Defined Benefit vs. Defined Contribution

The major decision I need to make in response to receiving my job contract is which type of superannuation (retirement) scheme to join. Yes, we have a choice between defined benefit and defined contribution (or accumulation in the Australian jargon). Defined benefit is mainly based on your average salary in the last three years that you work for a university that is a member of the Unisuper fund (indexed for inflation) and the number of years that you contribute to the fund. So here the main risk is career risk. This option performs best for someone who will work their whole career at Australian Universities and get promoted to professor or dean right at the end of their career. In defined contribution you have both a career and a market risk but much more of a market risk. An important benefit of the defined contribution is that you can rollover your benefit into another superannuation fund - i.e. it is portable - while the defined benefit is not.

When I previously worked at an Australian university we initially had no choice and were all in a defined benefit scheme. Then when we were given the choice of switching to defined contribution I did it immediately as I didn't expect to stay in the Australian university system in the long-term. After I left the university I rolled my super into Colonial First State. That was all going well until some unfortunate investment decisions last year.

Given my great career uncertainty at this point it seems obvious to go for the defined contribution scheme. But I will do a proper analysis and report back with the results.

The Unisuper scheme has, on top of a massive 17% employer contribution, a required 7% contribution from the employee's nominal salary. To balance things out, and given our higher income now, I will start 7% "salary sacrificing" (pre-tax employee contribution) for Snork Maiden too. Her employer contributes 15.4%. As her salary is higher, it seems fair to me to go for the equal percentage salary sacrifices.

BTW I'll see no gain from salary sacrificing this tax year as my marginal tax rate is 15% which is the same as the superannuation contributions tax.*

* In Australia retirement contributions are usually taxed at 15% going into the fund. You can choose to make employee contributions pre- or post-tax. Post-tax ones don't attract the contributions tax but obviously you pay your regular income tax on them. If your marginal tax rate is above 15% (as most people's is) then it seems like a no-brainer to go for the pre-tax contribution known as "salary sacrifice".

Australians' Loss of Wealth

According to an article in the Australia the Treasury Department says that the average wealth of Australians fell from $A249,000 in 2007 to $A225,000 at the end of 2008. This is described as unprecedented. Well, I can't find any information on Treasury's rather uninformative and unattractive website about this. A Google search reveals that the data is included in the "Modeller's Database" released today by Australian Bureau of Statistics. It appears that the numbers given by the newspaper are "private sector wealth" averaged over Australians of all ages. So I downloaded the population figures from ABS too and came up with some charts. First up is wealth per capita in December 2008 dollars (GDP Implicit Price Deflator):



In real terms, Australians' wealth is at the same level as in late 2003.

While doing the calculations I noticed that from when we arrived in Australia in September 2007 till the end of December prices rose 9.1%. Snork Maiden's salary rose 8.9%. Some of that salary increase was supposedly due to a rise in the pay scale. But we are just keeping up with inflation.

The next chart shows that we were near average wealth levels for Australia in late 2007 but since then have dropped dramatically below the average:



These numbers are not adjusted to inflation. The Moominvalley variable is our net worth divided by two.

Contract

I finally got my contract today. Last night on Snork Maiden's insistence I sent another e-mail to human resources and my supervisor immediately also sent one. Today the guy sent me an e-mail at 3:17pm that it was ready and I went downstairs from my office and picked everything up. I'll be busy this evening going through the details and filling in the forms but the key details are:

Official worktime is 65% of full-time

Nominal salary is $A95,126

Employer superannuation (retirement contribution) is 17% on top of that or $A16,171 (the minimum required in Australia is 9%).

So actual salary is $A61,831 and superannuation of $A10,551.

That's about $A10,000 a year less than Snork Maiden earns in a full-time position.

Rather ironically, after taking almost 3 months to come up with this contract, they give me till Friday to complete all the paperwork and return it to them!

****************

Follow up on the conference situation - they didn't agree to swap my papers. I expect I'll end up withdrawing both papers. It's quite a lot of money relative to my earnings.

Venice

My paper was accepted for the Venice meeting. But as I mentioned, I can't use project funding for the trip. Registration would be E450 and the hotel E230. Flying on Ryanair from London would be just £10. The train from Brighton to Stansted airport would cost much more than that! So I estimate a total Australian Dollar cost of about $A1,300. My marginal tax rate is 16.5% so after tax we're looking at about $A1,100. Originally, when I submitted to the conference I didn't know whether Snork Maiden would get accepted for the course in England. But now she can't come with me to Venice and I was there before anyway (1998). So I expect I'm going to have to withdraw my paper. I'll state the reason of course, just in case they have some funds to help out... The Amsterdam meeting is a similar cost and the same story pretty much if they don't agree to swap my papers.

Port Douglas

Last night, Snork Maiden and I booked a trip to Port Douglas (about one hour's drive north of Cairns in Northern Queensland) for us and the Snorkparents. The thing the Snorkparents most wanted to see in Australia was the Great Barrier Reef so it's worth spending quite big on doing this. Snorkmama has actually been there before but she wanted to show it to Snorkpapa. We're flying on Virgin Blue (which was the lowest fare we could find on Webjets - but we bought the tickets on Virgin's own site to avoid Webjet's fees) leaving Canberra at 6:30am in the morning and flying via Brisbane. Return times are much more flexible for the lowest fare.

We started looking at Cairns. There are really a lot of great accomodation options there in both hotels and apartments. Snorkmama, though, had expressed a desire to stay in a small town and Moom had recently been to Cairns. So we then looked at Port Douglas and settled on this apartment complex:




which is close to the centre of town, and the beach, has a decent swimming pool, looks nice, and is a reasonable price. We used Wotif.com, tripadvisor.com, and Google Earth to make our decision. There are cheaper choices, but they are either not as nice or further from town or the beach.

Snork Maiden's next task is to explore whether renting a car makes sense. It might be cheaper than paying for all four of us to travel from the Cairns airport to Port Douglas and perhaps we can then construct our own rainforest tour rather than paying for a trip. There is no need for a car if you just want to hang out in town and the beach and go on a trip to the reef. Moom will look at tour options - does it make sense to buy/book upfront or wait till we get there.

Oh, and the money for the trip came from the money the Snorkparents gave us before we married and when we were in China.

The Answer to My Question:

The answer to my question: "Can I use project funds to go to Europe" is "No". So I just wrote to the conference organizers and told them I can't come unless they swap my papers over and accept the one they previously rejected which has the funding attached to it. Don't know what the chances are but can't hurt to try. The other options are:

2. My supervisor sugggested to find another conference to present at. But I think it is too late for that, but I'll have a look.

3. A colleague elsewhere in Europe is interested in funding a visit by me. We were looking at next year, but maybe...

4. Pay my own way to Europe.

5. Don't go.

I think that's it. Any ideas?

Early Hedge Fund Returns for March 2009

With 55% of funds reporting Credit Suisse/Tremont estimate that hedge funds gained 0.86% on average in March. It's better than HFR's estimate but not much compared to equity markets. But that's fine, hedge funds are continuing the trend of again not being correlated to equity markets, which is a sign the global financial crisis might be abating.

Taleb on Rebuilding Capitalism

A Black Swan in Canberra

Nicholas Taleb has an article in the Financial Times about how he thinks the capitalist system needs to be changed in the wake of the global financial crisis. Roger Nusbaum made some comments on the piece. Taleb's comments are all about making the system more resilient to shocks and some of them make sense in that regard. However, his point that people shouldn't depend on financial assets for their retirement "which they don't control" but instead on "their businesses" that "they control" is problematic. If you've read this blog you'll know that I am all for people being entrepreneurial but on the other hand not everyone is cut out to be an entrepreneur. And risk is very concentrated in most small businesses. While the owner controls management decisions they have no control over the external environment. And though an economy of many small businesses might be more resilient in the face of shocks than one with just a few large ones this isn't true of those businesses themselves. This is why small businesses are usually sold for lower multiples than large businesses. Of course there are some small businesses which are pretty solid like a medical practice, though they still have their risks. But most retail and manufacturing enterprises are at great risk from competition as well as general economic conditions. Farms are at risk from the weather and market prices.

And anyway what is the retiree supposed to do when they "retire"? Sell the business and put the money in financial assets? I guess we might consider land to be a non-financial asset, but it's not risk free either. In pre-industrial economies people could retire by renting their land out to a tenant farmer or relying on their children to feed them.

Realistically, retirement income can only be provided for most people either from financial assets of some sort or from the government taxing productive people and enterprises to pay the retirees. Not everyone has children or could depend on them to look after them. Relying on an employer to pay you a retirement income would be even more risky unless the firm invests in financial assets.

March 2009 Moominvalley Report

We gained this month and so did the markets and we beat the market again. The following is based on the available data as a couple of funds won't report till near the end of the month. As usual everything is in US Dollars unless otherwise stated. I'll continue with the less formal format I adopted last month.

The MSCI World Index rose 8.29% in USD terms and the SPX rose 8.76%. We gained 11.33% in USD terms (3.22% in AUD terms). Performance was strongest in Australian stocks (9.07%) and the Australian Dollar gained. Leverage also helped for a change. Alpha measured against the USD MSCI rose to 4%.

We spent $3052 which is a bit below recent levels. The main mitigating factor is that according to Redbook the value of our car rose which I treat as negative consumption. Snork Maiden was surprised though as with her parents here we expected we would have spent much more than normal.



As you can see from these accounts our retirement accounts did much better than non-retirement investments this month. Net worth reached $202k ($A292k). Asset allocation moved away from our target as Australian stocks gained strongly and the shares of everything else in our portfolio fell:



The craziness of the financial crisis is evident in this chart of monthly returns:



As mentioned above, performance so far this calendar year has been better than the market even when adjusted for leverage in fact:



Points above the regression line are market beating on a risk adjusted basis. The slope of the line is "beta" in this sample.

Initial Hedge Fund Performance for March

The HFRX index is showing a 0.03% decline for March while stock indices rose more than 8% globally for the month. But a lot of the component indices seem to be unavailable so far and HFRX is based on a small sample of hedge funds. So the picture could look different later in the month when more hedge fund performance figures are in.

Moom Returns Breakdown for Feburary 2009

The returns for each asset class are also net of any movements in currencies. Losses have been adjusted up a bit since the close of the month due to hedge fund and commodities returns being poorer than expected.

Snork Maiden Returns March 2009

Snork Maiden finally saw a gain in her non-retirement investments this month after six losing months in a row. The gain was only $A332 or 3.8% but it's better than nothing I guess. Her super account gained $A412 pre-tax (there was a gain last in December). That's 4.1%. These are returns in Australian Dollar terms of course. The MSCI World Index only gained 0.4% in March in Australian Dollar terms.

Can I Use Project Funds to Go to Europe?

My paper about my funded research project was rejected by one of the two conference organizers in Europe I submitted papers to. They accepted a second paper on a different topic. I still need to hear from the organizers of the conference in Venezia but that paper is on the second topic too. So the question is whether I can use my research funds to go to Europe to present on a different topic. Of course I can talk to people there about the research project but it will be very much a general professional development thing. Snork Maiden had both her papers accepted, but she's going to the course in England during that time. I could present one of her papers but unless she registers we probably won't get a presentation slot.

AEP Announces Program To Maximise Shareholder Value

From the press release:

AEP ANNOUNCES PROGRAM TO MAXIMISE SHAREHOLDER VALUE:

• $60 million pro-rata return of capital proposed
• Continuation of business model for existing investments
• Suspension of new investment activity for the time being
• Shareholder vote in two years to determine future direction of the Company depending on
share price performance

AEP is a private equity company listed on the Australian Stock Exchange. The stock has been trading at less than 50% of net asset value for a while now. So it is good that they are looking to try to boost the share price, which indeed did rise on Friday following the announcement. It would be a shame though if this opportunity for retail investors to participate in private equity was wound up in the end.

Rationale for Joining LinkedIn

This guy has almost the same rationale as I did for joining LinkedIn - getting more visibility for your own website (and yourself). The same is true of RePEc in economics. If you are not on that site, to some extent you don't exist in economics... Increasingly people will use these sites as well as the traditional search engines to look for expertise. And RePEc and LinkedIn pages tend to come in high in Google Searches.

Sandisk Cruzer 16GB

I got the 16GB version of the Sandisk Cruzer USB Flash Drive in JB Hi Fi for $A75. The local Apple reseller only had one rather ugly small LaCie drive available. Dick Smith had plenty of 2 and 4GB drives but only one type of 8GB drive and no 16GB drives. I only recently realized that JB Hi Fi also sold general electronic goods... The name of the store is not that descriptive.

I followed the instructions on Sandisk's website for removing the included U3 software (which is useless on a Mac) and I reformatted the drive as a Mac drive. My e-mail often shows a very noticeable "latency", but so far it is not too annoying...

Moominmama in March

The table shows Moominmama's performance in March. The MSCI World Index gained 8.29% and the S&P 500 8.76% (total return). But Moominmama's allocation to equities is pretty low (24%) so she only gained 2.80%.

Flash Drives and Trees

I just got an e-mail about a new social media things called Academia.edu. The organizers state:

"Academia.edu was founded by Richard Price and a team of people from Stanford and Cambridge University. The aim is for the site to list every academic in the world, together with their university and department affiliation."

But like LinkedIn, I'm not yet sure whether it is really much use for anything else but being seen to be there. From a quick look around, it's overwhelmingly graduate students who are members despite the claim that: "Stephen Hawking, Richard Dawkins, Noam Chomsky, Paul Krugman and Steven Pinker have all added their names to Academia.edu's tree recently, and so have 70% of the Nobel Prize winners for 2008."

I'm settling into my office - all my books and stuff are now there and my computer is set up and I have an appointment scheduled for today to check my ergonomics.

I'm trying to decide on the best system to always have the most up to date version of my data (i.e. all my computer files excluding applications etc.) with me whether I'm working at the University or at home. In the past I've used an external hard drive with all the data on it, which I've then plugged into my home or office computer. I had the applications residing on the computers and used the computers as backup for the data (where usually an external drive is considered the backup). The only problem is the long cable to the drive is awkward when using a laptop and gets easily disconnected. I know that there are networking solutions like Apple's MobileMe but I can see where that will very quickly exceed my internet download allocation at home or I'll still need to use the hard drive to make backups. So the solution I'm coming to is getting a 16GB USB flash drive instead. It's big enough for all my data. I have a 2GB one at the moment Kingston Data Traveller but it is very slow when copying lots of small files as some users note. And too small for even my e-mail database. From what I read there is no reason why these things should be slower than hard drives. Maybe the next one I get will be faster?

Key

Finally today I got the key to my office and Snork Maiden and I moved some of my books and files in there this evening. My computer should be set up and in situ tomorrow. I still don't have a contract or a university ID that will let me access the library databases but I should soon... I'm also going to try to get a better chair. Looks like I might be able to just go buy one and claim reimbursement from my project funds. As I mentioned a while ago I had back problems last year and bought a new chair for home use. I don't want to risk the same kind of injury by sitting in an unsuitable chair. Hopefully I can do this without some bureaucratic requirement for a health and safety person to assess my needs...

Moominvalley, 2612, ACT, & Australia

Continuing the series on income and tax in the ACT and Australia, today's post compares the averages for "Moominvalley" (Moom's and Snork Maiden's average per person) in 2007-8 with the averages for our postcode, our state, and our country in 2006-7:



We earned a lot less than average in 2007-8 than these regions did in 2006-7. In terms of total income though we earned $36.7k compared to the Australian average of $43.5k. Fortunately we paid a lot less tax both absolutely and in percentage terms - just $3.5k in net tax (9%) compared to the Australian average of $9.7k (22%). The postcode average was 24% and ACT 23%. We got more imputation credits (for corporation tax already paid on dividends received), more capital gains, and much larger deductions than the averages for all these regions. All these reduced our final tax bill. We claimed particularly little in work-related expenses, however, as Snork-Maiden's employer is very generous in covering costs on business trips and she gets a laptop from work that covers her computing needs at home too. I claimed investment expenses instead of work-related expenses. Work-related expenses are employee, not business expenses. So they are really rather high as an average in Australia...

Sydney Trip

Most of last week we were on a trip to Sydney together with the "Snorkparents". The picture is the view from Watson's Bay of the Sydney CBD. Snorkdad said "Hong Kong" when he looked at this view and I replied "bu shan" (no mountain). I took them (while Snork Maiden was at her conference) on a trip to Circular Quay on the ferry to Watson's Bay, on a walk around South Head, fish and chips lunch, bus to Bondi Beach (snoozing in the sun for them and swimming for me) and back to the city. We are getting quite good at a few words of Chinese and English and lots of gestures. On Thursday I gave a presentation at the University which went well until someone asked a question I wasn't prepared for about stuff I haven't done yet but plan to do and my mind froze. I did manage to partly answer his question in my answer to the next question. I didn't get a good impression of the department though and all of us feel glad to be back in Canberra and don't relish the idea of living in Sydney. So maybe it's all for the good... Sydney's a great place to visit (apart from scratching the car in a parking garage and getting a parking ticket).

I also attended a few presentations at the conference Snork Maiden attended including one by a famous economics blogger. It was OK but Snork Maiden thinks he's better on his blog :)

P.S.

Snork Maiden just heard that she got accepted for a two week course in England - only problem is that is the second two weeks of June. And the meeting in Italy is the last week of May. I won't hear till Wednesday about the paper I submitted to a conference in Venezia in mid June and about a conference in the Netherlands till April 17th. Unfortunately, Snork Maiden wouldn't be able to come to Venezia with me. We'll have to see what Snork Maiden's supervisor thinks about such a long absence too... But soon we'll have to start booking flights and getting visas for her.

2006-7 Income and Tax for the ACT and Australia

Following up on Friday's post I've calculated the per capita breakdown of different income sources for all ACT postcodes and Australia as a whole:



I included both taxable and non-taxable individuals in my numbers - but total is still much less than the total population. For Australia the total is 11.8 million vs. about 21 million people in Australia. There is a lot one could learn from this data, so here are just some points that caught my attention:

1. As is well known the highest income ACT suburbs are all in the "Inner South" surrounding the parliamentary triangle. The poorest postcodes are all in Tuggeranong and Belconnen with Gungahlin also having lowish incomes. These are all outer suburbs. This is the standard Australian pattern of the rich living near the centre and the poor in the outer suburbs. The 2601 postcode though is strangely not so wealthy. I think this is because it not only includes the CBD but also the ANU campus with its student population.

2. Even the poorest ACT postcode, 2911, has a higher income than the Australian average.

3. Landlords on average lose money in all ACT postcodes and in Australia as a whole. Rental income is for some reason unusually high among Gungahlin residents.

4. Not all income sources are included as the numbers for individual sources do not add up to the totals.

5. Capital gains, not surprisingly, are very concentrated in the two highest income inner south postcodes (and Hall - a rural village in the ACT).

6. Business income from primary production (agriculture, mining etc.) is negative in almost all postcodes and in Australia as a whole. Not surprisingly it's concentrated in Hall and Pialligo. But non-primary production business makes money on average in all postcodes.

I'll be continuing this series with at least a couple more analyses.

Annual Australian Tax Statistics 2006-7

The annual report on Australian tax collections has just been published by the ATO. It's just crazy that "the vast majority of people use a tax agent" to submit their tax return in Australia. The Moomin household is in the 11.8% who submitted a paper return (well we didn't pay tax in 2006-7 of course, so in 2007-8 that percentage would likely be even lower). That's because e-tax only runs on Windows (and I think you also needed to have submitted a return in the previous year).

Otherwise, I'll confirm that we don't live in either the richest or poorest postcodes mentioned in that article :) In our neighborhood mean taxable income was $61,000 which was more than taxable income, let alone mean taxable income (see Moom's taxable income and Snork Maiden's taxable income - there is no such thing as a "joint return" in Australia). The raw data is available here.

Credit Suisse/Tremont Hedge Fund Index Again Impacted by Rogue Fund

The final Credit Suisse/Tremont numbers are in for February with the index losing 0.88%. In a replay of the Madoff scandal, equity market neutral index was down 5.61% partly due to the WTGC scandal. What is it about "equity market neutral" that attracts the scammers?

HFRI is down 1.13% for February and their equity market neutral index is down only 0.76%. HFRI is an equal weighted index of 2000 hedge funds. So no single fund impacts it much and I don't know if this WTGC thing was even included.

Book Review: Tim Ferriss - "The 4-Hour Work Week"

Snork-Maiden somehow convinced her employer to buy this book for their library :) I have mixed reactions. It's not one of these books that just drearily pads out a single idea in to book length format like Zilliak and McCloskey. So that's good.

1. I'm all for the don't defer life approach. Instead try to make money at something you like to do anyway and have fun doing it. That's pretty much what I've done most of my life as much as I can, so no problems with the basic premise.

2. Then there is stuff on focusing and cutting out useless or less useful work. This is good in principle.

3. "Low Information Diet". Taleb also says he doesn't read newspapers. This is a non-starter for an economist like me who is expected to have an opinion on what is happening in the political and economic spheres. Well anyway I enjoy reading news and opinion. I occasionally read fiction but prefer to read current affairs stuff for fun. I'm a social scientist. But there is another problem with it which also features in the next item...

4. "Interrupting Interruption and the Art of Refusal". It's certainly good to think about how to streamline routine interactions with people. But if you did half of what Ferriss suggests you'd come across as a total jerk who I wouldn't want to do business with. People who seem to have no interest in anyone else. And, though many meetings and interactions are a waste of time, you never know what might happen just as you never know what you might read that might be useful and give you a great idea. In other words, you need to be open and receptive to "positive Black Swans" not be some narrow-minded overplanning idiot.

Of course, what works for you will depend on what your personality type is. In the Myers Briggs system I guess that Ferris is an INTJ - Introverted, intuitive (but could be S sensing), thinking, judging. Certainly not an E-P (extroverted, perceiving) type who is open to learning and adapting to experience. Well, that's the impression his book gives.

5. The core of the book is very detailed information about setting up an internet based business which looks like it would be very useful for someone who wants to do that. It's never interested me enough to want to do it. So this section eventually got me rather bored and skimming through. My life has been based around being an employee who is least like an employee. The ultimate job I found was being a research only academic. In many ways that is great on the other hand I found myself getting stressed out worrying about how I could justify myself receiving money from the government as salary at times when my research wasn't going well. But that's because I am very conscientious. For someone like Ferriss who is willing to pretty much cheat to achieve his goals (i.e. his method of dehydrating to get into a very low weight class in Chinese kick-boxing and then inflating up again before the fight) it wouldn't be a problem. Being a trader also sounded cool but turned out to be hugely anxiety producing and not suited to my personality really.

6. The final part is all about planning travel and international relocation. I'm pretty much an expert at the latter so I skimmed pretty fast through this bit.

Don't get me wrong, there's lots of good stuff in all the chapters but don't think you should implement all of it and not all of it might be for you. I think my opinions differ because Ferris can't really imagine making money from doing what he wants to do anyway. So he is still in the mode of work is separate from life and you should compartmentalize. That's not at all where I'm coming from.

Career - Next Steps

The chairman told me that I interviewed very well and he doesn't have any feedback in that regard and if I find somewhere more matching my interests I should get the job. The potential Sydney job is a much closer match though we're not keen on a move to Sydney. It's nice to visit there but I prefer the weather here (I hate humidity) and both Snork Maiden and I like the bikeability and closeness to countryside etc. I also now have lunch lined up in a couple of weeks with the director of another school at the uni here.

Didn't Get the Senior Lectureship

I just heard that I didn't get the Senior Lectureship (Associate Prof in the U.S. system) position at the University down the street from me. The feedback I got so far is that people liked me but wondered whether I would be a good fit for the Department. The chairman had told me that he thought I was a good fit in fact which is presumably why I was interviewed, though they didn't originally advertize in my area of expertise. But another member of the selection committee seemed grumpy throughout my presentation and formal interview and I didn't get to meet them one on one so my expectation is that they was the main force against me. Anyway, I've asked for some more feedback from the chairman if possible to help me in future interviews.

I know from the most accepted research ranking in our discipline (who are obsessed with rankings) that I place pretty much in the middle of the full professors in that department. So it's certainly not a question of me being qualified as far as research strength goes.

Still no news on the job I supposedly did get. I e-mailed all the relevant administrators three days ago and not one of them has seen fit to reply to me at all.

I'm going to seek a meeting with the head of another School at the university to see if he can keep me in the loop regarding developments there. He is an old colleague from when I used to work at this University and just was promoted to Head of School. And I have my presentation in Sydney coming up later this month. They are looking for the equivalent of U.S. full professors. Discipline-wise it is the perfect fit to me. Their department is small and not very strong but if I went there it would be an opportunity perhaps to build something up. I'm not keen on moving to Sydney though.

I also just wrote to the people who wrote recommendations for me to thank and state that I hope I can rely on them in the future to recommend me.

I also have ideas for future research grants that I could pitch to funders...

P.S.
I just heard from one of the administrative staff, but basically the message was there might be progress next Tuesday or later.

Australian Unemployment Rising, But Still Low

Chart at Peter Martin's blog.

Planning Our Trip to Europe

Snork Maiden yesterday got a rejection e-mail for the paper she submitted to a conference in Slovenia. Having organized an international conference of this type myself where most presenters pay fees to attend the conference, I really can't understand conference organizers who reject papers unless they are really off topic, really incomprehensible, or multiple submissions. The excuse here is that "the facilities are insufficient for more than a certain number of papers" and so only the best will be accepted. Rent more facilities and charge participants more than the marginal cost of hosting their paper! Yes, the conference I organized did not have exorbitant fees and made a lot of money :)

Anyway, so Slovenia is out but plenty of places are still in the running. Venezia (a conference on the island pictured above where I attended another conference in 1998); Brighton, UK; Lecce, Italy; and Amsterdam. Between some juggling of these conference/workshop locations perhaps we can visit Moominmama and Moominbrother (somewhere in the Mediterranean basin). I just remembered yesterday that I have a friend (former student) based in Rome currently (working for UN FAO). I've used Rome before as a hub for European travels maybe we can do that this time. Frankfurt, Amsterdam, and London are the most likely other locations (done 'em all). OTOH Snork Maiden has never been to Europe and so is excited to check out everything.

P.S.
On review, it seems likely that Brighton is out of the running as successful candidates should have heard by 5th March and it is a European Union funded thing. The Lecce people confirmed that they will pay Snork Maiden's costs. I just need to hear about the Venezia thing to start to set the trip up.

Book Reviews: Gladwell

I read Blink by Malcolm Gladwell. While it is a good read I found it rather frustrating. I agree totally with the tone of the Wikipedia article. I guess it is too journalistic and not analytical enough. Sometimes making intuitive judgments is good and sometimes it is not. Some people are born with the abilities to make them and other times they can train to have those abilities. Well, the real world is messy I suppose but Gladwell doesn't make it much more tidy.

Next I tried to read "The Tipping Point". After reading about people who are "Connectors", "Mavens", and "Salesmen" I quickly got bored and gave up on reading. Maybe it is just too culturally specific to the US (where I lived ten years so other non-Americans would be really alienated). Very lengthy examples are Paul Revere, Sesame Street etc. It really didn't seem to be about how small things make a big difference as it is subtitled but about how social networks work. It really wasn't about "tipping points" at all as I would understand the term.

Next I've started Tim Flannery's "The Weather Makers"...

Credit Suisse/Tremont Hedge Fund Index Estimated to Finish down 0.45% for February

New York, March 9, 2009

Early estimates indicate the Credit Suisse/Tremont Hedge Fund Index will finish down 0.45% in February (based on 59% of assets reporting).
Volatility in global equity markets was fueled by an adverse feedback loop between the financial sector and the
economy in February, creating opportunities for hedge funds to capitalize on market swings. The Royal Bank of
Scotland in the UK, AIG in the US, and UBS in Switzerland all posted the highest corporate losses in recent times for
their respective countries. Hedge funds continued to decouple from equity markets and outperformed the MSCI World
Index by 10.04% in February and by 17.9% year-to-date. This can be attributed, in part, to many hedge funds taking
short positions, defensively positioning themselves with reduced net exposures to equity markets, tactically harvesting
market volatility, and being less constrained by the deleveraging process that hamstrung some managers in 4Q 2008.
The Dedicated Short Bias strategy looks to be the biggest winner for the month with an estimated return of 4.09%.

Topped-Up Australian Margin Loan

I paid down $A1000 of my Australian margin loan to reduce the risk of a margin call. It's one thing I can do to reduce anxiety. Still waiting to hear on the jobs. The money came from a credit card. I need to get paid soon.

Day Starting Badly.... Will it End Well?

Today I'm supposed to get my contract for the one year job and hear the outcome on the permanent job. Well, they said on both: "By the end of the week". And Monday is a public holiday here...

So the US market was down again and I was again forced to sell. Again, I miscalculated. I'm below the threshold for buying on margin now anyway, so I can't make the mistake again, any time soon...

And then I dropped a cup of coffee it to the drawer of my bedside table/nightstand and all over the place. At least it let me get my aggression out by doing a bunch of cleaning!

Hedge Fund Performance for February

The HFRX (daily small sample) index lost 0.38% for February. As you know stock market indices fell sharply with the MSCI World Index down 9.73% and the SPX down 10.65%.

February 2009 Report

I don't feel like writing my standard monthly report this month - too depressing. The market keeps going down with the MSCI down 9.73% and the SPX down 10.65%. We "only" lost 4.71% in USD terms (5.33% in AUD terms). Could be worse I guess. The last two months have been market beating:



This month this is due to a relatively strong (or less weak) performance by Australian equities. We did OK on non-US foreign equities too. Private equity sucked even more than US stocks... Maybe I'll report the breakdown at the end of this month when all hedge fund returns are available. Because of our relative outperformance alpha measures crept up this month to 3%.

Somehow we managed to spend almost $A6,500. Car costs totalled $A1,250 including $A777 for annual registration. My trip to Cairns cost more than $A500 of out of pocket expenses some of which will be refunded when I finally officially have a job. Snork Maiden spent $US527 on her parents visit in February. So that about explains the increased spending.

Our spending over the last 12 months is beginning to decline as we settle down from our move to Australia (all the humps in spending are international moves) and the Aussie Dollar declined. Comprehensive earnings over the last 12 months remain dire:



When the green line is above the red line net worth increased in the last 12 months and vice versa.

Book Reviews: Zilliak and McCloskey and Taleb

Snork Maiden brought home borrowed copies of Ziliak and McCloskey's "Cult of Statistical Signficance" and Taleb's "The Black Swan". in a way both are rants against standard practice in quantitative analysis. But Taleb's book is ten times better or more than Ziliak and McCloskey's. The latter have a single point that researchers often misuse the concept of statistical significance and ignore the actual size of an effect or variable in favor of just stating that it is "significant" - which just means in statistics that there is a low probability that we think there is an effect when there is none (the probability of falsely rejecting a null hypothesis that is in fact true). Now many researchers write up ineffective discussions of what their research found or make fundamental mistakes in method. But it's not universal and the book never really explains key concepts such as what statistical significance is. It's just one huge rant against all the economists and statisticans that the author feels have oppressed them or their like-thinkers. It assumes we know these things and know the authors critique already (which I do as an economist). The statistician R. A. Fisher is the big villain of the story and Gosset the oppressed hero. But there is never any discussion of exactly what their contributions were.

By contrast, Taleb defines all the basic ideas he uses and has more than one idea. Not all are original of course. Many are commonplace in recent behavioral economics and in more general economics. And they are not esoteric ideas in economics. Winner takes all ideas are in Frank and Bernanke's introductry textbook that I used to teach from. There are notes for the sources at the end of the book. And yes he rants and raves against everyone he believes thinks incorrectly but he does it in an amusing way. I like to read him and didn't find him too annoying. Some people complain about his use of fiction, autobiography, and fictionalised autobiography alongside factual material. In this he reminds me of Robert Pirsig who embedded philosophical and autobiographical material in a story about a motorbike trip across America in "Zen and the Art of Motorcycle Maintenance". I don't have a problem with it. It makes the book much more readable than it would otherwise be.

World's Top 200 Universities

All the universities I've studied or worked at are on this list. There's some luck in that. I've interviewed for jobs at some that are not on the list such as Clark University, New Jersey Institute of Technology, and Scottish Agricultural College (unless you reckon it's part of the University of Aberdeen) but none made me an offer. And then there are some on the list I interviewed at but wasn't made an offer. Most prominent among those is the University of Cambridge. My presentation at the end of the month is also at a top 200 university.

Career Update

The interview went smoothly but I think my chances are 50:50 on getting the job. Some people seem enthusiastic about hiring me while others seem skeptical. They say they'll let me know by the end of the week. I am also told that I should have a contract on the short-term research position by the end of the week. It's supposed to be for 3.25 days a week at what seems to be a nominal annual salary of $A100,296.

Interview Preparation

I completed my presentation slides on Thursday and today went over to a colleague's house to run the presentation by him. I was meant to meet him on campus on Friday, but he didn't show up. He works at the college I'm applying to but not in the unit I am applying for. He wrote a reference letter for me. He recommended mainly organizational changes in my presentation to give people a bit better roadmap of where I'm going and emphasize more what is new or different in my work.

Meanwhile the Snorkparents are settling in. We took them to look at the view of the city and mountains from the Telstra Tower (in the backgroun in the picture above) and for some shopping in Dickson... Tomorrow we might go to the open day at Government House (in the foreground). I've never been inside the grounds.

Moominmama February 2009 Performance

Moominmama's portfolio saw another loss this month of 3.66% in USD terms. The MSCI World Index was down 9.73% and the S&P 500 close to 11%. Moominmama lost in all asset classes apart from US Dollars cash (this asset class must have a positive return in USD terms :)). On a preliminary basis Moominoid and Snork Maiden lost around 5%. So we both outperformed the markets for a second month running. But we're still losing money.

Hedge Fund Performance for January

While the HFRX index saw a gain for January, HFRI * had a loss of -.04%. That's still great compared to the equity markets. Credit Suisse/Tremont saw a gain of 1.09%.

* For a review of the difference between HFRI and HFRX see my post on that topic.

Abolishing Corporation Tax Makes More Sense

Apparently momentum is growing to abolish Australia's system of dividend imputation. In Australia companies pass on tax credits attached to their dividends to their Australian shareholders for Australian tax paid. As the corporation tax rate is 30% (note for Americans - much lower than US rates and we're worried it's too high!) a taxpayer in the 30% marginal tax bracket pays no tax on the dividend. Taxpayers in higher brackets pay 10 or 15% and taxpayers in lower brackets get a refund. Superannuation funds pay zero tax on these dividends instead of their 15% for ordinary income. If you claim expenses for holding your shares (like margin interest) you lower your effective tax rate further and boost your refund. Last year I got a nice refund due to this strategy.

Imputation is meant to avoid double taxation of dividends (the US has introduced "qualified dividends" with the same aim). The arguments against it in the article are valid. Another argument is that imputation discriminates against reinvestment in the business (or favors borrowing to invest) because credits can only be attached to dividends paid out. Australian taxpayers will favor dividends over capital gains.

Of course I would personally be disappointed by the elimination of imputation. I'd cut our allocation to Australian shares and boost our allocation to foreign shares dramatically as a result. I'm not sure that the comments in the article about this move boosting the Australian stock market are valid as most Australian shareholders would do likewise (while foreign investors would increase their allocation to Australia).

It'd make a lot more sense in my opinion to abolish corporation tax and simply tax dividends and capital gains equally in the hands of recipients. This includes foreign investors. Foreign investors currently face withholding taxes on dividends that don't have attached credits but not on so-called "franked dividends" and no tax on capital gains (though of course they may be taxed in their own country).

Career, Financial, and Family Update

Yesterday, I went to a meeting at the government department that is funding my research project. One person left early and the most relevant person substantively didn't show up but still there was some useful exchange between us and one guy who directs a section in the ministry. But overall they don't have a very focused idea of what they are looking for from us, which I guess is good because then I can more or less do what I want :) I'm told that there is now an office at the university with my name on the door (one of the perks of academia is not working in a "cubicle" or shared office) but I still don't have a contract. It's entangled in the bureaucracy. After a recent restructuring no-one knows who is responsible for what, making the usually cumbersome university bureaucracy all the more so.

At least CommSec finally deposited my money in my Colonial First State account and started up my $A500 a month automatic savings scheme. So a little progress on the financial front. I have a bunch of financial stuff that I should post on but have been busy working on the project/paper/presentation for my interview on 2nd March. The 2nd March deadline has just been a good excuse to complete this project or get it to the stage where I can present on it. I also submitted a version to a conference in Europe later this year and there are plenty of follow up stages that can be done. Sorry I can't post more details on this blog of what topic I'm working on. I also now have scheduled a presentation at another major University for 26th March.

We successfully reorganized our apartment over the weekend for the visit of the Snorkparents. It looks pretty good. I quite like my office in one end of the long living room where the doors to the balcony can be opened wide... They should be leaving China late tonight I think.

Yesterday was our first wedding anniversary. Among other things we went out to eat (Korean food) and then took the car through an automatic car wash for the first time (can't have a dirty car to pick up the Snorkparents), while eating ice cream. Snork Maiden said it was one of the best value entertainments in Australia :)

Bounce in the Baltic Dry Index

As is the case for non-US crude oil prices there's been a bit of a bounce in the Baltic Dry Index of shipping costs. Of course, it could just be a case of a technical bounce following overshooting to the downside.

Ordering Computer

Some progress on the job front. A computer is being ordered for me from the project funds and a meeting being set up with the funders to discuss feasible goals for the project. But the rest is still entangled in the bureaucracy.

LinkedIn

I just joined LinkedIn. I don't really understand how it works or whether it is useful, but figured it is yet another portal to channel people to my professional website. I wish I could post a link here, but sorry that would blow my cover completely :) I'd appreciate any tips on how to use the site more effectively.

BTW in the last month this blog got 14 times as many visits as my professional site. But then there are more than 900 posts for people to hit on the blog and maybe 10 pages on the professional site.

Cable TV

I went along to my local TransACT office to ask about changing our broadband/phone plan into one that includes cable TV. Snork Maiden's parents will be visiting from China very soon. As they don't speak a word of English we want to provide them with television in Chinese besides the daily news broadcast from SBS. Otherwise we have a pirated set of all the Ghibli movies in Chinese for them to watch on DVD :) We haven't quite figured out how to provide them with an internet connection yet as the broadband internet connection is in the room that we are planning on using as our bedroom while they're here (and the desktop computer is going to be moved out of there...) and Snork Maiden's old laptop doesn't seem to work with our wireless internet for whatever reason... Anyway, I'm getting sidetracked.

The guy in the office said: "We're upgrading our system so we can't sign on any new customers for the next six weeks!". I'd never heard anything like that before. Foxtel don't seem to have a Chinese channel - or anything in foreign languages - which I find rather odd. But he could give me a new mobile phone and number on the spot. So now we have two. Again, this is primarily for the Snorkparents so when they are stranded in this foreign landscape they can call up to be rescued :)

Credit Suisse Yearbook

Great report from Credit Suisse on global equity returns.

Why Petrol Has Gone Up in Price Though Crude Hasn't

I've noticed that petrol (gasoline) has gone up in price from a low of $A0.99 a litre ($US2.41 a gallon) to around $A1.25 a litre ($US3.04 a gallon) while the US crude oil futures contracts have gone nowhere and neither has the Australian Dollar. Even the Ford dealer tried to distract me by talking about the price of petrol when I complained about the price of Ford parts. Yahoo has an interesting article about the issue, explaining that the price of other varieties of crude oil has risen above that of West Texas Intermediate Crude, which remains depressed. Could this be a sign of economic recovery elsewhere in the world?

Commonwealth Securities Service Deteriorating

After ranting yesterday about Ford, today it's Commonwealth Securities turn. I don't like putting down companies but I feel that criticizing companies on blogs is one way consumers can pressure them to perform better. CommSec's service has shown a very sudden deterioration since the beginning of this calendar year. It's almost as bad as Citibank now:

1. I sent in a request to buy units in a Colonial First State fund (another subsidiary of the Commonwealth Bank) through CommSec. Nothing happened. I contacted CommSec and was told to contact CFS. I contacted CFS and was told to contact CommSec. They told me they had no record of my application and instructed me to send in a new application. Which I did. Two weeks later, I get a call from CommSec: "Mr Moom - the form you sent in to buy CFS funds had a different account number than that of the funds which are on your margin loan". "Um, yes, that was on purpose, I sent the application to you to avoid the 4% load I'd have to pay if I sent the form direct to CFS. But as I've already sent in another application please just cancel this one...".

2. Still nothing has happened with my second application I sent in around 2 weeks ago...

3. I requested to withdraw x thousand units of my total shareholding of y thousand EBI.AX to the new unlisted EAIT. I see online that all y thousand of my units have disappeared from my CommSec account. I phone them up and am reassured that that is just a formality and the y-x thousand units will appear back in my account after the deal closes. I just opened the letter from Everest Financial welcoming me as a new unitholder of y thousand shares in EAIT... I guess not such a big deal, except all that money is now locked up for one year...

How Much Does That Cost?!

We got the major part of our car repairs done cheaply. Today we finally picked up from the Ford dealer the silver trim that goes on the bumper. The price: $A193! ($US125) Unbelievable. I guess I should have asked the price before placing the order. I assumed it would be $A20-30 at the most...

So, I'm back in much colder Canberra. A lot to do in the next couple of weeks before my interview at the university. I want to do more work on a project that I will give them a presentation on. Also in this time frame Snork Maiden's parents will be arriving from China and maybe my one year job will actually get going and I'll be involved in getting my office set up, bureaucracy etc....

I did get some good ideas for the one year project (I'll have to come up with a better name) while at the conference and also someone at another major Australian University wants me to apply for one of a few senior jobs (Professor or Associate Professor) that they might be able to advertise later this year. Today, he expressed interest in me giving them a presentation. Snork Maiden happens to be going there for a meeting in late March so maybe we can work something out. We'll just have to "babysit" her parents - i.e bring them with us and find them stuff to do there. They don't speak a word of English and though they have travelled quite a lot outside China it was on an independent basis. Her stepfather though has visited his daughter in San Francisco. He does seem a bit more adventurous.

Kuranda Trip

I signed up for a trip to Kuranda - a small town or village about 30km from Cairns. They pick you up by bus and take you to the terminal of the "Skyrail" outside town. This is a cablecar that runs for 8km up the mountains over the rainforests to Kuranda. Then you make your own way back on the scenic railway which winds its way down along the river valley back to Cairns. The station is a few blocks from my hotel. Cost is $A89 ($US55) - the tickets individually are $A40 for each of the trips so the bus out to the terminal is $A9. This morning I was pitched a bus tour to Cape Tribulation and back for just $A10 more (much reduced) - all day including hiking, swimming, crocodile spotting (not in the same location as the swimming!) and lunch included. Cape Tribulation is at the end of the sealed road on Australia's East Coast - in other words the end of the "civilized world" and the edge of the Outback. I'd have loved to go on that trip but it departs at 7:30am and unfortunately I need to organize some things here at the hotel in the morning and can't leave that early. Hence the trip nearer to town.

Talking about good travel deals, this evening I saw a round the world ticket advertised at $A1599 ($US1000) and London roundtrip for $A1250 ($US800) at a travel agent here in Cairns. Granted that there are likely a bunch of taxes and stuff on top of that, but still those are amazing prices. My flight to Cairns was $A625.

Cairns

I'm on my first business trip of my new job at a conference in Cairns, which is on the coast of northern Queensland deep in the tropics. I haven't been in tropical Australia before though I have been in the tropics in Thailand, Malaysia, Singapore, and Hong Kong. Cairns is the central location for trips to the Great Barrier Reef and to the rainforest of the Wet Tropics World Heritage Area. The city is surrounded by rainforest clad mountain ranges and across the bay I can see from the hotel the extensive mangrove forests along the coast. I'm hoping to manage to sneak in a trip to see some rainforests if I can instead of attending all the conference sessions. I don't plan on going to the reef. I have seen a coral reef before. In fact the most northerly reef in the World at Eilat in Israel. And swimming in the hotel's swimming pool this morning was about what I can manage, I don't think I'm up to snorkelling. I've never been a good swimmer though I like being in the water.

Back home all the paperwork is still in process and I don't know for sure what department at the university I'll be based in. But that doesn't stop them from paying for my trip here. I already, gave my presentation this afternoon. My first in more than a year and a half and it seemed some people at least liked it. As well as lots of academics and PhD students there are heaps of "public servants" here at the meeting in Cairns as always at these Australasian conferences. You never see this in the United States.

January 2009 Report

In USD terms we pretty much matched the MSCI index this month. Of course, this was its worst January ever. In Australian Dollar terms performance was flat and net worth increased slightly.

Income and Expenditure



Expenditure was $3,036 ($A5,015). Car repairs cost $A550. We bought a barbeque ($A365) and there were about $A260 of medical expenses which were partly refunded by Medicare in February. And the car depreciated another $A500. Before taking into account foreign exchange movements non-retirement accounts gained and retirement accounts lost money. They both lost in USD terms after taking into account the change in exchange rates.

Net Worth

Net worth fell by $17,337 to $188,160 or in Australian Dollar terms rose by $A735 to $295,060.

Investment Performance

USD returns were -8.92% vs. -8.51% or -8.43% for the MSCI and SPX respectively. In AUD terms we returned -0.19%.



All asset classes lost apart from hedge funds, which gained massively mainly due to the delisting of EBI as EAIT. Returns for both EAIT and the Man managed futures fund are now going to be estimated at the time of writing these accounts reports and adjusted later in the month (mid-month and month's end respectively) after the actual returns are available.

Using my preferred time series method, portfolio beta to the MSCI index was 1.31 with an annual alpha of 1.9%. Other methods now give a negative alpha.

Asset Allocation

At the end of October the allocation was 51% in "passive alpha", 57% in "beta", 0% was allocated to trading, 4% to industrial stocks, 5% to liquidity, 4% to other assets, and we were borrowing 21%. Due to the use of leveraged funds, our actual exposure to stocks was 98% of net worth. When we take into account borrowing by the leveraged funds we are invested in, borrowing per dollar of equity was 60 cents. Looking at asset classes:



Shifts in the allocation are mainly due to relative performance this month. We moved further towards our long-term asset allocation, though not for a good reason, but mainly because Australian stocks underperformed and we are overweight in them.

I Won't Get a $950 Tax Bonus

According to an article in the Australian Financial Review today, I won't be eligible for the Australian government's $A950 stimulus payment. Only people who paid tax and earned less than $A80,000 will get the full payment - with reduced amounts for those earning between $A80 and $A100k. I paid negative tax in the 2007-8 tax year, so no bonus for me. There are a bunch of other special classes of bonus, but I don't qualify for any of them either.

The bottom line is that poor people who don't fall into a special category - for example students - won't be getting a payment from the government in either this stimulus package or the previous one. I don't understand the logic of this. It isn't as if the poor don't vote in Australia (unlike other countries such as the US), as we have compulsory voting.

At least Snork Maiden should get a payment.

A Little Normalcy Returns

While stock indices had their worst January in history, globally, hedge funds did fine. The return of uncorrelated returns :)

NDS Deal Closes

The deal to take NDS private finally passed its last hurdle today. I last bought back into the stock on 19th December at $49. The takeover price is $63. I plan to redeploy some of the funds freed up in my Interactive Brokers account. I've been holding NDS in my Ameritrade account.

"NDS Announces Receipt of Final Court Approval of Scheme
Last update: 2/4/2009 11:48:00 AM
NEW YORK & LONDON, Feb 04, 2009 (BUSINESS WIRE) -- NDS Group Limited ("NDS") announced that earlier today, the High Court of Justice in England and Wales approved the remaining elements of the scheme of arrangement pursuant to which News Corporation and two subsidiaries of funds advised by Permira Advisers LLP will take NDS private. The scheme is expected to become fully effective on February 5, 2009, upon the registration of a copy of the court order with the Registrar of Companies in England and Wales and the last day for trading in ADSs is expected to be February 4, 2009."

Venture Capital: 1992 vs 2000

Interesting comparison of the outcomes for venture capital invested in 1992 vs. in 2000. The 2000 vintage is only now beginning to pay off in terms of distributions, but still has lost money overall. As in 2007 venture capitalists invested heavily at the top of the market. On average they don't seem a lot smarter than anyone else. Though there is some evidence that the best are good.

Why $950?

The Australian government announced its second stimulus package today. Included is a bonus payment of "up to $A950" for every worker earning less than $A100k per year. What an odd number. But the exchange rate with the U.S. Dollar is currently 63 U.S. cents to an Australian Dollar, and if you haven't guessed already, $A950 is exactly $US600, which was the amount of the "stimulus payment" in the first U.S. stimulus package.

EBI Saga Finally Resolved

In the end 27% of shareholders (including 6000 of my own shares) opted to participate in the new unlisted hedge fund of funds EAIT. The remainder will stay in the listed EBI which will be managed by Laxey Partners - an Isle of Man based hedge fund. The plan is to wind up the fund and distribute the proceeds. Unless there is another complete collapse in global share markets this is a great investment - buy $2.38 worth of assets for just over a dollar and get the proceeds redistributed to you mostly in the next couple of years. I may in fact buy more units when I can. I'm bumping the value in my accounts of the unlisted fund to NAV. This will be the biggest positive contribution towards this month's results.

Moominmama January 2009 Performance

Moominmama lost 1.39% in January. That's not bad considering the MSCI World Index lost 8.51% for the month. This is the portfolio breakdown:



And here is a new view in terms of asset classes:



Portfolio diversification worked pretty well this month (for a change).

When You Have $60 billion, Losing $4 Bllion isn't so Bad!

The Future Fund reported its results for the last quarter of 2008

Levitt on Credit Cards

Following up on my post about EFTPOS policies Steven Levitt is commenting on credit cards. Nothing much new there, but one of the commenters makes the very good point that taking cash payments also has costs to the retailer - having cash, making change, risking robbery, and spending time taking the cash to the bank and depositing it. But I guess, unless they banned cash payments altogether there is little marginal cost in taking a cash payment - as they have to do all those things already apart from give change.

Saving

Now that I am going to have a job I'm setting up a regular savings plan of $A500 a month from my salary to match the plan we already have going for Snork Maiden which is also now $A500 per month. I'm going to invest it in the CFS Diversified Fund in an account inside of my margin account at CommSec. I'm not going to be adding borrowed money to this investment but rather it will help reduce the loan to value ratio on my loan over time. If my job contract includes required salary sacrifice into superannuation (i.e. employee contributions to a retirement fund on top of the employer contributions) I plan to also set up salary sacrificing for Snork Maiden. Her employer currently contributes 15.4% on top of her salary to superannuation (the legal minimum is 9% in Australia).

Bank Santander Compensates Clients Hit by Madoff

Any chance Man Financial will do this for its clients who suffered losses (if relatively small) in RMF?

Happy Year of the Buffalo

Buffalo sounds better than Ox :) We should celebrate with mozzarella cheese :P

Second Round Interview

This morning I met my colleague who helped me with the grant application and began to work out the details. It'll take a little while to push everything through the notorious university bureaucracy. We don't even know yet exactly which program I'll be in though the overall school/college is determined. My flight is already booked to a conference in February and my colleague will see if he can get me onto the workshop schedule to give a short presentation about my planned project.

This evening I just received a message from the chairman of the department where I interviewed yesterday. he says he thinks I'm a good fit in his program and wants to do a second round interview including a seminar presentation. Either in early February or early March. I'd prefer March to give me more time and they have plenty of other people coming to give presentations in the meantime. Unless that looks like I'm not enthusiastic? I wouldn't be starting in their program till July.

I feel a bit nervous and sad for some reason and don't know why.