Moominmama Portfolio Performance December 2010

This month, world stock markets performed strongly with the MSCI index rising 7.35%. Moominmama's portfolio only gained 2.81%:



Bonds, Sterling, and hedge funds all performed relatively weakly, though positively, which because they are each a large share of the portfolio brought down the overall return. The negative return on USD cash reflects investment management fees which are deducted from this asset. All equities as well as commodities performed strongly as did the local currency which is what "other cash" is and the real estate value moves with the local currency against the USD as well.

For the year the portfolio gained 5.52% compared with a 13.21% gain in the MSCI. Our own portfolio gained roughly 10% for the year. The portfolio is still in rebound from the GFC, though within the range of the previous highs:



The majority of individual funds are now showing a positive rate of return since we bought them. This includes half the funds we bought in 2008.

US Tax Return Done

Well, there's still some printing, copying, and mailing to do. I wrote a check for $30.10. I had $98 withheld from dividends in 2008 but I didn't update all my brokers with the fact I was now non-resident in the US and so they didn't withhold the correct tax. I am sure the IRS has expended much more than $30 worth of effort on this. I certainly have and still need to pay for express mail, copying etc.

But if I didn't speak English so well and have a good handle on financial stuff I might have ended up hiring a US lawyer or accountant to deal with this at a huge expense.

Let's see if the IRS try to get me to pay a penalty on the $30...

Working on my 2008 US Tax Return

So, I'm finally working on my 2008 US tax return in the Christmas break. The main reason why I have put this off is that it is going to be a lot of work. First, 2008 was a chaotic year and I have to revisit all the trauma to put the data together. Second, Australia has a 1 July to 30 June tax year. So all my records are now set up on that basis for doing my Australian tax returns. The first step will be constructing an imaginary Australian tax return workbook in Excel for the 2008 calendar year. Then I can use that data together with the spreadsheet I created for my 2007 US tax return and a close reading of the 2008 US Non-Resident Alien tax instructions to come up with my 2008 US tax return...

Advantages of Closed End Funds

A nice piece on the advantages of closed-end funds. The downsides include:

1. If you need to sell but the fund is trading at a discount to NAV you lose more than if you bought a mutual fund, ETF, or closed end fund when the manager makes a market to ensure the price is always equal to NAV.

2. Activist hedge funds may buy up shares at a discount to NAV and then demand that the fund be wound up. This is good in the short-run for investors but removes funds from the market. We saw this in the GFC here in Australia.

I just sold some shares in Platinum Capital today at a premium to NAV. The manager has introduced a capital management program that should mean premia do not rise as high as they have in the past. So I thought it was time to sell a few shares.

Hedge Fund ETF

UBS and HFR have launched an ETF that tracks the HFRX Global Hedge Fund Index. Prices are available on Yahoo. These seem to indicate that it costs E50k per share?! The press release below says it targets "qualified investors". Maybe this is through the choice of the high price? Apparently the ETF is invested as a swap. They mention further listings to come. I'll be waiting with interest.


December 17, 2010 (Chicago & Zurich) – UBS AG and Hedge Fund Research (HFR) have launched the UBS ETFs plc - HFRX Global Hedge Fund Index SF, the first Exchange-Traded Fund (ETF) built on the industry’s most widely used standard investable benchmark of hedge fund performance globally, it was announced today.

The UBS ETFs plc - HFRX Global Hedge Fund Index SF-I was listed on the Deutsche Boerse Exchange on 3 December 2010 (symbol UIQG). The “SF-I” share class is targeting qualified investors. UBS and HFR anticipate additional listings in coming weeks. The ETF is UCITS III compliant.

With performance dating back to 1998, the HFRX Global Hedge Fund Index is the industry standard for investible hedge fund indices, offering investors access to the benefits of passive indexation in the hedge fund industry. The benefits are achieved through consistent fund selection, leveraging HFR’s industry standard database and classification structure to calibrate strategy weighting and optimize individual fund weightings.

One of the world’s leading financial firms, UBS is headquartered in Zurich and Basle, Switzerland. UBS serves a discerning and international client base with its wealth management, investment banking and asset management businesses. UBS is present in all major financial centers and has offices in over 50 countries. UBS employs more than 64,000 people around the world.

HFR is headquartered in Chicago and is the industry leader in the areas of aggregation, indexation and analysis of the hedge fund industry. The partnership for the ETF leverages the core strengths of both firms.

"We are delighted to bring the UBS plc ETF-HFRX Global Hedge Fund Index to the market. This is a unique opportunity for investors to access the world-leading hedge fund benchmark in a liquid, exchange traded, UCITS compliant form," said Nicolas Samaran, Executive Director in the Fund Derivatives Structuring Group at UBS AG.

“The UBS –ETFs plc - HFRX Global Hedge Fund Index SF represents the first in a new generation of hedge fund index ETFs, offering investors the ability to gain passive exposure to hedge fund performance in a transparent, liquid, and UCITS III compliant manner” said Kenneth J. Heinz, President of HFR. “The construction and versatility of the ETF enables it to be used broadly by both institutional & retail investors to obtain hedge fund exposure efficiently.”

Good Procrastination

I wish I could be better at this. I accused Timothy Ferriss of being too good at it.

Another Interview

This time in the nearest big city in a month and a bit...

Two Months to Go

Two months to go from today until I teach my first class. Three months till the next deadline for grant applications - though the real deadline is before that. And there a bunch of shorter term research demands coming in. So, it doesn't look like I'll be getting much of a summer vacation :) I don't have a contract yet for the new job and things move very slowly here but that doesn't stop me starting preparing for teaching. For example, here I have to find the teaching assistant who will help me with teaching the breakout groups called "tutorials". At least I have a textbook ordered, my own copy and all the materials from last year and the last time I taught a similar class in the US. The problem is that now most of the people who can help me with the details of scheduling etc. have all gone on vacation. At least I got to meet some and get the basic before the Christmas period started.

Taking a longer term perspective it is just over two years since I decided to get back into my academic career. Since then I have managed to get two one year jobs - the first one in research and the second in teaching/research (the one that I'm sorting out the details for now). I got a little consulting and a paid visit to Europe in the gap in between. I got several academic papers published in 2010 and three are already lined up for 2011 with about another three in various stages of review. I've also had several interviews for longer term jobs but no offer yet. I feel that am more productive and creative on the research side than I have ever been in my career at least since I did my PhD. So I think I made the right decision and that I have had about as much success as I could have hoped for.

How Accurate are Rich Lists?

I always wondered how accurate lists such Forbes are. The payout to the Madoff trustee that Jeffrey Picower's widow is making shows that Jeffrey Picower was at least notionally likely one of the richest US billionaires, but barely on the radar.

Annual Summary and Forecast for 2011

The chart breaks down net worth into four components - net money saved in retirement and non-retirement accounts and the profits on both those categories of accounts. We have currently saved just over $A250,000 outside of retirement over our lifetime, but profits are negative and so we have less than that in those accounts. Profits on retirement accounts are currently positive so we have more in those accounts than we contributed to them.

We managed to save money in both types of accounts in 2010, even though for 9 months of the year only one of us had a regular job. I brought in some consulting money when I wasn't regularly employed but it was much much less than I would have in a regular job. The dip in the savings curve is due to the trip we made to Europe. The costs of the trip were easily funded by the refunds we got and the money I earned there. But we only got that money towards the end of the year. Retirement saving was $18k and non-retirement $19k.

Earnings on accounts were negative for the year in Australian Dollar terms. At this point we are down 3.12%. But in US Dollar terms we've gained 7.08%.

The forecast for next year looks pretty rosy as we both expect to be working full time. This might not work out exactly this way as big changes could happen... If we do, we are expecting to save more than $100k, about 1/3 of it in retirement accounts and 2/3 outside retirement. The profit curves imply a rate of return of 12.3% p.a., which of course, may or may not happen. It is based on bottom up modelling of returns on individual assets in a spreadsheet. Remember that we use some leverage in investing.

It will be interesting to see what next year will actually be like :) I don't think I did a forecast or goal setting exercise of any sort last year. There'll be some more annual report posts in the next few weeks probably.

HFRI Performance November 2010

HFRI came in with a preliminary 0.26% gain for November compared to a small loss for HFRX. Most of the results for the different hedge fund styles are pretty similar to HFRX this month too.

Career Update

I am still waiting to get a formal contract, but this is based on what has been discussed. I should have a job for one year doing teaching and research. It's on the same campus I have already been based at but in a different department. The position is at a level equivalent to full professor in the US, though it's not called that here and of course it is temporary. Pay will be the first time I am earning a six figure salary. At the current exchange rate that's six figures in US Dollars too but it doesn't buy as much here.

The first course I have to teach is pretty much the same as the first half of a course I taught in the US and even using a different version of the book by the same authors, so shouldn't be too hard. Main difference is these are grad students rather than undergrads but this course isn't in their discipline so the difference between grads and undergrads isn't that big. So the teaching shouldn't be hard though I've never taught in Australia before.

This department is advertising a bunch of continuing positions but none is really in my area. I heard though today that a university in the nearest big city is looking for someone who fits my profile well. But, I applied there last year and didn't get an interview. But I'll give them another chance. I also got an invite for a phone interview with a US university.



So far I've proved that you can quit a job as a tenured professor, move country, take a year out and still get decent work in academia, at least some of the time :) The experiment will only be a full success though when I get a continuing position or a major grant. But you do need to have a good reputation and be prepared to work without getting paid for periods of time.

HFRX Performance for November 2010

The HFRX daily hedge fund index lost 0.27% for November. Systematic diversified was particularly bad with losses of 3.47% (which explains Moominmama's losses on "commodities"). Equity market neutral did well as did "fundamental growth" which is also an equity hedge strategy.

Moominvalley November 2010 Report

As usual some data will lag for a month or more but here are the accounts based on the information I have at the moment. And as usual everything is in USD. The AUD fell a little to 96.06 US Cents so there is a little more difference between US and Australian Dollars this month.



Non-investment income was again high this month because I got a tax refund. Snork Maiden earned her regular salary. Expenditure was near base levels at $3,612, which is a lot less than the average for the year.

Investment return was a loss of 2.64% in USD terms against -2.79% for the MSCI Index. So we slightly outperformed the market. In AUD terms we gained 0.06% and lost -1.19% in currency neutral terms. Over the longer term, we see periods where we have outperformed the market and periods where we underperform:



The chart shows the excess return relative to the MSCI World Index since the month indicated in annual terms. So since February 2003 we have made about 2.5% a year more than the MSCI but since July 2005 about 2.5% per year less. This shows the importance of investigating the returns of investments over various time frames. Just looking at performance over the last 3 years, for example, could be very misleading.

Net worth fell in USD terms by $7k (rose by $A6k in AUD terms) to $459k ($A477k). Allocation-wise the main change was a fall in large cap Australian stocks due to the market and a gain in cash and fall in leverage.

Small Cap Stocks are Doing Well

As I'm working on November's accounts I was checking out which of our investments are at all time highs in profits gained:

CFS Developing Companies
CREF Bond Market
TFS Market Neutral (TFSMX)
Celeste Australian Small Companies
CFS Diversified Fixed Interest
Aurora Sandringham Dividend Income Trust (AOD.AX)

CREF is a US annuity and the others are Australian managed funds, so none of them have ticker codes. AOD is actually invested in large caps using a hedge fund type strategy. But the others are small cap and bond funds. Small caps do tend to outperform large caps during economic recoveries. So this is not surprising.

Career Update

I finally got answers on the two jobs I interviewed for at the beginning of November. I didn't get either. So looks like I will be taking up the offer I had of a one year position here.

I guess I am doing OK in this career search. I get interviewed for jobs I apply for but don't end up the top candidate. Academia is very competitive. Just to get into the interview pool means you are in the top few percent of applicants.

The main thing is that we'll be earning decent money in 2011 if all goes to plan from now on. The department I will likely be working for has some continuing positions that will soon be advertised but I'm not really a perfect fit for them. I'm going to keep applying elsewhere and try >another shot at funding my own position through a grant. The rules look like changing on the latter which might let me apply this time around. At least I have last year's efforts to start from.

Moominmama Portfolio Performance November 2010

Moominmama lost 2.51% this month against a 2.80% loss in the MSCI World Index. The US Dollar strengthened causing losses in terms of US Dollars. US equities actually gained. Bonds and commodities had the worst losses in the portfolio.

Can't Invest in new TIAA-CREF Funds

It's good I didn't do too much research on the new funds available from TIAA-CREF. It turns out that, because I don't live in the United States, I can't invest in them anyway.

Career Update

So I had two interviews and haven't heard back yet. I have now sent 4 applications out to the US - 2 on the West Coast and two on the East Coast, 1 to Europe, and one to another city in Australia. I'm discussing with someone at another university in that city about whether to apply for the job they're advertising (well, I'm getting more info as last year I applied and was rejected without interview). And then a short-term and long-term opportunity here have possibly cropped up. We discussed the short-term deal here months ago and I thought it was then off the table. But I was just told that it was mentioned that an offer had been made to me and I hadn't taken them up on it. So on that basis I should have a job from January for a year. I'll meet the guy making the offer at a conference in the next few days and will raise it with him there. I'm guessing he'll still want to wait the outcome of the two interviews mentioned above but there is light at the end of the tunnel after a lot of twists and turns...

Also at one of the US locations there is also a possibility that a position could be created for Snork Maiden in a different unit.

Tax Refund

It came in pretty close to my estimate at $A 4231.81. The money will go towards reducing margin debt and maintaining my monthly $A500 investments in a managed fund. Yes, we've managed to keep both mine and Snork Maiden's automatic savings going over this period (no retirement contributions for me though). The recent round of interviews and presentations ended today, should send out the next application ASAP... Seems like they went OK to well. We'll see what the search committees think.

Interviews/Applications

I had the interview I mentioned before on Thursday. It went OK. It wasn't my best performance in an interview but I wasn't horrible. I really don't know what the outcome might be. One positive I didn't know about is that they need someone to teach in my area of specialization as the person who was teaching those courses has left.* Then on Friday was part I of another interview in my home town here. This was just a friendly chat with some general representatives of the department. One academic who I know well and two PhD students. Neither of us had much clue about what we were meant to discuss. I asked them some questions about the department and they asked me some. The more serious sessions are on Monday and Tuesday. It is a lower rank position at a very interdisciplinary place.

In the meantime I just sent an application in for a job in Austria. Yeah, it's hard imagining that I'll be able to teach in German any time soon, but I'm curious what happens. I was indirectly invited to apply.



* This isn't the usual academic job search where specializations were specified in the ad. They are looking for the best people in any area of the overall discipline.

US IRS Again

I got a rather threatening sounding letter today from the IRS regarding my 2008 tax return. But they did invite me to phone them to discuss the issue, which I just did. The problem was as I suspected that investment stuff was reported to them, probably by Interactive Brokers as if I was a US resident and without tax being deducted at source, yet I didn't file a tax return. The IRS will now send me a copy of what was reported to them so that I can prepare a 1040NR form for 2008 by December 15th. It's possible/probable that I don't actually owe any tax. The woman I spoke with told me that the amount I owe for 2009 is too small to file a tax return, but that they think I owe $2,000 for 2008. I have now changed my residence status with Interactive Brokers to record me as resident in Australia and this problem should be solved.

Moominvalley October 2010 Report

As usual some data will lag for a month or more but here are the accounts based on the information I have at the moment. And as usual everything is in USD, though it doesn't make much difference as the Australian Dollar hit 97.96 US Cents (and higher intra-month). Of course, it does make a difference when it comes to computing gains and loss from foreign exchange movements...



Non-investment income was very high this month, because I got paid for my trip to Sweden. 25% tax was taken out. I was also paid for travel expenses. After all that I got about $7,500. Snork Maiden earned her regular salary. Expenditure was a little high but we were having fun in Copenhagen and Bangkok :) Actually, the biggest expenditure was for car insurance: $A797.30. Over the last year we've averaged $A5,300 a month in spending.

So in total net worth rose by $23k ($A17k) to $465k ($A475k). A few days ago I posted our detailed investment allocation. There was relatively little change in the asset class allocation for the month. The main changes were an increase in bonds and commodities due to buying GTAA.

Investment return was 3.40% in USD terms against 4.28% for the MSCI Index. So we somewhat underperformed the market.

Moominmama Portfolio Performance July-October 2010

I haven't updated Moominmama's portfolio for a while due to my world travels. So this update covers the months of August, September, and October:



The rates of return are for the three months, and are not in "per month" terms. There have been nice gains in equities, bonds, and commodities over this period. Part of it is due to the fall in the USD. But gains in Sterling and other cash are much smaller, so a lot of the gain is real. Some of the funds we bought in 2008 are now finally above the prices we paid - the UBS Asia Ex-Japan Fund and the HSBC Indian Equity Fund. Man AHL has fluctuated above and below what we paid this whole period but is currently above ($46k vs. $40k). Funds from 2008 that are not yet above what we paid are: Aletheia, Thomas White, UBS A&Q Hedge Fund, UBS Agribusiness Certificate, and UBS Brazil Fund.

Investment Allocation

Following my new investment I thought I'd update our allocation to stocks and funds:



Where possible I have given the ticker code. But a lot of our investments are managed funds or retirement funds in Australia which don't have ticker codes and some US retirement funds that don't either.

Ass you can see we have a masssive allocation to the CFS Geared Share Fund which is a leveraged fund invested in large cap Australian stocks. I do want to bring that down to a more reasonable value over time, but both the leverage provided and franking credits (tax credits for Aus. corporate tax paid) are attractive. The next largest allocation is Snork Maiden's retirement fund which has to be in the one provided by her employer. Yes there is fund choice in Australia but they will only put 9% of salary in any other fund vs. 15.4% in this one. So there is no effective choice.

The only individual non-financial stocks we have are: Bekaert and Legend. EFG.AX is a fund management company and so is also an individual stock. 3i and Leucadia are basically listed private equity funds. Clime, AOD, IPE, CIF, OCP, CHN, and BTF are all closed end funds.

So we only have 1.1% of net assets in what I consider to be individual stocks.

New Investment

I have been a follower of Mebane Faber's blog World Beta for a while. Mebane is chief investment officer at Cambria Investment Management. Their main approach is an investment portfolio diversified across asset classes with timing in and out of these assets and cash. Mebane's paper on the basic model is one of the most downloaded papers from SSRN. Up till now you needed to have a lot of money to invest with them. But on Tuesday they launched a managed ETF with the ticker GTAA that implements a version of the strategy. I invested $US10k. Yeah, I got paid for my work trip to Sweden and chose to be paid in US Dollars due to the high current price of the Australian Dollar. I'll classify this fund as a diversified fund rather than a hedge fund as I only classify funds which have short positions as hedge funds. But it definitely falls in the category of "alpha investments".

TIAA-CREF Changes

Two of the TIAA-CREF funds I am invested in are being frozen which means that I can't transfer money into them in future. I am not clear whether this is a move by TIAA-CREF or just the university where I used to work at. The letter came from the latter.

In place of the CREF Bond Market Fund, they recommend PIMCO Total Return (PTRAX). In place of CREF Global Equities they recommend a 50/50 mix of American Funds EuroPacific Growth Fund (REREX) and Thornburg International Value (THVRX). These non TIAA-CREF funds are supposedly among an array that will be added at the market close on November 19th. I'm not sure that I'll actually be able to switch funds into them as a former employee. We will see. There is a limited range of other TIAA-CREF funds that I might be able to use.

So what do I think of these new non TIAA-CREF funds? I have heard, of course, of the PIMCO Total Return Fund and its manager Bill Gross. It has returned 8.09% p.a. over the last 5 years and 7.66% p.a. over the last 10 years. By comparison the CREF Bond Market Account has returned 4.65% and 5.97%. It's probably riskier than the CREF fund but it has good risk statistics. I would say that an immediate switch is justified here.

I've heard of Thornburg but have no idea if they are good or bad fund managers. The fund is a large cap, growth oriented fund according to Morningstar. Risk stats are good. It has a 5 year return of 6.3%. CREF Global Equities returned -0.05% and has pretty much a beta of 1 and alpha of zero relative to the MSCI World Index. On the other hand Thornburg exactly matched the MSCI's return in 2008 (-41.8%) and underperformed it in 2009. And in the most recent 12 months it maybe underperforms too. The manager paints a better picture than I am getting from Yahoo. So, I'm not sure about this one and won't be looking to switch in a hurry.

The final fund of the three has a good performance record and risk stats and is another large cap fund. It's assets are greater than $100 billion though. Capital Group has a good name. So I wonder if it can maintain the performance it's seen?

Actually the combination of these two funds is not an appropriate replacement for CREF Global Equities. The latter has 46% of assets in US stocks while these two new funds have no US exposure.

In sum these are all plausible to good funds it would seem. I'll look to get into Pimco soon, the others maybe later.

Why Don't Operating Systems Save a Buffer of Deleted Files?

After accidentally overwriting a file with an older version that was inside a newer version of a folder that I was backing up I wondered why don't operating systems simply create a buffer of recently deleted files that could be quickly accessed? I use "Data Rescue" software but it takes a couple of hours to search my disk for deleted files and to reconstruct them. If my computer had a record or copy of the most recently deleted files this process would be a lot quicker. Now that hard drives are so large I can't see why not.

Maps to Show Where You Have Been in the World

Revanche posted a link to a website where you can produce maps of the countries and states you have visited. Here is my world map:


visited 24 states (10.6%)
Create your own visited map of The World

The problem is that borders between countries are marked with white lines. This isn't a problem for the borders between the US, Canada, and Mexico. But it is a really big problem in Europe. So there looks like there is a white space in the middle of Europe on my map where there shouldn't be one as I've been to France, Belgium, Netherlands, Germany, Denmark, Switzerland, Austria, Italy etc. around that gap.

The map of US states turns out better:


visited 23 states (46%)
Create your own visited map of The United States

I excluded those states where I've only ever been at the airport (Texas, Missouri, Minnesota, Utah, Indiana, and maybe some others). Here's my map of Canada:


visited 1 states (7.69%)
Create your own visited map of Canada

I've only been to Quebec. As I haven't been to India and Brazil I couldn't do those ones. Why aren't there maps for Australia and China? That would be a good addition to the site.

Moom's Taxes 2009-2010

I'm going to give up waiting for a tax statement from EAIT. It's not like I've received the distribution itself either and my guess is that it is largely a capital return. I'll attribute any taxable amount to my 2010-11 taxes. So here is my income, deductions, taxes etc. according to the Australian Tax Office rules:



Salary was for 8 months of work which ended in February (it was a one year contract that started in the previous tax year - our tax years run 1st July to 30th of June in Australia). Australian dividends is pretty self-explanatory - but it doesn't include dividends earned through mutual fund (managed fund/unit trust) structures. These are included in the next item "distributions from trusts". That figure doesn't include foreign income or capital gains distributed by the funds. My net capital gain was zero. I now have an $A80k capital loss carry forward. So I'm not expecting on paying any capital gains tax any time soon. Assessable foreign source income included foreign dividends etc. and also money I earned from overseas as a consultant.

On the deduction side the biggest items in Australian dividend deductions is margin interest. But I also included computing costs etc. here. Supplement deductions are mostly foreign margin interest.

We then compute the gross tax liable using the standard tax rates. My marginal rate is formally 31.5%. But then I should be eligible for a $819 low income tax offset! After that the tax payable is $6,390.

This is offset by almost $2,000 of tax credits. These are mostly "franking" or "imputation" credits that account for the corporation tax paid by Australian companies who paid dividends to me. Australia is one of the few countries that still has this system of "see through" taxation. As a result my net tax liability was $4,405 according to my calculations or 10.4% of my taxable income of $42k.

But $8,565 was withheld from my salary. So I should get around $4,160 as a refund.

There are no state income taxes in Australia so that is my total income tax bill/refund.

For last year's numbers follow this link.

Career Update

I now have an interview lined up here for early next month. The original deadline for the job was early this year but they advertised for a whole bunch of positions and put together a very high powered interview team which would be very hard to get in one place together any time. And then I went travelling for almost 6 months. So it has taken 8 months to give me an interview in the end. They will be interviewing higher level positions for a while yet so I don't think my absence made much difference. We'll be doing plenty of prep for the interview closer to the date. The hardest question I think will be why I want to join this group when I have applied for jobs with other groups here and failed to be appointed. I don't need to give them a presentation. Presentations have been my weak point in recent job hiring processes. Not the interviews.

I am not actively looking for positions outside Australia but there is a constant flow of ads for jobs around the world that comes through the various networks. Now there is an ad for a job in the US in a highly desirable location geographically (in our opinion) where maybe Snork Maiden could also get hired on grant money as she has connections. It would put me back to the same point I was at in 2002 when I moved to the US from Australia and I am really not keen on making the move back to the US. But maybe it is something we should look at? The problem is though they are open to more senior candidates than many job ads are I wouldn't be offered tenure and Snork Maiden's position would also be very precarious and we would have no rights to live in work in the US until 5 years plus it would take to get a green card (given my previous experience). At least this time I could apply for a green card for Snork Maiden together with myself in one application. Last time around my application was already in progress before we met and we didn't marry until moving to Australia. If we stick things out another year here in Australia she can become a citizen here already. So there is an incentive to do that.

Thai Food

The main venues to eat out in Bangkok are in waitered restaurants, food courts in malls, and in the street. Upscale malls might have waiters in their food courts too and the food is mostly foreign. We went to a Korean restaurant in the Emporium Mall. The best Thai food we had was at a restaurant called Justharos which was near Siam Square. This restaurant caters mainly to Thais. This is their green curry:



Compared to the usual green curry you are served in western countries it is very much more like a soup. All the food we ordered there was really good. Another restaurant we went to is called "Cabbages and Condoms". This place caters mainly to foreigners and groups. The appetizer we ordered there was good:



Apparently it is a classic dish involving betel leaves wrapping some crunchy contents with a lemongrass flavor and a sweet sauce including sesame and coconut. You can also add chilis if you want. But there was plenty of chili in the papaya salad we ordered so we gave those a miss! The food we ordered at the food court at the Platinum Fashion Mall - a discount clothing mall was also pretty good and very cheap. Dishes typically were priced at 45 Baht ($1.50). At Justharos a dish was around 120 ($4) Baht and at Cabbages and Condoms about 200 ($7) was average. Even the latter is cheap by developed country standards of course. We also went to a Thai restaurant called "Royal Navy Club" near the Grand Palace where we thought the food was average to bad.

The only street food we bought was fruit. A guy has a handcart with a cabinet full of different peeled fruits - watermelon, rockmelon, pineapple etc. which he then chops up and puts in plastic bags for you. Each bag was 10 Baht. But street food also includes noodle soups, barbecue:



etc.

Israeli Food

Snork Maiden tells me she has more pictures of Israeli food. Maybe they will follow. There are a few main influences on Israeli food: Central and Eastern European food brought by Jewish immigrants from those countries and "Lebanese" food as well as food brought from other Middle Eastern and North African countries by Jews from those countries. And then there is the American influence. This must explain this:



Yes, a pita with falafel often comes stuffed with what Americans call French fries. But as they are called "Chipsim" in Hebrew maybe really it is a British influence. After all the British used to rule the country. Halva is a popular dessert. Here we see halva for sale at the Mahane Yehuda market in Jerusalem:



Or we could have more European style cakes:

Moom's Draft Australian Tax Return 2010

I've just completed drafting my tax return for this year. Our tax year ends on June 30. That's presumably because the agricultural year is out by 6 months in the Southern Hemisphere compared to the Northern Hemisphere.

I still don't have a tax statement from the EAIT fund of hedge funds. They claim they'll send one out this month. The deadline for the tax return is 31 October. If I don't get it soon, I'll just have to treat that as income for 2010-2001. But I'll wait a little longer before finalizing and sending in the return. Yes, I send in a paper return. I do all the calculations on a spreadsheet that I adapt each year to changes in the tax rules and my circumstances. Anyway, taxable income came in at roughly $A43k and I should owe about $A4,700 in taxes but $A8,565 was withheld. This is due to only being employed for 8 months of the year but having tax deducted as if I'd work for 12 months and about $A2,000 in franking credits and foreign tax paid. So I expect about a $A4,000 refund.

Last year, my taxable income was under $A10k due to lower income ($A25k vs. $A50k this year) and higher deductions ($A15k vs. $A7k). Mostly the increase in income was due to working 8 months vs. 4 months and the decrease in expenses to the derivative losses I suffered in the financial crisis.

I'll post the detailed spreadsheets when I finalize the return.

Moominvalley September 2010 Report

As usual, not all the final numbers are in but this is roughly what the accounts for September look like. Also, as usual, everything is in US Dollars unless stated otherwise:



Expenditure was pretty close to normal this month despite us being in Europe for the whole month. This was because either our hotel bill was being paid for us (in Sweden) or we were staying with family. "Other Income" is unusually high as Snork Maiden got 3 salary payments this month. Investment returns were high with about half the return in USD terms coming from the rise in the Australian Dollar towards a post-float record high (the Aussie was floated in the 1980s). USD returns were 11.65% vs. 9.60% for the MSCI World Index and 8.92% for the S&P 500 total return index. In Australian Dollar terms we had a 3.19% gain and in currency neutral terms 5.34%. The biggest gains in absolute terms were in Australian large cap stocks that represent now 52% of our gross asset exposure (yeah, way, way above target). Most other asset classes fell as shares of the portfolio but every class had positive returns. The highest percentage gains were in Australian small cap and US stocks. Net worth rose almost $50k to $440k though of course the rise in Aussie terms was "just" $A18k to $A457k.

Hedge Funds: Preliminary Performance for September 2010

Preliminary performance figures for HFRI show an overall gain of 3.37% for hedge funds in September, which is very strong:



There was strength across most styles apart from short bias, of course, as the MSCI World stock index rose 9.6% for the month. HFRX though shows quite different results, but it is based on a smaller sample of funds:



Overall gain was 1.72%. Macro and Systematic Diversified had negative performances according to HFRX but strongly positive performances according to HFRI.

August 2010 Report

I'm gradually digging out of the financial mess that awaited me here in Australia. The most worrisome thing is that the US IRS is still pursuing me over my US 2008 tax return. I explained to them in my last letter that I was no longer resident in the US since mid 2007 and anyway my income in 2008 was so low that I wasn't liable for any tax here in Australia even. But they again sent me a new letter while I was away and claim their records show I have sufficient income to owe tax. I'm writing back and telling them to prepare the tax return as they see it so I can at least understand what their claim is. I hope I don't have to end up wasting money on a lawyer on this issue.

Anyway, I have now completed the August accounts:



Of course, we spent a pile of money travelling in Europe. Investment returns were negative. In USD terms they were -2.63% vs. -3.46% for the MSCI World Index. As the Australian Dollar lost a little value AUD returns were -1.07% (-1.90% in currency neutral terms). High spending and negative returns meant that, of course, net worth fell - by USD 12k or AUD 7k. September was a much more positive month as you'll see soon.

Commonwealth Bank International ATM Fees are Extremely High

We found during our trip that Commonwealth Bank charges enormous fees for using ATM's overseas. Anything from AUD 6 to 14 depending on the amount of money withdrawn (5-12%). By contrast, using their Mastercard/Visa to make purchases results in a uniform 3% fee. So it makes sense to always use the latter when possible when travelling and only to withdraw large amounts of cash. To get down to 3% for ATM transactions you'd need to withdraw about AUD 500 in one go based on this.

Home

We're finally back from our "World Tour" and now into getting back up to speed mode here. Last stop was Bangkok. At some point Snork Maiden will provide more pictures of food including from Sweden, Israel, Denmark, and Thailand, hopefully. We are appreciating the nice weather and calm and orderly atmosphere here in Canberra. Israel and Bangkok and more exciting of course, but we prefer somewhere like Canberra as a home base. At least for the moment anyway. My next planned international trip is South Korea in May. A country I haven't been to before. I had been to all the countries on this trip except Hungary where we didn't leave the airport anyway. But I saw new stuff everywhere.

Now for lots of cleaning, sorting out mail, accounting, and my taxes for 2009-2010 still to do in the next week. Also our car wouldn't start. I think it is a "flat battery". And hopefully some more blogspots as things sort out.

German Food

The best food to be had in Germany, in my opinion, are the cakes and breads:



This is a cherry cake at a café on Marienplatz in München. On the other hand, savory dishes generally are not so good, in my opinion:



This was a Munich version of Rösti that was totally different to the Swiss version we tried. This was a latke-like potato pancake (but not as good). It was served with smoked salmon (good) and salad with some brown vinegar (not that good).

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.