Sadly, mainstream media coverage of this matter has been virtually non-existent.

The Hashemite Kingdom of of Jordan (originally Transjordan) was created by the British in 1923, by separating 76% of the territory of Palestine located east of the Jordan river and giving it to King Abdullah as a favour in exchange for not fighting the French in Syria. Jordan was founded with a policy forbidding Jewish people from living there.

This move by the British to create Jordan from lands under its administration was controversial, considering that the land was commited to being part of the Jewish state in the Balfour declaration of 1917, which was recognised by the League of Nations [the forerunner of the UN],  in 1922.

Jordan was one of the Arab participants in the 1948 Arab-Israeli war who invaded Palestine following the declaration of Israeli independence. By the end of the war, it captured land West of the Jordan river, which today is commonly referred to as the West Bank, Cis-Jordan or the Hebrew names Judea and Samaria.

Jordan annexed this territory following the war and gave citizenship to all residents, except Jewish people who had been forced to flee.

Jordan lost control of the West Bank following the six-day war of 1967, when Israel defeated the Arab coalition comprising Syria, Egypt and Jordan. Jordan eventually gave up all territorial claims to the West Bank in 1988, following the first Intifadah.

No related posts.

Paternity Tests Prove Hundreds of Men Duped

SMS after DNA test: You’re not the father

Australian men’s group seeks tests before child support

There is no doubt that the decision of a man and a women to have intercourse requires considerable understanding of the potential consequences.

The obligation of a father to financially support his child is clearly established in law. The retired tennis champion, Boris Becker, learnt this valuable lesson after being forced to pay millions of dollars for a child conceived during a brief liaison with a waitress in a restaurant broom closet in 1999.

Similarly, the responsibility of the woman to be truthful about her relationships is equally serious.  A women knows exactly whom she has slept with and would certainly know if there is any doubt about paternity.

To extract money out of an innocent person by making false claims of paternity is a very serious matter which also has serious consequences on the other party, both psychological and financial

• It is a gross betrayal of trust
• It is traumatic for the man and the child. The man may have formed a close emotional bond to a child, only to find out that he is not the father
• A man may be deprived of his livelihood for almost two decades until the child reaches adulthood and becomes independent

Apparently, some feminist groups are up in arms stating that the only person that will suffer will be the child. To this, I say that the same argument could apply to a woman who obtains support money by robbing a bank or stealing from her workplace. Does this make her any less culpable for the crime? Of course not.

So not only do I fully support this reform - I feel it should be made even stronger in the following ways:

• In the case of false paternity, child support money must be repaid WITH INTEREST to compensate for the man’s lost opportunities
• Mandatory DNA testing of both parents and children must be performed in all custodial disputes
• Where there has been a proven element of deception or fraud on the part of the woman who has falsely claimed child support, she should be subject to all applicable criminal law concerning fraud and theft
• In the above case, the man should also be entitled to seek civil damages as considered appropriate for the case

What are your thoughts?

Related posts:

1. Acquittal of Female Stripper for Male Rape Demonstrates Discrimination Against Men Last week, female stripper Linda Naggs was acquitted of raping...

These had been promised for many years and are needed to cope with the growing population in these areas. Housing has become highly unaffordable in inner-city Sydney, so people were encouraged to move to the outer areas in the expectation that the these Government transport projects, when completed, would be able to take them to their places of employment in the inner city.

The government of course states that these projects, which they previously claimed to be ‘fully funded’, have to be abandoned due to the budget ‘black hole’ created by the financial mismanagement of the past NSW Labor governments led by Morris Iemma and Bob Carr, and the global financial crisis which has led to reduced tax revenue.

Despite having cancelled these projects, the NSW government is desperate for cold hard cash and is prepared to sell all the public assets they can at any price. The latest assets up for sale are the electricity retailers, NSW Lotteries and Waste Services NSW. These are all profitable and income-generating.

One major reason cited by the state government for refusing to borrow money for infrastructure is that they want to maintain their ‘AAA’ credit rating. Correct me if I’m wrong, but isn’t the whole purpose of having credit ratings in the first place to allow reliable borrowers to obtain loans on good terms?

Now is the perfect time for the government to spend borrowed money. NSW is in recession and the economy needs to be stimulated – capital works projects have been historically effective in these situations.

Reviving the cancelled infrastructure projects will remove bottlenecks and lead to increased taxation revenue and economic growth. As we are are now in a higher inflation environment, the net present value of future loan payments will keep falling, reducing the future costs of servicing these loans.

Furthermore, keeping those public assets will ensure that their income is retained, and this income will of course reduce the burden of loan repayments.

Related posts:

1. Desperate NSW Government’s Latest Money-Raiser: Privatising Prisons Our desperate, cash-strapped and clueless NSW State Labor government have come up...

Pardon the sparseness of my posts in the last fortnight. I have been reading and thinking very hard. For me, it is important to try and say something meaningful rather than contribute to the endless media waffle concerning the current financial crisis that does nothing more than waste time and confuse people further.

As first glance, many ASX stocks look incredibly cheap based on historic valuations. There are now heaps of shares that have P/E ratios less than 10, and offer fully-franked dividend yields greater than 10%. These are not just the battered property trusts who have high debt – many of these companies are in other sectors and are still reporting record earnings growth. So why aren’t these companies’ share prices going up?

The reason is that sentiment is very very poor. The market is anticipating future drops in earnings over the next few years as the financial crisis runs its course. People lack accurate, trustworthy information, so they are expecting the worst.

I personally see reasons to be positive. Emerging markets like Brazil, China and India are still growing strongly, and many Australian companies have exposure to these economies. There will still be demand for cheap consumer goods. Plenty of money will still be made in biotechnology and agriculture.

My share portfolio has been battered heavily – I have many small cap stocks which naturally are more volatile and lack liquidity, but they’ve all been paying their dividends like clockwork and most of these dividends are higher than last year. I do not buy shares that do not pay a good dividend – I see the dividend as a mark of business stability and compensation for periods of stagnation.

Right now, I expect the market to see-saw up and down for a prolonged period. I am looking at ways to take advantage of this. One area I am reading up on is the investment technique known as Value Averaging. Most people are familiar with Dollar Cost Averaging, in which one regularly invests a fixed amount of money into a share or managed fund, regardless of the price. 

With Value Averaging you vary the contributed amount depending on the value of your portfolio at the end of each time period, in order to reach a pre-defined target. The end effect is to buy more shares when prices are lower and buy fewer shares when prices are higher. Research has shown Value Averaging to outperform Dollat Cost Averaging about 95% of the time. I plan to write a post on this in the near future. If you can’t wait, click on the above link.

In other news, on the 12th of October, Prime Minister Kevin Rudd surprised everyone by announcing a package to provide an unlimited  guarantee on bank deposits. The financial markets reacted like an agitated grizzly bear hit with a tranquiliser dart – there was a day of temporary euphoria, followed by a swift return to instinctive behaviour.

A week later, Kevin realised that the package may have been overly generous and he announced that the bank deposit guarantee would be limited to $1 million. Beyond this amount, bank account holders would have to pay for insurance.

I question the wisdom of this scheme. Although this may have allayed consumer fears about the solvency of banks, it may have had the unintended side effect of further fuelling an exodus from shares and other asset classes into this newly created ‘perfect safe haven’.

Furthermore, in the event that the financial crisis worsens and a bank does become insolvent, where is the Government going to get the money to meet their guarantee obligations? Probably by printing more money! This will cause increased inflation and devalue everyones’ wealth. Nonetheless, this is probably far more emotionally palatable than going to your bank and being told that your money is gone.

Speaking of inflation, the Australian Bureau of Statistics stated that the Consumer Price Index (CPI) will reach a 13-year high of 5% this year. The current interest rate on Australian bank deposits is around 6%-6.5% per annum, so people who have their money in cash will be treading water.

In contrast, corporate earnings are more resistant to inflation. Assuming that demand remains constant, corporate revenue rises with inflation. For this reason, I see better value in making defensive investments in defensive low-debt stocks than blindly putting money in the bank, unless you need to access your money in the short-term.

No related posts.

The Australian Government does not concern itself much with the affairs of young people these days – we have an aging population and the young person’s vote is not considered important, but every now and again, it throws a token gesture their way.

By this, I am talking about the First Home Saver Scheme, which commenced last Wednesday, the 1st October.
The stated purpose is to assist people, who have never owned a home, to save for their deposit. The full details and conditions of the scheme can be found here.

This scheme is accessed by opening a special First Home Saver Account with a participating bank or superannuation fund.

At the moment, all the First Home Saver Accounts offered by banks work just like interest-earning savings accounts, paying between 6-8% per annum on your account balance. In the near future, equity market-linked accounts will be offered by superannuation funds, allowing you to invest your savings in shares and other assets.

I see the main attractions as being:

• You get up to $850 per year in free money from the government (you must deposit at least $5000/year to get the maximum) – equivalent to a risk-free and tax-free 17% return!
• Interest you earn on money in the account is taxed at only 15% instead of your normal marginal tax rate (30% for most middle-income earners).

The main drawbacks are:

• You have to deposit at least $1000/year for four years to be able to use the money as a deposit on a propery
• If you buy a home before the 4 years are up, you can’t withdraw the money – your only option is to transfer the money to your super
• You can’t yet use it for property bought at auctions

Even if you don’t plan to buy a home, you can still take advantage of the scheme to boost your super:

• Each year, just deposit $5000 and you’ll get $850. This is useful for those of us who are ineligibile for the superannuation co-contribution scheme.
• On the other hand, if you ARE eligibile for the super co-contribution scheme, you get can up to $850 on top of the $1500 maximum you are receiving from that scheme. e.g. up to $2350 per year!

Other reasons to participate:

• Housing affordability may actually improve over the next few years as the credit crisis and slowing economy bite
• Share prices are depressed, and regular investing over the next few years may allow you to pick up bargain investments at the bottom of the market.

For further Information:

The Australian Prudential Regulation Authority (APRA) have a list of institutions that offer First Home Saver Accounts.

The Australian consumer magazine, Choice, has a review of the current First Home Saver Accounts on offer.

The best deal at the moment, is being offered by AMP Bank, who are paying 8% per annum, paid monthly until the end of the year.

Disclaimer: I am in the process of applying for an account with AMP Bank, and I have a subscription to Choice Online. Other than that, I have no affiliation with any organisations named in this article.

No related posts.

For those not in the know, short selling is the act of selling stock one does not own, with the aim of buying it back at a lower price and profiting from the difference. This strategy is used to make money in a falling market, or when one expects a fall in the near future.

Large hedge funds have been blamed for abusing short selling to manipulate the market and contributing to the deterioration of world stock prices. 

The US ban applies to 799 stocks, and will initially last for 10 days, but may be extended. The UK ban applies to 32 companies and will last until the beginning of January 2009.

In Australia, our own so-called regulator ASIC has stated that we already have restrictions on short selling. Many people would consider this laughable.

I have an article that’s been sitting on the back-burner concerning my opinion of the role of short selling in the world stockmarket turmoil. It will follow next.

No related posts.

Earlier this year, there was talk that this medicine was going to be rescheduled as a prescription drug, due to reports that people were consuming whole packs to get high.

The active ingredients in Nurofen Plus are ibuprofen (a non-steroidal anti-inflammatory) and a small quantity of codeine (an opiate closely related to morphine). Taking a whole pack would deliver enough codeine to get one high, but the excessive dose of ibuprofen could lead to a number of adverse reactions, potentially harming parts of the digestive system.

Nonetheless, it is a very effective medicine for headaches and muscular pain and it would be wrong to deprive the vast majority of people due to a few idiots, who are always going to be around, so I fully support the decision to keep it over-the-counter.

No related posts.

My favourite supermarket brand is Twinings. Usually, I buy tea in tea bags, but I discovered that loose leaf tea is far better value for money. The other day at my local Woolworths supermarket, I found a large pack of loose leaf Lady Grey for less than half the price of a much smaller pack of teabags.

The traditional problem with loose leaf is that it is hard to make a single individual cup – people usually make a whole pot, which is messy and requires a lot of paraphernalia.

I have solved this problem for myself with the aid of a split-sphere mesh tea infuser (the top utensil in the image below).

When you want to make a cup, you squeeze the handle, scoop up some loose-leaf tea into the bottom sphere, and then release the handle to close the spheres.

You then put the tea-filled infuser in an empty cup or mug, and pour in some freshly boiled water. You can optionally add sugar, and then stir it using using the handle of the infuser, saving the need for a separate spoon.

Once you’ve brewed the tea to the desired strength, you can remove the infuser from the cup.

To clean the infuser, hold it over a waste container and squeeze the handle. You may need to gently knock the handle against the side of the container. The bulk of the used loose-leaf tea should fall out in a ball-like mass. Rinse the infuser under a tap to remove any remaining tea leaves.

After many uses, tea residue may build up and discolour the mesh. I found that I could return the infuser to mint condition by standing it in a glass of dilute laundry bleach for a few minutes, then rinsing it under a tap.

I purchased my infuser from the local gourmet tea store T2 for just under $4. They can also be purchased from most tea shops and online.

No related posts.

When I have asked economics students to explain it, I have found it to be poorly understood. I have come up with my own analogy to explain the principle. Furthermore, it also explains how this principle applies to individuals in everyday life. Here is my example:

Let’s say I have a day job as contract web developer for which I get paid $50/hr. After work, I can either eat out for dinner or buy ingredients and cook at home.

When I go out to eat, my favourite meal is a Thai stir fry which has meat, vegetables and rice, which I can buy for $10. The resturant takes care of all the preparation and cleaning. All I do it eat and leave.

When I eat at home, I might prepare something in the kitchen with frozen vegetables, beef and potatoes, and the ingredients for that will average out to $5/day over the course of a week.

On the surface, it seems that I am saving $5/day when I eat at home, but this is not the whole story.

In addition to the time spent shopping, I will also have to spend time to unpack and prepare the ingredients, wait for them to cook and clean up afterwards. Let’s say that the total time from preparing to washing up takes 1 hour.

What If instead of doing that, I worked for an additional hour per day and decided to always eat out?

I would earn an extra $50, spend $10 on the Thai meal, leaving me up $40 from my starting balance, and $45 ahead of cooking at home. Amazing.

I can extend this further to the Thai restaurant itself. Let’s say the owner/head chef wants to promote the restaurant by creating a website. She could either close the shop, read web design books and learn how to use HTML editing software, or she could hire me. The website the chef wants is simple – it just has the restaurant’s name, phone, address, a street map and the current menu.

I could hammer this out within 2 hours, for which I would charge $100. The chef is also clever, but she might take 5 hours as she has to perform software installation, read documentation and debug common beginner mistakes.

What should the chef do? Let’s say the restaurant serves 20 people per hour, and makes an average margin of $5 on each meal, the restaurant’s hourly income is $100/hr.

If the chef builds her website herself during restaurant hours, she would forego $500 in revenue. If she hires me, her total out of pocket expense is $100. Hence, she is $400 better off by hiring me to build her website.

For this example, we would conclude that my comparative advantage is in web development, and the restaurant’s comparative advantage is in preparing food.

This principle can be used to justify why a multi-talented business owner may be justified in hiring a graduate fresh out of university for clerical tasks, or why one would hire an accountant to do a simple tax return.

Of course this example makes a few assumptions. If I were in a permanent job, perhaps I would not have the ability to work an extra hour. Also, some people might in fact like cooking at home or spending time with family. Also, some Thai restaurants use excessive amounts of oil which could lead to weight gain.

No related posts.

The moment saw it, I immediately recalled the climactic line from the movie Wargames, when the military computer Joshua discovers the futility of nuclear war and announces – “A strange game. The only winning move is not to play”.

I state my view straight up with no sugar on top. Global Warming Alarmism is Bullsh**. It is the greatest scientific embarrassment of the 21st century. I have not yet seen any evidence that proves that human activity has had a significant impact on Global Climate.

Children are having nightmares about disappearing polar bears and living in underwater cities. Billions of dollars are being spent on promoting monopoly money (carbon credits) and the whole thing stinks.

Amongst the most recent stupidities, the great polluting nation of New Zealand has announced that its Kyoto Protocol liability will exceed $1 Billion. Our own Government plans to spend $2.3 Billion of the budget windfall on fighting climate change.

In the process or whipping up this world frenzy, I have seen the following fundamental scientific and logical errors:

1. Lack of falsifiability in weather predictions
2. Combining measurements obtained using inconsistent methods, e.g. those used to produce graphs of historic temperature, ice thickness
3. Mapping a relationship between variables by curve fitting instead of creating a correct model of the underlying process
4. Retrospectively adjusting models to fit experimental data after abherrations are found
5. Violating Occam’s Razor
6. Confusing causation and correlation

To my knowledge, these are the only things that have been proven:

• We have more Carbon Dioxide in the atmosphere today than we did at the turn of the century, largely attributable to industrialisation
• Global temperature was in a downward trend between 1940 and 1970 and since then has been in an upward trend.
• Animal migration and breeding is linked to the weather in a certain area.

I include the following websites that do a far better job of explaining the specifics:

http://junkscience.com/Features.html

Basic Greenhouse Equations ‘Totally Wrong’

I expect a barrage of criticism, so I preemptively will answer the following questions:

What about the Polar Bears stranded on ice?

This is a myth that originated from a widely published photo. Polar bears can swim.

What about the Movie, “An Inconvenient Truth”?

A High Court judge in the UK found that the contains 9 scientific errors covering many of its key points concerning attribution of certain events to anthropogenic climate change.

What about the “Scientific Consensus”?

Science is not a popularity contest. The only valid science comes from the application of the scientific method – you need to have a testable hypothesis.

In any case, there certainly is not a scientific consensus. The following links on Wikipedia describe the controversy and scientists who oppose the “Mainstream Assessment”.

What about the IPCC report?

Short answer: the contributors who disagreed had their opinions suppressed.

OK Mr Skeptic, then, do you believe that CFCs harm the Ozone Layer?

That was genuine science. The ability of CFCs to break down Ozone was experimentally proven, and the presence of CFCs was detected in the upper atmosphere.

In fact, the evidence was so convincing, that the Montreal Protocol that phased out the use of CFCs was ratified by more countries than the UN Declaration on Human Rights.

What has made Global Warming Alarmism so popular?

These are my guesses:

• Economic rivalry between Europe and the USA
• A convenient distraction for the UN to cover up its failure to act on Human Rights Abuses throughout the world
• A way for the Left to attack Capitalism
• A sure-fire way to attract research funding for academics who otherwise struggle for money

I will update this article with more comments at the next convenient opportunity.

No related posts.

In response, I have created my own alternative list of virtues and corresponding sins:

1. Critical Thinking vs Blind Faith
2. Logic vs Rhetoric
3. Win/Win Negotiating vs Zero-sum (Win/Lose) Negotiating
4. Lifelong Learning vs. Ignorance
5. Good Hygiene vs Bad Hygiene
6. Financial Literacy vs Financial Illiteracy
7. Consistency vs Hypocrisy

This article was sitting on the back burner, and I didn’t want it to get too stale. This list isn’t in any order. I plan to add comments about each when [if] I have time. Your comments and criticism are welcome.

No related posts.

The term Natural Monopoly refers to industries where it often considered impractical to have multiple providers. Utilities such as Railways, Power Lines, Water, Sewage and in the past Telecommunications have traditionally been called natural monopolies, but more and more, we see these notions being challenged.

Technological advancements such as Fibre Optic cables and spread spectrum wireless communication have opened up Telecommunications to many competitors, and there are few people who long for the days of Telecom Australia.

The establishment of the National Electicity Market in 1998 and the interconnection of all Southern and Eastern States (every state except WA and NT) started paving the way for private participation in Electricity generation. In NSW, all generators are still publicly owned at the moment.

The other utilities, more or less, still fit the definition of natural monopolies.

Funding
Goverments have a great advantage in that they can raise money by issuing bonds. Government bonds pay lower interest rates than enterprise would have to pay if they borrowed the money from banks or issued their own corporate bonds.

Funds can also be raised by issuing new shares via an IPO, but it likely to receive a cold response unless investors are convinced that there are realistic earnings expectations.

Hence, it is significantly cheaper for a government to fund the construction of expensive infrastructure.

Indirect Profits
Privatised infrastructure can only make money through the direct operation of the infrastructure, i.e. by pricing electricity, water or rail tickets at a healthy profit that is considered acceptable to shareholders.

With public infrastructure under government ownership, the government can still make a net gain, even if the specific infrastructure operates at a loss. If the infrastructure enables economic and population growth, it will lead to increased taxation revenue.

For example, a new power plant could increase the productivity of miners who extract metals from ore (indeed, BHP’s Olympic Dam mine in South Australia is expected to consume half of the state’s supply following its expansion).

New railways could reduce transport bottlenecks, easing labour movement, reducing unemployment as people are more easily able to get to areas with opportunities.

Profitability
Private enterprise wants profits from day 1, or at least as early as possible. There is little incentive for private enterprise to expand infrastructure to an area that is not currently experiencing growth, or may not experience growth for an extended period – e.g. 10 years.

As we have seen here in Australia, Telcos have been reluctant to provide service in the bush and the government has been forced to consider legislation to compell them.

In fact, this can worsen an existing situation where people will move away from an area with poor infrastructure and increase the burden on infrastructure elsewhere, leading to urban sprawl, traffic congestion. As someone who enjoys the convenience of working in the Sydney CBD and having a short rail commute from the East, I would not jump at an employment opportunity in North Ryde, for which I would need to buy a car, fill it up with expensive petrol and maintain it.

Operation of Infrastructure
I am not sure what is the best way for infrastructure to be operated, but here are my thoughts:

Operate Publicly
This is where the government is responsible for everything, including hiring employees. One could expect all the associated problems traditionally associated with government ownership, such as low productivity work culture, and frequent threats of union action.

Lease out the infrastructure to private enterprise
Potential private operators would issue tenders to operate the infrastructure for a given period of time, and would be responsible for day-to-day operation.

The advantage of this is that a bad operator can be evicted and replaced. The disadvantage is that the private operator has low incentive to improve the infrastructure. Any expensive upgrades or technological enhancements would have to be approved and funded by the government.

Other Issues
In order for Public Ownership to succeed, the following would preconditions would have to be met

• We would need intelligent bureaucrats who know where to put the infrastructure
• The bureaucracts would have to perform a sensible Cost-Benefit Analysis to ensure that there is a net gain.

Examples of poor analysis – the NSW Cross-City Tunnel and the Airport Link for which ticket/toll prices were considered unreasonably expensive by Sydneysiders. They were only patronised by a fraction of the expected number of commuters, and both facilities have gone into receivership.

Public-Private Partnerships
If handled correctly, these could possibly work, but recent history have shown the State Governments to be have been incompetent negotiators working against their constituents. Both the the failed NSW Cross-City Tunnel and the Airport Link were Public-Private partnerships.

Related posts:

1. Desperate NSW Government’s Latest Money-Raiser: Privatising Prisons Our desperate, cash-strapped and clueless NSW State Labor government have come up...

I personally oppose the creation of private monopolies. Consumers realise no benefits from capitalism without the presence of healthy competition.

Another event took place that is likely to steer this debate further:

Today in the media, it was reported that the New Zealand government reached a $555 million deal with Toll Holdings to nationalise its railways. They were originally government owned, but had been privatised in the early 90′s under a previous government.

According to the article, under private ownership, the railway lines have been poorly maintained and many services reduced or cancelled, so the government saw no other option but to repurchase.

No related posts.

For the sector as a whole, I expect Capital Gains to be subdued for the next few years as our economy is slowing, interest rates are high and people are borrowing less (or paying back debts). Profit growth will be very small, however I do not expect any cuts in dividends.

For individual banks, the situation is not so clear. ANZ has been in the news due to having increased its provisions for bad debts, as well as the OPES Prime fiasco. NAB has also copped some flack due to exposure to the US mortgage crisis. SGB and WBC have done better, both reporting strong single digit earnings increases.

I am not going to make a call, but I can tell you how I would start my analysis – I would examine each bank to determine the proportion of income from each of the bank’s activities, e.g. Retail banking, business lending, wealth management/financial advice and others. Also, I would look at the proportion of income earned in Australia and the proportion earned overseas. I can then make my own judgement on the future prospects of each activity.

Commonwealth Securities provides research from Aspect Huntley on its website. The above information can be found under the ‘Analysis’ tab.

Be cautious about PEG estimates provided online. These are purely guesses made by the research company’s analysts. It is better to read each bank’s earnings guidance in their annual report and use your own critical thinking skills to see what assumptions lie behind them.

For me, banks are now an income investment, as they pay large, stable, fully-franked dividends. I have been holding ANZ and NAB since last year. Do not consider this a recommendation.

No related posts.

No related posts.

I first read about this in MX in 2006, just before the election, and I knew the plan was total BS and a fake election promise to fool the naive.

No related posts.

The presenter pointed out a number of ASX-listed debt securities (often called Capital Notes) that are trading below their Net Present Value (NPV), by between 5-12%. I was asked for my opinion.

For those that don’t know what these are, these are much like bonds – they are normally issued by public companies, e.g. banks/insurance companies to the public in order to borrow large amounts of money, e.g. to facilitate expansion.

Each bond/note that is issued has a given face value, e.g. $100. They pay a certain interest rate periodically for the duration of their lifetime, i.e. 8% per annum for 10 years,  after which the bond matures and the face value is paid back.

The underlying value of a bond at a given point in time is the Net Present Value (NPV) of its future cashflows. We take each pending payment (interest income and the face value paid upon maturity), discount them back to today’s dollars using current market interest rates and then sum them together to produce the NPV.

This is why when the RBA raises interest rates, the value of bonds falls, and if interest rates fall, the bonds rise.

OK, here’s a far better written explanation from Investopedia:

http://www.investopedia.com/university/advancedbond/advancedbond2.asp

OK, so does this mean that if a bond/note is currently being traded below its NPV, that it is a risk-free investment? The answer, as always, is in the fine print.

I checked out a couple of product disclosure statements. I noted the following:

• One product gave the company the right to indefinitely delay maturity of the bond.
• One product stated that in the event of the company getting into financial trouble, note holders would rank above shareholders, but below other debtors.
• Some have other conditions that make returns dependent on the movements of the company’s normal shares.

Such conditions may potentially pose risks and should be factored into your investment decision.

No related posts.

I dislike it for the following reasons:

1. The repetitive accompaniment consisting of maybe four notes tops
2. It would somehow sneak into playlists at parties and get a crowd into a retarded synchronised frenzy
3. The song’s lyrics teach women that cheating on your boyfriend is a cool and fun thing to do
4. The outfits of the women in the video
5. Having the two old guys (who wrote the song) in the video was clearly an afterthought
6. The fact that after this was a hit, they came back for a second money grab with the “Christmas Joy mix” that replaced the English portion with snippets of Christmas Carols.

For those of you who dislike this song as much as me, I bring you “F*** the Macarena” by MC Rage, courtesy of Youtube. It’s hardcore techno (gabba) and apparently was a hit in the Netherlands. Good on ‘em.

WARNING: Profanity – use headphones if at work

Oh, and if you really need to be reminded of the original:

No related posts.