Anymatters

When should I start writing again?

2009-11-06T23:05:00.002+13:00

The question for a blogger lately: "When should I start writing again?"

Busy at work, joy with family, too much time on Facebook and any other things more amusing and interesting than blogging are the key factors that make me stop updating my blog.

Hmmm...

Pemilu dan Teori Ekonomi Politik

2008-12-05T21:21:00.011+13:00

Saya bekerja di bidang aplikasi keuangan dan perencanaan keuangan pribadi tapi akhir-akhir ini tertarik dengan politik Indonesia. Kenapa? Karena kebetulan saya menjadi anggota Panitia Pemilihan Pemilihan Luar Negeri (PPLN) Wellington yang menangani penyelenggaraan pemilu di Selandia Baru, jadi sempat melakukan beberapa observasi dan ingin sekali mengemukakan opini.

Pemilu (Pemilihan Umum) adalah aksi dimana rakyat memilih secara politis. Rakyat yang tidak (mau) memilih atau golput tidak akan masuk dalam pembahasan saya, karena mungkin mereka tidak mau terlibat secara politis. Hal ini berarti memberikan batasan (limitation) terhadap pembahasan saya, dan bisa dikategorikan sebagai deviasi atau "error". Mungkin ada batasan lainnya seperti pilihan random dan pilihan yang dipengaruhi.

Saya mulai pembahasan ini dengan konsep choice atau pilihan. Konsep ini popular dan mendasar dalam teori ekonomi yang lebih dikenal dengan rational choice theory, yang bisa diartikan bahwa seseorang dengan mempertimbangkan biaya dan manfaat terhadap suatu barang akhirnya memutuskan untuk memilih barang tersebut. Berarti secara rasional individu itu memilih barang dengan biaya semurah mungkin dengan manfaat sebesar mungkin.

Namun kemudian biaya tidak menjadi masalah karena partai politik (parpol) dan calon legislatif (caleg) dalam Pemilu bukan barang yang mengeluarkan biaya. Biaya yang mungkin dikeluarkan boleh jadi berbentuk biaya kesempatan (opportunity cost) karena kehilangan manfaat, aspirasi atau tujuan pribadi yang tidak tercapai. Dan juga biaya eksternal (externality) karena kemenangan mayoritas akan merugikan kekalahan minoritas dalam implementasi kebijakan.

Biaya kesempatan yang mungkin terjadi adalah realita dimana seseorang memiliki preferensi terhadap 2 atau lebih parpol yang akhirnya harus memilih satu parpol agar suara menjadi valid. Perlu diingat bahwa individu ini berupaya untuk menentukan pilihan dan tidak menjadi golput sementara manfaat yang ingin dicapai (desire) tersalurkan dalam lebih satu parpol.

Dalam kerangka politik, individu pastinya akan berkelompok karena kenyataannya setelah diumukan KPU bahwa Daftar Pemilih Tetap (DPT) terdapat 170 juta lebih individu yang akan memilih hanya 38 parpol. Berarti disini kita mengarah ke sikap dan perilaku pemilihan publik bukan individu lagi.

Yang menarik dari sikap dan perilaku ini adalah kepentingan individu (dari desire individu) berkembang menjadi kepentingan umum (publik). Berarti kepentingan individu akan secara kolektif menjadi suatu agregasi kepentingan individu. Contoh simpel agregasi dalam ekonomi adalah pendapatan pribadi yang dikumpulkan menjadi pendapatan domestik bruto (GDP).

Parpol apapun yang menang dalam Pemilu akan secara potensial menyebabkan biaya eksternal yang besar dari parpol yang tidak menang karena keputusan tersebut memerlukan persetujuan super mayoritas individu atau publik dalam suatu sistem.

Contohnya yang jelas dalam Pemilu adalah salah satu parpol akan mendapat suara tertinggi dan mayoritas, sementara parpol yang lain akan mendapat suara lebih rendah. Walaupun kita asumsikan terjadi koalisi, parpol-parpol yang berada dalam koalisi yang kalah atau kurang dari mayoritas akan mengeluarkan biaya eksternal.

Apa sih biaya eksternal itu? Biaya eksternal yaitu biaya yang dikeluarkan oleh parpol/koalisi yang kalah karena kerugian yang diperoleh akibat dari keputusan atau kebijakan parpol yang menang yang nantinya akan merugikan parpol/koalisi yang kalah.

Teori ini disimpulkan dari teori pilihan publik, Buchanan dan Tullock dalam bukunya The Calculus of Consent: Logical Foundations of Constitutional Democracy (1962). Kalau diartikan diartikan secara kasar dalam Bahasa Indonesia adalah Kalkulus Persetujuan: Dasar Logis dari Demokrasi yang Konstitusional. Haha... untuk yang suka Kalkulus waktu SMA/kuliah dan yang suka politik praktis waktu kuliah tentu akan tertarik untuk membeli buku ini.

Sekarang kita ambil salah satu contoh kebijakan khayalan, misalnya kebijakan umur pensiun 65 tahun dan dwi kewarganegaraan. Setelah Pemilu, parpol/koalisi yang menang menjebolkan UU tentang kebijakan tersebut. Tentunya yang rugi adalah parpol/koalisi yang kalah yang tidak menjebolkan UU tersebut karena memang bukan menjadi suatu aspirasi atau inspirasi yang ditawarkan kepada para pemilihnya. Walaupun demikian, proses demokrasi dalam Pemilu dapat dikatakan berjalan lancar, cuma ada aspirasi yang tercapai dan tidak tercapai.

Sekarang muncul masalah aspirasi dan desire yang ingin dicapai. Tema pendukung pemilu kali ini kebetulan salah satunya adalah "Kenalilah dan pilih caleg yang peduli pada aspirasi dan inspirasi rakyat."

Saya mencoba mengambil konsep keuangan untuk membahas hal ini, yaitu Hipotesis Efesiensi Pasar (Market Efficiency Hypothesis). Konsep ini bisa diartikan bahwa harga di pasar keuangan ditentukan dengan informasi yang diterima oleh pelaku pasar terhadap suatu produk. Jadi, kalau informasi yang diperoleh jelek dan tidak sesuai, maka produk tersebut cenderung memiliki harga yang rendah, dan begitu juga sebaliknya.

Mudah saja diartikan apabila dikaitkan dengan Pemilu, yaitu bahwa kalau informasi yang diperoleh terhadap suatu parpol dan calegnya tidak sesuai dengan aspirasi dan inspirasi calon pemilih, maka parpol dan caleg tersebut tidak akan dipilih.

Bagaimana Pemilu bisa menjadi efisien? Cara satu-satunya adalah seorang calon pemilih perlu mengorek informasi sebanyak mungkin terhadap visi, tujuan, agenda dan profil caleg suatu parpol sedemikian rupa sehingga calon pemilih dapat mencocokan dengan aspirasi, inspirasi, manfaat dan desire-nya. Hal ini dapat diperoleh melalui kampanye-kampanye yang dilakukan atau secara suka rela melakukan observasi terhadap suatu parpol dari media massa atau media internet.

Kalau akhirnya pilihannya menjadi suatu pilihan yang acak (random) atau yang tidak sesuai dengan aspirasi dan inspirasi, maka ada kemungkinan Pemilu menjadi tidak efisien dan boleh jadi menghasilkan suatu agenda baru yang mengambang, tidak aspiratif dan inspirasional.

Apabila kita formulasikan sebagai berikut: Y = f(X1, X2,... X3), dimana y = pilihan parpol dan x = variable parpol yang diobservasi (misalnya Profil Caleg, Asas, Visi, Tujuan, informasi lainnya), maka secara jelas dan logis pilihan individu dapat ditentukan sesuai dengan aspirasi, inspirasi, manfaat dan desire. Ada kemungkinan fungsi ini menjadi Ya = f(Xa1, Xa2,... Xa3) dan Yb = f(Xb1, Xb2,... Xb3), apabila pilihan menjadi lebih dari satu atau multi-variasi, hmmmm... ;-).

Mohon datang ke link ini untuk melihat Daftar Caleg Tetap >>>

Untuk klasifikasi Asas berdasarkan website: IndonesiaMemilih.com, Asas parpol yang mengikuti pemilu dapat dibagi sebagai berikut:

Pancasila (parpol no. 1, 2, 3, 4, 5, 6, 7, 9, 11, 12, 13, 16, 17, 18, 19, 20, 21, 22, 23, 25, 28, 30, 31, 32, 33, 41)
Islam (parpol no. 8, 18, 24, 27, 29, 34, 42)
Keadilan, Demokrasi, Kemajemukan, Pancasila (parpol no. 10)
UUD 45 & Pancasila (parpol no. 14, 43, 44)
Marhaenisme (parpol no. 15)
Nasionalisme (parpol no. 26)

Salam Pemilu 2009 dan Selamat Memilih.

I didn't see any troubles in the current financial turmoil

2008-09-18T22:02:00.014+12:00

In share trading we trade the physical shares while in futures trading we trade the contracts of the physical shares. That's why in share trading without short selling, investors are always exposed to a 'naked position' of 'buy' as the initial action is always 'buy' from the brokers in the exchange. Meanwhile in futures trading, investors can sell the contracts first and then buy them after, directly from the exchange.

I didn't see any troubles in the current financial turmoil with a successful futures trading.

When Lehman Brothers filed bankruptcy on Monday 15 Sep 08 and the US market was down by 4.4% on that day, Australia and New Zealand were still in the evening. Next day, Tuesday morning, I set an open position of selling 50 contracts of ASX SPI 200 Dec Futures at 4,738 expecting a very big catch of a lifetime. (1 contract is valued at $25 per point, so with 50 contracts, if the ASX SPI 200 Dec decreases 1 point, I can profit $1,250.)

I waited for 2 days. I didn't trade on Wednesday cos I was doing something else. I knew that bad news was continuously spread by 'fellow media'. On Thursday 18 Sep 08 the price of ASX SPI 200 Dec Futures dropped to 4,616. So, by 122 points I reaped $152,500 profit.

ASX SPI 200 Futures has been my favourite toy traded in Sydney Futures Exchange (SFE). The price is tight to the index of ASX SPI 200, index of 200 Australian shares. A day rally in the US market (evening in Aus) frequently influences the next trading day in the Australian market. Sometimes the profit can only be taken before midday though. ASX SPI 200 Futures trading opens 9.50 am.

Current financial turmoil might not be an issue for some people. Yeah right...

Cover Your Breasts

2008-08-20T09:48:00.003+12:00

Visit
www.CoverYourBreasts.com

Pemilu Indonesia 2009 di Selandia Baru

2008-08-12T16:22:00.007+12:00

Kunjungi www.pemilu-nz.org

Assallamu'alaikum wr.wb dan Salam Sejahtera

Kesejahteraan, kenyamanan, keamanan dan keteraturan kehidupan kita di Selandia Baru saat ini bukan berarti kita tidak lagi memikirkan masa depan bangsa dan negara kita Indonesia. Bagaimanapun juga, sebagai warga negara Republik Indonesia kita masih tetap memiliki tanggung jawab, atau paling tidak kesadaran, terhadap perubahan ke arah yang lebih baik.

Mimpi dan harapan terhadap suatu perubahan yang optimal, atau paling tidak yang kita rasakan terbaik, bagi bangsa dan negara Indonesia tergantung dari satu suara pribadi yang diberikan dalam Pemilu 2009 mendatang. Satu suara pun, walaupun berasal dari ujung dunia seperti Selandia Baru, sangat berarti. Dalam proses demokrasi yang sempurna, suara anda akan berujung pada beberapa kekuatan politik yang pada akhirnya akan berkoalisi untuk menyamakan persepsi pada suatu agenda perubahan. Pada akhirnya, satu suara anda itulah yang menentukan agenda perubahan yang mengubah mimpi jadi kenyataan, harapan jadi anugerah.

Pemilu 2009 akan diselenggarakan pada hari Kamis, 9 April 2009. Pemilu 2009 di Selandia Baru dilaksanakan dengan dua jenis penyelenggaraan:
(1) Pemungutan suara di Tempat Pemungutan Suara (TPS), dan
(2) Pemungutan suara yang dikirim melalui Pos (NZ Post).
Pemungutan suara di TPS berlaku di kota Wellington dan pemungutan suara melalui pos berlaku di kota selain Wellington.

Jumlah suara yang sah dalam Pemilu 2009 di Selbar akan dimasukkan dalam wilayah pemilihan DKI Jakarta-II.

Panitia Pemilihan Luar Negeri Selandia Baru (PPLN Selbar) dibentuk 2 Agustus 2008. Hubungan PPLN Selbar dengan KPU Pusat adalah melalui Kelompok Kerja Pemilu di Departemen Luar Negeri.

PPLN Selbar ---> KBRI Wellington ---> Pokja Pemilu Deplu ---> KPU Pusat

Pada saat PPLN Selbar dibentuk 2 Agustus 08, isu pertama dan utama yang sangat diperhatikan adalah pemutakhiran data pemilih. Daftar Pemilih Sementara (DPS) akan diperbaiki menjadi Daftar Pemilih Sementara Hasil Perbaikan (DPSHP). Kemudian DPSHP akan diperbaiki kembali menjadi Daftar Pemilih Sementara Hasil Perbaikan Akhir (DPSHPA). Berdasarkan DPSHPA akan disusun Daftar Pemilih Tetap (DPT). Lihat Tahapan Pemilu untuk jadualnya.

DPS -> diumumkan -> tanggapan/masukan dari masyarakat
Perbaikan
DPSHP -> diumumkan -> tanggapan/masukan dari masyarakat
Perbaikan Akhir
DPSHPA -> dikirim ke KPU
Penyusunan DPT
DPT -> dikirim ke KPU
Dilengkapi dengan Daftar Pemilih Tambahan

Periksa apakah nama anda sudah tertera pada Daftar Pemilih Sementara (DPS).
* Jika belum ada, mendaftarlah secara online atau menghubungi Panitia Pemilihan Luar Negeri (PPLN)
* Jika sudah ada, lakukan pendaftaran ulang dengan mengirimkan data alamat, no telepon, no paspor dan email terbaru secara online atau dengan menghubungi Panitia Pemilihan Luar Negeri (PPLN)

Apakah anda berhak memilih?
Jika anda sudah berumur 17 tahun pada hari Kamis, 9 April, 2009, atau sudah/pernah kawin, maka anda berhak untuk memilih dalam Pemilihan Umum 2009.

Pastikan bahwa hak pilih anda tidak hilang dengan:
* Mengisi formulir pendataan ulang secara online
* Memastikan bahwa nama anda tercantum dalam daftar pemilih sementara
* Meng-update data anda

Terima kasih atas perhatiannya.

Salam Pemilu

PPLN Selandia Baru
d/a KBRI Wellington
Alamat pos:
PO Box 3543, Wellington 6140
Alamat fisik:
70 Glen Road, Kelburn, Wellington 6012
Telepon:
64-4-475 8697/98/99
Fax:
64-4-475 9374
Email:
info@pemilu-nz.org
Website:
www.pemilu-nz.org

Baca pembentukan PPLN Selbar >>>
Baca kegiatan PPLN Selbar >>>
Baca anggaran PPLN Selbar >>>

(/jml)

Australia Invades New Zealand?

2008-07-20T21:02:00.001+12:00

What's the underlying reason and purpose of this ad? I don't know. Bledisloe Cup maybe.

kez

2008-07-16T23:38:00.004+12:00

Indonesia tumbuh kencang?

2008-07-05T11:18:00.019+12:00

picture's source >>>

Dari sisi luar negeri dan pasar modal, jangan lewatkan siaran kampanye Investasi di Indonesia di CNBC tanggal 14 Juli 08 waktu NZ via SkyTV. Lihat jadwal >>>

source >>>

CNBC and the Investment Coordinating Board (ICB) in Indonesia, announced a sponsorship of a special week of Squawk Box on the Road: Indonesia.

This campaign will feature CNBC’s signature show, Squawk Box, broadcasting live from Jakarta and Bali for the week of July 14, 2008. The program sponsorship will be complemented with a 2 month on-air advertising campaign.

CNBC links (updated):

Squawk on the Road: Indonesia
All this week, CNBC Asia's Squawk Box goes on the road in Indonesia. We'll be looking at issues including trade and investment, energy, and tourism. And we'll also be talking to the country's movers and shakers, asking them their take on where Indonesia is going and how it will get there.

Sovereignty of Indonesia's Economy

End of Fuel Hikes in Indonesia

IMF's View of Indonesia's Economy

Tackling Indonesia's Price Rises

Saya tertarik untuk mengobservasi apakah ada volatilitas indeks IHSG yang signifikan sebelum dan sesudah coverage dari CNBC itu dan apakah volatilitas tersebut bisa dikategorikan noise atau signal. Masalahnya, IDX belum banyak dimasuki global emerging fund portfolio karena mungkin lebih banyak noise daripada signal.

Dari sisi domestik dan pasar hutang, harga naik malah dijadikan kesempatan untuk peningkatan usaha tersebut. Kalau supply naik akhirnya toh harga turun juga, pendapatan pada akhirnya akan turun. Kalau suku bunga naik, pengembalian hutang modal kerja tentunya akan meningkat juga, biaya modal akan naik. Kalau pendapatan turun, biaya modal naik, perusahaan bisa merugi. Kalau tingkat kerugian sampai mengganggu arus kas, tentunya hutang modal kerja tidak bisa dikembalikan full atau paling tidak tepat waktu.

Kredit Bank Tumbuh Kencang
BI Rate Naik Menjadi 8,75 Persen
Jumat, 4 Juli 2008 | 00:57 WIB
sumber: kompas >>>

Di tengah tren kenaikan suku bunga, lonjakan harga komoditas, dan ketidakpastian pasar keuangan global, pertumbuhan kredit perbankan nasional justru bertambah kencang. Pertumbuhan kredit terutama dipicu oleh kebutuhan modal kerja yang meningkat di sektor pertambangan dan perkebunan.
............
Pertumbuhan kredit tersebut tercatat sebagai yang tercepat sejak masa krisis. Penyaluran kredit yang kencang itu justru terjadi di tengah tren kenaikan suku bunga dan lonjakan inflasi yang sejatinya merupakan faktor negatif bagi pertumbuhan kredit.
...........
Menurut dia, besarnya kucuran kredit saat ini dominan dipicu oleh maraknya kegiatan usaha di sektor-sektor berbasis sumber daya alam, seperti pertambangan dan minyak sawit (CPO) serta proyek infrastruktur yang mendapat jaminan pemerintah.

Usaha pertambangan, energi, dan pertanian marak karena harga produknya tengah meroket. Selain itu, sektor usaha mikro, kecil, dan menengah juga tumbuh kencang dipicu oleh adanya program kredit usaha rakyat yang mendapatkan jaminan pemerintah.

finally, the pregnant man has given birth

2008-07-04T22:14:00.009+12:00

if you have placed your bet on this before, i tell you the pregnant man has given birth to a baby girl...

from sky news >>>

picture file from times online >>>

Thomas Beatie, who lives as a male after undergoing surgery and hormone treatment, gave birth at a hospital in Oregon on June 29, according to People magazine.

Both he and the baby are said to be "healthy and doing well".

............

"The only thing different about me is that I can't breast-feed my baby. But a lot of mothers don't," People quoted Beatie as saying.

He has had his breasts surgically removed.

He said that the baby was not delivered by Caesarean section, but no other details about the birth have been confirmed.

............

some good memories

2008-07-03T08:12:00.008+12:00

with the Panggabeans and the Achmadis

with the Rahmadis, the Saragihs and the Kurniawans

with Richard, Alison, Kezia and Mum

with Atholl, Prof Leigh and Dawn

with Kezia and Nina

test vodcast St John

2008-06-15T18:57:00.006+12:00

from http://stjohnsinthecity.blogspot.com/

Rugby at Westpac Stadium

2008-05-04T01:42:00.022+12:00

I've never watched rugby live at the stadium before. But lucky me that ING (NZ) just gave me a chance to watch rugby at Westpac Stadium from its corporate box. So excited...

Aaron, a good guy (senior manager) from ING (wearing a black long sleeve in the photo below) invited me as a rep from Lyfords. The invitation was actually for Kirsty, but she couldn't come so I didn't waste the opportunity. Drink (wine, beer etc) and dinner (lamb stew I think) were provided before the game. Hmmm... nice. Thanks a lot, Aaron.

The ING corporate box consists of two parts: the lounge inside (with lounge set, dining table, bar, and of course a private toilet) and the 3-row balcony outside. The photos below were taken from outside.

The game was such an easy game for Hurricanes since Lions is apparently underdog.

Short clip

Happy Birthday to Me

2008-05-01T22:10:00.010+12:00

This morning just before going to work I was quite surprise finding that Nina and Kezia prepared a little celebration for my birthday. Thanks love.

Another suprise was when they both suddenly came up to the office. Kirsty actually had phoned Nina the day before asking her to come to the office around morning tea time as Alison and Richard had prepared a little party and a cake. Thanks for everything Alison, Richard and Kirsty.

I'm officially old, but relatively young. Relax...

"Pakatuan wo Pakalowiren to me"

CAPM return and cumulative data matter

2008-04-05T10:50:00.011+13:00

This story began when I wrote about benchmark issue in CAPM. Then, it continued with an Excel model for optimisation of shares or funds portfolio. The main problem defined in the model is to select shares and find the optimised asset allocation in a portfolio with three scenarios:

1. Assumed CAPM can't be applied and historical data is important therefore historical mean (average) return and standard deviation are used to simulate random return normal distribution and calculate Variance Covariance matrix.

2. Assumed CAPM can't be applied and cumulative data is important therefore projected mean (average) return and standard deviation are used to simulate random return normal distribution and calculate Variance Covariance matrix.

3. Assume CAPM can be applied and cumulative data is important therefore projected CAPM return and standard deviation are used to simulate random return normal distribution and calculate Variance Covariance matrix.

Starting by processing 13 NZ shares in the optimisation model with the three scenarios then applying the result of the share selection and the asset allocation into three passive portofolios, after one month holding period I found the return as follows:

Scenario 1 = -8.98%

Scenario 2 = -2.86%

Scenario 3 = +6.06%

I will update after 12 months.

Easter break day 2: Christchurch

2008-03-24T21:08:00.022+13:00

Christchurch name is taken from the Christ Church of the University of Oxford, which the building and rooms have been used for the Harry Porter movie set. It's such a religious name for a city. Does it represent the spirit of the city? the people?

After having breakfast at the motel, we started the day around 9 am headed to Christchurch Botanic Gardens. We parked our car at Armagh St car park. It's free admission. We spent an hour walking around the garden and taking photos. It's kind of quiet garden (early morning of course) with big trees and beautiful rose garden. Kezia picked up a flower that she is not supposed to do that in a city garden.

From Botanic Gardens, we continued to Antartic Centre, which is located next to the Airport. We paid $60 for 2 adults and Kezia is free. The most interesting experience was the little blue penguin watch. Kezia really enjoyed it as she was so close enough with the penguins unintendedly stepping out to the penguin area. Then, the chilling -5 degrees Celcius room and the experience of the Antartic Storm when the temperatur was reduced to -18! I also spent a moment looking at the Scott Base photos.

We left Antartic Centre going back to motel for having a quick lunch. After lunch, we went to the Cathedral Square. We parked our car somewhere on Worcester St CBD area. We found that the public toilet is a two level building with a sliding door at the entrance! We went into the Cathedral and coming to the prayer spot where Nina and Kezia were praying together. We then took the tram circling the city square. Kezia's stroller is put just in front of the tram. Around 3 pm, we stopped by a cafe inside the Cathedral Junction to have a Flat White and a Hot Chocolate. Nina bought some souvenirs at the shop next to the cafe. It's a good spot to take photos with a passing tram in the background.

Last place we visited was the Christchurch Gondola. We paid $60 for 2 adults including the tram ride before. The gondola ride is exactly the same with one in Rotorua so I wasn't really excited. Except for Kezia. At the top almost 500m above sea level, we could see the Christchurch City and Lyttleton Harbour and the Pacific Ocean. Because it's cloudy we couldn't see the Southern Alps.

The next day, Easter Sunday, we checked out around 5 am. I parked the car and returned the car key at the Avis counter. We flew back to Wellington with 7.15 flight.

Arriving at Wellington airport, we went to the long term car park using a free shuttle. We're back to our "blue car" as Kezia saying and "no more white car". We went straightaway to the market for Nina's shopping and then church for Easter Sunday service. In the afternoon, we have an Easter Dinner with Indonesians of our church.

HAPPY EASTER

Easter break day 1: Mt Cook

2008-03-24T17:33:00.052+13:00

We had a two-day break going to South Island, specifically to Mt Cook and Christchurch. In the midst of NZ recession outlook, we still however continued with our plan to have a costly holiday. Do we have to avoid that? No. We need to live our life to the full, yet with a help from one important economic tool, i.e., saving. Our next holiday should be Christmas considering that we need to save some money again after spending quite much on this Easter Holiday.

We started from home around 5 am on Good Friday to Wellington Airport and parked our car at the long term car park. It costs $41 for 2 nights. We booked the flight two months ago, so we could get the cheapest available fare from Air NZ. Our flight to Christchurch boarded on 6.30 am. The flying time from Wellington to Christchurch is normally 45 minutes. Kezia really enjoyed the flight.

Arriving at Christchurch Airport around 7.30 am, I then went to Avis Rental Cars counter to pick up the car key reserved and sign some papers. The base rental fee for 2 days is $110 ($55/day) plus airport fee $30. For the sake of "no-hassle trip", I also added a GPS costing $20 for 2 days ($10/day). Putting the GPS into practice, I could save lots of time wondering where to go using a map, particularly in the urban area. Bear in mind, I've never been in South Island or Christchurch before even after 8 years living in NZ.

Finding the car is a small nice new car (2007), we became overwhelmed since our car is 12 years older. I loaded all of our stuff in to the car including Kezia's carseat and stroller. Kezia seemed happy as she thought the white car was our new car. After setting the GPS, we drove to the City Worcester Motel to check-in. The motel is located in the city centre area and the rate is quite cheap compared to the other motels, costing $200 for 2 nights. It's clean but with old furniture. I met some Japanese and Dutch tourists staying next door and downstair.

After getting the room key, we straightaway drove to Lake Pukaki. I set the GPS to Lake Pukaki Visitor Centre. It's a 4 hours drive departing around 9 am and arriving at Pukaki around 13 pm. We then had our lunch there. Nina prepared nasi goreng and tuna croissant for our lunch. We spent time enjoying the scenery and taking photos.

We then decided to drive to Mt Cook village as it's not really part of the plan. But Alison, my boss, suggested me to visit Mt Cook because it's worth coming by after driving a long way from Christchurch. The route is a dead end road, easy drive as not so much traffic, the best scenic drive in NZ and it's only 30 minutes from Pukaki. We enjoyed the scenery of the green Lake Pukaki on the right, Ben Ohau Range on the left and The Southern Alps on the front. It's an amazing beautiful scene. Thanks Ally. A bit tear in my eyes for someone who had been waiting for 8 years to enjoy the beauty of South Island. Next tear would be Queenstown! (I have the plan in my mind and pocket)

After walking around the Mt Cook village and taking photos, we realised that The Church of Good Shepperd, Lake Tekapo, is our main plan. Then, we drove back to Lake Tekapo as we actually just passed through it on the way to Pukaki. The view from the church is amazing. The church has a glass window behind the altar so that the congregation can enjoy the scenery while having the service. We had a big while having a good time taking photos and lying down on the grass enjoying the scenery of the lake, Southern Alps and Two Thumb Range.

We left Lake Tekapo around 6 pm headed back to Christchurch. The next day we had our Christchurch time.

Good Friday is good, thank be to God for the safe flight and drive.

Top 10 Indonesian Managed Funds (Reksa Dana)

2008-03-14T19:06:00.010+13:00

"Reksa Dana or Reksadana" is an Indonesian term for managed funds. The total number of managed funds in Indonesia is 475. It's amazing! And, the highest real return is around 70%!! Seeing the high return of Indonesia market, who cares about standard deviation...

Fixed Income	168
Shares	58
Mixed	111
Money market	32
Protected	103
Index	1
Listed	2
TOTAL	475

TOP Performers as of 29 March 2008 (in %)

SHARES funds	(Rp)	30 days	1 year	1 year real
Makinta Mantap	3.713,76	-16.76	66.27	62.19
Fortis Ekuitas	9.005,18	-12.42	57.97	51.83
Pratama Saham	2.118,94	-13.2	52.08	50.57
Fortis Infrastruktur Plus	1.557,37	-11.64	54.2	49.29
Optima Saham	1.578,07	-8.16	53.57	48.3
Bahana Dana Prima	8.163,82	-12.05	51.93	47.44
Schroder Dana Istimewa	2.677,91	-8.53	46.77	46.04
Danareksa Mawar	4.715,90	-11.8	47.52	45.33
Mandiri Investa Atraktif	2.757,80	-13.65	46.86	45.21
Reksa Dana Dana Ekuitas Prima	2.320,73	-11.58	53.53	43.7

MIXED funds	(Rp)	30 days	1 year	1 year real
Prospera Balance	2.788,39	-11.37	59.5	53.25
Bahana Dana Infrastruktur	4.997,78	-11.91	56.33	51.71
Fortis Pesona	11.610,89	-11.24	50.22	46.87
TRIM Syariah Berimbang	1.441,77	-9.95	43.37	43.37
Mandiri Investa Syariah Berimbang	2.136,52	-4.25	44.52	41.65
Reksadana Mega Dana Syariah	1.533,92	-6.92	42.78	39.95
Star Balanced	1.778,10	-6.06	42.03	39.9
Danareksa Anggrek Fleksibel	1.895,27	-8.04	44.53	39.62
Schroder Dana Prestasi	12.447,40	-10.69	41.64	38.49
Mega Dana Campuran	1.538,57	-8.55	40.61	37.15

Which Market do you prefer?

2008-03-14T14:23:00.002+13:00

"IHSG" is the Jakarta Market. Isn't it way too high? The mean and also the stdev.

"NZXall" is the the good one I think. It has a considerably high mean and low stdev.

Weekend di Taupo

2008-03-10T17:59:00.000+13:00

Tulisan ini dikutip dari Keziawatch... ditulis oleh Nina.

Diajak sama keluarga Panggabean ke taupo yang kebetulan dapet jatah nempatin holiday home kantornya om Arthur. Gak cuma kita sekeluarga aja yang diajak, tapi keluarga Achmadi juga diajak. Jadilah 3 keluarga menghabiskan weekend sama-sama, makan minum sama-sama, barbeque sama-sama, gila juga sama-sama deh. ;p

Di Taupo selama 3 hari 2 malam, kita sempet ke Huka Falls dan The Honey hive, maksudnya sih nyoba madu gratis yang akhirnya gak nyoba madunya sama sekali tapi mommy & daddy malah nyobain Chocolate Mints dan Butterscotch-nya berkali-kali. Hahaha...suka atau doyan ? Abis enak rasanya seperti Baileys...finally Daddy beli butterscotch buat malamnya

sambil barbeque !!!

Cerita lainnya bisa diliat di blognya Tante Imelda dan blognya Tante Erika.

Ini beberapa photonya yang ada (baik dari cameranya tante erika atau dari camera kita sendiri) :

The Liandos, The Panggabeans, The Achmadis...

Mommy, daddy & kezia di tepi Huka Falls...

Kezia and Will....

Will, kezia and Nickolas di rumah lebah.....;p

Gak lupa bawa teleskop, hobby baru mommy & daddy....*_^

Sebelum pulang sempet kabur duluan dari 2 keluarga yang lain tuk nikmatin

Lake Taupo....dan photo-photo dong ;D

Mampir di Chateau Tongariro, Whakapapa tuk lunch...hmmm dah lama juga nih kita gak ke whakapapa, jadi kangen. Liat deh bagaimana borjunya makanan kita, setimpal dengan harganya. huahahaha....

Photo dulu di depan Chateau, sebelum lanjutin perjalanan....

Daddy sempet2nya photo sebelum nyetir lanjutin perjalanan....

Mampir ke Whanganui yang ternyata karena ada whanganui river-nya menjadikan mirip sekali dengan Hamilton (kota kesayangan kita) dengan Waikato river-nya....cuma kalo hamilton kota jauh lebih besar kali yee....

Pulang deh kerumah masing-masing....thanks a lot ya om Arthur udah ngajak kami walaupun cuaca kurang mendukung karena hujan dan adanya Triathlon tapi tidak mengurangi kebersamaan dan kekompakkan kita. Thanks guys for the lovely time....love you all ;D

US Recessions and the MSCI World Index

2008-02-24T21:29:00.002+13:00

Recent market talks are around the fears of recession in the US. Although finance is often considered as sort of an exact science, it however cannot avoid the influence of the state of anxiousness by market players and investors. That is why a behavioral finance matters and needs to be neutralised by showing the real facts in the financial markets and a good sense to answer if a US recession is really going to bring down the entire world financial market in the long term.

Periods of US recession and the definition

The state of US recession period is officially announced by the National Bureau of Economic Research (NBER). Since 1970 there have been 5 states of recession in the US, as follows :
• November 1973 to March 1975
• January 1980 to July 1980
• July 1981 to November 1982
• July 1990 to March 1991
• March 2001 to November 2001

The NBER defines that
“A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough. Between trough and peak, the economy is in an expansion. Expansion is the normal state of the economy; most recessions are brief and they have been rare in recent decades.”

The informal recession definition is a decline in the Gross Domestic Product (GDP) for two or more consecutive quarters.

Relationship between recession and stock market decline

There is a confusing logic in relationship between recession and stock market decline: does a recession cause a bearish market or the other way around? The exact answer is that the recession comes first and the bearish market after. In a recession, analysts would see the value of companies is declining therefore the stock prices may fall. However, some classic strategy suggests that investment in the consumables sector may be a recession-proof investment since people still buy those products, recession or not.

If the recession comes first and the bearish market after, how can we explain the states of US recession in July 1990 to March 1991 that came 3 years after the 87 crash? Many analysts argue that the Crash was mainly caused by a programmed trading system and psychology factor that beyond the economic factor of an exact finance. The “quants” (quantitative traders) who developed a computerised trading system that automatically created a sequence of selling positions might had been to blame, or it could had been the investors who were psychology weak and then fell into selling positions.

How strong is US recession influence on global market?

Another question to answer: does US recession strongly influence the global financial market, particularly Australia and NZ markets? It may not be. Asian countries like Japan, China, South Korea and others have been the dominant trading partners for Australia and therefore NZ for the last decade competing trading flows with the US. This recent economic decoupling theory may explain how US recession may be absorbed by growth in the competing countries (Asia) as maintaining trading flows with the third trading counterparts (Australia/NZ).

Some simple examples: the US recession may not affect New Zealanders to stop buying stuff from the Warehouse stores, but Americans to visit their Walmart stores. New Zealanders are not going to disconnect their Telecom line at home because of the US recession.

The recent subprime trouble in the US economy may be likely to influence ASX and NZX in terms of market psychology rather than concluding a good excuse and common sense that Australian and NZ companies should decline in value because of it. The fundamental assessment of companies’ value seems to be flawed in the short term.

Unfortunately, the recent January big drop in Asian and European markets is however breaking the belief of the decoupling theory. Investors and market players are then more aware of the true impact of US recession on the global financial market.

Market randomness over recession period

It seems some finance and economics theories try to explain and justify the prediction of world’s share market trend in the future. However, contradictions, unpleasant facts and non-economic factors may affect one’s prediction and there is only one underlying theory that can explain all this, i.e. randomness and stochastic.

Therefore, it is important to show some historical fact to see the ex post impact of US recession to the world financial market by taking a closer look at the historical data of popular benchmark of the world financial market, the MSCI World Index. The goal is to conclude that randomness in the share markets may be likely to drive the prices up in the long term regardless recession.

The conclusion of this can be easily understood by paying attention to the following chart, which show the period of US recession and the MSCI World Index. The fact is, in the time frames of 10-15 years the US recessions seems to have been driving the ex post movement of the world share market up. Therefore, recession is not a measure of uncertainty in stock market. Or, is it just because the market randomness factor always win over the recession factor?

1977 to 1987: two recessions and 280% return

A decade before the stock market crash of 1988, and despite the two recession periods were defined in 1980 and 1982, the MSCI had been dramatically increased by 280% return.

1987 to 1997: one recession and 135% return

After all, the MSCI index still increased by 135% despite the 1991 US recession was occurred.

1997 to 2007: one recession and 92% return

Regardless the Technology Crash 2000-2002 and the “War on Terror”, and despite the 2002 US recession, the MSCI index still increased by 92%.

The best example of the MSCI Index Fund managed in NZ is AMP Investments' World Index Fund (WiNZ)

Shaolin Monk Kungfu

2008-02-22T19:00:00.004+13:00

This group of monks is well-known as a kind of resistance for Chinese rulers in the past. Shaolin Monk Kungfu may have been considered as the origins of all martial-arts in China, Japan, Korea and South East Asia. A group of monk warriors with good martial-art skills may not be such an effective and efficient resistance these days. Why not start to teach them how to use pistol, machine gun, grenade launcher, anti-tank rifle, etc...? No! Peace man, Buddha bless you.

I took these pictures from their performance at Te Papa last week.

The Parables of Investment

2008-02-18T14:36:00.003+13:00

From an interesting paper:
The parables, premium puzzles, and the CAPM
by Hong-Jen Lin and David C. VanderLinden
(download)
image: One Year Bible Blog

Rate of return, risk free deposit, and equity premium

In Matthew 25: 14-30 (the Parable of the Talents), a master has given his three servants five talents, two talents and one talent of money, respectively. The first earns five more talents, the second earns two more talents, and the third earns nothing since he played it safe and buried all the money in the ground. The master commends the first and the second ‘‘Well done, good and faithful servants’’ (verses 21 and 25) but excoriates the third as a ‘‘wicked, lazy servant’’ (v. 26).

A key principle to this parable is risk-taking. The first two servants were willing to place at risk the endowment given to them, but the third servant was ‘‘afraid.’’ As interpreted by most commentators, the parable is an exhortation to take risks in using one’s gifts for the kingdom of God. Jesus indicates a reward for those willing to take risk, and punishment for the one who was too fearful (risk-averse).

Perhaps, we can also infer how the master evaluates performance of the investments by three servants. Why did the first and second servants receive the same praise and rewards? Both took risk and, while the absolute value of income differed, they both earned the same rate of return. In this case (but not for the Parable of the Ten Minas), the master gave them the same rewards. Proverbs 3:14 (in the Old Testament) also alludes to return: ‘‘for she (wisdom) is more profitable than silver and yields better returns than gold.’’ The concept of return appears in both the Old Testament and the New Testament.

Regarding the third servant, the master criticized, ‘‘you should have put my money on deposit with the bankers, so that I would have received it back with interest’’ (v. 27). Given the comment, we can surmise that the risk-free deposit market existed in Jesus’ era. The third servant is despised because he has earned zero return in investment, under the riskfree rate. Therefore, one can interpret the verse to mean that the master measures performance not just based on the rate of return but on the return rate in excess of the risk-free interest rate. This conforms to the formula of the Sharpe-Lintner CAPM:

ri – rf = Bi ( rm – rf )

where ri is the rate of return for asset i, rf is the risk-free deposit interest rate, and rm is the market return. Bi denotes the systematic risk. Both sides of equation are returns in excess of the risk-free deposit rate. In other words, the measurement of performance of investments is based on the rate of return in excess of the risk-free deposit rate.

A similar concept is found in the Parable of the Ten Minas (Luke 19: 11-23). However, in this parable, each servant is given one mina. The first servant invests it and returns ten minas to his master; the second invest the mina to return five minas; a third servant hides his mina in the ground because he is ‘‘afraid.’’ In the Parable of Ten Minas, the master rewarded the faithful servants by giving them authorities to rule cities; the first over ten cities, the second over five. That is, the ‘‘payoff’’ in the Parable of Ten Minas is much more than that in the Parable of Talents (as is the return), but it is proportional to the returns of each servant. Again, the criticism of the third servant’s inaction is still sharp.

The scripture seems to encourage investors to earn as much as possible. The master criticized the third servant because of his laziness. The laziness is simply caused by his fear of taking risk (v. 25). Therefore, according to the Parable of Talents, Christians are motivated to invest and accumulate wealth to glorify God. It seems that Jesus appreciates people who dare to take risk and grasp profitable opportunities. This is consistent with Solomon’s exhortation to enter into risky trade and ‘‘cast your bread upon the waters, for after many days you will find it again’’ (Ecclesiastes 11: 1). Consistent with Weber’s propositions, it may be that the financial markets have been influenced at least indirectly by these principles. That is, religious teachings can change people’s mindset and then motivate them to invest and to fully utilize the financial resources they have. As a result, financial markets are formed, which increases general wealth. The prosperity of financial markets further inspires researchers in forming financial theories such as the CAPM. A possible relationship among the biblical teachings, financial markets, and financial theories is illustrated in Figure 1.

Avariant of the CAPM is the consumption CAPM, in which investors hold wealth to allow consumption. Thus, the expected return on an asset should be related to how the asset’s returns vary with consumption. Mehra and Prescott (1985) found that the historical equity risk premium (the rate of return on stocks over and above the return on a risk-free rate) was too high for ‘‘reasonable’’ levels of risk aversion. Termed the ‘‘equity premium puzzle,’’ this finding has stirred numerous unsuccessful attempts to explain the puzzle. One possibility is that investors have diverse preferences or beliefs (rather than those of a representative individual as usually assumed). In both the Parable of the Talents and the Ten Minas, one investor either was too risk-averse to invest or had different payoff expectations such that he was unwilling to invest. Perhaps these parables offer an avenue of explanation for the equity premium puzzle.

According to Benartzi and Thaler (1995), when investors are myopic-loss-averse, the return on equity must be large enough to attract them to buy stocks. We can also observe from the Parable of Talents that the third servant is myopic-loss-averse. In other words, the third servant ignores upcoming rewards he might earn. His fear of loss is much more than the joy of gain. Therefore, the equity premium is a must to draw investors like him to invest in risky assets.

One final note on equities is in order. Because the master strongly motivates the servants to invest by authorizing them to rule over cities (i.e. have ownership of productive assets), this kind of teaching could be viewed as encouraging Christian investors to hold equities, as the light shed by Weber (1930).

In the field of corporate finance, equity holders may pass up profitable (i.e. positive net present value) investments when debt holders may get most of the benefits of the projects. That is, equity holders may tend to under invest when they realize that their gains in the new projects are limited (see Grinblatt and Titman, 2002, p. 563). In the Parable of Talents, similarly, the third servant may think that the master will get most of benefits so he is reluctant to invest. Actually, he really under invests: invests into the ground!

To sum up, conceivably these parables could help to explain the equity premium puzzle in asset pricing and the under investment problem in corporate finance. Teachings based on the parables may shape the behavior of people especially when these biblical teachings have already become a part of the system in a country.

Dulu, saya ingin jadi Akademisi

2008-02-13T18:52:00.003+13:00

Crickey!
Ternyata di database katalog website perpustakaan Universitas Atma Jaya www.atmalib.com ditemukan hasil tulisan saya.

Detail tulisan ini bisa dilihat di sini.

Analisis Deskriminan Sebagai Metode Alternatif dalam Menilai Kinerja Keuangan Perusahaan
Oleh: Djuanda, Gustian ; Liando, Jeffry Merril
Jenis: Article from Journal - ilmiah nasional - terakreditasi DIKTI
Dalam koleksi: Widya: Majalah Ilmiah vol. XVI no. 166 (1999), page 40.
Topik: analisis deskriminan; kinerja keuangan

>>> Download full text >>>

Sebenarnya judul aslinya "Analisis Diskriminan" bukan "Deskriminan", mungkin yang benar memang "deskriminan". Analisis Deskriminan (Discriminant Analysis) adalah metode pertama dan utama yang menarik perhatian saya saat itu.

Hal ini mengingatkan bagaimana saya sebenarnya ingin menjadi seorang Akademisi saat itu. Waktu itu masih ada Kopertis dan Majalah Widya dimiliki Kopertis, jadi menulis di situ akan menambah poin tersendiri untuk Akademisi swasta. Gustian Djuanda adalah dosen pembimbing saya, orangnya baik, rendah hati dan sangat pintar. Dia ahli pajak dan pernah berjuang di Mahkamah Konstitusi untuk keberatannya terhadap UU Pajak. Saya sempat diberikan kesempatan menjadi asisten dan berbicara di depan kelasnya saat itu.

Masa itu tahun 98-99, sebelum saya bekerja di salah satu pabrik di Balaraja sebagai Akuntan Manajemen. Waktu berjalan, begitu banyak jalan yang telah saya lalui sampai akhirnya sekarang saya menetap di NZ.

My new baby: Silver Fern

2008-01-21T15:23:00.000+13:00

Just a little gardening as today is a Wellington holiday.

Silver Fern (Cyathea Dealbata)

How social is Anymatters?

2008-01-21T14:31:00.000+13:00

Instead of personal webpages like: Keziana.com, KeziaWatch, MasakanNina, KezianaGallery, Anymatters, Anymatters Photoblog, FinMod, and AstraWatch, Anymatters has also helped out some friends to create their own webpages:

KBMIH (Indonesian Society of Hamilton NZ)
sma12.org (High school reunion)
OukyShow.com (Jakarta based professional dancers)
CoreMakeup.com (Wellington based hair and makeup artist)

Holiday pics

2008-01-04T10:17:00.000+13:00

I go back to work on Monday the 7th. This holiday season we just spent our time in NZ, instead of visiting our family in Jakarta and Manado like we did last year.

Update: yes, we've been enjoying our summer mainly at beaches around Wellington: Oriental Bay, Breaker Bay and Scorching Bay.

A noisy market siren

2008-01-04T10:04:00.001+13:00

The idea is to automatically activate a noisy siren from a sound file when opening the excel file as the market index value drops to, or is below, the minimum expected value. The market index value is refreshed every 30 minutes.

Eg. the index value alert is 4,300. If the market index value is below 4,300, the noisy siren will be automatically activated.

I first set a WebQuery for the market index latest price with automatic refresh every 30 minutes. Then, apply VBA macro to call a sound file.

I modified the VBA codes taken from ExcelTip.com and J-Walk.com as follows:

Public Declare Function sndPlaySound Lib "winmm.dll" _
Alias "sndPlaySoundA" (ByVal lpszSoundName As String, _
ByVal uFlags As Long) As Long
-------------------
Sub PlayWavFile(WavFileName As String, Wait As Boolean)

If Dir(WavFileName) = "" Then Exit Sub
If Wait Then
sndPlaySound WavFileName, 0
Else
sndPlaySound WavFileName, 1
End If

End Sub
-----------------------------
Sub PlaySoundAlert()

For i = 1 To 5

PlayWavFile "c:\WINDOWS\Media\notify.wav", True

Next i

End Sub
-----------------------------
Function Alarm(V)

x = Range("alert")

If V <= x Then

Call PlaySoundAlert

Alarm = True
Exit Function
Else
Alarm = False

End If

End Function

VBA Progress Indicator

2008-01-04T10:02:00.000+13:00

I learn how to create an VBA progress indicator from j-walk blog after surfing around and finally found the simplest one.

And now I can apply it into my portfolio optimisation model, as follows:

Sub optimise()

Dim PctDone As Single

Application.ScreenUpdating = False

nosim = Range("nosim")

For i = 1 To nosim

Application.DisplayStatusBar = True
Application.StatusBar = "Please be patient..."

Range("simulation").Copy
Range("simmeanresult").Cells(71 + i, 1).PasteSpecial Paste:=xlPasteValues

Count = Count + 1
PctDone = Count / nosim

With UserForm1
.FrameProgress.Caption = Format(PctDone, "0%")
.LabelProgress.Width = PctDone * (.FrameProgress.Width - 10)
End With

DoEvents

Next i

Unload UserForm1

Application.StatusBar = False

SolverOk SetCell:=Range("tangency"), MaxMinVal:=1, ValueOf:=0, ByChange:=Range("proweight")
SolverAdd CellRef:=Range("proweight"), Relation:=3, FormulaText:="0"
SolverAdd CellRef:=Range("one"), Relation:=2, FormulaText:="100%"
SolverSolve UserFinish:=True

Application.ScreenUpdating = True

End Sub

Selected works from Keziana.com

2008-01-04T09:55:00.000+13:00

Today is Kezia's birthday and Keziana Financial Modelling website (Keziana.com) is launched. Here some selected works from it.

Dow Jones Index in the future

2008-01-04T09:41:00.000+13:00

Happy New Year 2008. Wishing you a prosperous year of 2008 and years after.

I was again playing with random numbers simulation and found everlasting properous years of Dow Jones Index in the future.

Bear in mind, this is just a rough simulation played to get rid of boredness in the first day of 2008.

The process is as follows:

Gather Dow Jones Index daily prices since 1-Oct-1928 and calculate the mean and standard deviation.
Using NORMINV(rand(), cumulative mean, cumulative stdev), simulate the daily return.
Using Price n * (1 + simulated daily return), estimate Price until n equals to 1-Jan-2100.

That's it. Easy.

Lotto generator

2008-01-02T15:01:00.001+13:00

This lotto generator might not explain how I was so lucky two years ago. At least, randomness may still explain how people could win a lotto.

The process of this lotto generator:

1. Running a set of Monte Carlo simulations for getting 6 numbers from 1 to 40 randomly.
2. Calculating the probability statistics from the simulations.
3. Incorporating the historical statistics since the 1st draw until the latest one.
3. Picking up the highest probability numbers.

Springboks won RWC 2007

2007-10-21T13:57:00.000+13:00

Springboks (South Africa), which represent the southern hemisphere rugby, won RWC 2007 after beating England (15-6). But no tries.

Springboks 15
Tries: 0
Conversion: 0
Penalty: 5 x 3 = 15 (Montgomery, Steyn)
Drop goal: 0

England 6
Tries: 0
Conversion: 0
Penalty: 2 x 3 = 6 (Wilkinson)
Drop goal: 0

By the way, this is how Habana is in training.

Happy 20th Anniversary !

2007-10-19T11:21:00.000+13:00

Happy 20th Anniversary of Stock Market Crash 1997

In financial markets, Black Monday is the name given to Monday, October 19, 1987, when the Dow Jones Industrial Average (DJIA) dropped by 508 points to 1739 (22.6%),[1] and on which similar enormous drops occurred across the world. By the end of October, stock markets in Hong Kong had fallen 45.8%, Australia 41.8%, Spain 31%, the United Kingdom 26.4%, the United States 22.68%, and Canada 22.5%. (The terms Black Monday and Black Tuesday are also applied to October 28 and 29, 1929, which occurred after Black Thursday on October 24, which started the Stock Market Crash of 1929.)
(read more)

France forward passing !!!

2007-10-11T17:38:00.000+13:00

link >>>

It's not easy

2007-10-09T23:46:00.000+13:00

I admit the fact that it's not easy to forget and accept the All Blacks lost. Until now. In the bus, on the street, in the city, I can see faces with all the regrets.

For the last couple days, the city has not been as usual. It seems not so many people are going to work. Is it the national mourning period for NZ? Does the national productivity really drop in response to the lost of the All Blacks as suggested before?

To be honest, I'm not really a NZer but I had been following the 2004 RWC and am now the 2007. Since rugby is the national sport and the All Blacks team is the national icon, we eventually go along with them and the society in general. Assimilation I suppose.

Since last month, we (I & her) have been trying to stay awake until late night or wake up early in the morning only for watching All Blacks matches in pool stage. I'm okay but I feel something's just not right.

Cricket lost in semi-final from Sri Lanka, America's Cup lost in final from Swiss and now Rugby lost in quarter-final from France.

Perhaps, Netball win in final can pay everything.

In 2011, Kiwi will win all the games! God bless.

France won

2007-10-07T09:48:00.000+13:00

All Blacks didn't go to semi final for the first time in the history.

All Blacks (13) 18
Try: 10 - McAlister, So'oialo
Penalty: 6 - Carter
Conversion: 2 - Carter

France (3) 20
Try: 10 - Dusautoir, Jauzion
Penalty: 6 - Beauxis
Conversion: 4 - Beauxis, Elissalde

That's okay, the history doesn't stop now.

Go All Blacks!!!

Quarter Final RWC 2007 - All Blacks vs France

2007-10-06T17:10:00.000+13:00

Second thing this weekend.

It seems I'm okay with my basic rugby passing practice by now even just using Kezia's doll as the ball :) Now I'm ready to bet for the quarter final. No kidding, she will never permit me.

But anyway let's look at the quarter final match (knockout stage) schedule:

Quarter finals
Sat 06 Oct, 15:00 (NZ time: Sun 07, 02:00) Australia - England
Sat 06 Oct, 21:00 (NZ time: Sun 07, 08:00) All Blacks - France
Sun 07 Oct, 15:00 (NZ time: Mon 08, 02:00) South Africa - Fiji
Sun 07 Oct, 21:00 (NZ time: Mon 08, 08:00) Argentina - Scotland

I'd better sleep now for midnite going out with friends watching rugby at a sport bar (having a few stubbies of course). No I'm not serious, she won't permit me. I'll stay on the bed watching the match with her as she likes it eventually and leave the monday match for replay viewing.

Okay, now the facts of NZ (All Blacks) vs France in Rugby World Cup history.

1. France beat the All Blacks once in the 99 semi final, but the All Blacks beat France many times.
2. The All Blacks always went to semi final.

Head-to-head statistics All Blacks vs France in all matches since 1903:

Played: 45 times
All Blacks won: 34 times
France won: 11 times
Draw: 1 time

The facts of Australia (Wallabies) vs England match:
1. I don't really care actually at the moment.
2. Although England beat the Wallabies in the 2003 final, but until this moment England has shown very bad performance particularly got 0-36 vs the Springbroks (South Africa) in the pool stage.

Update Wallabies vs England: 10 - 12
England 12
Penalty goals: Wilkinson 4

Australia 10
Try: Tuqiri
Conversion: Mortlock
Penalty goal: Mortlock

No tries from England but she won!

Confident and Arrogant

2007-09-29T13:52:00.000+12:00

This is a clone of a nice article written by Jennie ("Be one in a million, not of a million")

...

In certain cultures, acknowledging how special we are is oftentimes considered pompous and arrogant. There is, on the other hand, a thin line between being “confident” and being “arrogant.” In most Asian countries, it is always preferred to keep a low-key profile and not to outshine others. There is an Indonesian adage that says, “The higher you have become, the more you need to bow down.”

Sure, it makes a lot of sense because there is no doubt humility will go a long way, even in this highly wired modern world. Still, many people misunderstood it as “lowering ourselves as low as others or lower than others, so we do not threaten other people by being ourselves.” That is a total misconception.

The fine line between being “confident” and being “arrogant” is an awareness of self and how one relates to the environment. A confident person accepts accolades with grace, strives to better themselves and their surroundings with dignified efforts. They do not take things, either tangible or intangible, from others. They know where they stand and how to get where they are heading in life. An arrogant person behaves differently: they do not accept things with grace, even take things that do not belong to them, and tend to belittle others in order to elevate themselves.

One thing that we should not forget as special beings is that we are all born with multiple intelligences. According to Howard Gardner, there are at least eleven types of intelligence:

1. Linguistic intelligence
2. Logical-mathematical intelligence
3. Spatial intelligence
4. Bodily-kinesthetic intelligence
5. Musical intelligence
6. Naturalistic intelligence
7. Interpersonal intelligence
8. Intrapersonal intelligence
9. Spiritual intelligence
10. Existential intelligence
11. Moral intelligence

What we need to be aware here is that everybody has a concoction of special intelligences. We all have our strong and weak traits. Simply do not focus on what you do not have, but instead hone whatever you have at hand. I personally prefer, however, focusing on what I can do best because that is my “niche” in the world. Whatever is easy for me might not be that easy for other people, which is awesome.

....

(read more)

Konstruksi portfolio reksa dana Indonesia

2007-09-28T22:03:00.000+12:00

Cuma suatu usulan.

Suatu portfolio investasi dapat direalisasikan cukup dengan menggabungkan beberapa reksa dana ke dlm suatu portfolio setting yang dikonstruksikan sesuai dengan risk profile investor. Logikanya adalah reksa dana itu sendiri sudah merupakan suatu portfolio terdiri dari beberapa saham dan/atau obligasi.

Kelemahan reksa dana di Indonesia adalah pengkategoriannya yang masih umum sbb: reksa dana saham, fixed income, campuran, pasar uang dan indeks. Idealnya bagi investor di Indonesia, mereka paling tidak harus mampu membedakan reksa dana mana yang berada dlm konteks Indonesia, negara2 berkembang lainnya dan negara2 maju spt Australia, US, Jepang dan US. Pasar modal tiap negara atau regional pada kenyataannya memiliki tingkat return dan risiko yang berbeda. Dengan demikian, konstruksi portfolio bisa dibangun sesuai dengan profil risiko masing2 klien.

Risk profile seorang investor dapat dikategorikan sbb: defensive, conservative, balanced, growth dan aggressive. Sementara pembagian kelas asset dapat dipisahakan menjadi income asset dan growth asset. Income asset terdiri dari cash dan fixed income (obligasi). Growth asset terdiri dari: property dan shares (saham).

Berkaitan dengan profil risiko, biasanya orang muda memiliki risk profile growth dan aggressive dan orang tua cenderung balanced, conservative dan defensive. Rangka waktu (jangka pendek atau jangka panjang), toleransi return dan tujuan keuangan juga menentukan risk profile seseorang.

Ringkasan kategori asset dalam portfolio yang disusun berdasarkan tingkat return dan risiko adalah sbb:

Income asset:
1. cash: deposito US Dollar
2. cash: deposito Rupiah
3. reksa dana fixed income negara maju: Australia, US, Eropa, Japan, Singapore, HK
4. reksa dana fixed income Asia: China, Taiwan, Korea, Malaysia
5. reksa dana fixed income Indonesia

Growth asset:
6. reksa dana properti Indonesia
7. reksa dana saham negara maju: Australia, US, Eropa, Japan, Singapore, HK
8. reksa dana saham Asia: China, Taiwan Korea, Malaysia
9. reksa dana saham Indonesia

Reksa dana 9 menunjukkan investasi yang paling tinggi tingkat risikonya, tapi paling tinggi juga tingkat returnnya. Pembagian ini mungkin akan didukung para ekonom krn memang kenyataannya demikian. Investasi property di Indonesia mungkin bisa didebatkan lebih berisiko dari pada investasi saham negara maju.

Untuk penyelidikan lebih lanjut, silakan kunjungi website MSCI-Barra untuk melihat tingkat return per negara atau regional.

Usulan konstruksi portfolio

Usulan konstruksi portfolio ini dibuat berdasarkan pengalokasian strategis (strategic asset allocation) dan masih dapat dimodifikasi dalam pengalokasian teknis (technical asset allocation) sesuai dengan kondisi pasar modal domestik dan internasional serta kecenderungan kurs Rupiah terhadap mata uang asing.

Defensive Portfolio

Income asset: 90%
1. deposito USD = 5%
2. deposito IDR = 5%
3. RD fixed income negara maju = 40%
4. RD fixed income Asia = 20%
5. RD fixed income Indonesia = 20%

Growth asset: 10%
6. RD properti Indonesia = 5%
7. RD saham negara maju = 5%
8. RD saham Asia = 0%
9. RD saham Indonesia = 0%

Conservative Portfolio

Income asset: 70%
1. deposito USD = 3%
2. deposito IDR = 2%
3. RD fixed income negara maju = 25%
4. RD fixed income Asia = 20%
5. RD fixed income Indonesia = 20%

Growth asset: 30%
6. RD properti Indonesia = 10%
7. RD saham negara maju = 10%
8. RD saham Asia = 5%
9. RD saham Indonesia = 5%

Balanced Portfolio

Income asset: 50%
1. deposito USD = 0%
2. deposito IDR = 5%
3. RD fixed income negara maju = 15%
4. RD fixed income Asia = 15%
5. RD fixed income Indonesia = 15%

Growth asset: 50%
6. RD properti Indonesia = 10%
7. RD saham negara maju = 20%
8. RD saham Asia = 10%
9. RD saham Indonesia = 10%

Growth Portfolio

Income asset: 30%
1. deposito USD = 0%
2. deposito IDR = 5%
3. RD fixed income negara maju = 5%
4. RD fixed income Asia = 5%
5. RD fixed income Indonesia = 15%

Growth asset: 70%
6. RD properti Indonesia = 15%
7. RD saham negara maju = 15%
8. RD saham Asia = 15%
9. RD saham Indonesia = 25%

Aggressive Portfolio

Income asset: 10%
1. deposito USD = 0%
2. deposito IDR = 0%
3. RD fixed income negara maju = 0%
4. RD fixed income Asia = 5%
5. RD fixed income Indonesia = 5%

Growth asset: 90%
6. RD properti Indonesia = 15%
7. RD saham negara maju = 20%
8. RD saham Asia = 25%
9. RD saham Indonesia = 30%

Ketersediaan reksa dana macam ini

Mungkin ketersediaan reksa dana macam ini masih menjadi isu utama di bisnis reksa dana Indonesia. Namun, saya yakin peningkatan pengetahuan investasi kelas menengah Indonesia akan mendorong manajer investasi yang berdomisili di Indonesia untuk menciptakan produk reksa dana yang lebih kreatif dan menunjang pembentukan model portfolio di masa mendatang.

Daftar lengkap reksa dana Indonesia dapat ditemui di website Bapepam.

Update 1

Baru mendapat konfirmasi dari John D Item, CFA bahwa:

Industri reksadana saat ini hanya boleh investasi instrumen luar negeri maksimum 15% dari total portofolio. Oleh karena itu, penggunaan reksadana lokal untuk analisa alokasi aset domestik maupun internasional saat ini belum relevan.

Kalau begitu, kreatifitas manajer investasi lokal masih terbatas dan reksa dana asing (yang dikelola manajer investasi Singapore misalnya) mungkin masih belum boleh dijual di Indonesia.

Hal ini memberi kesan bahwa portfolio investasi reksa dana di Indonesia pada dasarnya aggressive, atau paling tidak growth atau balanced. Bagaimana nasib para orang tua dengan portfolio defensive atau conservative?

Update 2

Ada pertanyaan kritis yg bagus dari Bahar, Indonesian hedge fund manager yg berdomisili di Singapur, di blog-nya. Kenapa di blog-nya? Krn saya me-link post ini ke comment-nya. Fair enough :)

Pertanyaannya:

Angka2 yang muncul di ” konstruksi portfolio RD Indonesia” berdasarkan apa bung Anymatters? Some Markowitz based optimisation?

Jawaban saya:

thanks bung iHedge. keliatannya Prof Roger Ibbotson dr Morningstar yg mengembangkan model alokasi aset itu msh berkiblat ke teori Markowitz deh.

angka2 itu saya ambil dr model portfolio-nya Morningstar NZ yg didistribusikan ke fin adviser (maaf hasil risetnya tdk bisa dishare) dan saya modifikasi sendiri sesuai dgn situasi Indonesia. dimana komponen asset class-nya saya rate berdasarkan tingkat return indeks per negara/regional di website MSCI-Barra.

proporsi asset class antara income-growth menggunakan alokasi aset strategik (blm taktikal), yaitu defensive (90-10), conservative (70-30), balanced (50-50), growth (30-70) dan aggressive (30-70).

mengenai produk2 apa saja dlm komponen asset class tsb, saya belum bisa recommend. mungkin nanti kalo pulang ke Jkt, bisa buat ide usaha :)

tapi kalo ada waktu, saya mau riset produk2 RD yg di-archive di website Bapepam. kalo ada waktu.

mungkin Morningstar Singapore sdh watch RD Indonesia dan memiliki konstruksi model portfolio RD di Indonesia. cek aja, alamatnya 80 Raffles Place, Level 35, Unit 35-06, 048624 UOB Plaza 1, Singapore, +65 6530 6402.

Perhitungan premi asuransi yang sophisticated

2007-09-28T08:28:00.000+12:00

Screenshot di atas adalah contoh perhitungan premi asuransi jiwa dari sebuah perusahaan asuransi global yang bekedudukan di NZ. Tiap perusahaan asuransi jiwa di sini menyediakan quotation software yang didistribusikan ke financial adviser dan di-update tiap semester atau triwulan.

Perhitungan premi di Indonesia saya lihat terlalu sederhana dan terpaket sehingga nasabah tidak dapat menikmati manfaat asuransi secara purpose-driven dan membandingkan preminya dengan perusahaan2 asuransi lain.

Kenapa perusahaan asuransi di Indonesia tidak menyewa programmer membangun software semacam ini? Nasabah tentu akan merasa puas apabila perhitungan premi lebih transparan. Kelihatannya bisnis asuransi di Indonesia belum dijalankan sebagaimana mestinya

Input paling penting selain nama lengkap adalah tanggal lahir (umur), jenis kelamin, status perokok dan jenis pekerjaan. Karena input ini menjadi variable2 utama dalam penentuan premi.

Asuransi jiwa biasanya terbagi 4 macam: proteksi jiwa, proteksi trauma (critical care), proteksi kecacatan dan proteksi pendapatan.

Proteksi Jiwa (life protection)

Sum insured atau jumlah pertanggungan boleh ditentukan oleh nasabah sendiri. Makin besar jumlahnya, jelas makin besarlah preminya. Tipe premium bisa stepped (bertahap) atau level (rata). Stepped premium maksudnya preminya bertambah tiap tahunnya krn umur bertambah sementara level premium itu diratakan. Level biasanya lebih besar dr stepped. Kalo ditik CPI (inflasi) berarti jumlah pertanggungan akan di-index sesuai inflasi di masa depan.

Proteksi Trauma (critical care)

Trauma atau critical care adalah pertanggungan lump-sum yang diberikan sekaligus kalau nasabah sakit berat tapi tidak sampai meninggal, seperti kena kanker, serangan jantung atau stroke. Bukan medical insurance (asuransi kesehatan) loh, krn itu digunakan untuk membayar biaya pengobatan dan rumah sakit sementara proteksi trauma diberikan begitu saja tanpa mempersoalkan untuk diapakan uangnya. Contohnya, seorang klien yang baru terkena stroke menggunakan klaim dari asuransi kesehatan untuk membayar biaya perawatan dan rumah sakit sementara menggunakan klaim dari proteksi trauma untuk jalan2 ke luar negeri dan/atau membeli kapal boat.

Proteksi Kecacatan (total and permanent disability/TPD)

Sama dengan proteksi trauma dibayar lump-sum, tapi nasabah tersebut dalam hal ini mengalami cacat tubuh atau sesuatu hal yang membuat dia tidak mampu melakukan aktifitas dan pekerjaan seperti biasanya. Ada dua pilihan type TPD: any occupation (pekerjaan apa saja) dan own occupation (pekerjaan sendiri). Contoh any occupation adalah Ahmad seorang pilot pesawat tapi setelah cacat berubah profesi jadi guru teori pilot, sementara dalam own occupation dia harus tetap menjadi pilot. Premi any occupation lebih murah dari own occupation.

Proteksi Pendapatan (income protection/IP)

Sama seperti TPD, tapi yang ini berkaitan dengan tingkat gaji dan dibayar secara regular. Hitungan standardnya adalah biaya pertanggungan = 75% dari gaji yang biasa diterima. Waiting period 4 minggu artinya nasabah harus menunggu 4 minggu setelah gajinya terhenti sebelum dia mendapat tanggungan proteksi pendapatan. Premi tentunya akan lebih murah jika waiting periodnya 8 minggu, makin lama tunggunya makin murah preminya.

Financial adviser yang baik

Seorang financial adviser yang baik akan menyarankan proteksi yang mana saja yang perlu diambil oleh seeorang klien sesuai dengan situasi keuangan dan kebutuhan masing2. Bahkan, seorang adviser akan meng-quote dari 2 atau 3 perusahaan asuransi yang memiliki rating paling tidak A- untuk perbandingan dan mengambil yang paling cost-effective (murah) untuk disarankan ke klien. Jadi ada kemungkinan proteksi2 tersebut terbagi di dua perush asuransi yang berlainan.

Untuk melihat perbanding premi antara laki-laki dan perempuan dengan tingkat umur yang berbeda silakan baca "Male, smoker and older matter".

Bulan January nanti saya akan me-launch website untuk financial modelling yang mungkin issue asuransi akan juga dicover.

The Smartest Province of Indonesia

2007-09-23T22:47:00.001+12:00

After winning the legitimate local own statutes, now she becomes the smartest province of the Republic of Indonesia.

Why other provinces can't follow this?

source from BKPM >>>

George Soros to invest in oil palm sector in Aceh

Andi Haswidi, The Jakarta Post, Jakarta

One of the world's best-known fund managers, George Soros, plans to invest in the oil palm plantation sector in Nanggroe Aceh Darussalam, its governor, Irwandi Yusuf, said Thursday after meeting with Soros in New York recently.

"He said that he was interested in developing an oil palm plantation of about 20,000 hectares during the first stage. This kind of investment could feed around 2,500 families in Aceh," Irwandi said as reported Thursday by Antara.

The governor could not put a precise figure on the investment, or the likely timeframe. However, he promised that his administration would work hard to help Soros realize the plan.

Basic Passing in Rugby

2007-09-21T03:13:00.000+12:00

As copied from BBC Sport

The more relaxed you are when you catch and pass the ball, the easier the next pass becomes.

STEP ONE

Your number one aim is to pass for the player, rather than at the player.

Hold the ball in two hands with your fingers spread across the seam, with your chest facing forward.

STEP TWO

Sight your target.

Draw the ball back across one hip, keeping your elbows slightly bent, as you turn your chest away from the target.

Sweep the ball off your hip as you swing your hands through an arc, keeping your elbows close to your body.

STEP THREE

Release the ball with a flick of the wrists and fingers.

Follow through with your fingers pointing to the target - chest high in front of the receiver.

Bom chicka wah wah

2007-09-16T19:50:00.000+12:00

This AXE or LYNX ad is taken from here.

Btw, I'm not sure if the other short versions of AXE/LYNX commercials are actually played in Indonesia. Here's some YouTube links: BCWW-dad, BCWW-supermarket guy, BCWW-dentist, BCWW-student.

The meaning as quoted from the urban dictionary:

Onimonapia (meaning word that is spelled like a sound) that is supposed to stand for 70's guitar Porn-riff. Usually this is the music that came on when the action was just about to get started. It has been used in a subcultural context to denote any porn-like or pornified situation.

Being a sound, it could also be spelled several different ways such as: Bow Chicka Bow Wow, Bow Chicka Wow Wow, Wakka Chikka Wakka Chikka, etc.

Your friend picks up an extra large sausage. This is a great time to sing Bom Chicka Wah Wah.

You see a hot guy/girl that you could imagine yourself in a porn with. Also a good time to sing Bom Chicka Wah Wah.

Another version, Dj Smiths Vs. Markanera (Feat. Dundika)

Yeah, it's Hungary.

Desired weekend

2007-09-15T02:50:00.000+12:00

Friday evening, with friends playing pool and having Steinlager stubbies.

Saturday morning, going to city center with family, brunch with big breakfast and Flat White.
Saturday afternoon, lawn mowing.
Saturday evening, family dinner-out. Back home, with wife having Pinot Noir, assumed our Kezia slept already.
Saturday late evening, watching All Blacks in Rugby World Cup or any other interesting matches. Steinlager or Pinot Noir is optional.

Sunday morning, church.
Sunday afternoon, at home, barbeque lunch at the backyard and playing with Kezia. Blogging is optional. Flat White is optional.
Sunday evening, watching a couple of DVDs. Steinlager or Pinot Noir is optional.

So, it's about Flat White, Pinot Noir and Steinlager.

supposed to be a photo: a narcist show

2007-08-31T20:08:00.000+12:00

It was supposed to be a photograph taken by my coworker, but she took a wrong setting in the camera and it turned out to be a movie.

What a long "cheese", isn't it?

"...it's saying recording..."

Next Coupon Date: IF THEN Formula

2007-08-20T20:49:00.000+12:00

This was actually a simple problem in semi-annual coupon bond pricing when I was asked to determine the next coupon/interest date after the settlement date. I just needed to use my common sense to find the date from the maturity date.

If the maturity date is 15-Jul-08 and the coupon is paid semi-annually, then the coupon dates are 15-Jan and 15-Jul (6 month difference) ignoring the year. If the settlement date is 16-Oct-07, then the next date after 16-Oct-07 between 15-Jul and 15-Jan should be 15-Jan-08. It's easy!

However, Excel and Visual Basic never consider my common sense to work just like that. There is always a formula or function need to be developed. Surprisingly, using the arithmetical date formula, I came up with the longest if then formula I've ever made. That's crazy as I couldn't find the simpler one.

Finally, I found this bloody Excel formula:

=IF(AND(B3>DATE(YEAR(B3),MONTH(F3)+6,DAY(F3)),DATE(YEAR(B3),MONTH
(F3)+6,DAY(F3))>DATE(YEAR(B3),MONTH(F3),DAY(F3))),DATE(YEAR(B3)+1,
MONTH(F3),DAY(F3)),IF(AND(B3<DATE(YEAR(B3),MONTH(F3),DAY(F3)),
DATE(YEAR(B3),MONTH(F3),DAY(F3))<DATE(YEAR(B3),MONTH(F3)+6,DAY(F3))),
DATE(YEAR(B3),MONTH(F3),DAY(F3)),DATE(YEAR(B3),MONTH(F3)+6,DAY(F3))))

And this is the easy way of how you look at the formula:

IF(
AND(B3>DATE(YEAR(B3),MONTH(F3)+6,DAY(F3)),
DATE(YEAR(B3),MONTH(F3)+6,DAY(F3))>DATE(YEAR(B3),MONTH(F3),DAY(F3))),

=> if Settlement Date > first Coupon Date > second Coupon Date

DATE(YEAR(B3)+1,MONTH(F3),DAY(F3)),
=> next coupon date

IF(
AND(B3<DATE(YEAR(B3),MONTH(F3),DAY(F3)),
DATE(YEAR(B3),MONTH(F3),DAY(F3))<DATE(YEAR(B3),MONTH(F3)+6,DAY(F3))),

=> if Settlement Date < first Coupon Date < second Coupon Date

DATE(YEAR(B3),MONTH(F3),DAY(F3)),
=> next coupon date

Else,
=> if first Coupon Date < Settlement Date < second Coupon Date

DATE(YEAR(B3),MONTH(F3)+6,DAY(F3))))
=> next coupon date

Bear in mind that 15-Jul-07 is the first coupon date and 15-Jan-08 is the second coupon date and the settlement date 16-Oct-07 is between both dates, therefore the next coupon date is DATE(YEAR(B3),MONTH(F3)+6,DAY(F3)), which is on 15-Jan-08.

If you want to be spoiled by Excel, there is actually a formula already provided: COUPNCD(settlement,maturity,frequency,basis).
I just wanted to be a dumb person who had been trying to figure out this IF THEN formula.

Dirgahayu RI - Djakarta is Coming

2007-08-17T17:12:00.000+12:00

Nothing particular, just wanna show how strong our country is therefore some intelligence uses those words to threaten a status quo.

"Dirgahayu Republik Indonesia", hopefully "Djakarta is not coming yet".

note: I got the words after watching "Spooks". Try the games.

Test Flash

2007-08-10T13:40:00.000+12:00

UK pension transfer to NZ

2007-07-30T12:18:00.000+12:00

TO
Some of this blog's readers may be from UK and intend to move to NZ for a new job and life. Or, may already in NZ but leaving a pension behind in UK.

Here some reasons for transferring your UK pension to NZ:

Enables you to keep track of your pension plan and gain more control of your funds without affecting their earning power. You won't need to be concerned whether the fund is merging, closing or going out of existence. From April 2006 simplification rules will come into effect, new investment rules will soon be effective enabling a much wider range of permitted investment.
You may be able to transfer your British pension to New Zealand and access up to 25% of the value immediately. This will be dependent on the specific requirements of your UK Pension plan.
You no longer need worry about exchange rate fluctuations affecting your pension payouts.
You will not be paying bank fees for each transfer (may be as a high as 18 pounds per transfer)
You will have more information and control on the companies holding your retirement savings.
Easier to access your money in retirement.
If you die with a UK pension scheme your spouse can get up to 2/3 of the pension you would have received. If you both die your pension dies with you, however, If you both die leaving qualifying dependent children , your UK pension could continue for as long as you fulfil the schemes eligibility criteria. With New Zealand superannuation plans all of your remaining investment becomes part of your estate and is passed on to your children, heirs.

Visit this link for more information about UK pension transfer to NZ.

US Market will continue to drop, whatsoever

2007-07-29T21:10:00.000+12:00

This week (ended 27/07/07) was the worst weekly drop in the US market since 2002, yet as MarketWatch covers it will continue to drop.

Stocks stumbled over the past week, with the Dow Jones Industrial Average losing 4.2% on the week after experiencing two successive sell-off sessions -- 312 points on Thursday, and 208 points on Friday. That was the worst week for the Dow since March 2003, and it ended up leaving the blue-chip average down 1% for the month so far, just one week after it closed above 14,000 for the first time. The Dow still sits on a gain of 6.4% for the year. The S&P 500 Index plunged 5% on the week and the Nasdaq Composite Index lost 4.6%.

But stocks will remain vulnerable to any new signs of distress from hedge funds hit by their exposure to bad U.S. home loans, as well as from credit markets, where Wall Street firms and corporations are finding it harder and harder to obtain financing.
(Read more)

Alpha Trends covers more specifically in an in-depth technical analysis as can be seen in this video analysis.

Some of my notes:

Credit derivatives played by hedge funds have come to the stage that everyone is supposed to worry. A bad credit is not something to bet on.

The US market is a venue for global players or investors as part of their international equity portfolios. Sooner or later, it will spread to other bourses. Strategic and tactical allocation for a growth or aggresive portfolio must be rebalanced, or shifting to a balanced or conservative portfolio for the time being.

GDP rise is an economic sign and has nothing to do with the market sentiment. Last week drop proved it to be so, GDP rises but stockmarket drops. Credit can be so leveraged and multiplied by risky derivatives plays and may outpace GDP. Boom!

Moreover, one can acquire a huge position in stocks only because some investment banks provide the ~~funds~~ loans.

~~If technical analysis says a down trend, just sell-sell-sell. That's what it wants. Don't think and let's join the party. (sorry, i mean, the volatility).~~

Dynamic Beta Calculation

2007-06-18T14:19:00.001+12:00

Assume CAPM is applicable and works empirically without any doubt in the theory, we can then calculate a stock Beta dynamically over time as it represents the updated historical stock prices from the latest price. Hence, the stock Beta changes over time.

Please download this excel file: BetaCalc.xls and enable macro as it contains some VBA codes to run the automation of the beta calculation.

This spreadsheet consists of 3 worksheets that dynamically calculates the beta of Astra stock returns (ASII.JK) against the Jakarta Composite index returns (^JKSE) as being updated over time by clicking the "Update" buttons. Thus, we can get the latest Beta of Astra stock.

The first worksheet is JKSE sheet that contains the recent updated market prices and the second one is ASII sheet for the recent updated stock prices. In these two sheets, there are two "Update" buttons that allow us to update the recent prices from web query and to record the recent prices into the Beta sheet (third worksheet).

The stock Beta is then calculated by simply finding the slope between the periodical stock (x axis) and market (y axis) returns.

Gaza Strip and West Bank: there's no such a thing as a power sharing

2007-06-18T11:55:00.000+12:00

Any winning revolution or liberation may end up to a power sharing between the elements in the movement. The one ultimate goal is now divided into some separate goals of the elements. Such power sharing will never happen whatsoever.

As we know Palestinian National Authority (PNA) consists of the area of Gaza Strip and West Bank. For many years prior to its independence, Hamas had been figthing for Gaza Strip while Fatah under Palestine Liberation Organisation (PLO) had been figthing for West Bank. Today, Hamas dominant force is centered in Gaza Strip and Fatah dominant force is centered in West Bank.

Fighting between Fatah and Hamas has occured several times since PNA independence. The last result could be concluded that if Hamas might establish a new Gaza Strip government, Fatah might then establish a new West Bank government.

Since independence in March 2003, PNA has 5 prime ministers, 3 from Fatah, 1 appointed from Hamas, after it won a democratic legislative election in Jan 2006, and the latest PM is from the Third Way, the unity of Fatah-Hamas government, appointed 3 days ago 15 Jun 2007.

Assume there's no such a thing as a power sharing government, Palestinian National Authority (PNA) might be divided into two states of one Palestinian nation: Gaza Strip State and West Bank State.

Web design: speed, valid, simple and creative

2007-06-10T15:00:00.000+12:00

Web designing is fun and this weekend I managed to redesign my blog considering factors of speed, valid, simple and creative.

Speed. I managed to speed up my home page until 8.15 seconds for 56Kbps connection and 2.94 seconds for 1.44Mbps connection according to the report from WebsiteOptimization.com. I've reduced some images and optimised some CSS and XHTML scripts. What is your speed?

Valid. Optimising some scripts, this web page is however still valid CSS and valid XHTML. There are some many scripts can be used to create a website, but only some scripts are actually valid, including one to embed a flash file (.swf) into a web page.

Simple. I managed to include only important hyperlink texts in the web page and let visitors' curiosity goes from there. Post entries and related images are the result and consequence of clicking that come after the simplicity and for the completion to satisfy the curiosity.

Creative. Inspired by emergy-C, I still keep the option of low energy colour to view my web pages. The idea is to reduce electricity power.

I really want to reduce the download time to 5 seconds for 56Kbps and 2 second for 1.44Mbps if it's possible.

Unlimited Joost Invites

2007-06-10T13:30:00.000+12:00

Of the 900 Joost invites last month, I've sent to everyone who wants it based on the comments or by emailing me directly. I've also sent to some people I chose for introduction. Up until now, I've sent around 100 invites.

Now, I have unlimited Joost invites. I thought Joost will go public anytime soon, but it hasn't. Thus, if you can afford the bandwidth cost for Joost please put your name (first, last) and email in the comment and I will send the invites. Cheers.

===

Joost is pronounced as "juiced" but it's also a common Dutch name pronounced "Yost".

Everyone is the winner

2007-06-09T14:56:00.000+12:00

Sejahtera Manufacturing has a project valued Rp1 billion with Rp300 million expected return and then borrows from IndoBank.

Sejahtera's Rp1 billion loan at Rp150 million interest to IndoBank is protected with Rp100 million from Suwito Corp for a maximum Rp500 million default.

There's no reason for IndoBank to not give the loan to Sejahtera Manufacturing since its profit is still Rp50 million after the protection cost.

Suwito expects that the default may not be more than Rp 100 million so that he can profit from the protection revenue. As he worries, he then buy protection from Buyung Corp at Rp20 million for a maximum Rp100 million default. Suwito can now secure his income from the Rp100 million protection paid by IndoBank.

We can say that Buyung may be the loser because he needs to cover Rp100 million if Sejahtera defaults while only receiving Rp20 million from Suwito.

The secret of this transaction is that Buyung Corp has already owned a majority of Sejahtera's shares and bet on Sejahtera's prospect that could achieve at least Rp200 million return. Paying Rp150 million interest to IndoBank and receiving Rp20 million protection plus Rp200 million return, Buyung and Sejahtera still pocket Rp70 million net profit.

Every transaction is based on the perceptions of the probability and likelihood of default among the players.

IndoBank's perception is a default by Rp500 million that needs to be protected with Rp100 million. Suwito's perception is a default by Rp100 million that needs to be protected with Rp20 million. Meanwhile, Buyung has no perception of default at all since he knows the situation of the project.

Buyung must have a larger size of business in order to help Sejahtera’s project from default. This kind of help usually comes when the project is already underway and seems to have some issue but still prospective.

Who is the biggest winner here? IndoBank gets Rp50 million, Buyung and Sejahtera share Rp70 million and Suwito collects Rp100 million, so Suwito is the biggest winner.

Why is that? The first bettor on uncertainty normally enjoys the biggest return.

In the future: Cibeureum

2007-06-02T10:22:00.000+12:00

In 2050 Indonesia becomes a strong ultra-nationalist country. The people, coming from different backgrounds of different islands and different places in Asia, have been assimilated into one official culture and language, i.e. Indonesia. While China is isolated in the mainland, all area and islands surrounding it including Hong Kong, Taiwan and South-East Asia receive politic and economic directives from the United Nations of Indonesia (UNI).

The economy has grown rapidly with a strategy of maximum borrowings for high-tech development projects collateralised by all possible natural resources. Indonesia becomes the first technology provider country followed by the US, Japan, China, India and EU. The secret is that the capital cost is the lowest one among those countries.

In politics, the representative system has been abolished and turned into a direct executive board elected through a personalised qualification rating system. This rating system is a computerised system from a database that stores all historical data of an individual relating to his or her contribution to the country and state. The highest one becomes the chairman of the board.

Years prior to the fall of the United Nations in 2045, there are eight main groups in the world: The America (US, Canada and Latino), The Europe (EU, UK and Russia), The Sushi (Japan and Korea), The Old Man (Africa and Middle East), The Mongol (China) and The Moghul (from Iran, India to Bangladesh), The Pacific (Australia, New Zealand and Pacific Islands including Hawaii) and The UNI. Since the Treaty of Nuclear Non-proliferation has not been recognised, there is no alliance formed among these groups.

In 17 August 2050, nuclear bombs are dropped in five main cities of the UNI, in Jakarta, Makassar, Singapore, Bangkok and Hong Kong. News and information networks are cut off while there's no electricity almost everywhere. The flow of refugees comes from those main cities to the area surrounding. While the UNI officials assumed death, no one of the people knows what happened.

People are wondering who has been dropping the nuclear bombs. Is it the Mongol, The Sushi, The Moghul or The Pacific? Could it be The America, The Europe or The Old Man? What is happening with the UNI military? Do they surrender?

A group of people in a village called Cibeureum think the same way. They have no idea with what happened with the current blackout and no tv or internet receipts. Before the bombing, this village is a peaceful place set with a combination of beautiful nature and high technology. There is no crime occurred in this village. This village becomes a sough-after retirement place for some smart people.

Cibeureum is one of the high-tech villages in Indonesia. One retired computer genius named Sangaji managed to establish an internet connection directly to the satellite and tell about all information and news he can get to his friends Bayu, a retired government official, and Hartono, a retired army general.

The story is that the bombs are dropped by the alliance of The Mongol and The Pacific with a new high-tech rocket that cannot be detected with sonar and satellite detectors. One source confirms that this is not an alliance attack but rather than a cooperative attact for a mutual benefit resulted from the attack considering that The Indo is located between them. Also in the news, the other groups won’t involve in this issue as to avoid a further confrontation. The UNI nuclear launch centres have been paralysed by locking in the launch code with a high-tech decoding system developed by The Mongol and The Pacific. The UNI has no power to do anything to counterattack.

However, there is one demand to end this war. The demand is that The UNI has to mobilise its skilled workers to The Mongol and The Pacific industry site. [I think they just want to beat The UNI in terms of a cheaper capital cost.] Finally, the day after the bombing, The UNI government has ordered to the military to go to all area of The UNI to pick up some skilled workers to be sent to The Mongol and The Pacific, including Cibeureum.

Cibeureum village is a small village but it has a school called Cibeureum School of Technology (CST) found by Sangaji, Bayu and Hartono (SBH). The students’ skill is above the national average. SBH start to worry about this matter. They are fully nationalists and will never send the students outside the country. Assuming that they have no power to hold the military force entering their village, they plan to set something great.

They choose 100 excellent students and implant a microchip into an individual’s brain with help from Gerhana, a retired surgeon, who is Bayu’s sister. The microchip stores data of how one must act in the future and an anti-electromagnetic pulse. The message in the microchip is to reset everything the workers have made during the time of their works. Thus, there is no value added for the enemy in using the workers. SBH assume that if they can reset the technology in one country while they can move on, they can counterattack in the future.

In 2060, ten years after the bombing, The UNI attacks back The Mongol and The Pacific. The UNI does not attack with nuclear bombs but instead with electromagnetic pulse bombs that attack people's brain. The electromagnetic pulse has paralysed almost all people’s brains of The Mongol and The Pacific. Seeing the success of this counterattack, The UNI continues to attack the other five groups, including The America, The Europe, The Old Man, The Sushi and The Moghul with the goal of achieving supremacy in the world.

The rest of the world has a brain dead unless the people of The United Nations of Indonesia. However, the bombs work in males' brains so that the war leaves the females for future breeding.

Global Peace Index

2007-06-01T01:59:00.000+12:00

See the full ranking
See the methodology
See the drivers of peace

I'm feeling great and peace seeing this index.

About:

The Global Peace Index aims to:
- Highlight to the general population the relative position of nations’ and regions’ peacefulness;
- Catalyse philanthropic support for further research of peace and funding of peace initiatives;
- Serve as a foundation for primary, secondary and tertiary educational study;
- Emphasise the need for governments to consider the drivers of peace in policy decisions.

The Global Peace Index has been developed in conjunction with:
- The Economist Intelligence Unit
- an international panel of peace experts from Peace Institutes and Think Tanks
- the Centre for Peace and Conflict Studies, University of Sydney, Australia

Benchmark Issue in CAPM

2007-05-30T20:41:00.000+12:00

If you have to see these indices: American DJIA and SnP 500, England FTSE 100, French CAC 40, German DAX, Japanese Nikkei 225 or Chinese Hang Seng Index, as your benchmark, please don't!!!

Capital Asset Pricing Model (CAPM) has been widely used for finding a suitable required rate of return of a share or portfolio. However, the assumption of using a major share market index as the benchmark becomes an issue.

CAPM and efficient portfolio

CAPM assumes that a major stock index can be used as a benchmark to determine risk premium and beta for calculating the required rate of return of a stock. The formulae can be shown as follows, Rs = Rf + Beta ( Rm – Rf ), or by noticing the future expectation as this: E(Rs) = Rf + Beta ( E(Rm) – Rf ). To see the relationship between share and market returns, it can be formulated as follows: E(Rs) – Rf = Beta ( E(Rm) – Rf ).

The benchmark index assumed in the CAPM is promoted as the market proxy of the efficient portfolio of risky assets. The benchmark index is then set artificially to be a manifestation of a whole market reflecting the acceptable portfolio chosen by investors within the efficient frontier. Markowitz (1952)[1] suggests that rational investors would choose minimum risk and maximum return in diversification and with any combination of weight the optimal portfolio lies on the efficient frontier.

This is such an excellent portfolio theory so that Sharpe (1964)[2], Lintner (1965)[3] and Mossin (1966)[4] further modelled it to include the risk free rate. As the efficient frontier only includes the portfolio of risky assets, a risk free asset with a zero risk return can be combined with risky assets added to the efficient portfolio and investors can then go beyond the frontier by borrowing and lending at risk free rate. A capital market line that used to linearly predict the market return can be drawn by lining up a point of a portfolio with only risk free rate to the other point that touches the efficient frontier, known as a tangency portfolio. The tangency portfolio explains that investors separate their decisions in investing and financing the investment as suggested by Tobin (1958)[5].

In a sense of linear prediction of an individual share return, CAPM is then modelled with a security market line, in which a share’s rate of return can be predicted given the market return, risk free rate and beta. The line is plotted by the expected rate of return of a share with its beta to the market return. The issue of benchmark index can be seen at this point. If there is a benchmark error, CAPM cannot estimate the correct beta and risk premium properly thus cannot calculated the expected rate of share return correctly.

Benchmark error

Benchmark error using CAPM for evaluating portfolio performance according to Ross (1980,1981)[6] can be seen in two ways when the market index produces an incorrect beta for the share and when it produces incorrect estimation for the market premium optimised to the risk free rate (see figure 1 and 2). The problem is not due to statistical variation but rather to the cause that the market index is not a good predictor of mean/variance efficient portfolio.

Figure-1. Incorrect beta

Figure-2. Incorrect market premium

A further study by Green (1986)[7] shows that benchmark errors are continuous behaviour and different for different indexes, thus, share or portfolio performance is sensitive to the choice of benchmark for the market index. We may now say that as beta assumed equals to one, the expected rate of return should be higher as we choose any benchmark that produces a higher market risk premium, and lower for any benchmark that produces a lower premium.

Benchmark errors are also considered in the context of global investment. Reilly and Akhtar (1995)[8] found that there is a variation of beta when using a domestic index, global index or a diversified global stock and bond portfolio. The beta of domestic equity index is lower than the world equity index and much larger for the diversified global stock and bond portfolio.

Market proxy, beta and risk premium problems

The root of benchmark error was based fundamentally on Roll’s critique (1977)[9] that found that market index is efficient per se, not for the individual shares or portfolios. Ross (1978)[10] also added that market proxy is not ex ante mean-variance efficient and individual preference in portfolio selection may be judged with a different market index and then will be penalised by share’s beta according to the different market index. Roll and Ross (1994)[11] found that the market proxy may be located within 22 bps below the efficient frontier (Figure-3).

Figure-3. Market proxy and efficient frontier

Using the true market proxy of the value weighted portfolios of all US shares, Fama and French (2004)[12] tested CAPM by plotting the annualised monthly return and beta of every stock in NYSE, AMEX and NASDAQ from 1928 to 2003 and to be compared to the returns predicted with CAPM. The result is telling us further problem other than benchmark error and market proxy problem, that is, beta inconsistency.

Figure-4. Beta inconsistency.

Figure-4 shows an inconsistency of beta in CAPM. Low beta shares that are predicted to have low returns are in fact too high whereas high beta shares that are predicted to have high returns are in fact too low, as seemingly the line rotates.

The inconsistency of beta was identified a decade before by Fama and French (1992)[13] as suggested a three-factor model by adding size and book to market ratio (B/M) to CAPM. They concluded that value shares with high dividend yield, high B/M, low P/E tend to have bigger expected return than growth shares with low dividend yield, low B/M, high P/E.

Again using the true market proxy and the three-factor CAPM, Fama and French (2006)[14] tested whether the value premium exists in CAPM pricing. The result is rejecting CAPM pricing for portfolio based on size, B/M and beta as concluding that size and B/M, not beta, reward the expected return. The evidence shows that expected return does not compensate beta variation unrelated with size and B/M for both small stocks and big stocks. We may say that if CAPM is fine a good benchmark index should contain both small stocks and big stocks.

Alpha

Market proxy distortion opens an opportunity to have a better portfolio performance than the market itself which was earlier suggested by Jensen (1969)[15] with alpha as a performance indicator: Alpha = Rs - Rf + Beta ( Rm – Rf). However, one can say that even a passive portfolio can beat the benchmark. Bowden (2000)[16] further argued that alpha relates to market timing and cannot be observed by conventional performance measures and suggested ordered mean difference (OMO) as an alternative measure, which is a function of a running mean of the difference between asset/portfolio and benchmark returns that is ordered by values of the benchmark.

Recently, Fama and French (2006)[17] discussed about a portable alpha as a way to add a portfolio consisting risk free rate and index funds with an additional hedge position that generates alpha. Moreover, an alternative indexing has been suggested by Arnott (2005)[18] in fundamental indexation to solve the distortion in value weighted index with some alternative weighting constraints, such as book value, cash flow, revenues, gross sales, gross dividend and total employment.

Conclusion

CAPM assumes a major share market index as the best market proxy for efficient portfolio to predict the required rate of return. Despite the good theory background of mean (return) – variance (risk) efficient portfolio, the linear CAPM prediction using such proxy could be far from the reality of historical returns. As Fama and French (2004, p.44) suggested, "But we also warn students that despite its seductive simplicity, the CAPM’s empirical problems probably invalidate its use in applications".

Hey, this is from the father of market efficiency.

----------
References

[1] Markowitz, Harry. (1952). Portfolio selection. Journal of Finance, Mar 1952, Vol. 7 Issue 1, p77-91.

[2] Sharpe, William F. (1964). Capital asset prices: a theory of market equilibrium under conditions of risk. Journal of Finance, Sep 1964, Vol. 19 Issue 3, p425-442.

[3] Lintner, John. (1965). The valuation of risk assets and the selection of risky investments in stock portfolios and capital budgets. Review of Economics & Statistics, Feb 1965, Vol. 47 Issue 1, p13-37.

[4] Mossin, Jan. (1966). Equlibrium in a capital asset market. Econometrica, Oct 1966, Vol. 34 Issue 4, p768-783.

[5] Tobin, James (1958). Liquidity preference as behaviour towards risk. The Review of Economic Studies, Vol. 25, No. 2, p65-86.

[6] Roll, Richard. (1980). Performance evaluation and benchmark errors (I). Journal of Portfolio Management, Summer 1980, Vol. 6 Issue 4, p7-14.

Roll, Richard. (1981). Performance evaluation and benchmark errors (II). Journal of Portfolio Management, Winter 1981, Vol. 7 Issue 2, p17-22.

[7] Green, Richard C. (1986). Benchmark Portfolio Inefficiency and Deviations from the Security Market Line. Journal of Finance, Jun 1986, Vol. 41 Issue 2, p295-312.

[8] Reilly, Frank K and Rashid A Akhtar. (1995). The benchmark error problem with global capital markets. Journal of Portfolio Management, Fall 1995, Vol. 22 Issue 1, p33-50.

[9] Roll, Richard. (1977). A critique of the asset pricing theory's tests: part I: on past and potential testability of the theory. Journal of Financial Economics, Mar 1977, Vol. 4 Issue 2, p129-176.

[10] Ross, Stephen A. (1978). The Current Status of the Capital Asset Pricing Model (CAPM). Journal of Finance, Jun 1978, Vol. 33, Issue 3, p885-901.

[11] Roll, Richard and Stephen A Ross. (1994). On the cross-sectional relation between expected returns and betas. Journal of Finance, Mar 1994, Vol. 49 Issue 1, p101-121.

[12] Fama, Eugene F and Kenneth R French. (2004). The capital asset pricing model: theory and evidence. Journal of Economic Perspectives, Summer 2004, Vol. 18 Issue 3, p25-46.

[13] Fama, Eugene F and Kenneth R French. (1992). The Cross-Section of Expected Stock Returns. By: Journal of Finance, Jun 1992, Vol. 47 Issue 2, p427-465.

[14] Fama, Eugene F and Kenneth R French. (2006). The Value Premium and the CAPM. Journal of Finance, Oct 2006, Vol. 61 Issue 5, p2163-2185.

[15] Jensen, Michael C. (1969). Risk, the pricing of capital assets, and the evaluation of investment portfolios. Journal of Business, Apr 1969, Vol. 42 Issue 2, p167-247.

[16] Bowden, Roger and Jennifer Zhu. (2005). Kiwicap: an introduction to New Zealand capital markets. (2nd ed.). Wellington: Kiwicap Education.

[17] Fama, Eugene F and Kenneth R French. (2006). Tilted Portfolios, Hedge Funds, and Portable Alpha. Chicago GSB Magazine, Winter 2007.

[18] Arnott, Robert D, Jason Hsu and Philip Moore. (2005). Fundamental Indexation. Financial Analysts Journal, Mar/Apr 2005, Vol. 61 Issue 2, p83-99.

Credit Derivatives played by Hedge Funds

2007-05-29T20:50:00.000+12:00

There have been some big changes in market environment after LTCM collapse as more hedge funds have been entering credit derivatives market. From the above facts, it can be noted some failures on credit derivatives, such as LTCM with total return swaps, Aman Capital with leveraged credit derivatives and Marin Capital with synthetic CDO. It seems LTCM has been the pioneer of hedge funds involvement in credit derivatives market and some hedge may have seen the opportunity to gain big returns assuming that their bet would never go wrong like LTCM’s bet.

In spite of Warren Buffet’s opinion in 2003 that credit derivatives are “financial weapons of mass destruction”, players in capital market continue to use credit derivatives for speculating and hedging purposes. The general argument is that credit derivatives provide more liquidity for credit markets other than from financial institution’s funding and also provide higher returns than the original securities or assets. Hedge funds with their investors’ funds can be seen as the sources of credit liquidity. Here it can be seen that even in a nature of retail funding a hedge fund may access the wholesale credit market due to the advantage of high leverage.

Figure-1. Players of Credit Derivatives [4]

In has previously been mentioned that total assets under management of hedge funds is estimated more than US$2 trillion in 2006. If the involvement of hedge funds is about 30% average between buyers and sellers (see figure-1) and the total market volume of credit derivatives is estimated US$20 trillion in 2006 (see figure-2), it can be projected that US$6 trillion of credit derivatives market is managed by hedge funds. If say 20% of hedge funds or US$400 billion assets played in credit derivatives, this may suggest that there is a 1:15 leverage applied by hedge funds with assumption that the 30% average hedge funds consists of offsetting long and short strategy. If it is assumed that hedge funds overall may have stand-alone strategies as buyers and sellers and the involvement becomes 60%, then it can be projected about US$12 trillion of credit derivatives market is managed by hedge funds with 1:30 leverage in trading. For example, a hedge fund selling a credit default swap (CDS) of a US$15 million loan value for US$1 million premium would have to face maximum US$15 million claim. If selling US$2 million mezzanine notes of a synthetic collateralised debt obligation (CDO) of two CDSs above, a hedge fund would have to face maximum US$30 million claim.

The market volume of credit derivatives have shown a figure of exponential growth from 1996 to estimated 2008. From just US$0.2 trillion in 1996, it has been growing gradually to US$2 trillion in 2002 until rapidly jumping to US$5 million in 2004 and estimated to grow exponentially to US$20.2 trillion in 2006 and further to US$33.1 trillion until 2008. The size in 2006 is around 1.5 times annual nominal US GDP. However, this cannot be compared explicitly as there are factors of leverage and multiplier in credit derivatives that may bias the perception of the real volume of credit market and money circulation in the context of macro and monetary economy. The main driving factor of credit derivatives is in fact governments who sponsor the development in the countries that use alternatives of liquid funds available other than those in financial institutions and can be explored outside the countries. Hedge funds all over the world are one of the liquidity providers for credit derivatives market even though some tend to deal with a lot of speculations.

Figure-2. Market volumes credit derivatives (US$ trillion) [source]

(Synthetic) Collateralised Debt Obligation (CDO)

A CDO is a derivative resulted from a securitisation process of a portfolio of loans or bonds which is being sold by a lender or issuer to a Special Purpose Entity (SPE) who then issues securities in the form of notes collateralised by the portfolio of bonds or loans. A synthetic CDO refers to a portfolio of CDSs.

The notes issued by an SPE are structured with different payoffs and prices based on the credit qualities of the underlying portfolio to give investors choices to invest in different risk profiles. By structuring a CDO, SPE can enhance the quality of a portfolio with mainly speculated grade loans or bonds by issuing notes with higher credit qualities. In an arbitrage CDO, the notes are usually priced over the yield of the underlying bonds or loans for SPE to gain. For example if the average yield of the bonds portfolio is LIBOR+5%, the CDO may be priced on average at LIBOR+6%, thus the PV of bonds portfolio is higher than the CDO. By purchasing CDO notes, investors may enjoy the advantage of higher expected return even without having the original assets. Despite there are complicated mathematical techniques for structuring and pricing CDO notes, a simple hypothetical example of an arbitrage CDO can be described as follows.

Structuring an arbitrage CDO and hedge funds’ play

The underlying portfolio of $100 bonds matured in 2 years with $10 expected default consists of:
- $10 rating C bonds with expected return LIBOR+4%.
- $10 rating B bonds with expected return LIBOR+2%.
- $30 rating A bonds with expected return LIBOR+1%.
- $50 rating A+ bonds with expected return LIBOR+0.5%.

The notes issued in different tranches:
- Equity tranche: $10 note unrated at LIBOR+5% p.a.
- Mezzanine tranche: $10 note for rating B at LIBOR+3% p.a.
- Mezzanine tranche: $30 note for rating A at LIBOR+2% p.a.
- Senior tranche: $50 note rating A+ LIBOR+1% p.a.

With this simple structure assuming LIBOR is 4%, SPE may expect the net present value between the bonds portfolio and the CDO’s tranches are still positive as the average rate of return of the bonds portfolio is lower the average cost of capital of the CDO tranches.

Buyers of the equity tranche may enjoy the highest return of 9% followed by mezzanine and senior tranches. However in default event of $10, equity tranche buyers may not receive back the $10 investment but senior and mezzanine tranches are still repaid. In default of $4, equity notes receive only $6 of $10 investment. Equity tranche buyers expose to default risk.

Sellers of equity tranche pay 9% or $0.9 but the $10 investment received from buyers would not be repaid if the portfolio defaults by $10. It means that only with $0.9 sellers can generate $10. Meanwhile, by selling mezzanine and senior tranches at the existing notes’ rate, sellers expect the rate will drop so that they can buy back and profit. But they may lose if the rate rises.

The most popular position played by hedge funds is long equity tranche and short mezzanine or senior tranche. The advantage of this position is that hedge funds can enjoy the high return from buying equity tranche by selling mezzanine or senior tranche with smaller cost. For example at LIBOR equal to 4%, a hedge fund receives $0.9 (9%) from long equity and pays $0.6 (6%) for short mezzanine rating B note, earning $0.3. If LIBOR rises to 6%, a hedge fund closes it positions and pays $1.2 for equity and receives $0.8 from mezzanine, costing $0.3. If the proportion of mezzanine tranche is bigger the equity, a hedge fund can profit if LIBOR increases. If the proportion of mezzanine tranche is smaller the equity, a hedge fund can enjoy the spread assuming LIBOR decreases or at least does not move. However, this position is still risky. Marin Capital in June 2005 held $500 million long equity position and $1 billion short mezzanine position betting on General Motors (GM) outlook. When GM was rated down to speculative grade, the equity and mezzanine tranches were repriced downward and Marin ended up with an enormous loss.

How CDO helps private equity’s LBO and attracts hedge funds investment can be seen in figure-3 regarding the tranches financing structure of a target company’s debt. By investing in equity tranche, private equity funds may enjoy the highest returns while banks and CLO may enjoy higher returns rather from investing directly to the company. In CLO is the portfolio of CDOs from several private equity’s LBO. Hedge funds and mezzanine funds are the way to hedge position in the equity tranche.

Figure-3. Tranches financing structure of private equity’s LBO [1]

The first CDO hedge fund was launched by Ferrell Capital Management in 2001 when issued US$50 million of unrated junior notes which were based on the performance of a group of hedge funds. Then JPMorgan structured out hedge fund-of-funds CDOs for Grosvenor Capital Management and Ivy Asset Management. In Europe, Deutsche Bank financed CDO for Prime Edge private equity funds transactions. Credit Suisse First Boston structured out deal for US$500 million hedge fund-of-fund CDO deal for the Bahrain-based Invest Corp. Seemingly, the CDO is structured out of hedge funds of funds, which are normally held by major investment banks. [2]

In May 2007 Merrill Lynch and Credit Agricole Asset Management launched a new type of CDO called the collateralised foreign exchange obligation (CFXO).[3] If the product is successful in market it would be the first CFXO that may be followed naturally by other CFXOs. The underlying portfolio is made up of about 10 foreign exchange pairs combining the currencies of the Group of 10 developed countries with a number of emerging market currencies. The AAA-rated tranche is to pay 80 bps - 100 bps in coupons while the riskiest equity tranche is expected to return about 20 per cent.

Credit Default Swap (CDS) and Total Return Swap (TRS)

CDS

CDS is basically a derivative showing an agreement as one counterpart agrees to pay some regular protection premium as a percentage of the notional debt held as its asset to the other counterpart who promises to pay any defaulted part of the debt so that its assets are protected from losses. Figures-4 shows Acme Inc. agrees to pay premium to CDS dealer or seller to buy protection of Giant Corp’s debt held as its asset. If Giant Corp. suffers a default, Acme Inc. is safe and CDS dealer suffers a loss. If Giant Corp. is fine, Acme Inc. still costs a protection and CDS dealer enjoys a protection payment.

Figure-4. Basic CDS cash flows[4]

Hedge funds as CDS buyers usually purchase CDS to hedge portfolios of the bonds they currently own. Hedge funds also purchase CDS on corporate bonds designed to profit from a widening corporate credit spreads as CDS is cheap when the spread is narrow and expensive when widen. Some buy CDS on sub prime, mortgage backed, fixed-income securities and indexes as a way to profit when borrowers’ credit quality falls. Some hedge fund managers also buy CDS on emerging debt to bet on a decline in a country's credit quality.

Hedge funds as CDS sellers like to receive protection income and expect no default in the bonds or loans. With that intention, they bet on a good hope of bonds or loans to fulfil the obligation. Notwithstanding this intention, the bonds or loans default hedge funds may end up owning the bonds or loans and think the next strategy to recover the defaulted part.

Trading CDS on Sallie Mae’s LBO[5] can be related to the process tranche financing in CDO as to protect the tranches portfolio in three ways. First, hedge funds buy CDS before Sallie Mae’s LBO at say 40 bps and sell it at say 60 bps after the LBO as the credit quality and risk of Sallie Mae increase. Second, hedge funds buying CDS on Sallie Mae debts expect students’ debt would default as receiving default payment. They may be predicted not so many jobs for students and not so many bright students. Third, hedge funds selling CDS on Sallie Mae debts expect otherwise and receive protection income.

TRS

TRS is basically a derivative of a netting position between the bonds’ fixed payment and the bonds’ referenced floating payment. Any yield decrease may increase the bonds value and the receivers or buyers may profit whereas the payers or sellers may lose. Any yield increase may decrease the bonds value and benefit the sellers whereas the buyers may lose.

Figure-5. Basic TRS cash flows[6]

Hedge fund buyers of course expect yield decreases, price increases and spread narrows. For example, a hedge fund pays at LIBOR+2%+$90 and if price increases and spread narrows it would receive at increasing LIBOR+2%+$95. On the other hand, hedge fund sellers should expect yield increases, price decreases and spread widens. Moreover, with small collateral hedge funds can trade for a huge value of bonds. For example, only with $1 million capital hedge funds can trade TRS for a face value of $100 million bond. Using 1:10 leverage hedge funds can upsize the TRS profit to 10 times. The collapse of LTCM may be regarded with TRS transaction. LTCM bet on narrowing spread after the Asian Crisis and then bought TRSs on emerging countries bonds. Unfortunately, Russian bonds then defaulted. Spread widened, yield increased and bond price decreased. Because of too much leverage LTCM lost US$2.3 billion with US$1.6 billion TRSs in the portfolio.

References
[1] Banque de France. “Are risk transfer mechanisms sufficiently robust?” Financial Stability Review, No. 9, December 2006. http://www.banque-france.fr/gb/publications/telechar/rsf/2006/chroni3_1206.pdf

[2] O'Leary, Christopher. “The CDO Revolution Continues as Market Awaits Issue Backed by Hedge Fund Debt.” Investment Dealers' Digest, 3/5/2001, Vol. 67, Issue 9, p15.

[3] Davies, Paul J, “Merrill, Credit Agricole bring credit derivatives to FX.” http://www.ft.com/cms/s/0ed8c664-f80e-11db-baa1-000b5df10621.html

[4] Smithson, Charles and David Mengle, 2006, p56. The promise of credit derivatives in nonfinancial corporations (and why it's failed to materialize). Journal of Applied Corporate Finance, Fall 2006, Vol. 18 Issue 4 p54-60.

[5] The Economist, “Sallie Mae’s big day.” 21 Apr 2007, p79-80.

[6] Smithson, Charles and David Mengle, 2006, p55.

What is a Hedge Fund?

2007-05-29T20:08:00.000+12:00

A hedge fund is an investment product like a mutual fund or a pension fund and not necessarily maintaining a hedge position. A hedge fund is an actively managed fund of a tailored investment pool which is organised by an investment advisor who sets up a company under a limited liability partnership to invest money that is privately placed by a group of not more than 499 accredited investors as the partners. Accredited investors mean individuals with net worth more than US$1 million or income more than US$200 thousand. The hedge fund manager or the investment advisor will be compensated by a large incentive normally 15%-25% of the fund’s net profit. Because of its nature, hedge funds exempt from 1940 Company Act in order to minimise public disclosures and 1933 Securities Act in order to charge asymmetric performance fees.

Seemingly, it is quite simple to set up a hedge fund on the grounds that one has excellent skills and knowledge in portfolio analysis, network relationship building and marketing. As an investment advisor or financial planner she may offer some of her wealthy clients to go to the next step in business relationship as her limited partners under a limited liability partnership. By having an excellent concept of what to hold, buy and sell in the portfolio, she may start to explore some better offers available in the market with counterparties, in the exchanges or over-the-counter, with ordinary securities or derivatives. She may build relationship with some exchanges, investment banks or other financial institutions for some chances in repurchase agreement, fund borrowing and margin facility. The most common trading strategy is by going long and/or short in the stock and/or derivatives exchanges, whether domestic and/or offshore. To avoid higher tax, she may choose some tax havens for the domicile of the funds. She may also need to test first that her managed portfolio is supreme before offering to her clients as they need some kind of proof of a sought-after investment. In practice, many hedge funds nowadays operate under the umbrella of investment banks which are investing in portfolio of hedge funds. All of the above shows some level of freedom in hedge fund transactions compared to ordinary mutual funds.

Unlike mutual funds that usually take long positions, hedge funds have more degree of freedom to take any speculative position for increasing investors’ profit and managers’ incentives from investment returns above average benchmark returns. Now is popular with the term of seeking alpha. They can go mainly long, mainly short or combination of both. A short position can be done by entering a repurchase agreement or borrowing with high leverage.

To pursue a high leverage level, hedge funds are likely to go short and bet on a decreasing price or alternatively borrow directly from major banks to upsize the volume for a bigger chance return. For private equity funds, they can borrow funds for far more percent of the equity they are willing to invest through a leveraged buyout (LBO). Creditworthiness of hedge funds could be viewed from the managers’ skill to implement a good strategy for a big return. Hedge funds are somehow able to take other financial players as counterparts.

The nature of short position, high leverage and high incentives are similar to those in the first hedge fund set up by Alfred Winslow Jones in 1949. His strategy was a market neutral or hedge strategy by buying undervalued shares with an offset position of short selling overvalued shares. Since his long and short positions were applied to different shares, it was a leverage strategy as he possibly expected a profitable divergent movement of such shares.

A hedge fund is structured as a heterogeneous asset class by employing different approaches, strategies and instruments to explore opportunities to generate abnormal returns. Some hedge funds trade in shares and some do not trade at all but more focus on emerging market debt, fixed income and derivatives. Latter development shows that some hedge funds play in credit derivatives market offsetting positions with fixed income trading and through interest rate swaps.

Classification of hedge funds according to TASS, as follows: convertible arbitrage (between a convertible bond and equity), dedicated short, emerging market funds, equity market neutral (maintaining close balance), event driven (responding corporate event, e.g. merger, LBO), fixed income arbitrage (long/short related bonds), macro (directional movement in financial market and macro economic indicators), long/short equity (with a long bias), managed futures and others (risk arbitrage, statistical arbitrage, derivative arbitrage, distressed securities, fund of hedge funds). In 2004, the largest percentage of asset under management is long/short equity 32% followed by event drive 19%. There is a slight decline from the previous year in macro strategy from 11% to 10% and an increase in others from 8.5% to 10.1%.

Hedge fund industry has been growing rapidly along with investors’ desire to enjoy excess returns or alpha. The spirit of seeking alpha becomes the main goal of hedge fund strategy. Assets under management of the hedge fund industry grew from US$456 with number of funds from 3,102 in 1999 to US$973 with 5,782 number of funds in 2004 according HFR database and it is estimated to be more than US$2 trillion at the end of 2006, 30 percent more than a year earlier . The average annual return from 1994 to 2004 for live hedge funds is 14.4% for TASS, 14.3% for HFR and 15.5% for CISDM. TASS, HFR (Hedge Fund Research) and CISDM (Centre for International Securities and Derivatives Markets) are three commercial databases for hedge fund research.

However, despite the prospect in generating excess returns hedge funds also experience some failures. This is due to the speculative risk in taking such positions that can offer big returns therefore also big risks. The survivorship bias return in the table-1 shows the average lost return deduction after some collapsed hedge funds. Some failures in the hedge fund businesses gathered from different news sources in the internet are as follows:

Long-Term Capital Management in 1999 lost US$2.3 billion in equity value after its bet on narrowing credit spread after the Asian crisis being hit by Russian default.
Tiger Management in 2000 failed to return US$6 billion in investors’ assets after its strategy to go short of overpriced technology stock being hit by the bull market in technology.
Aman Capital in June 2005 lost more than US$100 million from its leveraged credit derivatives strategy.
Marin Capital in June 2005 closed its funds valued at US$1.7 billion after its bet on the outlook for General Motors by buying its bonds, shorting its stock, and with $500m long equity position and $1bn short mezzanine position, being hit by GM junk bonds rate.
Bailey Coates Cromwell Fund in June 2005 dissolved and lost 20% of US$1.3 billion asset due to wrong bets on the movement of US stocks.
Amaranth Advisors in September 2006 lost the total of US$6 billion in two weeks after its bet on an appreciation natural-gas futures post Katrina Hurricane 2005 being hit by the depreciation of the futures.

Hypothetical simulations of credit derivatives

2007-05-29T19:50:00.000+12:00

To simulate securitisation process and credit derivatives, some simple hypothetical examples can be described in the forms of personal loans.

Scenario 1: with XXX

Ten students borrow $100 each at $15 interest from AAA. If the ten students pay back all of their debts, AAA will receive $1000 plus $150 interest, totalling $1150. Knowing that AAA would have the $1150 at the end, he then asks XXX who has many friends to find some people who want to lend AAA some money. XXX finally finds 80 friends with $1 interest for $10 each and 20 friends with $2 interests for $10 each. Friends who choose the $1 interest will be paid first after those taking $2 interest if any of the students default. If not default, AAA would earn $30 (may be shared with XXX) from $150 interest deducted by $120 and the 80 friends would earn $1 each and the 20 friends US$2 each. If 2 students default, AAA would still earn $30 but the 80 friends with $1 interest would have to wait longer to get their $10 back.

Scenario 2: with QQQ

Other way to show a protection motive would be like this. AAA knows that there is a risk of the ten students not paying back the debts. The ten students would pay back the interest, but may not pay back some part of their debts. AAA then finds a special friend QQQ. QQQ asks AAA to pay $100 in advance as promising to cover any loss AAA gets at the end. QQQ may expect that AAA might just get $925 back of $1000 as paying the rest of $75 to AAA. If the ten students just pay $925 back, AAA still gets $1000. However, AAA’s $150 income is to be deducted by $100 protection cost from QQQ who has promised to cover the loss, totalling $50. Meanwhile, QQQ would receive $100 from AAA and pays $75 to cover AAA’s , earning $25 in total. If the ten students pay back all of the $1000, AAA’s earning would be still $50 and QQQ’s earning would be $100 without covering any loss. How about if the ten students just pay $700 back of $1000? QQQ may simultaneously buy protection at $50 from GGG who promises to cover the loss until $300. QQQ would earn $50 if default or not default whilst GGG would earn $50 if not default and lose maximum $250 if default.

Scenario 3: with HHH

Another instant way to alter the risk of default can be shown as another friend HHH pays AAA $100 now and $1000 at the end whatever the situation would be as AAA has to pass all of US$1150 at the end. AAA would get an instant profit of US$100 now and HHH would get a profit of US$50 at the end if the ten students do not default. To cover the loss if the ten students default, HHH may buy protection from GGG at US$30 to protect the loss until US$150. HHH would earn US$20 whether default or not and GGG would earn US$30 if not default and lose maximum US$120 if default.

Scenario 4: GGG as a dealer

The last two simulations shows that the price of GGG’s protection may vary based on the probability of default of the students’ debts over time. To some extent, the premium $50 for $300 is still reasonable. If the default probability decreases, it may apply premiums from $40 for $200 loss, $30 for $150 loss, $20 for $100 loss until $10 for $50 loss. Therefore, it can be set protection prices referred to the value of $1000 students’ debts would default from $50 to $10. As a dealer, GGG may trade the protection with some counterparties. One may buy GGG protection for the students’ debts at $20 for $100 default and sell it back to GGG at $40 once the students’ debts are getting riskier to $200 default, earning $20 in total.

GGG now holds protection $40 for $200 default. Believing that the students’ debts would default maximum $100, GGG then may end up buying protection from ZZZ at $20 premium for $100 loss. If not default, GGG would receive $40 from QQQ and pays ZZZ $20, earning $20. If default by $100, GGG’s earning is still $20 and ZZZ would face a maximum loss of $80.

Credit Derivatives

2007-05-19T03:31:00.000+12:00

I and the other 9 people borrow some money from you $100 each with interest at $15. At the end, if we payback all of our debts to you, you would receive $1000 plus $150 interest, totalling $1150.

Knowing that you would have $1150 at the end, you then simultaneously borrow from 100 friends of yours for $10 each promising them $1 interest. Everyone of your friends would receive $11 from you at the end, costing you in total $1100.

At the end, you would get $50 without actually having the $1000.

Other way.

You know that there is a risk of us not paying you back. We would pay back the interests, but may not pay back some part of our debts. You then find a special friend of yours and telling her about this.

Your friend asks you to pay $100 in advance as she promises to cover any loss you get at the end. She may expect that you might just get $925 back from $1000. She would then pay the rest of $75 to you.

If you really just get $925 back, you still get $1000. However, your interest profit of $150 needs to be deducted by $100 protection from her who has promised to cover your loss. Your total profit is now $50. It is less but at least you still get some profit here. Meanwhile, your friend receives $100 from you and pay $75 to cover your loss. She in total gets $25 profit.

If you get back all of the $1000, your total profit would be still $50. However, she would be better off as receiving $100 from you without covering your loss.

She is such a great speculator, isn't she? How about if you just get $700 back from $1000 you lend to us?

Another way.

One big guy pays you $50 now and $1000 at the end whatever the situation would be and asks you to tell your friends to pay him all what they owe you ($1150) at the end.

You get an instant profit of $50 now and he would get a profit of $100 at the end if your friends pay all of their debts.

If your friends might not pay some of their debts, it would be his problem because you would still get your $1000 from him.

Clip from Economist.

Bankers themselves are fuzzy about explaining their trading profits, bandying about phrases such as “deploying our intellectual capital”. But it is clear that three powerful forces are at work, all of them overlapping and mutually reinforcing, and all fundamental to the gushing liquidity the world is currently enjoying.

The first is the alchemist's trick of turning debt (mostly leaden) into derivatives (mostly liquid); the second is the emergence of a new class of leveraged client (hedge funds and private equity); and the third is seeking out new capital markets, and clients, around the world. Moreover, in all these pursuits the firms are now using not just their clients' money but, to differing degrees, their own too. (read more)

Clip from Mises.

The example might help in putting into perspective the breathtakingly strong growth of the credit derivative market. A credit derivative (in the form of, for instance, a credit default swap, total return swap, or credit linked note) is a contractual transfer of the risk of a credit from one market agent to another (without transfer of the underlying asset). Early forms of credit derivative are, for instance, financial guarantees.

The total market volume of credit derivatives outstanding was an estimated US$20.2 trillion in 2006, amounting to around 1.5 times annual nominal US GDP, up from just US$1.2 trillion seen in 2001 (Figure 2). The market is expected to grow further to US$33.1 trillion until 2008. In fact, the credit derivative market has become the biggest market segment of the international banking business already. (read more)

The Parables of Investment

2007-05-18T03:50:00.000+12:00

From an interesting paper:
The parables, premium puzzles, and the CAPM
by Hong-Jen Lin and David C. VanderLinden
(download)

Rate of return, risk free deposit, and equity premium

In Matthew 25: 14-30 (the Parable of the Talents), a master has given his three servants five talents, two talents and one talent of money, respectively. The first earns five more talents, the second earns two more talents, and the third earns nothing since he played it safe and buried all the money in the ground. The master commends the first and the second ‘‘Well done, good and faithful servants’’ (verses 21 and 25) but excoriates the third as a ‘‘wicked, lazy servant’’ (v. 26).

A key principle to this parable is risk-taking. The first two servants were willing to place at risk the endowment given to them, but the third servant was ‘‘afraid.’’ As interpreted by most commentators, the parable is an exhortation to take risks in using one’s gifts for the kingdom of God. Jesus indicates a reward for those willing to take risk, and punishment for the one who was too fearful (risk-averse).

Perhaps, we can also infer how the master evaluates performance of the investments by three servants. Why did the first and second servants receive the same praise and rewards? Both took risk and, while the absolute value of income differed, they both earned the same rate of return. In this case (but not for the Parable of the Ten Minas), the master gave them the same rewards. Proverbs 3:14 (in the Old Testament) also alludes to return: ‘‘for she (wisdom) is more profitable than silver and yields better returns than gold.’’ The concept of return appears in both the Old Testament and the New Testament.

Regarding the third servant, the master criticized, ‘‘you should have put my money on deposit with the bankers, so that I would have received it back with interest’’ (v. 27). Given the comment, we can surmise that the risk-free deposit market existed in Jesus’ era. The third servant is despised because he has earned zero return in investment, under the riskfree rate. Therefore, one can interpret the verse to mean that the master measures performance not just based on the rate of return but on the return rate in excess of the risk-free interest rate. This conforms to the formula of the Sharpe-Lintner CAPM:

ri – rf = Bi ( rm – rf )

where ri is the rate of return for asset i, rf is the risk-free deposit interest rate, and rm is the market return. Bi denotes the systematic risk. Both sides of equation are returns in excess of the risk-free deposit rate. In other words, the measurement of performance of investments is based on the rate of return in excess of the risk-free deposit rate.

A similar concept is found in the Parable of the Ten Minas (Luke 19: 11-23). However, in this parable, each servant is given one mina. The first servant invests it and returns ten minas to his master; the second invest the mina to return five minas; a third servant hides his mina in the ground because he is ‘‘afraid.’’ In the Parable of Ten Minas, the master rewarded the faithful servants by giving them authorities to rule cities; the first over ten cities, the second over five. That is, the ‘‘payoff’’ in the Parable of Ten Minas is much more than that in the Parable of Talents (as is the return), but it is proportional to the returns of each servant. Again, the criticism of the third servant’s inaction is still sharp.

The scripture seems to encourage investors to earn as much as possible. The master criticized the third servant because of his laziness. The laziness is simply caused by his fear of taking risk (v. 25). Therefore, according to the Parable of Talents, Christians are motivated to invest and accumulate wealth to glorify God. It seems that Jesus appreciates people who dare to take risk and grasp profitable opportunities. This is consistent with Solomon’s exhortation to enter into risky trade and ‘‘cast your bread upon the waters, for after many days you will find it again’’ (Ecclesiastes 11: 1). Consistent with Weber’s propositions, it may be that the financial markets have been influenced at least indirectly by these principles. That is, religious teachings can change people’s mindset and then motivate them to invest and to fully utilize the financial resources they have. As a result, financial markets are formed, which increases general wealth. The prosperity of financial markets further inspires researchers in forming financial theories such as the CAPM. A possible relationship among the biblical teachings, financial markets, and financial theories is illustrated in Figure 1.

Avariant of the CAPM is the consumption CAPM, in which investors hold wealth to allow consumption. Thus, the expected return on an asset should be related to how the asset’s returns vary with consumption. Mehra and Prescott (1985) found that the historical equity risk premium (the rate of return on stocks over and above the return on a risk-free rate) was too high for ‘‘reasonable’’ levels of risk aversion. Termed the ‘‘equity premium puzzle,’’ this finding has stirred numerous unsuccessful attempts to explain the puzzle. One possibility is that investors have diverse preferences or beliefs (rather than those of a representative individual as usually assumed). In both the Parable of the Talents and the Ten Minas, one investor either was too risk-averse to invest or had different payoff expectations such that he was unwilling to invest. Perhaps these parables offer an avenue of explanation for the equity premium puzzle.

According to Benartzi and Thaler (1995), when investors are myopic-loss-averse, the return on equity must be large enough to attract them to buy stocks. We can also observe from the Parable of Talents that the third servant is myopic-loss-averse. In other words, the third servant ignores upcoming rewards he might earn. His fear of loss is much more than the joy of gain. Therefore, the equity premium is a must to draw investors like him to invest in risky assets.

One final note on equities is in order. Because the master strongly motivates the servants to invest by authorizing them to rule over cities (i.e. have ownership of productive assets), this kind of teaching could be viewed as encouraging Christian investors to hold equities, as the light shed by Weber (1930).

In the field of corporate finance, equity holders may pass up profitable (i.e. positive net present value) investments when debt holders may get most of the benefits of the projects. That is, equity holders may tend to under invest when they realize that their gains in the new projects are limited (see Grinblatt and Titman, 2002, p. 563). In the Parable of Talents, similarly, the third servant may think that the master will get most of benefits so he is reluctant to invest. Actually, he really under invests: invests into the ground!

To sum up, conceivably these parables could help to explain the equity premium puzzle in asset pricing and the under investment problem in corporate finance. Teachings based on the parables may shape the behavior of people especially when these biblical teachings have already become a part of the system in a country.

900 Joost invitations to send

2007-05-04T20:05:00.000+12:00

More than 900 Joost invitations to send. Please leave your first, last name and email address in the comment below. Mind the spammers, eg. by changing @ with "at".

Make sure you have the sufficient computer technology required, and most importantly, enough bandwidth of broadband connection.

Upddate 7/5/07

I still have 940 invites left to send out. However, when Joost goes public anytime after fixing some minor bugs and adding CNN, CBS or any other stations, I'll stop inviting. Last weekend, 61 invites sent of course by typing every name manually.

Update 8/5/07
It seems Joost won't go public anytime soon as some additional tokens have been given everytime some invites are sent.

Economic view on Joost
I guess Joost is more popular for users in the coutries where broadband connections are well provided and the bandwith is significantly cheap. Note for those in the developing countries, the users should have extra bandwith budget to be able to afford Joost. Tecnology and innovation have additional cost unfortunately.

Male, smoker and older matter

2007-05-02T19:56:00.000+12:00

Being a male, smoker and getting older really matter in insurance cover. Being a smoker and getting older we pay averagely approx. 100% more expensive and 50% more as being a male for a life cover premium.

I made some quotations with several insurance companies based on a Life cover of $200,000 to be paid upon death.

Below are the monthly premiums quoted as an average premium of several insurance companies.

Male
age 30 => non-smoker: $14 smoker: $25
age 40 => non-smoker: $18 smoker: $40
age 50 => non-smoker: $45 smoker: $103

Female
age 30 => non-smoker: $8 smoker: $15
age 40 => non-smoker: $13 smoker: $27
age 50 => non-smoker: $34 smoker: $72

We can't do anything with getting older particularly being 50! But some people do quit smoking. Do insurance companies consider those who are transsexuals?

Anyway, a male chauvinist pig doesn't have the power for getting cheaper premiums, unless that for Income Protection cover.

Update

Average monthly premiums for $200,000 Trauma/Critical Care cover:
Male
age 30 => non-smoker: $27 smoker: $48
age 40 => non-smoker: $61 smoker: $143
age 50 => non-smoker: $183 smoker: $431
Female
age 30 => non-smoker: $27 smoker: $52
age 40 => non-smoker: $59 smoker: $131
age 50 => non-smoker: $127 smoker: $284

Average monthly premiums for $200,000 Total and Permanent Disability cover:
Male
age 30 => non-smoker: $11 smoker: $15
age 40 => non-smoker: $17 smoker: $30
age 50 => non-smoker: $60 smoker: $111
Female
age 30 => non-smoker: $10 smoker: $13
age 40 => non-smoker: $17 smoker: $29
age 50 => non-smoker: $66 smoker: $114

Average monthly premiums for $4,000 a month Income Protection cover:
Male
age 30 => non-smoker: $36 smoker: $44
age 40 => non-smoker: $61 smoker: $75
age 50 => non-smoker: $121 smoker: $149
Female
age 30 => non-smoker: $54 smoker: $63
age 40 => non-smoker: $91 smoker: $109
age 50 => non-smoker: $179 smoker: $211

Joost Invitations to send

2007-04-26T23:57:00.000+12:00

Finally, Joost team just gave me 3 invitations to send. I reserve 1 invitation for family and 2 invitations are to be sent to anyone who wants it. Please leave your first name, last name and email address in the comment below. Cheers and welcome to Joost TV.

Important Notes for Joost

Windows system requirement: Windows XP Service Pack 2 with DirectX 9.0c; Pentium 4 processor, 1GHz; 512Mb or more RAM; A modern video card with DirectX support and at least 32Mb of VRAM; About 500 MB free disk space
The Joost software is a 10 MB download, expanding to 30-35 MB on disk. The remainder is used as a cache
Broadband/ADSL (1Mbit/s downstream, 512Kbit/s upstream recommended, although lower speeds may well work)
Joost is a streaming video application, and so uses a relatively high amount of bandwidth per hour. In 1 hour of viewing, 320 Mb will be downloaded and 105 Mb uploaded, which means that a 1 Gb cap will be exhausted in about 10 hours.
If you pay for your bandwidth usage per megabyte or have your usage capped by your ISP, you should be careful to always exit the Joost program completely when you are finished watching it.
To stop using bandwidth, you need to exit the program entirely as follows: Right-click on the Joost icon in the system tray (at the bottom right hand corner of your screen) and choose Exit.

Update

Sorry, this post is closed for comments. Please come to this one as I have more Joost invites for you. Thanks.

Joost TV: channel catalog

2007-04-18T01:14:00.000+12:00

Anymatters is now Joost official beta tester. Thanks Joost team!

I just downloaded Joost but have no time to watch all channels on Joost. Hopefully this weekend, if I have time and bandwith.

Briefly, it's the way to substitute the need of having a cable TV, by using an internet TV instead. No, it cannot be said as a substitution as this one is actually free of charge.

Moreover, it's a community for particular audiences to a tailored TV programme that suits them.

Or, I can say here, it's the way to utilise more of my internet time and connection. Of course, with additional cost of bandwith.

Anyway, I'm not sure when I'm authorised to send an invitation.

Update:

The way I can save my bandwith is by turning it off instead of pausing it whenever I don't wanna watch it. I think Joost broadcasts as a streaming audio/video file.

One emailed me to get an invitation, but true I still have 0 invitation to send as this screenshot below, taken when watching a boxing game. I at that time wanted to chat with someone talking about that programme.

Indonesian Institute of Public Administration

2007-04-12T22:29:00.000+12:00

As kafe depok gives the signal, this is the visualisation.

For visitors who don't get it, this is a brief description of a State Institute in Indonesia which provides an undergraduate study (even a Master study) in Public Administration for Local Government.

Please imagine and tell me how strong Indonesia is.

NYSE Circuit Breaker to Prevent Crash

2007-04-04T11:40:00.000+12:00

Some people may be worry with the possibility of crash in Dow Jones as blogged before "Dow Jones 1987 and 2007: crash then, crash now".

It won't be happening now since NYSE has introduced a system called "Circuit Breaker".

An imposed pause in trading that permits buyers and sellers time to assimilate incoming information and make investment choices. Circuit breakers promote investor confidence by giving investors time to make informed choices during periods of high market volatility.

And there's a set of rules approved by the US Securities and Exchange Commision.

The securities and futures markets have circuit breakers that provide for brief, coordinated, cross-market trading halts during a severe market decline as measured by a single day decrease in the Dow Jones Industrial Average (DJIA). There are three circuit breaker thresholds—10%, 20%, and 30%—set by the markets at point levels that are calculated at the beginning of each quarter. The formulas for these thresholds are set forth in the New York Stock Exchange (NYSE) Rule 80B.

Meaning that the system will halt a few moments until the market neutralised as can be seen in this example.

The halt for a 10% decline would be one hour if it occurred before 2 p.m., and for 30 minutes if it occurred between 2 and 2:30, but would not halt trading at all after 2:30. The halt for a 20% decline would be two hours if it occurred before 1 p.m., and between 1 p.m. and 2 p.m. for one hour, and close the market for the rest of the day after 2 p.m. If the market declined by 30%, at any time, trading would be halted for the remainder of the day.

Full description and example of Circuit Breaker >>>

In response to the market breaks in October 1987 and October 1989 theNew York Stock Exchange instituted several circuit breakers to reducemarket volatility and promote investor confidence. The following isa list and brief description of these circuit breakers, and the currentlevels.

Free Hugs

2007-03-31T02:16:00.000+12:00

A quite tearful clip, I might have lost my humanity otherwise.

I remember when she hugs me every time I open the door coming home after work.

the link

(via DPF)

Dow Jones 1987 and 2007: crash then, crash now

2007-03-29T20:42:00.000+12:00

Someone just gave me a piece of technical analysis information written by a research department of one big investment bank in Europe. Sorry can't disclose any names.

I'm still wondering why people still believe in technical analysis to guess the future stock movements without any market theory behind this.

By comparing key similar characteristics between DJIA index movements prior to October 1987 crash and that recently, this analysis surprisingly suggests a possibility of stock crash the near months. Good God!

Because I can't show the original document, I had to modify the graphs with data taken from yahoo finance in order to blog this.

It's a technical analysis, so best just see it and don't try to think about it.

UPDATE:

Don't worry there's a system called "Circuit Breaker".

Almost Joost

2007-03-20T17:43:00.000+12:00

Woohoo! Just wait for a couple of weeks, I'm gonna Joost around. Please check out this blog in the next couple of weeks for a Joost invitation from me.

Joost Support Thu, Mar 15, 2007 at 11:07 PM
To: anymatters@gmail.com

Hi,

This is just to let you know that we haven't forgotten your request to try Joost. We're now speeding up the process of adding testers and we'll shortly be inviting everyone who has signed up to try Joost.

This includes you, so expect an invite within the next couple of weeks - in the meantime, thanks for bearing with us - we appreciate it.

See you soon on Joost!

The Joost Team

What is Joost?

Joost™ is a new way of watching TV on the internet, which uses new and established technologies to provide the best of both the internet and TV worlds. We're in the process of making it as TV-like as we can, with programmes, channels and adverts. You can also see some things that we think will enhance the TV experience: searching for programmes and channels, for example, as well as social features like chat. There are many more new features to come!

Buyat Bay case, what's the verdict? Richard Ness is Dutch

2007-03-17T15:48:00.000+13:00

A verdict on Buyat Bay case will be held next month, 4 April 07. It's gonna be a surprising verdict considering a lot of matters capturing the social-economic issue, environmental issue, historical, even the social-political issue.

A verdict in a high-profile pollution trial involving the Indonesian unit of Newmont Mining Corp and its American chief will be delivered on April 4, the judge trying the case said on Friday. PT Newmont Minahasa Raya (NMR), which once operated in North Sulawesi province, and its president director Richard Ness face charges over allegations the miner dumped toxic substances into a bay near its now defunct gold mine, making villagers sick. (read more)

It has been seemed as a fight between NGOs unfortunately supported by the Indonesian government and a multinational corporation fortunately supported by local experts/scientists/academists.

There were two seminars held to discuss this case:

21 August 2004, National Seminar: "National Seminar and Workshop on the Buyat Bay Controversy", that were attended by a number of local and national experts.

The conclusions (as described by Prof. Dr. M.I.J. Umboh, MS, DEA):

Environmental health in the Buyat Bay region is very poor from the point of view of behavior and available infrastructure
Community education and knowledge about health is very poor.
The diseases found are diseases typically found in other regions, especially coastal regions, which have poor sanitation and low economic levels.
The pathology of the tumors indicates benign tumors.
No signs of Minamata Disease have been found.
Research is needed to monitor and evaluate the community’s long-term health status.

10 May 2005, International Seminar: "Mining, environment and sustainable development: A lesson from the gold mining controversy in Buyat Bay, North Sulawesi", that were attended by 34 international scientists.

The conclusions:

The quality of sea water around Buyat Bay did not show the danger/threat to sea biota environment (link).
The bay had not been polluted (link).

I consulted and confirmed my aunt (MIJ Umboh) a few times to ensure the conclusions and she sticked to the genuine conclusion, that is, there is no evidence and proof of pollution. I personally support her, nevertheless, I try to see this case more in the matter of social-political.

Historically, Buyat was used as an official southern border of De Minahasa from the Kingdom of Bolaang set by the Dutch in March 1756. The area of gold mining is in Ratatotok village, South Minahasa, 4 km from Buyat Bay. Buyat residenst are migrants from Bolaang and Talaud which are separated historically from Minahasa. They live from fishing.

Minahasa is identified strongly with the Dutch language and connection and also the Protestant faith, in fact, that when Indonesia became independent in 1945 inhabitants of the region pleaded with the Dutch to let it become a province of the Netherlands (source). If Minahasa became a province of the Netherlands, all the gold resource might had still been owned by Nederlandsch Mijnbouw Maatschappij which started the gold mining in 1887.

Supporters of Newmont and Richard Ness are mostly Minahasan scientists who have strong international links. By supporting Newmont and Richard Ness as expert witnesses, they indirectly fight the attorneys of Indonesian government represented by the local government of North Sulawesi.

If local autonomy or decentralisation is the main issue here, it means that the local government of North Sulawesi under the central government of the Republic of Indonesia has to face resistance from the local scientists, who may believe in neoliberalisation. Actually, it has been offered to the people of Minahasa from the Dutch in 1945 to be the 12th province of the Netherlands.

If NGOs' involvement is the main issue here, keep them away from Buyat Bay. Because they know nothing and obviously have no competency to analyse compared to the local scientists. They have strong resistance from the Minahasan scientists in terms of scientific evidence.

One Malaysian blogger, Ong Hock Chuan, mistakenly identified as Indonesian blogger by another blogger, Jennifer Marohasy, has been wondering why WAHLI did not open for discussion in his blog. Ong should have realised that the scientific evidence of no pollution has kept WAHLI's mouth shut.

For me, this case is quite complicated. On one side, NGOs are quite supported by the government, which is uncommon, probably because De Minahasa has a bargaining power in case of separation from the Republic. On the other side, Newmont is supported by the educated locals, who understand the value of their lands historically and culturally.

------------------

Richard Ness is American and of course from the Ness family, which could be originally from Holland, otherwise Scottish.

Spelling variations of this family name include: Ness, Nes, Neser, Nesse, Nessen, Nessel, Nest, Nesh, Neste, Netz, Nas, Nass, Nos, Noss and many more.

First found in Holland, where the name became noted for its many branches in the region, each house acquiring a status and influence which was envied by the princes of the region.

Some of the first settlers of this family name or some of its variants were: those recorded from the mid 17th century onward in the great migration from Europe to the New World.

Garuda, Adam Air and the Offer

2007-03-10T21:04:00.000+13:00

I'm not being a conspiracy theorist, but just trying to perceive some information related to the Indonesian airline business and issues/problems arising prior to and at this moment.

Adam Air offer

We understand that 40% of Adam Air's stake was planning to be sold to Qantas and in Singapore market in Feb 2006.

Adam Air said Friday it would sell 20 percent of its shares to Qantas. "The Australian company actually offered to buy 30 percent of the shares but we are only prepared to sell 20 percent because another 20 percent will be sold during Adam Air's initial public offering (IPO) in Singapore next year," Adam Air's chief executive officer Gunawan Suherman said Friday.

However, since Adam Air disappearance, the plan also disappeared as it's not really attractive anymore.

But, what if the offer price is lowered plus significant contribution of more professional aviation management?

Garuda offer

We know that just last month (19 Feb 07) up to 49% of Garuda's stake was planning to be sold following the refinancing plan of a $749 million debt.

The Indonesian government hopes the privatization of debt-ridden state airline PT Garuda Indonesia will be completed in the first half of this year, a minister said Monday.

The government announced earlier this year that it is seeking strategic investors to purchase up to 49% of the flag carrier.

Surprisingly, the last wednesday (7 Mar 07) fire which burnt 21 passengers seemed to still flame the spirit of privatisation.

The Garuda Indonesia air disaster on Wednesday appears to have had minimal commercial effect, with few ticket cancellations and a commitment by the airline to push ahead with its privatisation program.

Of course the value is getting lower after now and 49% may influence almost half of the management.

If

If both plans are carried on and Adam Air or Garuda is going to be half-managed by foreign airlines which are believed to be more capable in terms of safetiness, then customers confidence may reach a considerable level for Adam Air or Garuda to win the competition. Although, high air fare is the consequence. This may be followed by other Indonesian airlines.

Buying the Technology

Interesting story from The Age pointing out Indonesia incapability to read Garuda black box was admitted by the former head of Indonesia's National Safety Committee, Prof Diran.

"The black box is being recovered and I think (brought) to Canberra," Professor Diran said."The Australian Government proposed to get a read-out in Canberra, we accept that of course because we don't have the facilities for that."

From now, Indonesia government is supposed to have been thinking in buying "the facilities" from overseas. One new customer for the suppliers, one new item in the budget. Remember the tsunami buoys.

Aviation Consultancy

If we google "aviation consultants", there is a huge list for it. Some may put interests in Indonesia. Or, to improve the whole aviation infrastructure (air-traffic controllers, pilots, cabin crews, support staff, airports management), some aviation consultants might be considered to be hired. One business opportunity opens in Indonesia.

If there is a conspiracy theory

Airline business is a big business in Indonesia boomed in 2000s, similar to the oil business boomed in 1970s with similar experience in how some foreign corporations entered the onshore and offshore oil business in Indonesia. The difference is that the target now is domestic market.

There could be a battle of two sides between a group who is trying to make airline and aviation business not attractive ("unattractive group") for foreign investors and another group who is trying to make it attractive ("attractive group").

Sabotage and Failed

If both accidents are the results of sabotage as some people first thought, it could have been set by "the unattractive group". However, considering the lower valuation could have been impacted in the offering, this might have become even more attractive. Otherwise, this might have been planned by "the attractive group" for the purpose of lowering the offer value.

Let's see

We may allow five years time from now to see the development of airline and aviation business in Indonesia. We can see which airlines or airports are going to be controlled by foreign investors and which are not. We may also consider national conglomerates to take control.

Data

Indonesia has 23 active domestic airlines and 213 airports with 21 international airports.

Low Energy Background Colors

2007-02-23T14:17:00.000+13:00

In his daily delicious, somerandomdude addresses an issue of low energy color mentioning a black google saves energy. It ends with some questions regarding web designing.

So what to do? Do we all change our vibrant ways? I would like to scale things back a tad from this site, but I am very cautious of ruining the site’s identity. Either way, this is an interesting topic in the theoretical sense. Does design on the web need to start accounting for energy efficiency for the end user? Perhaps it is just me, but it seems that with every passing day, web design becomes more and more like industrial design.

Mark Ontkush in his ecoiron shows six colors considered as low energy colors. Of course, the white color is intended to have a small proportion in a design.

Starting with the EnergyStar wattage ratings for different colors, Jon Doucette of Jonathan Design came up with the six colors at top. On average, this palette uses only about 3 or 4 watts more than a completely black screen. White is included as an accent color.

The hex codes of these colors got from somerandomdude's reply in this comment.

#822007 (rusty red), #000000 (black), #b2bbc0 (blue-grey), #19472a (forest-ish green), #3d414c (cobalt-ish), #ffffff (white)

I'm an organ donor. Is she gonna veto?

2007-02-23T01:02:00.000+13:00

Since six years ago, I've made a commitment as an organ donor in my driving licence. In case of death in an accident, some of my organs would be passed to others who (may desperately) need. It's my genuine willingness to help others as giving my life.

As a dead person, I won't show any objection for removal of the organs. But, the question is, does my wife agree to have my organs being removed? Is she gonna veto my decision before as she may have a different perception regarding this?

We got married three years ago and I hope she understand that this was a decision made before that. Or, should I change my mind?

Blogger Hacks: direct link to permalink or post ID

2007-02-22T23:04:00.000+13:00

The hacks below modify some codes with <a href="..."> </a> link for the purpose of style modification. Please note the bolded tags as important.

Comment

Standard "Post a Comment" code:

<p class="comment-timestamp"><$BlogItemCreate$></p>

Hacked with direct link to post ID:

<a href="https://www2.blogger.com/comment.g?blogID=8349815 &postID=<$BlogItemNumber$>&isPopup=true" title="add comment">
Add comment</a>

Backlink

Standard "Create a Link" code:

<p class="comment-timestamp"><$BlogItemBacklinkCreate$></p>

Hacked with direct link to post permalink:

<a href="http://www2.blogger.com/blog-this.g?t=&u=<$BlogItemPermalinkUrl$> ;&n=<$BlogItemTitle$>" title="create backlink">
Create backlink</a>

Email post

Standard "Email this post" code:

<$BlogItemControl$>

Hacked with direct link to post ID:

<a href="http://www2.blogger.com/email-post.g?blogID=8349815& postID=<$BlogItemNumber$>" title="Email this post">
Email this post</a>

Del.icio.us

Standard "Save to Del.icio.us" code:

<a href="http://del.icio.us/post" onclick="window.open('http://del.icio.us/post?v=4&noui&jump=close& url='+encodeURIComponent(location.href)+'& title='+encodeURIComponent(document.title), 'delicious','toolbar=no,width=700,height=400'); return false;"> Save This Page</a>

Hacked with direct link to post permalink:

<a href="http://del.icio.us/post?url=<$BlogItemPermalinkUrl$>& title=<$BlogItemTitle$>" title="Add to Del.icio.us">
Add to Del.icio.us</a>

Digg

Standard "Digg this" URL:

http://digg.com/submit?phase=2&url=example.com&title=TITLE& bodytext=DESCRIPTION&topic=TOPIC

Hacked with direct link to post permalink:

<a href="http://www.digg.com/submit?phase=2& url=<$BlogItemPermalinkUrl$>&title=<$BlogItemTitle$>" title="Digg it">
Add to Digg</a>

Hope you can get it.

Every Step Has Dignity

2007-02-19T00:53:00.000+13:00

We don’t go somewhere that we don’t know the way is. However, our life has spirit that can show the way where we should take our steps. If we remain in our place, staying still, our spirit will be one with our soul to understand why we should go next.

There are choices, to stop or to move on. People tend to stop after exhausted and move on after refreshing. In general, the whole process needs continuation until we find the purpose of something and reach the expectation.

We are scare to be failed, but on the other hand, we dare to fail. We don’t know what’s going to happen next, but we believe that faith is everything. We think to find out that our situation is affected by something in someway. Then, we assess carefully any potential threat that can jeopardise our steps.

In our view, self-consciousness gives limitation to the relationship with others. As success may come from others’ recognitions and acknowledgements, we then include others to take part in our steps. Nevertheless, we may face that our success could be taken for granted by others as their own.

Finally, the most important thing in our journey is that every step we take has dignity.

English Cricket Team

2007-02-14T15:55:00.000+13:00

As a country where the cricket game originated, England has performed not very well since 1960. Never been the champion.

England failed to win a series against the West Indies between 1969 and 2000. England similarly failed to compete with Australia for a long period and the The Ashes stayed in Australian hands between 1989 and 2005. England struggled against other nations over this period as well and after a series loss to New Zealand in 1999 they were ranked at the bottom of the ICC Test cricket ratings. From 2000, English cricket had a resurgence and England reached the final of the ICC Champions Trophy in 2004 and regained The Ashes in 2005. The team is currently ranked second behind Australia in the Test rankings, but One Day perfomances have been very poor with England falling to 8th place in the ICC rankings.

World Cup
1975: Semi-Finals
1979: Runners up
1983: Semi-Finals
1987: Runners up
1992: Runners up
1996: Quarter-Finals
1999: First round
2003: First round

ICC Champions Trophy
1998: Quarter-Finals
2000: Quarter-Finals
2002: Second in Group Pool 2
2004: Runners up
2006: Main Round

That's okay. At least we've got a same taste.

Live-Updated Spreadsheet for Time Series Data

2007-02-06T20:59:00.000+13:00

The purpose of this model is to provide a live-updated spreadsheet by automatically capturing the current data provided by a website via Web Query and then automatically recording the data into a master data sheet through a Bootstrapping method.

So, it's just two clicks away on our spreadsheet to update a time series graph to the current rate, automatically. It's similar when we are running a live-update for our antivirus software.

The Worksheet

To follow the technique, it's good to download the sample worksheet first (please enable macro) and follow the coding explanation by opening the visual basic editor (>Tools >Macro >Visual Basic Editor) and the corresponding cells in the worksheet.

The Sheets

There are three sheets: INDO17, Data and Graph. "INDO17" is a sheet where the web query should go and where the two updating clicks are available. "Data" is a sheet where the bootstrapping process is running. "Graph" is only for visualisation.

Cell Naming

Cell naming is an important method as explained before in the previous post. There are several cells to be named in this worksheet and used for visual basic coding: INDO, INDOrow, INDOwebquery, nodays and updatelatestINDO.

To find which range is referred by a cell name, just go to the box on the top left, scroll the box and click the name. A range or cell will be shown.

INDO: a range as the destination for the updated rate from 2-Mar-06 to 31-Dec-10 in "Data" sheet (B5:B1263).
INDOrow: a cell showing a number of rows from 2-Mar-06 to the latest date has been updated in "Data" sheet (D3).
INDOwebquery: a range as the source of data captured via web query in "INDO17" sheet (A2:D21).
nodays: a cell showing a number of days need to be updated since the last updated date in "INDO17" sheet (M14).
updatelatestINDO: a cell showing the next date needs to be updated in "Data" sheet (G4).

Visual Basic Coding

Web Query Update
This code is for the first button "Update INDO-17 Yield from Web Query". The webpage source used for web query is the INDO-17 yield data provided in the Central Bank of Indonesia website.

The code:

Sub dailyINDO()

Application.OnTime Now + TimeValue("12:00:00"), "updateINDO"

End Sub

Sub updateINDO()

Sheets("INDO17").Activate
Range("a1").Select
Selection.QueryTable.Refresh BackgroundQuery:=True
dailyINDO

End Sub

Recording Data through Bootstrapping
This code is for the second button "Record Yield into Data Sheet". The code is quite complicated. However, if we can follow the logic and as referring to the range names, this is a piece of cake for us.

The code:

Sub recordINDO()

For j = 1 To Range("nodays")
For i = 1 To Range("nodays")

If Sheets("Data").Range("updatelatestINDO") = Range("INDOwebquery").Cells(i, 1) Then
Range("INDOwebquery").Cells(i, 4).Copy

r = Sheets("Data").Range("INDOrow") + 1

Sheets("Data").Range("INDO").Cells(r).PasteSpecial Paste:=xlPasteValues
Calculate
End If

Next i
Next j

Sheets("Data").Select

End Sub

The meaning of the above code is:

For the loops as many as the number of days needs to be updated, Excel will copy each yield in the web query sheet and paste into the data sheet on each corresponding date. Where the corresponding date is found by referring the number of rows from the first date to the latest updated date plus 1 day after.

Piece of cake, aye?

The "INDOrow"

It seems the key problem here is to find the number of "INDOrow", a cell showing a number of rows from 2-Mar-06 to the latest date has been updated in "Data" sheet (D3).

The way is using a MATCH function to calculate the number of rows from 2-Mar-06 to the latest date as this formulae:
=MATCH("latest date",C5:C498,0)

Where the "latest date" is found by tagging a note in the column C as the latest date using IF formulae: =IF(AND(the next yield=0, the current yield >0),"latest date","").

The "updatelatestINDO"

This is a cell showing the next date needs to be updated in "Data" sheet (G4) that can be found easily using an INDEX function:

=INDEX($A$5:$A$498,INDOrow+1)

Recommendation and Notes

The title is for updating government bond yield, but the application can be also for updating other time series data such as foreign exchange rates or share prices.

I also open for any suggestions particularly for any more simple VBA codes.

Please let 2 days lag from Bank Indonesia website for current rate. It doesn't mean they are lazy to update, they just have a lot of other things to do.

More explanation about how to get data from the internet in Excel can be viewed here in Microsoft website.

Excel supports both reading and writing of XML. Complimenting this feature is the ability to create Web queries to XML files. You can create a Web query to any XML, but if you use the XML Spreadsheet schema, then you can preserve rich spreadsheet concepts like formulas.

Love

2007-01-28T00:00:00.000+13:00

I won't post anything until the day. In the meantime, I'm just quoting this for those I love.

Love is patient, love is kind. It does not envy, it does not boast, it is not proud. It is not rude, it is not self-seeking, it is not easily angered, it keeps no record of wrongs. Love does not delight in evil but rejoices with the truth. It always protects, always trusts, always hopes, always perseveres.

Love never fails. But where there are prophecies, they will cease; where there are tongues, they will be stilled; where there is knowledge, it will pass away.

(source)

Jakarta Notes

2007-01-19T20:25:00.000+13:00

The main purpose of my Jakarta visit this Christmas was for visiting our families particularly visiting my father and father-in-law graves, who both passed away before they met their granddaughter, Kezia. I took some notes in my mind for what I had been seeing in three weeks there.

Seeing Rp300,000 as 100 bucks

NZD100 is supposed to be more than Rp600,000 but I prefer to see it as Rp300,000. No economic value theory supports this analogy, this is only my own respect in how to value money in Jakarta and compare it with Wellington as I feel it's worth it. This roughly equals to USD70. So I use my own rate here, 1USD=Rp4,300 and 1NZD=Rp3,000.

Rp100,000 for 22 litres petrol

My first hate was when I spent Rp100,000 (33 bucks) for 22 litres premium petrol. With 33 bucks, I could also buy 22 litres unleaded (91 octane) in NZ and drove my car on the best quality roads and traffics. No stressful driving atmosphere.

Say that I earn Rp5 million a month, if I spend Rp100,000 a day commuting to my office and return, there is a transportation cost of Rp2 million a month. Kill me!

Motorcyclists rule

Motorcyclists often tooted their horns from behind asking for their space to overtake. This was a crazy way that I never managed to ignore because I was just affraid to crash them. They just suddenly came up from my left or right. They had a very short visibility as they could find a small space to suit their motorcycles in the middle of traffic.

I found there might have been an increasing motorcycle users in Jakarta. Particularly because of the price of a motorcycle is so cheap and with very low down payment. It has a low running cost as well.

Public vehicles also rule

Something that I found it's still the same from time to time is the chaotic public vehicles behaviour. I can understand that as the drivers were chasing their target of income. No wages or salaries here.

Spending Rp600,000 for groceries

We tried to go shopping for groceries as we normally do in NZ. We spent Rp600,000 at Giant the closest supermarket from our home. Using my exchange rate, it's 200 kiwi bucks, the same amount with our grocery expense in NZ. I felt something wrong in the economy, or just my exchange rate is outrageous, beyond the normal economic morality. Who said that 1USD=Rp4,300 is immoral?

Toyota Avanza and Honda Jazz

These two cars were often seen in Jakarta's roads and car parks. Toyota Avanza is just around Rp100 million but giving much more utility to the users as it's low running cost (1,300 cc) and a 7-seater car, suits for family car. While Honda Jazz is just Rp125 million, low running cost, more stylish and suits couple or single driver. Money consciousness, I think, is the reason to buy these cars.

No Internet

One time I had no internet access as a result of Taiwan's earthquake. I couldn't log in to internet banking to pay my bills and amend my automatic payment, and also to retrieve my emails.

Super Milyader 3 Milyar (billion)

Super Milyader 3 Milyar is an ANTV programme which imitates "Who Wants to Be a Millionare" to win USD1 million. Using the normal exchange rate, USD1 million roughly equals to Rp 9 billion. Why Rp 3 billion? Can you see USD1=Rp3,000?

Worth it or not

Say that we live in Jakarta and try to calculate our monthly budget.
Petrol= 2,000,000
Groceries= 2,400,000
Phone and Electricity= 1,500,000
Clothing= 200,000
Dinner out= 400,000
Total= 6,500,000

Finding this, I asked myself: is it worth it to spend Rp6,500,000 a month in Jakarta? No, it is not really worth it. Remember to put USD1=Rp4,300 in mind, you would think that it would be better if you live overseas.

I wrote this for fellow immigrants from Indonesia who live in OECD countries. You may find it's not worth it with what you're having now, but when you come back you'll find even more not worth it. With a same value of spending you're getting the upgraded atmosphere.

However, something that has no value and price is meeting your relatives and friends. Cheers.

Jakarta Monorail (the old version)

2007-01-16T23:53:00.000+13:00

One note from my visit to Jakarta.

Before the dream of the Jakarta Monorail comes true, it's good to see the real one. The old version of the Jakarta Monorail has been operated for years in this area. Guess, where about is it?

Right, in Taman Mini Indonesia Indah. It has been there since 1989. This monorail system was built by AEROMOVEL.

The AEROMOVEL® system is located within the recreational theme complex, Taman Mini Indonesia Indah, in Jakarta, Indonesia. This system has carried more than three million passengers over the last nine years. The system consists of a single track elevated guideway connecting six passenger stations along a 3.2km (2mi) loop. Three single-articulated vehicles operate in the line simultaneously. Each vehicle consists of two compartments with full internal access. Two vehicles were designed to carry 104 seated passengers and the third one was designed for 48 seated and 252 standing passengers.

Click the image to see it moving.

Long Waits to Jakarta

2006-12-20T12:12:00.000+13:00

Due to a high-frequency of flight from Sydney-Denpasar this period, I have to fly to Perth first and according to my ticket it's gonna be a two-day trip from Wellington to Jakarta. I've obtained an Aussie Transit Visa to secure my trip.

20 DEC: WELLINGTON TO AUCKLAND
QF4172 ETD 08.30 ETA 09.30 (8 hours wait)

Wait-1: online through Aukland Airport Hotspot

20 DEC: AUCKLAND TO SYDNEY
NZ707 ETD 17.30 ETA 17.30 ETA 19.00 (11 hours wait!)

Wait-2: just arrived at Sydney Airport, got a free internet. planning to drop my luggage in the locker and go to the city centre if possible, or find a nice space to sleep. free cab to domestic terminal, thanks Libby.

21 DEC: SYDNEY TO PERTH
QF 565 ETD 0610 ETA 09.10 (9 hours wait)

Wait-3: Perth airport, just ordinary. humid like Jakarta. no free internet. paid 8bucks for interterminal shuttle.

21DEC: PERTH TO JAKARTA
GA 731 ETD 18.20 ETA 20.45 (yay!)

I'm not travelling with anyone, just being patient with myself.

Sober Santa

2006-12-18T20:13:00.000+13:00

This is a stolen link from www.funny-games.biz.

Your objective in this funny Christmas game is to keep farting Santa on the roof while drinking as much champagne as possible. Use the ARROW KEYS to control Santa. When a glass with champagne appears on the roof do your best to pick it up as fast as possible to earn more points. Have fun!

Jablai Blog dan Mancrut Blog

2006-12-17T22:48:00.000+13:00

Hi hi hi hi hi... Gue mulai dari ketawa dulu karena istilahnya sendiri udah bikin geli.

Pas gue buka google reader, ditemukan istilah "jablai blog" dari quicklink-nya Enda. Dengan rasa penasaran, apa sih artinya "jablai". Ternyata, "jablai" itu adalah "jarang dibelai", istilah dangdut yang gue dapet dari hasil search di google.

Gue jadi mikir, kayanya blog gue masuk kategori "jablai". Culun juga istilahnya.

Tapi gue ngerasa ga fair aja kalo yang satu diistilahkan "jablai blog" masa yang lainnya diistilahkan "seleb blog". Dari padanan katanya aja udah ga matching.

Gimana kalo kita ganti istilah "seleb blog" dengan "mancrut blog", yang mana bisa diartikan sebagai suatu blog yang komennya mancrut kaya air setelah diposting.

Kebetulan saat ini gue lagi kangen sama temen nongkrong gue di kampus dulu. Namanya Iman, sementara anak-anak manggilnya "Mancrut". Kenapa bisa dipanggil gitu? Sorry, yang ini ga bisa gue ceritain.

Anyway, gue mo balik ke Jakarta selama 3 mingguan tanggal 21 ini. Yang jelas gue mo contact yang namanya "Mancrut". Kayanya "old school spirit" balik lagi nih.

Feliz Navidad

2006-12-14T23:35:00.000+13:00

Feliz Navidad
Feliz Navidad
Feliz Navidad
Prospero Ano y Felicidad.

Feliz Navidad
Feliz Navidad
Feliz Navidad
Prospero Ano y Felicidad.
I wanna wish you a Merry Christmas
I wanna wish you a Merry Christmas
I wanna wish you a Merry Christmas
From the bottom of my heart.

Amris Hasan - Indonesian Ambassador to NZ

2006-12-01T19:57:00.000+13:00

After a decision made by Commission I Meeting of Indonesian Parliamentary, 31 May 06, from 26 ambassador candidates suggested by President Susilo Bambang Yudhoyono (SBY), Amris Hasan is one of them as a candidate for Indonesian Ambassador to New Zealand (NZ).

Later on 18 Oct 06, President SBY inaugurated 24 Indonesian Ambassadors fixed Amris Hasan position as Indonesian Ambassador to NZ. Amris Hasan and wife arrived in NZ via Auckland on 18 Nov 06 with the last Garuda flight for this season.

At a party for introducing himself to Indonesian society in Wellington 26 Nov 06, Amris Hasan admitted that he is not a career diplomat. However, he convinced that his background and experience dealing with international affairs can support his function as an Ambassador.

Prior to this appointment, he was a Co-chairman of Commission I of Indonesian Parliamentary and Chairman of Inter-Parliamentary Cooperation Board which deal with international affairs issues. He was a member of House of Representative from Indonesian Democratic Party of Struggle. And before that, he was a lecturer at the University of Indonesia with an MA degree in International Affairs from the University of Kent, Canterbury UK.

Relating to life and dynamic in an embassy environment, he mentioned that he had that kind of experience when his father was appointed as Indonesian Ambassador to Egypt. He is actually a son of ex Education Minister Prof. Fuad Hasan.

He promised to do a maximum effort in conducting his function and be open for any problems and issues from Indonesian people in NZ, including family matters as long as he can give advice and solution. (I reckon this is relating to the marriage between Indonesian Citizens and Non-Indonesian Citizens)

Coming along with him is his wife, Afi Shamara Hasan. Afi Shamara is a national film producer under a movie company, Kalyana Shira Film (KSF), which was established with her friend, Nia Dinata. KSF successfully produced several box-office movies such as: Ca Bau Kan, Biola Tak Berdawai, Arisan, Janji Joni and Berbagi Suami. Afi Shamara Hasan is also a daugther of Faisal Abdaoe, ex Pertamina CEO.

Still needs initiative, there is an inspiration to carry out an Indonesian Film Festival in NZ, of course with a full support from Madame Ambassador.

My Father-in-law Passed Away

2006-12-01T18:31:00.000+13:00

It's been a while after my father in law passed away. That's why my sweetest faces (Nina and Kezia) had gone back to Indonesia since 18 Nov for grieving, left me here alone and unattended. That's okay, they can gather with family back home.

We left Indonesia 3 years ago straight after we got married, and as time passing by we now have our daughter, Kezia. Kezia was supposed to use a NZ passport as she's naturally a NZ citizen. However, the Indonesian embassy advised me that it would be better to use Indonesian passport for going back and apply for Returning Resident Visa from NZ immigration.

The Sweetest Faces

2006-11-23T00:56:00.000+13:00

We've just moved to Wellington

2006-11-18T10:37:00.000+13:00

Recently we've just moved from Hamilton to Wellington from a flat landscape to a hill-and-valley one. The weather here in Wellington is much worse with lots of strong wind. However, it's the Capital. A small 2-bedroom house, but it's okay since we have a nice hills view from our backyard and lounge. Our first guests were the Nayoans, coming from Manado, Indonesia for holiday.

The Videos:
Outside

Inside

Halal Bihalal KBRI Wellington

2006-11-07T17:42:00.000+13:00

Sabtu, 28 October 2006 bertepatan dengan Hari Sumpah Pemuda, lingkungan KBRI bersama kelompok masyarakat Indonesia (KAMASI) Wellington mengadakan acara silaturahmi/halal bihalal dalam rangka Idul Fitri 1427H. Beberapa grup yang hadir dalam acara ini terbagi sebagai berikut: staff KBRI, masyarakat (KAMASI) dan mahasiswa(PPI).

Acara ini dimulai dengan upacara peringatan Hari Sumpah Pemuda selama kurang lebih setengah jam dan diteruskan dengan makan siang dan ramah tamah hingga pukul 2 siang. Upacara dilakukan sebagaimana umumnya dengan disisipi pembacaan Hasil Kongres Pemuda 1928. Pembina upacara adalah Ibu Marlina Tahrir dengan komandan upacara adalah Mas Budi Putra. Upacara ini juga diikuti oleh Pak Hermono dan Pak Saragih sebagai Counsellor.

Hidangan mantap disediakan oleh ibu-ibu KBRI dengan menu spesial seperti nasi kuning, dendeng, ayam goreng, teri kacang, urap, salad, emping, sambal goreng dll. (there is such a thing as a free lunch... :))

Kemudian pada akhir acara, beberapa umat Kristiani Wellington melanjutkan ke suatu pertemuan untuk kebaktian dan rapat Natal di Karori Baptist Church.

Upacara Peringatan Hari Sumpah Pemuda

Silaturahmi/Halal Bihalal Idul Fitri

The Embassy

Pertemuan umat Kristiani Wellington

Hole in Lake Taupo, NZ

2006-10-26T19:55:00.000+13:00

The golfer.

The hole.

And, this is the driving range.

You can find this unusual golf driving range in Lake Taupo, NZ.

I drove down from Hamilton to Wellington a couple weeks ago and stopped by having lunch at the lakeside. It's about 8 hours driving.

Started from Hamilton at noon.

Arrived in Wellingtong in the evening.

Auction for Kiwi surfers only - [Sold]

2006-10-19T19:41:00.000+13:00

Sorry it's sold.

Hi if you are Kiwi surfers, please check out this auction.

Aotearoa (New Zealand)

2006-10-06T15:34:00.000+13:00

Ini postingan istriku di "keziawatch". Dia terkagum-kagum dengan awan putih yang panjang. Anyway, this is Aotearoa hon... New Zealand, heaven on earth.

Kalau Indonesia terkenal dgn istilah Zamrud Khatulistiwa, maka New Zealand juga terkenal dengan istilah lainnya yaitu Aotearoa atau The Land of the long white cloud.
Tadinya kami heran....kenapa bisa dinamakan dgn The Land of the long white cloud. Yaa pokoknya singkat cerita dulu ada beberapa polynesian yg menyebrang dan menemukan aotearoa ini krn melihat satu-satunya awan putih yg paanjaang sekali ditengah birunya langit...masa' sih ya ? karena slm ini (setelah hampir 3 thn di nz) kita belom pernah liat. Tapi ini sungguh cerita yang menarik....

Kemarin (seperti biasa) kita berdua (kezia & mom) exercise dan tiba2 saja mommy 'ngeh' melihat ke awan....dan menemukan Long white cloud. Dengan semangatnya mommy langsung take a picture (waduh sepertinya mommy prepare bgt sampe bawa camera segala).

(sorry ya picturenya kurang bagus...amatiran, diambil di Te aroha st.)

Weapons made in Indonesia

2006-09-22T19:49:00.000+12:00

The website's design is average and the products are considered to be basic. Indonesia, a country of 220 million people, in fact has a weapons factory named PT. Pindad, located in Bandung.
This is one of its best.
Other products:

Freedom Tower

2006-09-22T19:30:00.000+12:00

Freedom Tower project overview:

The Freedom Tower will be a lasting memorial to the victims of the September 11 attacks as well as an iconic building. SOM are following the proposals outlined in Daniel Libeskind's memory foundations master plan to create the structure.

Incorporating the highest standards of design, safety, engineering and building technology, Freedom Tower will re-establish New York City as the epicentre of high-rise skyscraper design and serve as a symbol of the revitalisation of lower Manhattan.

At 1,776ft, Freedom Tower will be over 400ft taller than the twin towers and over 100ft taller than Taipei 101 in Taiwan, currently the world's tallest building.

USD/CHF Bombing Hedge Fund

2006-09-11T17:36:00.000+12:00

In commemorating the 9/11 attack, we all are now watching the ABC two days series "The Path to 9/11". Despite the movie seems to discriminate one particular group, I would like to bring up some issue relating to a fictional hedge fund play, called "The USD/CHF Bombing Hedge Fund". Hey, don't take it seriously there's no such thing called bombing hedge fund, unless it's real. Or, at least, the figures is real.

Hedge fund is a high-fee investment play in creating funds invested in other investment funds, so like funds in the funds. Other than just investing long in securities, the most common practice of hedge fund is short-selling forex via government securities or derivatives market.

The play of this fictional hedge fund is to short-sell USD with CHF (SwissFranc) and buy it at any lower prices. Of course, after a set of bombing plots that can shake the USD down. For example:

Borrow USD 1,000 Treasury Bonds then sell to Swiss counterpart at 1.70 receiving CHF 1,700.
Wait and observe the market and news. The USD/CHF rate may drop because of a series of bombing plots.
If it drops to 1.50, buy back the USD Treasury Bonds at that rate with CHF 1,500 receiving USD 1,000.
Hey, we got CHF 200 profit (USD 133).

The play is easy to understand so it can be explained only by showing the figures below. One big question, HOW CAN WE KNOW THE TIMING? Easy, just make friends...

The Taylor Rule Mechanism

2006-08-29T20:23:00.000+12:00

As quoted from Wikipedia.

John B. Taylor (born December 8, 1946) is an economics professor at Stanford University.

Born in Yonkers, New York, he earned his A.B. from Princeton University in 1968 and Ph.D. from Stanford in 1973, both in economics. He taught at Columbia University from 1973-1980 and the Woodrow Wilson School of Princeton from 1980-1984 before returning to Stanford. He has received several teaching prizes and always teaches Stanford's introductory economics course.

An expert on monetary policy, he developed the Taylor rule, which provides a guide to central banks on how to determine interest rates.

He has also been active in politics, serving as the Under Secretary of the Treasury for International Affairs during the first term of the Bush Administration. He was also a member of the President's Council of Economic Advisers during the Ford and George H. W. Bush administrations.

Video 2 >>>
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