Swiss Food: Breads and Desserts

Chocolate for sale:



This bread is called "Zopf":



We bought a 700g loaf. I thought it might be a bit sweet like some hallah but it wasn't really at all. This is a rum flavored chocolate truffle in the form of a hedgehog at a cafe/bakery in Bern:

Swiss Food: Savory Dishes

The traditional Swiss dish, Rösti, at the Altestramdepot restaurant in Bern:



This is basically a lot of grated potato plus heaps of cheese. It was a lot better than spätzli, which we also ordered. After this encounter with the native food we decided to try Mexican food in the form of this cactus salad:



It was interesting. A bit reminiscent of some Chinese salads. At the Zurich railway station, Snork Maiden picked up this precisely wrapped pizza:



The wrapping is definitely better than the pizza.

French Food

Two salads ordered by Snork Maiden in Paris. This was called an "Italian Salad":



at a café near the Arc de Triomphe called "Le Comptoir de l'Arc". Yes, watermelon, and lots of Parmesan. And this one is duck and foie gras:



at a café near the Louvre.

Why is Canned Fish in the Fridge in Swedish Stores?

Well at least in the store next to the hotel I stayed in. Jars of pickled herring too. As well as the notorious fermented herring. By Australian standards, prices of food etc. mostly seem fairly reasonable in Sweden. And in Switzerland. I remember when I first went to Switzerland 24 years ago I was shocked by the high prices. Some things are cheaper than Australia and some more expensive. Beer in bars is expensive I'm told. But the price of wine in the System Bolaget store is very reasonable. Of course, by French standards it's expensive. It's the only place to buy wine, liquor, and beer stronger than 3.5% alcohol except in a bar and from 3pm on Saturday to Monday morning it's closed. The queues at 2:30pm on Saturday before they close at 3pm are nuts. They need a security guard to control the crowd queued up outside the store and winding all throughout it....

HFRX Performance for August 2009

HFRX results are in for August. The overall hedge fund index was only up 0.17%. Equity market neutral performed particularly poorly and systematic diversified very well. Other results are in the table:

Preliminary Report August 2010

The MSCI World Index lost 3.46%. We seem to have lost roughly 3% slightly ahead of the market.

Snork Maiden: ATO Refund

I expected that Snork Maiden would have to pay an extra $A13 in tax for the 2009-2010. In fact, she got a $A203 refund. So that's nice!

Credit Suisse/Dow Jones Hedge Fund Index Performance July 2010

Credit Suisse have now reported for July 2010:



They report an average return of 1.59%, a bit below HFRI's preliminary 1.82%.

Recommend Books on Investing in Australia for My Reader

A reader commented on my last post:

"Hi
I have a question for you. After 2 years of travelling I am coming back to Australia and I want to start investing my money wisely. I am completely new to the topic of investments and I was wondering if you could recommend a book I could read that would be a good starting point. There is lots of books on the market but I'm not sure how to choose. I'll appreciate you help. M"

Do any of you have recommendations on which books are worth reading. The only one I've bought recently was on superannuation. I'll have to check the author/title later on.

Please post your suggestions in the comments.

Hedge Fund Index Performance July 2010

Preliminary results for the HFRI index:


Overall, hedge funds gained 1.82% vs. a 8.17% gain in global equities. As a result of the latter, short bias funds performed worst. HFRX gained 1.23% for the month.

Moominvalley July 2010 Report

Everest Financial still hasn't reported fund results for May let alone June so the numbers are getting fuzzier... As usual everything is in US Dollars unless otherwise stated. This was a good month overall. The Australian Dollar rose around 6 US cents and the Pound and Euro also gained. Global stock markets rose sharply by 8.17% (MSCI World Index) and US markets 7.01% (S&P 500). In currency neutral terms we gained 5.70% and in Australian Dollar terms 3.89% in terms of investment returns, whereas investment gains in USD terms amounted to 10.94%.



Expenditure was a normal. Our car depreciated by $A600. Without that cost we spent near baseline levels. We spent more than $A500 on travel and so were otherwise really frugal. Net worth rose by $US40k to $US404k (or by $A17k to $A446k). The allocation to Australian large cap stocks rose by 2.1% of assets due to the strong market. All asset classes saw gains with the strongest gains in private equity, Australian large cap and US stocks. Total portfolio borrowing (including geared/leveraged funds) is 40 cents for each dollar of equity. Beta is around 1.2. Based on a rolling three year regression, alpha is just about zero against the MSCI World Index. Long-term I want to bring down the allocation to Australian large cap stocks and leverage to the market.

Moominmama Portfolio Performance July 2010

A nice portfolio performance this month but the MSCI World Index rose 8.2% in USD terms. European and Brazilian equities made gains in that range. Bonds also performed well due mainly to the rise in Sterling. As you'd expect the portfolio still hasn't caught up to pre-GFC levels:

Permanent Residency

Congratulations to Snork Maiden who got her her permanent residency in Australia today! We've been here just over 2.5 years. So in 1.5 years she can apply to become a citizen. You need to be in Australia for 4 years and be a permanent resident for one year to qualify. Compare this to the US where I was 4 years into the process and still hadn't got my green card and I would have to wait 5 years after getting that to become a citizen. One of the reasons we moved to Australia is that I didn't want Snork Maiden to have to go through all of that long process from scratch.

Snork Maiden's Taxes 2009-2010

It's tax time again down under. The tax year ends on 30th June here and the deadline for submission is 15th October. It will be a while before I can do my own taxes but I have got Snork Maiden's tax return out of the way. As it is pretty straightforward and I have a spreadsheet set up from last year as well as last year's return to refer to it took me less than an hour to do. See last year's figures for a comparison.



I estimate that she owes $13 in taxes which is much better than last year. Her salary actually increased a lot more than this over the past year (from $71,772 to $77,756) but this was our first full year of making salary sacrifice contributions of $A225 per fortnight into superannuation (i.e. pretax retirement contributions). This reduced her take home salary. Otherwise, there is not a lot of difference. Australian investment income was a little higher and foreign investment income a little lower.

Her average tax rate was 22.78%. Her marginal tax rate is 31.5%. This covers all taxes as there are no state income taxes in Australia.

The NYT follows up their recent article on how it is illegal to rent an apartment for less than a year in Paris with one about doing just that. We're paying about the same as the author paid for the studio apartment in Paris for a hotel room. But it won't be as nice and isn't around the corner from the Louvre.

Early View: HFRI and Credit Suisse Dow Jones

HFRI is reporting a -0.81% return for hedge funds in June while Credit Suisse Dow Jones is reporting -0.88% with 77% of assets reporting. This compares with a HFRX return of -0.94%. I will report more when the final numbers for the month are in.

Snork Maiden got her second visa today. Where to? There is a clue in the picture. So things should all go smoothly now :)

June 2010 Report

The true numbers for this month will be slower to arrive than ever. Everest Financial still hasn't reported fund results for May. So I might as well go ahead with the numbers as they stand at the moment. As usual everything is in US Dollars unless otherwise stated:



Non-investment income was fairly good this month as I earned a chunk of consulting income. This month exchange rates were relatively stable. Global stock markets were down another 2.95% (MSCI World Index) and US markets 5.23% (S&P 500). In currency neutral terms we lost 5.24% and in Australian Dollar terms 5.25% in terms of investment returns, whereas investment losses in USD terms amounted to 4.53%. So exchange rate movements improved USD returns relative to AUD returns. A loss of $17-20k either way you look at it though.

Expenditure was a little high as we continued with some travel expenses. But nothing like the massive spending of last month.

Net worth fell by $US13k to $US364k (or by $A18k to $A429k). The allocation to Australian large cap stocks fell by 1.5% of assets due to the bad market. Our "private equity" investments were also badly hit. A -22% rate of return. The only positive area was real estate, finally showing some gains.

In France it is Illegal to Rent an Apartment for Less than One Year!

This New York Times story stunned me with how stupid regulation can be. So the government prefers wealthy people to leave their apartments empty for much of the year instead of renting them out? I wonder what the hotel industry did to get that law passed? Seems there is so much inefficient regulation in the housing industry worldwide.

HFRX Indices June 2010 Performance Notes

The HFRX Global Hedge Fund Index declined by -0.94% for the month of June, bringing the YTD 2010 performance to -1.20%.

The weakest area of hedge fund industry performance was Equity Hedge strategies, with the HFRX Equity Hedge Index declining by -1.38% in June. All EH sub-strategies posted declines for June, with the most significant weakness in Fundamental Growth strategies, which declined by -2.85% for the month. Fundamental Value strategies posted more modest declines, with these posting a loss of -0.65%, while Equity Market Neutral declined by -0.77% in June, maintaining a gain of +1.93% for the 1H10.

Partially offsetting weakness in Equity Hedge, the HFRX Relative Value Arbitrage Index posted a gain of +0.29%, adding to the YTD gains to post a +1.29% gain for 1H10. Credit-focused Convertible Arbitrage and RV: Multi-Strategies were positioned for the financial market volatility and falling US yields which ensued in June, with both posting small gains in June to add to YTD gains; with each of these gaining +1.92% and +3.23% for 1H10, respectively.

The HFRX Macro Index posted a decline of -1.32%; as with the previous month, losses in fundamental, discretionary Macro strategies offset gains in Systematic trend following strategies. In total, Macro strategies have declined by -2.32% in 1H10 but the diversified, quantitative, systematic, trend-following funds gained +0.64 in June, with long positions in developed market fixed income offset weakness in currencies & commodities. Similar to the Financial Crisis of 2008, Systematic Macro strategies are the top areas of industry performance in 1H10, posting a gain of +4.53%.

The HFRX Event Driven Index posted a decline of -0.53% on corporate credit weakness, slowing M&A environment, increasing risk aversion and widening deal spreads, bringing 1H10 performance to -0.73%. The weakest area of ED performance was Distressed strategies, which declined by -3.73%, paring 1H10 gains to +0.38%. Merger Arbitrage and Special Situations funds posted declines of -0.58% and -0.48% in June to pare 1H10 performance in each of these to +0.13% and +0.03%, respectively.

Cambria Investments Plans GTAA ETF

I have long been a follower of Mebane Faber's blog World Beta. Quite a few of the ideas I have presented were influenced by my reading there. Up till now, investing with Faber's company has required a large investment. But now they are planning to introduce an ETF which will implement one of their key strategies. I think I might invest in that when it becomes available.

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.