink Perspective

Management 'Observed' recently that there are an awful lot of ex-pat ladies in HuaHin. Given the fact that we stand out like sore thumbs among throngs of brown skinned girls with long black hair that was pretty astute.

Fortunately Management quickly went on to say that there are no ex-pat female columnists. My thoughts exactly, so lets try to redress the balance.

It makes you think though. 5 years ago I knew maybe 10 Western women in Hua Hin, and only one other who was in business here.

Since then our numbers have grown rapidly along with the property boom. Hardly surprising when you consider the climate, location, amenities and property prices.

But how did we go about our respective decisions to move, and what effect does the new lifestyle have on us and folks back home?

For the growing numbers of younger Western teachers here it must be relatively easy. A year or so doing a worthwhile job abroad before getting bogged down with mortgages and Rug Rats. A good talking point for the CV as well. Some teachers of course will get hooked and stay, without having to agonise over whether to ship out the set of Le Creuset and a 10 year supply of M & S undies.

The rest of us have to make the sort of Really Important Decisions which would drive Martha Stewart into rehab.

Not least of the problems is the reaction from family and friends. "You're going WHERE? Will you be able to get Tampax there?"

A good (now ex of course) friend of mine wailed "Why do you want to live with a bunch of heathens" I kid you not.

The response of course should always be "You can come and visit on holiday" Its a perfectly reasonable response to a difficult situation, and we never expect them to actually do it. Especially the ones who have never been further than Lanzarote.

Big mistake. Rule number one - never have a guest room. Those folks who love Lanzarote will suddenly decide to splash out on the holday of a lifetime, and turn up with the Lonely Planet, enough mozzie repellant to sink the Titanic, and expect your guest room to offer full English breakfast.

For many of us that means exposing the delightss of our pseudo European kitchen with its two gas burners and a microwave. It also means splashing out 900 Baht apiece on decent frying pans from the Mall - always assuming that the frying pan department hasn't relocated overnight to the roof.

This is when shipping the Le Creuset out seems like a good idea after all.

First time visitors to Thailand , particularly the female family variety, are generally not good news and to be avoided at all costs. Male friends and couples fare better, particularly if they can be pursuaded to book package deals at the Hilton or Sofitel. Then they can brag to you every day about the great English breakfast they just had, while you are juggling with your two gas burners and cheap woks.

Apart from the 'what do I fetch' dilemma, preparations for the move also include a visit to that friendly neighbourhood blood sucking masochist known as the Nurse at your Doctors' surgery. Her eyes light up on learning your destination, and she heads for the fridge with alarming speed, preparing to deliver a shot into every available limb and buttock.

Mine got so carried away that, realising I was left with one leg still unviolated, she offered a flu vaccine to complete the cocktail.

At least we are able to walk from the surgery unaided, unlike the guys who require 24 hours in Recovery.

Finally we arrive at Don Muang trying desperately not to look like a tourist. You know the type. All fake YSL, wildly decorated jeans and painful looking beaded braids. They can often be spotted holding up the queue at a 7 Eleven near you (and don't dare say there isn't one near you now) while they deliberate over the alien display of cigarettes.

Naturally we pig out at first on some touristy things. Manicures, pedicures, foot and scalp massages etc. This Is Normal . Such luxuries at home would make a serious dent in the household budget. However after a few cricked necks and bleeding toes the novelty wears off. (Why do Thai manicurists insist on cutting the edges of your nails down to the quick?)

Gradually we also start to resent paying Tourist prices for anything. To be fair the locals eventually realise that we ain't going anywhere, and sometimes even give up on trying to sell us silk tablecloths and Hill Tribe silly hats. So by the time our ex Lanzarote visitors arrive we have completely lost the plot with prices at home. "You paid 300 Baht for THAT! You were robbed".

Later - much of the same plus coping with male counterparts.

Tantawan's Kitchen - Crispy Fish with Chili Sauce

Preparation:

1 Fish about 500g. (clean and cut two slits)

1 cup of oil for deep frying fish

1 tablespoon Chinese parsley leaves

_ cup fish sauce

_ cup palm sugar

_ cup tamarind juice

2 red chilies

3 tablespoons of garlic

3 tablespoon of chilies (prick keenoo)

1. Blend all the seasonings in a blender or food processor. Set aside.

2. Score the fish by making diagonal slashes on each side.

3. Heat the oil in a pan. Deep fry the fish until both sides are golden brown.

4. Put the blended seasonings in no. 1 into a saucepan and simmer over low heat until the mixture is thick.

5. Before serving pour the chili sauce over the fish and sprinkle with the Chinese parsley leaves.

Martin wetting the babies head with Mags

Noi celebrates her birthday with Kevin at Sabai

Luciano (centre) coming to grips at Grappa

Observer staff on holiday

Useful Telephone Numbers for Hua Hin

Railway station
032-512 770, 032-511 073

Bus station of Hua Hin
032-511 654, 032-512 543

Bus station of Prachuabkirikhan
032-601 901

Bus station of Pranburi
032-621 443

Hua Hin Hospital
032-520 401

Dog Rescue Center
0-1981 4406

Wild life Rescue Center (Tayang)
032-458 135

Department of Land Cha-am office:
032- 430 846-7

Department of Land Hua Hin office:
032-536 164, 032-512 407

Department of Land Prachuabkirikhan:
032-611 211

Department of Land Pranburi
032-622 199

Local Government (Hua Hin)
032-521 340, 532 471

Local water supply
032-511 677

The Power Board of Hua Hin
032-512 215, 032 513 165

Observer office:
032-531 078

Red Cross.
032-512 567

San Paolo Hospital
032-532 576-85

Polyclinic International
032-516 424, 032-516 425

Shell Cooking Gas
032-511 144, 032- 515 620

The Communication Authority of Thailand
(Hua Hin)
032-511 351

Rotary Club of Hua Hin
0-1916 6637
Meeting every Thursday 8.pm
at Hua Hin Grand Hotel & Plaza

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