Moominmama Portfolio Performance June 2010

Moominmama's portfolio actually saw gains this month despite the 2.95% fall in the MSCI World Index in USD terms. As always I report Moominmama's performance in USD terms. The main reason for the gain was the rise in Sterling which helped both Sterling Cash and Bonds perform well this month. The fall in USD cash reflects management/safekeeping fees rather than actual negative returns on USD cash which is impossible if we are measuring things in US Dollars! Non-US equities also did OK.

Everest Financial to Wind Up Business

Following a strategic review, Everest Financial Group is to wind up the business, return capital to shareholders and transfer the funds under management to other firms. I have units in the EAIT and EDIF funds and am a shareholder in Everest Financial. This once seemed to be a successful business but the GFC hit it hard. Particularly damaging were the actions of activist hedge funds that resulted in reducing funds under management to far too small a scale for the company to go on. The book value of the shares exceeds the market value so hopefully we'll get something decent back and hopefully a decent manager will take over EAIT and EDIF.

"Dow Jones" Replaces "Tremont"

CREDIT SUISSE AND DOW JONES INDEXES JOIN FORCES ON HEDGE FUND INDEXES

Former Credit Suisse/Tremont Hedge Fund Indexes To Be Rebranded Dow Jones Credit Suisse Hedge Fund Indexes

New York (June 22, 2010) – Credit Suisse, one of the world's leading financial services providers, and Dow Jones Indexes, a leading global index provider, today signed an agreement which covers the calculation, licensing, branding and marketing of the hedge fund indexes formerly known as the Credit Suisse/Tremont Hedge Fund Indexes. Under this agreement, the indexes will be branded Dow Jones Credit Suisse Hedge Fund Indexes, and Dow Jones Indexes will calculate, distribute and market the indexes, while Credit Suisse affiliates will continue to manage the financial products linked to them. Credit Suisse and Dow Jones Indexes intend to keep the methodologies and rules for each of the existing indexes consistent with past practices.

Got Schengen Visa

Snork Maiden got her Schengen visa which allows travel to most European Union countries apart from Britain:



I thought that it was strange that we had to get it from the Norwegian embassy because Norway isn't part of the European Union. But it turns out that Norway is part of Schengen though it isn't part of the European Union. Switzerland is too. At least we got the visa for free due to Snork Maiden being married to a citizen of the European Union, me (I'm also an Australian citizen). She is a citizen of PR China and it will be about another two years till she'll be an Australian citizen and then travel arrangements will be a lot easier.

A PF Blog with a Difference

This guy lives in a van while doing a masters degree at Duke University. I read an article by him before but just discovered he now has a blog. He seems to annoy a lot of people.

Savings Impact of Trip & Laptop

We spent a lot last month in particular on flight tickets to Europe and a new laptop computer. At least half of those expenditures are business expenditures much of which will be refunded at some point. Anyway, they still had an impact on savings:



The blue line tracks savings in non-retirement accounts minus the effect of investment returns. You can see that last month's spending did have a noticeable impact, but it is much less than the savings we accumulated in the last year. Retirement savings continue to accumulate in the meantime (the pink line). To get total retirement wealth add the pink and green lines. To get non-retirement wealth add the blue and brown lines. All four together are equal to net worth. I find this breakdown to be very useful.

Moominvalley Report May 2010

This month's numbers are pretty terrible, especially in US Dollars:



But, as you can see once you take out the exchange rate losses of $36k they aren't quite so bad. In currency neutral terms we lost 6.98% and in Australian Dollar terms 6.09% in terms of investment returns, whereas investment losses in USD terms amounted to 15.10%. However, the MSCI World Index lost "only" 9.48%.

Expenditure totaled a very high $10k due to the new laptop and the trip to Europe. Other events include the transfer of $A1,000 to superannuation I did this month.

Net worth fell by $US71k to $US377k (or by "just" $A33k to $A448k). The allocation to Australian large cap stocks fell by 0.6% of assets despite my switching money back into the Colonial First State Geared Share Fund. But the allocation to bonds also fell by 1.13% of assets a a result of the switch. Allocation to foreign stocks and hedge funds rose.

Another Leg of Our Trip Organized

Just booked a couple more steps in our crazy trip. We will fly from Copenhagen via Billund in Jutland - the Danish Peninsula - to Paris. I'd never heard of the airline or Billund which is just a village. But turns, out it is the headquarters of Lego and the location of the original Legoland themepark. This flight had the best combination of cost and timing. Also I booked somewhere to stay in Paris, which you can see above. E62 per night. Apparently, Jean-Paul Sartre and Simone de Beauvoir lived there for a while in the 1930s and 1940s.


There are still some steps to complete the planning for this epic voyage to six countries :) Snork Maiden hasn't been to any of these countries before.

Hedge Fund Index Performance May 2010

Credit Suisse/Tremont have published preliminary results for hedge fund performance in May:



The index lost 2.73% which is very similar to the HFRX result. All strategies lost except for short bias. Surprisingly though, managed futures lost 4.42% and equity market neutral lost 3.87% whereas HFRX found that systematic diversified and equity market neutral gained in May. HFRI also have
a "flash update":



They show slightly lower overall losses. Like HFRX they show gains for equity market neutral but small losses for systematic diversified and quantitative directional.

Dell vs. Mac

Enough Wealth suggested on my last post that really I could have gotten a Dell laptop and saved money over buying a Mac. So, at least part of my Mac purchase was discretionary. Well, I would have had to buy all new Windows versions of my software including a stats package that costs about USD700 so that would wipe out any gains and after 20 years of using Macs I'm not planning on switching. But anyway, I thought I could check out what a comparable Dell would cost for the purposes of this post.

This seems to be the closest model I could find:



It has the same CPU, screen width, and RAM though a slightly larger hard drive (500GB vs. 320GB). Price is $1,150 vs. $2,199 for the Mac. Actually, you can get the larger drive on the Mac for $2,339. So the Dell is $1,189 cheaper.

Are these models really comparable? Which would you get?

Shuffling Money Around

Recently we booked a trip to Europe. The tickets came in at $A5,900. And we're not yet done with trip costs. On the other hand, the people I am going to work for in Sweden are going to pay about $A2,500 of that, but probably not till October. Also I bought a new laptop for $A2,199. I'll gradually get some of that back over time through depreciation deductions on my tax but only 15-30% over 3 years.

Both of these were initially paid for with a credit card. But we will have the credit card bill paid off by the end of this month. I immediately paid off $A2,000 of the credit card bill with cash we had in a cash management account at Adelaide Bank. My pay went into when I worked for the Uni here and all Australian dividends etc. which are not reinvested are paid into. OCP.AX will be paying $A1,200 of a capital return into this account in two days time, which will help pay this back. My rationale is that I want to have an immediate Australian credit line available for emergencies. The card limit is $A10,000. Now we have close to $A4,000 available.

Next move is to set up to borrow $A4,000 on my Australian margin loan for a couple of weeks time just before the credit card is due. With that and the cash in the Adelaide account we can pay off the credit card. We had about $A32k of borrowing power, so I feel safe using an eighth of that. Over time it will eventually be paid back. The interest rate is lower than that on the credit card so that makes sense.

I'm still waiting to be paid for the two consulting jobs I did recently. The money should be paid in US Dollars for those.

Daily HFRX Performance for May 2010

The Daily HFRX hedge fund indices show an overall loss of 2.64% for May. In comparison to the MSCI World Index's loss of 9.48% that's not too bad. All styles lost money with the exception of equity market neutral that gained 2.08% and systematic diversified which gained 1.03%. With reference to the latter, I know that Man-AHL lost only 0.1% for the month.

Moominmama Portfolio May 2010

This was a tough month in the markets. Stocks, and especially European stocks, and non-US currencies were hard hit. Alternative investments just fell less than other investments. The MSCI World Index fell 9.48%. Given the portfolio's estimated beta of 0.47 performance this month was not good in comparison to the index either.

New Laptop

Yesterday, I bought a new MacBook Pro. The old one was less than three years old but it was again malfunctioning, has an almost useless battery, and cracks in the metal on both sides of the screen. Just a new battery costs more than $A200 and I decided not to put any more money into it. The new computer cost $A2,199 which is less than the $US2,159 that the last one cost in 2007. Both are the base model 15" model. This one has a 5 core chip instead of a 2 core chip, 4GB of RAM instead of 2GB, and a 320GB hard-drive instead of a 160GB one. The clock-speed is 2.4GHz vs. 2GHz. It's interesting that for a long time computers competed on faster and faster clockspeeds but in the last 3 years there have not been very large gains at all on this dimension. I'll be deducting the remaining value of my old computer from my taxes and a big chunk of this one. If I'm in the 30% marginal tax bracket that reduces the cost by a nice amount.

Also yesterday we visited the Norwegian embassy to deal with Snork Maiden's visa for Europe. Even though Norway is not in the European Union they deal with European visas for people visiting Scandinavia here. They are really unclear about the rules applying to people who are spouses of European citizens. Maybe we don't need to pay for the visa. According to the French government she wouldn't need a visa at all. I'm also working on organizing our accommodation in Sweden. Finding something there at a decent price that meets our requirements for the duration of our stay seems pretty challenging.

Aurora Funds Management IPO

As I have shares in the Aurora Sandringham Dividend Income Trust, I just received a prospectus for the IPO of the manager. Investors in the funds get a $A5,000 "priority allocation" of shares in the IPO. They pay exactly the same price as all other investors though. So this is only an advantage if the IPO is oversubscribed. The company does not seem to think this is likely as they have specified a minimum offering of $A2 million and a maximum offering of $A5 million. Why list two limits if you were confident of raising the $A5 million?

The prospectus provides 2 1/2 years of accounts. In the 2007-2008 financial year they made $A400k in profit and in 2008-2009 they made $A1.3 million on a pro forma basis. However, in the first half of 2009-2010 they lost $A400k. Both management and performance fees were below those of previous years and costs were up. So it is hard to value the company. The IPO values the firm at $A20 million. So this is a P/E of about 20 based on the three years but the income volatility is huge.

In the 2008-2009 financial year the company paid shareholders $A590k in dividends which is entirely reasonable. But in the first half of 2009-2010 they paid out $A1.1 million despite actually losing money. This seems to be a case of the directors taking a last chance for fat dividends before going public.

The prospectus also claims that all the funds will be used for operations including product development, debt repayment, regulatory capital, and offer costs ($A340k if the offer only nets $A2 million which is big bite). But existing shareholders will receive $A750k in cash for shares they hold. The prospectus states that this will be paid out of pre-offer cash, but of course cash is fungible.

So at this point I'm leaning towards passing on this one. Any thoughts?

Accepted

Back in March I wrote that I was nominated by the Australian government for a UN scientific advisory body. I just heard today that the UN group accepted my nomination and so I will be participating for the next few years. Now if only I can convince someone here that this shows I should be worthy of getting a job! :) There are hundred of people involved in this effort but still there are not that many from any one country.

National Emergency?

Wow, if this is even somewhat accurate this is both outrageous and crazy. Using national emergency powers to campaign for the RSPT? If it is really political then the Labor Party or the Unions etc. should fund it. The opposition doesn't get to spend public money on this.

I haven't said much about the RSPT, but, yes, I am against it. I happen to think the royalties regime makes sense but I can see some of the arguments against it. I would accept some introduction of a tax along the lines of the PRRT (Petroleum Resource Rent Tax) at a high enough level to replace the state royalties and the reduction in corporation tax on mining companies with the funds going back to the states probably. IN theory though I think royalties that are then invested in a sovereign wealth fund are the best option.

Rebalancing

I just switched this back again. At least my average price is lower now...

Sign of the Times

HSBC (USA) is converting my checking account from "Interest Checking" to "Basic Checking" because the former product is being discontinued, which is no surprise given the level of US interest rates. It's good news for me as the fees on the new account are a quarter of what I was paying on the old account and will be waived for 6 months after the conversion...

Booked Europe Trip

Today we booked at paid for our flights to Europe and Israel. We'll also be staying in Thailand for a couple of nights. Hopefully, conditions will be more stable by the time we travel. It's our first trip overseas for a couple of years and is crazily long. Cost came in at just under $A6,000. That's just the flights. We should be able to recover at least half the costs - my trip to Europe will be refunded by the people I am going to work for in Sweden and maybe Snork Maiden can get something if her paper is accepted at a conference.

P.S.
We don't only need good luck in Thailand but also Iceland :)

Bought Some Shares...

I bought some shares in CHN last night. Price 25.13. It closed a little below that. Had been planning on that for a while and this seemed at least like an opportunity...

Snork Maiden's Funding Confirmed

Some good news. Snork Maiden heard that the funding her team got for the next two years is no longer contingent on them raising additional matching funding. On the other hand, they'll be able to employ one less person without getting more funding but her salary is funded by the confirmed money.

Hedge Fund Performance April 2010

The hedge fund performance figures for April from HFR and Credit Suisse/Tremont are in. Credit Suisse/Tremont reports that funds overall gained 1.24% in April. HFRI (preliminary) was at 1.29% and HFRX 0.80%. according to Credit Suisse/Tremont most strategies did well apart from short bias which lost 3.89%. Equity strategies that involved shorting performwed weakly. Equity market neutral made 0.43% and long-short equity 0.29%. HFRI reported similar results for strategies except that equity hedge came in at 1.37%. HFRX reports losses in macro and much more variability across strategies than the other two sources. It is based on a smaller sample of funds that report daily and seems to be less reliable.

Article on NetWorthIQ in NYT

Interesting article on NetWorthIQ in NYT. The article takes a negative angle on net worth tracking. Personally, I get a feeling of security to some degree from the net worth number when it is heading in the right direction and when it's not I know something needs to be done... I think it is essential to know how much you are saving and whether you can meet retirement and other financial goals. For these purposes, tracking net worth is necessary.

Indirectly Informed of Rejection

They just announced today who got the positions in my department. So, I find out that I won't get an offer (there was a chance of a second round offer). I haven't received formal notification of rejection yet. So it is annoying to find out this way. By not appointing me and instead appointing a more junior candidate they have been able to partially fund a couple more very junior positions... Now all my focus will be on my upcoming interview (date not specified yet) at another department here...

Rejection...

Today, I got the rejection e-mail for the job in Brisbane that I applied for. We didn't want to go to Brisbane anyway and I didn't want to do this job, particularly, anyway so no big deal. Still haven't heard the outcome for the job I most recently interviewed for here though.

Crazy Chinese Property Prices

As everyone knows by now property prices are crazy in many parts of China. When compared to incomes they are far far higher than in countries like Australia where property prices are already ridiculously high. My mother in law reported that in their neighborhood (picture above) prices have reached RMB 14,000 per square metre. This is the usual way of measuring prices in China. This price is AUD 2300 per square metre or USD 190 per square foot. A 100 square metre apartment is, therefore, about $200k. This would be cheap in Australia and a decent price in cheaper areas of the US. But incomes in China are much lower. She claims that her apartment is 170 square metres. So it would sell for USD 350k or AUD 390k. This is in the suburbs of Tianjin, which is one of the wealthier cities in China (after Shanghai, Beijing, and Shenzhen). But still. When they moved there in 2002 prices were RMB 3400 per square metre so the unit would have cost USD 85k. They didn't actually pay this. My stepfather's workplace gave them the apartment as part of a retirement package which involved them giving up their old apartment.

Dishlex

The motor on the Bosch dishwasher in our apartment died and we had to get a new dishwasher. As the landlord is in another country the local agent paid organized this. So far it seems to be that this new machine is total junk. The brand is "Dishlex" which I'd never heard of. It claims to be "made in Europe (Albania?)". Just feeling the door closing you know it is lower quality. The inside space appears much smaller though the outside of the machine takes up as much space. And several dishes are not cleaned properly each time. I've been using the regular setting. I'll try the "pots" setting - next time.

Moominvalley April 2010 Report

As usual, everything is in USD unless otherwise stated. I've estimated returns for hedge and commodity funds that haven't reported yet. The monthly income/expenditure report follows:



Our spending was low at $3,257 ($A3,501). $1,860 of this is rent. The rate of return in USD terms was 0.10% vs. 0.22% for the MSCI World Index. In AUD terms we lost 1.17% as the Aussie Dollar rose against the US Dollar. Aussie small cap stocks, hedge funds, and commodities gained this month, while Aussie large caps dragged down returns:



These figures are currency neutral. There were no big shifts in allocation apart from about a 1% decline in Aussie big cap stocks and leverage. Net worth reached $448k (AUD 481k) an increase of $3k.

On the whole it wasn't a very eventful month.

Moominmama Performance April 2010

Moominmama beat the MSCI index this month for a change. It only rose 0.22% and she gained 0.88%. Hedge funds, bonds, other investments, and the gain in Sterling all helped and seems like her US stocks must have performed better than average.

BHP

BHP's stock price is down 3.7% so far. Alan Kohler said yesterday that the resource rent tax would reduce their profits by 19%. So, so far, investors can't think the government is serious or most of the loss was already built into share prices? Rio Tinto is down 5.56%. Kohler's estimate was 30%. So that is proportional.

Mean and Median "Ordinary Time Earnings" in Australia

"[The mean is] $62,400 per year. Around half of workers earn less than three–quarters of AWOTE [$46,800]."

Government Response to Henry Review

The government will do three main things - raise the compulsory employer superannuation contributions to 12% from 9% of salary over time, reduce the corporation tax from 30% to 28% over time, and introduce a 40% mining rent tax. For the latter state royalties already paid can be credited against the tax. The first of these moves was actually ruled out by the Henry Review. The second is more timid than the Henry Review (they proposed 25%) and the latter probably more aggressive. No bold tax reform is planned.

The first move will have no effect on Snork Maiden or me as our employers already contribute more than 12%. The second is rather marginal. The latter move could have negative effects on stock prices to the degree that a lower rate of resource tax was expected.

There are quite a few other provisions but I see them as being more minor. Superannuation taxes are unchanged as is the $A25k p.a. cap on concessional contributions for under 50s. Over 50s will be able to contribute up to $A50k p.a. if they have less than $A500k in super.

P.S.

"The Henry review recommended abolishing the tax on super contributions and halving the rate of tax on fund earnings to 7.5 per cent, neither of which was adopted by the government."

P.P.S.

It seems that they meant to abolish the super contributions tax and instead tax super contributions at normal rates. So yes that would be a move towards the Roth IRA model. The government just ignored this of course (like 136 other recommendations).

P.P.P.S.

The Review actually proposed a 20% "offset". This means that people on the 15% bracket would pay -5% on super contributions and people on 45% would pay 25% on super contributions. But, the full contribution would actually go into the fund. So this would have effectively increased the superannuation guarantee to 10.575% from 9%.

Superannuation Co-Contribution

I just contributed $A1,000 to my superannuation (Australian retirement account) in order to get the government's co-contribution. Last year, I got a $A1,500 "match" from the government for putting in the money. This year the maximum match is down to $A1,000 and as I earned more money I won't get the full match. I still look set to getting something though.

Henry Review Predictions

Based on all the leaks some things seem clear about what the Henry Review to be released Sunday will contain.

I do expect that we'll move one step closer to the Roth IRA model where super contributions are fully taxed but earnings are not. One guess would be that super contributions will be taxed at 15% below your marginal rate. So 0% for those in the 15% bracket, 15% (the current rate for everyone) for those in the 30% bracket, and up to 30% for those in the 45% tax bracket. Maybe with that they can relax the $A25,000 a year contribution cap. I'm likely to be exceeding the cap myself next year, will be interested to learn how that is dealt with by my employer.

The Henry review will if anything reduce overall taxation on capital from all the sounds it has been making. First, they may reduce the corporation tax in return for the resource rent tax. They might fiddle with capital gains tax discounts but doubt they will eliminate them. The aim overall is to lessen the gap in tax treatment between different forms of savings and to increase the tax burden on immobile land and reduce it on more mobile capital.

Henry Review Release Scheduled

The tax review will finally be released a week from this Sunday. Releasing a report on a Sunday is very weird. If that is meant to bury it, it could do just the opposite as there is less news on Sundays generally.

P.S.
That's a hairy nosed wombat in the picture. Ken Henry, secretary of the Treasury and head of the tax review, is a big fan of these creatures.

Record Number of Young People Say They Will Never Own a Home

Press release from Australia mortgage industry association.

Another Interview

Yeah, another one. Sometime in May. Depending on ranking this is the top department in Australia. I think I need to do a different presentation than the one that failed to get a first round offer here. I think it is my presentations that are letting me down... The most impressive stuff I can show though is a very incomplete project. So not sure if that can work.

SMH Series on the Aussie Housing Market

The Sydney Morning Herald is running a series on the Australian residential property market. It looks like it will take a skeptical tone.

Europe 2010

We're beginning to make plans to go to Europe this year. Last year we planned but never went. First step is sorting out visa details for Snork Maiden. For the Schengen area we should have no problem. The French embassy website (we're not planning to go to France, or at least not mainly) says that spouses of EU citizens don't even need a visa. But even if we do it should be straightforward. We also want to visit Israel. Citizens of many countries can visit Israel without a visa. Unfortunately, citizens of Snork Maiden's country cannot. At least they have diplomatic relations with Israel... But she needs a passport valid for one year after the data of entry and so will need to apply for a new passport from her country's embassy here.

More Concrete Offer

So I met with the Director just now. He offered me a backstop one year regular teaching/research position if all three candidates accept the offers they made. It might take a month till we know what the outcome is. It will take about a week to get contracts to the candidates and then they will have 2-3 weeks to accept or reject...

Credit Suisse/Tremont Returns for March 2010

Credit Suisse reports similar results to HFRI for March.

Career Update

So 4 candidates were interviewed for 3 positions here in what I called my "dream job". And 3 offers have gone out but not to me! But I am still the reserve candidate if one of them turns it down. There is some possibility that two of the candidates could get other offers that they would prefer. I heard this from the "chairman" today. I know who all the candidates are and all their info and have some info on where else they interviewed. The "director" wants to meet me at 4pm tomorrow. I suppose he'll tell me this and then discuss again the possibility of some other job for me here again.

Tuesday, I had an interview in a more northerly city. Really don't know how I did and more people will be interviewed next week. There, more normally, there are 4 candidates for one position. I'm not keen on a move to northerly city to say the least. But if nothing worked out here it would be better than nothing. I'd need to get used to hot humid weather (north here of course is closer to the equator). The job also sounded very hard as they want high performance in so many areas. Top universities focus on research and low ranked universities on teaching. Each wants to see some activity in other areas but you can focus more. In mid-level universities they want excellence in everything yet your infrastructure on the research side is weaker than in the elite universities. I think it would be hard to attract good quality grad students to my area at that mid-level university, when there are only 2 people in my discipline in the huge department. Yeah, there's a business school also at the university but they don't have a grad program in econ either. At the interview I said I would look to collaborate with 2 other unis in the city on a grad program possibly and benchmark practice elsewhere. I don't think they liked that. But in the fields of the people on the committee their department might be pretty good and practices might be different than in my field. Interdisciplinary communication is always hard...

Payment Methods

I've recently done two small consultancies - one for an agency of the Cyprus government and one for a US government agency. The Cyprus people asked for my banking details and will make an electronic payment to my account (which happens to be in the US). This is the normal way of doing business in most of the developed world. The US people ask me to submit an invoice which doesn't include any banking information. So I guess they will send me a paper check all the way to Australia, which I will then have to mail all the way back to the US to my bank in New York. Two opportunities for it to get lost in the mail. Here in Australia, paper checks (or cheques in British) are very rarely used. Electronic payment through a number of methods is standard. While the US is on the cutting edge with many communications technologies this definitely doesn't apply to payment methods. Why is this? It seems that Americans think that asking for bank details is a sign of potential fraud. But I can't take money out of an account with just the account and branch number. So why would that be? And why aren't Australians worried about that?

5000

The All Ordinaries Index is above 5000 for the first time since the financial crisis!

HFRI Preliminary Performance March 2010

It was a good month for hedge funds. The HFRX Daily Index reports a 1.38% gain for March. But the HFRI (which includes more funds) reports a 2.70% gain. The only HFRI strategy that lost money was short bias, while a couple of HFRX strategies had negative returns. Equity market neutral was a weaker strategy this month returning 0.69% (HFRI) or -0.04% (HFRX) as was merger arbitrage: 0.95% or 0.73%. All other major HFRI strategies returned from 1 to almost 4%

Another Interview...

I have an interview Tuesday in a northern state (there is only one northern state of course :)). They're putting me on a flight leaving here at 6:30am and arriving there at 8:05am. I am meant to give a presentation at 9:15am and be interviewed at 10:30am. Flight out is at 2:15pm. That's about the most rushed academic interview I will have been too. At the best of times I'm not much of a morning person. After getting up at 4:30am and flying across the country I'll probably be extra grumpy. I'm not very enthusiastic about moving to this location or this job anyway. I don't like hot and humid weather. Not if I have to get stuff done anyway. But as yet I don't have another offer and if one does materialize and this place makes me an offer it could be a bargaining chip.

How Millennial are You?

How Millennial are You?. I only scored 19%. Which is exactly the expected score for my age (45). Having two blogs and LinkedIn and Facebook pages etc. didn't help me :( And I didn't read a newspaper in the last 24 hours. I did watch more than 1 hour of TV though. Snork Maiden scored 53% which is a year or two below the average for her age (34).

Nicholas Retsinas on Whether to Buy or Rent

Very sensible article on home-ownership. Question is how it translates to the Australian context. House prices are extremely high here relative to incomes, but will they ever come down like they did in the US? It doesn't seem likely unless immigration slows and planning restrictions are relaxed. It's these two things that seem to be maintaining the high prices. But they could both happen.

Preliminary Report for March 2010

I might put some more numbers and charts up at the end of the month when all investments have reported, but here are numbers with some guesses included (in USD):



I still received just over two weeks salary in March and Snork Maiden got three salary payments. So current non-investment income (after tax) came in at $7,633. We spent $4,148 which is lower than last month but several hundred above our lowest spending months, when we can spend up to a thousand dollars less than this somehow or other :). Retirement accounts did better than non-retirement accounts but overall the rate of return in USD is estimated at 8.16% against 6.48% for the MSCI World Index and 6.03% for the S&P 500. Net worth reached $445k ($A485k). Our all time high was $482k, so we're getting back towards that range:

Moominmama Report March 2010

Moominmama had a positive month with good gains in stocks and commodities. The MSCI World Index rose 6.48% in March and the average equity return here about matched the index.

Income/Expenditure 2009: Australian Dollar Edition

I've produced a version of the annual accounts in Australian Dollars, which is what we are actually spending in and for the most part earning in:



Same format, different currency. We came in at over AUD 100k in after tax non-investment income - mostly salaries. This puts us near the top of the income distribution in Australia. Especially when we add in the retirement contributions and investment income. A large proportion of the latter is just bounce back in capital values though. This year will probably not look anything like that. The rising Aussie Dollar put a damper on the investment returns. Retirement contributions add 24% on top of the after tax salary due to the high contribution rates in public sector jobs in Australia and additional salary sacrifice contribtions we are making for Snork Maiden.

For non-Australian readers - the compulsory level of retirement contributions by employers is 9% on top of the pre-tax salary. But in the government sector the levels range from 15 to 17%. On top of that, at the universities, employees are required to contribute an additional 7% out of the salary for some reason.

The spending and saving percentages below the main table refer to saving from non-investment income and don't include stuff in the retirement column while the savings numbers in the main table include investment income.

Annual Report 2008: Final Episode

While I'm at it, here is finally the income, expenditure, savings report for 2008:



I didn't post it last year, as it was just so horrible. The crude savings rate from non-investment income was 9%. This compares to 41% in 2009 and a negative savings rate in 2007 when we moved to Australia. So I guess the trend is in the right direction. When I was single I managed the following savings rates: 2003, 34%; 2004, 48%; 2005, 43%; 2006, 58%. It's hard to imagine how I only spent $26k in 2006. But my rent was only $600 a month for a start.

Income/Expenditure Report 2009

I did an annual report for 2009 but skipped the actual income, spending, and saving accounts for the year. So here they are:



They follow the format of my monthly reports. All numbers are in USD though we mainly earn and spend in AUD. After tax salaries, tax refunds, etc. amounted to $82k. Out of that we spent $48k. So our crude savings rate there was 41%. Most of my salary, which we only had for a year, was saved. Retirement contributions from pre tax salary and the employer's contributions came to $21k (This number is also after the 15% Australian contributions tax). I also made a $732 contribution in after tax money in order to get the government co-contribution. Investment returns are pre-tax. Tax credits then adjust those returns so that we get the correct change in net worth. Our accounts saw a very strong rebound redressing a large part of the 2008 debacle. Net worth increased by $213k about half and half split between retirement and non-retirement accounts.

Obviously, our true savings rate was above 41%. But if we compare expenditure to the total income figure we had a negative savings rate in 2008... So maybe that's not very useful. Comparing these numbers with this post I'd say we spent 40% on needs, 20% on wants, and saved 40% roughly.

Risk Reduction

I switched $A13,750 from our holdings of Colonial First State Geared Share Fund to the CFS Conservative Fund in my CFS Superannuation account. This effectively sells the units I purchased in July and September 2008 for a small profit. Even so, the value of our holdings in this fund in this account has still gone up this month at this point. Our allocation to large cap Australian stocks will be about constant this month and still well overweight and leverage will be down by just over a percentage point. Still this is a small step towards risk reduction without going overboard in any way :)

P.S.
I'm actually going to let the risk allocation in Snork Maiden's accounts drift up going forward. I increased the allocation of future investments in superannuation account in the "sustainable" (=Australian shares) allocation to 20% from 10%. The actual current allocation is 11%. I'm also going to tweak the allocations in her non-superannuation Colonial First State account. But I'll blog about that more when I actually make a move there. My accounts have gotten overinvested in risk and hers under, so we'll move them towards each other.

Job Search Update

The chairman just wanted to update me on the state of the job search. It'll be another two weeks till they can make a decision... I did get a bit more insight into what's happening at least and what the thinking is. There's a good chance I get a job but not yet a certainty.

P.S.

Just as I finished this blogpost I got a call from another university in Australia who want to interview me on 14th April...

Moominvalley February 2010 Report

These reports are now going to come about a month after the close of the month, because only then do we have reports from all funds. As usual, everything is in USD unless otherwise stated. The monthly income/expenditure report follows:



Our spending was a bit above the low end at $4,262 due to car expenses (registration and depreciation - there has been no depreciation for a about a year). There were moderately positive - the rate of return in USD terms was 2.14% vs. 1.31% for the MSCI World Index and 3.10% for the S&P 500. In AUD terms it was 1.16% as the Aussie Dollar rose against the US Dollar. The only asset class that lost this month were hedge funds. There were no big shifts in allocation. Net worth reached USD 409k (AUD 457k) an increase of $12k.

Leverage continued to decline. Loans are only 8.5% of net worth now and total leverage including leverage embedded within investments fell to 36.7% relative to net worth. The peak levels we hit were 90% total leverage in August 2008 and 38% loans to net worth in July 2008.

One Project Close to Closure the Other in Limbo

I submitted the final report for the project I did over the past year today, though I'll need to edit down the paper a lot to submit it to an academic journal for formal publication. I'll wait a while and do other stuff (plenty of it) before coming back to it with a fresh eye. We have already submitted two other papers from the project, which are now at various stages in the review process. Some more people at the government ministry want to meet with me to discuss the results, so that's good.

As I noted in the comments, the chairman wants to meet with me next week subject unspecified. Presumably about the job. I found out that another candidate hasn't heard anything yet so based on the theory that you don't reject interviewed candidates before negotiating with your preferred candidates, I don't think he wants to tell me in person he is rejecting me. Either he wants to make me an offer (but then why not just phone me) or he wants to ask me more questions that he didn't have a chance to at the interview or he wants to negotiate with me about what rank I'd accept in order to know how many people he can hire on his budget. That's all my ideas so far. So who knows. Maybe he wants to talk to me about something else. For example, a course they need teaching I was already asked about. I wish he'd specify the reason. But trying to act cool I just booked a time with his secretary and didn't ask him what it was about.

How Much Does it Cost to Replace a Car Window?

This isn't our car, just the closest picture I could find on the web

Some time between Saturday afternoon and Sunday morning someone smashed the front passenger window on our car, which was in a supposedly secure underground car park underneath our apartment building (at least in Canberra, car parks under the building are the norm at apartment complexes (why not complices?)). That's all that happened. Either they were looking for the garage opening device that all of us have been warned not to leave in our cars or thought that an empty bag lying on the back floor might have had a laptop in it. We won't leave a bag in the car again.

The police said that the body corporate should install security cameras. The body corporate person told me that cameras are useless...

Anyway, so we needed to get quotes. These guys who advertise on TV wanted $A450 whether we went to them or they came to us to replace the glass. NRMA quoted $A350. Another guy wanted $A300. In the end we went with a semi-DIY approach. This morning we went to Queanbeyan, NSW about 10 miles away and bought a second hand window for $A75. Then Snork Maiden took it to another place in Canberra that cleaned and fitted it for $A88. You need to add some time and fuel costs into our real price but still it looks like there is a lot of price dispersion there.

Interview

The interview went OK. One of the committee told me I did well on the formal panel interview section. I didn't crash and burn or anything bad in the presentation. I got lots of questions which were to the point or good and some people seemed interested. Another candidate still needs to be interviewed but the selection committee chair said they hope to make a decision within a couple of days. I've been having a hard time sleeping coming up to the interview. I slept each night but not so many hours. And tonight it seems even worse, though there is nothing I can do now so logically I should relax.

Flood :)

I was commenting last time that when it rains it pours. Yeah, well the people who asked me to submit my details in order to maybe spend 40 hours reviewing a report want me to do it. Deadline 19th April. Snork Maiden says maybe she can help.

I'm pretty much saying no to the offer to teach a class in the second half of the year because we want to travel to Europe then. I thought of teaching the second half of it but the other guy - the course originator is the only person who could teach the first half and he wants to avoid teaching anything this year and it doesn't look like collaborating in this way would work because of the integrated structure of the course would mean I have to teach exactly according to his material. The alternative is to run it like an intensive MBA style course in the second half of the semester. But I don't think that would be good for the students who are mostly doing this part-time or for someone teaching it for the first time.

I got some more info on my interview on Monday which if correct means this is pretty much mine to lose rather than win if you know what I mean. So I really need to focus on preparing over this weekend.

When it Rains it Pours

It looks like this will happen following a meeting and e-mails today. It's nominally about AUD 20k in funding. As I'm fending off offers to teach a course later this year...

Interview

Another interview coming up on Monday. I just heard this evening. This one is pretty much my dream job. Hopefully, I don't screw it up like the last one.

Hedge Fund Returns for February 2010

Results are now in for both Credit Suisse/Tremont and HFRI. HFRI gained 0.52% (HFRX monthly 0.26%) and Credit Suisse/Tremont 0.68%. Managed futures, macro, long-short equity all did well according to CS and dedicated short bias and equity market neutral lost money. According to HFRI short bias also lost money and quantitative directional and systematic diversified gained 2.06% and 1.04% respectively but they find that equity market neutral gained moderately. Other styles moved less than 1% for both index providers.

Nominated

The Australian government is nominating me as a candidate for participation in an international research organization in my field. Of course, all the other UN countries get to make nominations too. And they didn't pick me out of the blue. I submitted my name to the government department here. Of course I was in the right network to hear about the opportunity in the first place. It's not a paid position (your expenses are covered) but it can't hurt my CV (I think) and maybe could have an influence on policy. So that's good. It's much easier to get involved in these opportunities here than it was in the US. I did have some interactions there with the policy sphere but not as frequent. Partly it is because this is a smaller country, population wise and I am nearer the centre - geographically and institutionally. It's much easier to get a position in a top institution here than it is in the US. There is trade off - being second tier in a top country or first tier in a second tier country...

Class Matters

Some insights about class. In attitudes and circumstances I think I am on the border between the middle class and owning class. I try to be a non-conformist, think outside the box, and do something different, but in the end fall back on being an employee out of neccessity and lack of ability I guess to do some of these other things. I think the class structure in this article is too broad. There are "middle class" business owners with employees who don't have a high net worth and so aren't in the owning class as well as professionals and managers. And there is a difference between a self-employed professional and an employed professional in attitudes about government, taxes, regulation etc.

Some of the people around me find my relaxed attitude to my current situation rather puzzling. I don't tell them of course that we have more than $A200k in liquidish assets. I do tell them that we can live OK on one salary and while we want to have two salaries in the long-term there is no emergency at the moment.

The deeper question is why we've saved so much money outside of retirement accounts and why we live frugally when we could spend more when many (most?) people expand their spending to match their income. I think it is largely a result of learned attitudes (at least on my part) that relate to these class issues. It isn't so easy to do these things that many personal finance gurus and bloggers promote without deeply embedding the right attitudes, so it's no longer a question of discipline in keeping spending under control.

This isn't the whole story on this complex issue of course. You can see more of my posts on class here.

HFRX Daily Hedge Fund Index Performance for February 2010

Always the first of the hedge fund indices to report, the HFRX daily index reports a gain of 0.26% for February. January saw a loss of 0.02%, so we're still pretty much flat for the year. There were no large moves for any of the strategies. Macro, Equity MArket Neutral, and Systematic Diverisifed saw gains of over 1%. No strategy lost more than 1%.

Secondment?

I gave a presentation at a government department today, which they seemed to like and then the possibility of me being "seconded" to that department was raised. I don't have a first job, but there is a budget we have that hasn't been spent for secondment...

Follow on funding here now looks a lot less likely due to a change of priorities, but my colleague wants to try to give that a shot too (a proposal needs to be submitted, but first we'll ask if it has any chance).

Moominvalley January 2010 Report

I finally got the accounts together for January (accounts in USD):



Our spending was again at the low end. February is going to come in around $A4,750 due to car expenses (registration and depreciation - there has been no depreciation for a about a year). As you can see from the accounts we lost lots of money in January - the rate of return in USD terms was -7.34% vs. -4.30% for the MSCI World Index and -3.60% for the S&P 500. In AUD terms it was -6.27%. The largest losses were in Australian stocks and the effect of the strengthening of the USD with the Aussie falling about one US cent over the month.

Moominmama Performance February 2010

Moominmama lost 1.82% in February, mainly due to the fall in Sterling against the US Dollar. The value of Sterling Cash fell 4.81%, while bonds returned -3.70% as the larger part of her holdings are in Sterling bonds. Not surprisingly, US equities were the top performer. The MSCI World Index returned 1.31% this month.

Moominmama has a UK Savings Certificate - a kind of government savings bond - that is still in the name of my father who died in 2002. My brother has started investigating how we can transfer it into her name. The authorities in the UK responded by demanding a list of all assets jointly owned by my parents in 2002. This will be hard to come up with and there is a danger that they'd then demand inheritance tax to be paid on the estate or something. My parents left Britain in 1995, but the British government has very strange tax rules. Being "domiciled" in Britain is what counts not being "resident" there. It looks like we might need a lawyer to deal with this. The savings certificate in question is worth about $US65,000.

Living on One Salary

As this period of receiving two salaries comes to a close, I'm reviewing how our saving vs. spending has been during the last year. Current savings shows savings from non-investment income into non-retirement accounts ("taxable accounts" in American jargon - I don't use the term because retirement accounts are taxable in Australia, just at a lower rate). Since I started getting a salary in March 2009 we have managed to save almost $A50,000 (see the blue line). That's more than I earned in fact. In the period from late 2007 till then when we were living together on one salary, savings was pretty much flat - in other words, we didn't save or dissave. In the last year we managed to save at about the same rate as or a bit higher than I did when I was single and living in the US from 2002 to 2007. Our retirement savings (pink line) accumulated rapidly - at about the rate I managed in the US when earning extra summer pay or when I started maxing out my 403b in 2007 (which brought my non-retirement savings rate down to almost zero).

This shows that we basically live on one salary whether we are earning one or two salaries. But in order to save we need two salaries.

The green and brown lines show that there has been some regain of investment losses. But there is still a long way to go till the losses are entirely recovered.

Career Update

My current contract ends today more or less, paywise. I still haven't actually completed what I agreed to do, but it will be done in the next week or two. There is some vague possibility of getting some follow up funding some time or other. In the meantime I get to keep my office, library access etc. for another six months. The university is prepared to make that investment in me at least, knowing I'm likely to produce stuff they can claim as output. It takes a while to publish things academically. So I published nothing last year. I have one paper now accepted for this year and more will follow. In the meantime my track record helps with their ranking etc. There's going to be no progress on the job I applied for in this department for another couple of weeks, at which point it will be 2 months after the submission deadline. They're not in a hurry it seems. I submitted an application today for a job in NZ, which I'm underqualified for I think and 2 positions in Australia earlier this week. In the end I couldn't submit the grant proposal, much as expected.

In the meantime, some consulting stuff is starting to trickle in. I reviewed a research proposal for a small fee, and just got asked if I'm interested in reviewing a report for a fee of USD 2800. They reckon it's about 40 hours work. They might not pick me, they wanted me to submit all my details to decide. I rejected reviewing a proposal from another country that wasn't in my area of expertise really and had no fee attached. Usually, academics review papers for journals for free. The basis for this is that if you submit a paper you also will get reviewed for free yourself (though a few journals charge submission fees), and as a way of helping shape research in your field by recommending the rejection of bad research and helping improving the better papers. But I have no incentive to review a research proposal from a country's funding agency where I am not eligible to submit a proposal. They need to pay.

Moomin Valley Nominated for Best Economics Blog

Moomin Valley is one of the finalists in the category of "Best Economics Blog" for the "Plutus Awards. Well, I don't think I stand much chance against "Seeking Alpha" and "The Big Picture" :) But please vote for me anyway! Voting starts on Wednesday. If you haven't visited here before, I've been very busy lately and haven't managed to post much. There are many more good posts on economics, investment theory, the housing market, and other topics back in 2009 and earlier years.

Today was the grant application deadline. Realistically, I knew I wasn't going to be able to come up with the matching funding I needed in the end to apply for a grant. So I couldn't submit an application in an attempt to create my own job. I'll have to be less of a non-conformist and get a regular academic job - I'm making several more applications this week. If I was younger or followed a more straightforward career path I might have been able to apply for the 100% funding level for a fellowship. There was some vaguely positive news today about follow-on funding for my current project - we might be able to ask for more money.

Climate Change?

I came into the office this morning after working at home yesterday and found that a ceiling fan had been installed. This building is 50 years old and no-one had thought that necessary up till now. I think it is a good idea as it can get hot in here either due to hot summer days or overheating in winter (and I can't figure how to turn the heating down). Strange thing is the fan won't work unless the light is turned on. That seems a really silly waste of electricity...

Credit Suisse/Tremont Returns for January 2010

Credit Suisse Tremont show a 0.17% gain for hedge funds in January. And in further contrast to HFRI's numbers they show Global Macro returning 1.07%. Managed futures lost 3.81% and long/short equity 1.50%. Fixed income, convertible arbitrage etc. did well.

Tenure

You've probably heard about Amy Bishop who shot three faculty members at the University of Albama in Huntsville after she was denied tenure. Turns out she shot her brother in 1986 in an incident that seems like was covered up as an accident but according to police who remember the event said was intentional - you don't shoot someone three times by accident with a non-automatic weapon. I maybe can see why she was denied tenure. She only published 6 papers in OK-ish journals since taking her current job. That's not much in biology. And her teaching evaluations are mostly not that good. Of course, there may be political reasons too. I've seen people with good teaching and research track records denied tenure because they didn't get on with the chairman of the department basically.

Anyway, it's amazing that someone would end up shooting people over this. I had tenure at a US university and gave it up and came back here to Australia. It was never something though that I wanted to get, though. The way the system worked I had to get it.

Hedge Fund Performance for January 2010

HFRI reports a 0.71% loss for hedge funds globally in January 2010 while HFRX reported a 0.02% loss. By contrast, stock indices were down by several percent. Macro, systematic trading, and equity hedge strategies all lost money. Most fixed income and arbitrage strategies made money. Credit Suisse Tremont hasn't reported yet.

Epic Grant Fail

After I put a lot of work into developing a grant application to try to create a position for myself (as well as applying for regular jobs) it turns out that I need someone at a university to guarantee a 50% contribution to the salary. If I got a job with them and got the grant then they might receive a 50% subsidy from the funding agency but if I don't get a job but get the grant they'd have to pay out. The expected value of this seems to be close to zero and given that I might get a job elsewhere instead (and take the application with me) the probabilities of either receiving a payout or having to make an equal contribution are quite low. But noone wants to risk it and I can understand them. The amount of money they might have to pay out is significant. It seems that the university as a whole would want to do this - maybe get an extra position half funded by a funding agency. As people leave all the time it's not neccessarily an increase in their outlays. But there is a tragedy of the commons problem here to some degree where each individual department would like to see it happen but doesn't want to put their own money up. I haven't completely given up and just sent out two "last ditch" e-mails.

The real problem here is that the grant application deadline is soon, before the jobs I am applying for will be decided

There is another fellowship I can apply for but I need to submit an "eligibility request" as a priori I'm not eligible. Apparently they make few or no exceptions. So I don't expect that will work either but we'll try.

The effort is not entirely wasted. It has helped me clarify my ideas, learn about this funding agency, and if I get a job I can make an application next year recycling the proposal I wrote this year.

Moominmama Performance January 2010

Moominmama suffered a loss of 0.96% in January following a similar loss in December. This month, though, the MSCI All Country Gross World Index fell 4.3% for the month in USD terms so that's not relatively so bad. Brazilian stocks (other equity) did particularly badly followed by European and US equities. Hedge funds, bonds, and stuff denominated in the local currency made positive contributions. Man-AHL continued to perform poorly contributing to the negative return in commodities.

I don't have much idea of the performance in Moomin Valley this month as yet. Don't expect a detailed report any time soon, as things are crazily busy here. I have an important career discussion/negotiation coming up this afternoon. Maybe when I know the outcome of that (it's not a job as yet) I'll post on where things are now standing career-wise. Also, because of comment spamming I'm turning on comment moderation on older posts.

Sirius Resources: Unmarketable Parcels

Sirius Resources (SIR.AX) is going to automatically sell out all shareholders with less than $A500 worth of shares free of brokerage and send the proceeds to the shareholders. They have 11,000 such shareholders including me. You can opt out by sending in a form. My shares are stuck in a Computershare registry account. When they were delisted from the ASX they were removed from my CommSec account. The fee to sell the shares through ETrade using a "Visitor Trade" is $49.50. But this is more than the shares are worth. Fee to send a new holding statement in order to transfer the shares to CommSec is $33.30 which is also more than they are worth. So I haven't sold them.

Monthly performance figures for December and annual figures for 2009 are now in for the HFRX monthly indices:



The Global Hedge Fund Index rose 0.55% for December and 13.40% for 2009. The best performing index for the year was the Russia Index while, not surprisingly Short Bias did worst. As I've been noting throughout the year, Convertible Arbitrage was the best performing of the traditional hedge fund strategies.

The Cost of Success

Not long after I commented that the TFS Market Neutral Fund was at an all time high the fund has decided to institute a "hard close". The close is going into effect on 22nd January.

A soft close is where a fund only accepts new investments from existing investors. The Colonial First State Developing Companies and Future Leaders Funds (both small cap Aussie stocks) are soft-closed funds. Under a hard close the fund does not accept new investments from existing investors either. In this case dividend reinvestment and some other exceptions are allowed.

The reason funds close to new investment is that the managers decide that increasing the size of the fund further will have negative effects on performance. Funds with sustainable good performances often end up closing to new investment. It is an indicator that the managers care about performance. This is much more common in the hedge fund world than in the mutual fund world. It's usually small cap or other specialised funds that are likely to close due to limited investment capacity.

It's a pity though that I won't be able to put more money into this fund in future.

Annual Report 2009: Part IV

Following a breakdown of the sources of growth in net worth, we look at changes in asset allocation over the year:



This first chart tracks gross assets. Net worth is less because of borrowing both by fund managers and ourselves. The growth in the various categories of stocks is pretty clear though. Looking at percentage share chart:



we see that the percentage allocated to Australian large (41.6 to 48.7%) and small cap (8.6% to 10.1%) stocks has clearly increased. Hedge funds now constitute a smaller share than at the market bottom (from 17.7% to 11.9%), but their share is about unchanged from the beginning of the year. The shares of other asset classes have mostly declined a little over the year. At some point we will need to cut the allocation to Australian stocks but I'm not ready yet.

HFRX Daily Hedge Fund Index Performance for 2009

The Global Hedge Fund Index rose 0.55% in December and 13.40% for 2009. Performance over the last 3 or 4 years is negative. The MSCI All Country Gross World Index was up 35.41% this year, down 4.05% annually over the last three years and up 1.79% annually over the last 4 years. So its long run rate of return was higher but so was its volatility.

Signature Debit?

It's weird that "signature debit" dominates the US debit card market - at least according to the New York Times. I don't think there is such a thing here and I can't remember ever doing anything other than keying in a pin number in the US either in recent years... (I banked with HSBC, maybe that explains it). Here, PIN credit cards are increasingly common as are debit and credit cards with chips in them. Credit cards do cost merchants more in Australia than debit cards. From the article it seems that signature debit costs the merchant almost as much as a credit transaction in the US while PIN debit is cheaper. The NYT article has this interesting graphic of trends in US payment vehicles:



Britain has already decided to phase out personal checks by 2018. When will banknotes and coins eventually go too?

Annual Report 2009: Part III

This chart shows that the rebound from the lows in early 2009 in our net worth is due to a combination of new savings and investment gains. This is true for both retirement and non-retirement accounts. Adding the "profit" component and the "savings" component for each class of account should give the current total value. With regained the bulk of our profits in retirement accounts but still have net losses in non-retirement accounts, which were managed much more riskily. That is likely to be different in the future.