How the rich differ from the rest

Article from Nothing really new, but it might a good reminder.

A common definition (of Rich) is a person with at least $US1 million ($1.2 million) in assets not including the family home.

“The rich are normal human beings, but with bigger wallets, and invest in much the same sectors and asset classes – property and shares – as most investors do, but on a much bigger scale,” said Bourke Shaw Financial Services principal Lawrence Orlando.

“There is no desire to have huge holdings in cash or fixed interest investments that have an earning capacity of 4-5 per cent. These asset classes are generally used as short-term parking bays,” he said.

“Wealthy people want to preserve their assets as well as keep building wealth. They are patient accumulators of assets that generate solid income. Within shares, it’s the blue-chip Australian companies with a good track record of growth and paying dividends that are most favoured.”

common characteristics of wealthy people included:

*LIVING well below their means all their lives.
*ALLOCATING time, energy and money to increasing their wealth.
*BELIEVING that financial independence was more important than displaying a high social status.
*THEIR parents did not provide financial handouts.

“They are extremely focused and passionate about their business or occupation and about earning strong income from that. They are also driven to live within their means, which enables them to invest on a regular basis,” Mr Grey said.

“I think the real answer to the question about how people become rich is – in my experience – because they have a business idea that they then turn into reality.

“They have the courage to start their business when others want the comfort of a pay cheque, they take calculated risks and they work damn hard to achieve their goals.”

…they have been through market cycles more and expect bad times. They don’t do things with their heart – they react with their head.”

Where the world’s wealthy live
High net worth individuals are those with at least $US1 million of financial assets.
North America ……….. 3.3 million
Europe …………………… 3.1 million
Asia-Pacific ……………. 2.8 million
Latin America ………………400,000
Middle East …………………400,000
Africa ………………………….100,000
Total……………………10.1 million

Full article here

Quotes from Ken Jakubzak’s interview

I have been busy with my day job and struggling to have sometime in finalizing my trading system. That explains why posting has been lagging. Anyway, I hope I can get back on track soon.

In the August version of Currency Trader magazine, Ken Jakubzak was interviewed. There are a couple of points which I pretty much agree with him..

it was a major shift for the currencies.They don’t trend like they did in the 1980s and early 1990s.Look at the overall trend of the Euro (Figure 2). It hit a bottom of roughly .8600 in 2001 and now it trades at 1.5600 (as of July 7). That’s a move of 60 handles (one handle = 100 points, or pips). But it took seven years to get there.

If you want to say that’s a long-term trend, then good luck trading it. In December 2004, the Euro hit a high of 1.3660 and then dropped to 1.200 a year later. That’s a drop of 16 handles (1,600 points). Do you want to ride that down?

My point is that there are no long-term trends in the currencies anymore. They may go up 10 to 12 handles, but they will also drop almost as far. You can make some money using a trend-following approach in currencies, but you’re not going to find big trades like you can in grains or crude. Also, 90 percent of all trades are losers. The other 10 percent should make your year and if they don’t, then you’re going to lose big. It’s very difficult to trade that way.

Full article can be found here

Charities feel the Subprime pain

MORE than 100 local councils, charities, churches, hospitals and nursing homes across Australia are sitting on a $2 billion black hole after buying subprime investments structured by Wall Street banks during the bull market but which are now potentially worthless.

A document leaked to BusinessDay revealed that Lehman Brothers is managing tens of millions of dollars in funds for Victoria’s community, education and health sectors, much of it invested in high-risk financial instruments now potentially worthless.
BusinessDay has identified more than 150 government, private and charitable institutions that bought complex financial instruments such as collateralised debt obligations (CDOs). There have been few buyers for CDOs and similar structured finance products since the subprime meltdown this time last year that sent global financial markets into a tailspin.

The $2 billion in investments identified by BusinessDay pertains only to funds under Lehman Brothers management. Lehman acquired boutique local bank Grange Securities two years ago and Grange had been the biggest player in the CDO market, having undertaken a strategy of selling the product to local government, charity and semi-government agencies.

As Lehman was acting as “agent” to most of its council and charitable clients, it not only sold the products, it also managed them for clients, and in some cases “churned” the CDO portfolios by 200%, 300% and 500%.

In other words, the bank bought and sold the products between its clients and earned commissions on the sales, according to sources close to the councils.

Full article/crap here

Interesting game played by Lehman, but that’s not the point. Sorry, but pardon me, communities, charities invested in high-risk financial instruments?  High-risk instrument, pardon me? Charities?

What’s wrong with these people? ‘Westerners’

I don’t normally post non-trading stuff here. But recent reports , particularly in Australian medias are just so annoying. Full of craps.

More ceremony fakes unearthed

Stephen Hutcheon | August 15, 2008 – 12:08PM

The Olympic opening ceremony featured faked fireworks, a fake singer who lip synced to another girl’s voice and now it appears that the children appearing in costumes representing China’s 55 minority groups were also fakes.

Full bullshit here

The only fact  is, western medias, yes, Australian, you are one of them, trying their extremely best to dig everything, anything bad, negative about China, about Beijing Olympics.

The fact is, China presents one of the greatest opening ceremony ever and great games, great people to the world. That’s the whole point. Look at the opening ceremony, the effort, the hard work, and the performance, it is almost second to nothing. I’ve almost forgotten about other Olympics, Atlanta? Sydney? how about you? Oh Yes, I still love the Barcelona opening, that’s awesome.

Man, you are missing the point, you are blind.

I am sorry, but Trader Gav feels really pissed by these reports.

Trading links stocktake

I was doing some housekeeping on my bookmarks, here are some trading links I thought it might be useful to my readers.

Trading Plan:

General trading readings

That’s all for the time being. Busy week for me, I am trying hard to allocate some time for trading, research and reading.

So I am a detailed trader..What type of trader are you?

Hat tip to John for the link. I took the test twice (as the I did not read the questions carefully in the 1st run), and it ended with the same result. So, I believe I am a detailed trader now. LOL. Seriously, I can’t agree more with the result about my trading strength and challenge. It actually reflects in my working life as well. I am pretty good and confident in execution, but, I can be very wrong by working and researching something in the wrong direction. What the …..

Anyway, give it a try. Here is my result.