Quick Heads Up on WiFi and Grace Park

Take a look at this article on rogue/evil twin Wifi hotspots (I think I used all the lingo I could in this sentence).

And thanks Marmot for this link to Grace Park (not the golfer; funny pic here) in Maxim. Ahhhh. She's the same Grace Park from the remake of Battlestar Galactica (one of my fav shows while growing up) and she also played a lesbian in a high school-set show made in Canada (down boy!). Get a load of this quote from her:

"The craziest thing I did on a date was probably cutting through the lobby of the Wickaninnish Inn buck naked except for a yellow rain jacket and rubber boots, stripping down, and jumping into the ocean right in front of the hotel. Mind you, it was October and we were in Canada. Not only was it freezing; it was night and we couldn’t see our clothes."

G-g-g-good G-g-g-g-god! I know that place...it's at Long Beach on Vancouver Island. Man!

Here are the Pics!

I know you've been waiting for my long weekend pics all week...so here they are--wait no longer!

First, on Thursday night I went to Petcetera again with Spencer. He saw some toy dog bones and wanted to get one for Buddy, my parents' dog. I thought it was $1 but turns out it was $5! No way, man, that's a little steep for a toy I'm used to spending like $0.50 for at a market in Seoul (I think Korea has skewed my sense of value somehow). Anyways, he got over it and decided to make Buddy some bones out of Play-Doh (no, they didn't last, but he had fun).


Spencer and his Play-Doh bones for Buddy.

On my daily train trip I see this park near the ocean. It looks real pretty so we decided to go there on Friday. There were quite a few Chinese there as well as a Korean group catching crabs off the dock. A few people were in the water in kayaks and other boats too. Nice place, and so close to home.


Here we have some grass...


...and a rocky beach...


...and a sandy beach.


Winston posing.


Spencer eyeing the crabs...and donuts (out of frame).


Whoops...you get the idea.


Spencer unleashes on some rocks...creating a new stream.


Winston feeds the (somewhat aggressive) geese.


A nice little house nearby...


...complete with playset in the backyard!

Saturday was a day in the house (raining again) but we made it out to a McDonald's in Port Coquitlam (PoCo) that had a play-place. There was a group of Korean kids tearing around the place--at least until Kate told them (in Korean) to slow down and take it easy--Koreans cannot say no to someone older, and the Korean language made an impression on them. Spencer was enthralled by a blonde there (about a year or two his senior) and they played quite well. When we left he said he wanted to go to her place but I said (mistake) that her Dad is in the Secret Service and he'd have to get into it to be able to find out were they live. So, now, Spencer wants to be in "service". Ok, maybe a little early for that kind of abstract thinking.


Winston gets into the 'love the big corporation' thing a little early.


Spencer checks out the netting--the blonde gal behind him (Elsie) tickled his fancy a bit.


Spencer shares his ice cream with Winston (that which he doesn't get on his shirt, at least).


Now he tries to get it back.

Sunday was a full day at church...there was good food, egg-decorating and, oh ya, some talk of God. This church is a little far (40 mins) to get to so I'm a little dogged by the end of the day.

Jess (the sis-in-law) cooked a fantastic meal Sunday night...some of which is in the next pic.


Spencer picks up a giant peanut...actually it's a sweet potatoe, but who could guess??

Monday was a day at Crash Crawly's (kind of a Chuck E. Cheese's, but more games and stuff, less emphasis on food and a flat rate for all day).


The boys go for a ride at Crash Crawly's.

That's it...hope you liked it.

Another good McKinsey Article

Like the last one, this one on the markets requires a free membership signup (they don't sell your name).

Train, Work, Steel,The Fed/CRB Connection and The Rule of 72

Back on the train this morning. I forgot to mention yesterday that because of the engine failure a couple of days ago the rail company issued us an apology letter and 2 free coffees. Looks like they may need to do it again because it looks as if we’re stuck at a station once more—at least this time I’m on the train and not waiting on the platform. Ah, there it goes. They had to restart a generator. Let’s see how long it takes to actually start moving.

You know, yesterday was a sad day. There are two guys who sit near me at work, I’ll call them Peter and Ryan, and I find them to be very interesting chaps. Ryan is a new broker. Quieter than some—train just started moving!—and reminds me of my bud Carlo from when I just started in the business. Peter, on the other hand, is older (54, to be exact). He knows everything. Just unreal encyclopedic knowledge of many things—especially mining, other businesses, markets (and their history) economies and interest rates. Things you can actually use in this business. An LME metal trader I know in London, Tony, had a question for him yesterday (I told Tony Peter is a bit of a whip at many things). The question was: “Why steel is not being traded on any of the exchanges?” Peter’s answer? “Different steelmills produce steel for inventory in different forms—then when they get an order they form it to specs—thus, there isn't much (or no) standardization. Alloys and form (ingot, roll) is all over the place in the industry. Even when ordered there are little, but important, specs like bias/orientation of the grain that are major factors to the cost and suitability. Thus, it isn’t suitable for exchange trading like gold, molybdenum or lead might be.”

I didn’t let you know the sad part yet: those two now have their own office (with a window, no less) so they’ve moved out of our little area (there was a fourth guy, David, there as well, and he is still there).

The good news is I’ve almost met all of the brokers in the firm and the response has been pretty positive to my role. At first most guys say there are few or zero clients of theirs that would be good prospects for what I do, but after speaking about it for a while with them they usually come up with a few ideas. That is cool. In Ontario, Calgary and, recently, Montreal where we’ve rolled this out it has been well-received—both by brokers and clients—so I’m not too concerned about that front. We’ll see, though.

You may know that Union Securities was a bit of a bucketshop when it started in the 1960s (or so I hear). Now the firm is adding many wealth management functions (like mine) to their platform, but, still, many of the clients are traders in the more speculative markets. One broker, on old hand (not as old as Peter, though) had an interesting comparison to RBC Dominion Securities (where I started) and other more conservative firms and Union. He said that at DS the name of the game is ‘asset management’ (you’re finding places to invest people’s money and your success depends on how big your book/client base is); at Union the deal is ‘debt management’ (you have clients buying stocks on margin and you have to make sure they don’t blow themselves up and end up leaving the firm, and you, a big debit balance to try to settle). It’s the end of the year for the firm now so all debit balances have to be covered by the end of the day. I asked this broker how it was coming in getting cheques from clients to cover—he said they did nothing of the sort. If the account isn’t flat by the end of the month (less 3 days to take into account settlement, I imagine) they hit the bid (sell at market) in the account until it is on-side. Ha! That was the last resort at DS, but I guess in this business if you wait too long you might have to make up the difference so you might as well do whatever it takes. Interesting.

Now, on interest rates. Peter has an interesting theory that wheneve the CRB rises above 238 the Fed tightens rates. I haven’t tested this, but it worked in the last tightening (although it was about 1-2 months in anticipation). The CRB is now 300 or so…and the word on the street it rates should rise about 5% from these levels to get things in order. Use that info as you like.

Got to get off the train. Later.

UPDATE: Rule of 72--The real rule (that hardly anyone knows):

log(2) / log (1+r) = periods to double

The numbers skew a bit at the edges (approaching zero and 72) but it generally holds in the mid-range.

McKinsey Report on Global Capital Markets

Thought this might be intersting for readers. It's a pretty good read and a good overview of the markets today.

Free Coffee!

Ok, this licensing situation is getting a little crazy. There have been SNAFUs at almost every turn but you’d think that after 3 months that everything would be straightened out by now. But nooooooooooooooo. Basically, I’m now of the opinion that you can’t count on anyone but yourself to badger people to get things done. You have to check and recheck things to ensure that all is well at every stage. I now understand what my junior in Korea was doing—although perhaps never to his extreme: he’d ask me to check things every 30 minutes, even when the people I was to check with were still asleep on account of the timezones involved.

Anyways, I have a deadline now to get all of this done and get on with things. I really hate deadlines when there are a few parts that I cannot control, but this is the only thing that seems to make sense now. At the end of the day, things have to come together and allow me to make a lot of money. I know I have the ability to do it but I can’t legally do anything concrete without this license.

On the more upbeat side, while waiting for the train this morning I saw four rather large coyotes scamper in the brush and trees under and near the platform. We’re a ways up on it, which was reassuring (well, I’m too tall for them to think of going after) and it was kinda neat to see them. I wonder if I’ll see some sort of critter every morning now.

It’s a lot better than the gangs that have been marauding around town. Groups of 5 to 20 kids are attacking people all over the city and car theft is getting a little nuts. Actually, I haven’t seen the stats on it; it’s mostly what I read in the news (which, as you know, is biased and sensationalized in many cases) but it sure seems like we need (i) more police, (ii) tougher laws and, most important, (iii) some sort of non-government system to pressure these youths to keep to the straight and narrow.

You know, that would never happen in Korea. Kids there are so piled high with school work, after-school classes and general family and other obligations that they don’t have any time to be a kid—nevermind be in a gang. One of the nice things about Korea—you know where your kids are: in class or in bed.

Time to work. Got to call the Insurance Council today to ask about my license.

Oh ya, this morning I got an apology letter from the guys who run the train (which didn't run so I had to take the bus) plus 2 free coffees (up to $3 value, not bad). Yahoo!

Brutal Day

What a day…It was so long I didn’t even have a chance to blog at all. So, I’ll post my weekend stuff tomorrow morning. I was trying to upload a ton of pics to the ol’ blog, but things weren’t working very well.

Ok, here it is: I got up at 4:50AM. It was 5 minutes later than usual as those kids of mine kept me up at night. I’ve been getting used to taking Winston into the other room to get him back to sleep at about 2AM the last few nights…Kate is weaning him and I found that since I don’t have the required equipment he doesn’t bother crying for me to feed him. (He also gives no fuss when I change his diaper—he knows that Dad doesn’t even slow down if he fusses, and I can pin him without a problem: physical or emotional.) Anyhoo, he cried again last night then went back to sleep quickly, but (too late) I was already up—until about 4AM.

So, I get up. Then make my way to the train. I actually packed a lunch today. I figure I might as well take advantage of the mother-in-law’s cookin’ while it’s around. Got to the train and saw not only a coyote and the pair of ducks near the tracks but also a squirrel. A freight train went by as we waited for it. Then nothing. Seems the locomotive died at the station before mine. This was not cool. I had to get on a bus and get to work 45 minutes later than usual. The lateness is not a problem, I have a fairly flexible schedule and get in about 2 hours before my manager as it is—and he’s out of town for the week anyways. The difficulty was the traveling fatigue. You know when you figure it’ll take so long to get somewhere then you have to change things up and take a bus (as I did) or something.

When I got to work I got to it…my manager is presenting a strategy (or concept) illustration (basically, a way to sell our products all nicely packaged in a convenient solution for clients. The upside is big for the firm and the client so I figured I’d make a Powerpoint presentation on the thing. It took about 4 hours (I took breaks). I did the insurance illustrations, threw them in to Excel and then added verbage to the presentation. It’s pretty fun stuff—but a fair bit of work for yours truly. The good thing is that we can use it again and again. I ought to get a medal for this kind of stuff.

One meeting I had today was with a UBC Commerce/Finance grad. He’s pretty interested in the brokerage industry in Vancouver and I figure if that’s one thing I have a handle on it’s that. Pretty bright guy: came from Russia 4 years ago and finishing his bachelor’s this year—and I think he’s just 19 years old or something. Very determined look in his eye, I must say. Very polite and quite bright. Reminds me of myself in my younger days…more or less.

I met another grad (from SFU) on Thursday. He was determined as well: apparently he wanted to get into finance since birth. A pretty strong candidate but (this can be rectified and I realize he is still in study-mode) could have used a haircut and shave. Seemed a little out of place with the navy suit. Regardless, what came out of his mouth was pretty much on the money—or as much as you can expect from someone with no industry experience.

I have more of these look-sees set up via the university over the next few weeks. I like it, as I feel as if there is some benefit for these guys (and gals, but mostly guys) and they tell me it helps them too.

Ha, get this. One of the firm’s clients rode down the elevator with me last week (must have been Wednesday). He asked where a coffee place was. I said there’s a Starbucks just across the street. “What was that?” he asked. “Starbucks.” “Oh, like Tim Horton’s” “Ya.” I couldn’t believe it. There are sometimes 2 Starbucks kitty corner to one another or even in the same mall here (I think there are 10 within 2 blocks of my office) but nary a Tim Horton’s. Meanwhile, in Toronto, Tim Horton’s is all the rage and they have no idea what a Starbucks is. Even in the same country we have these differences; no wonder going to Korea is such a shock for so many.

Well, I’m on the train now…probably a good time to take it easy and rest. Spencer and Winston are probably going to pummel me when I get home so better get ready for that. Later.

Korean News

This morning I watched KBS News (they broadcast it here on the mulitcultural channel...with a few subititles for guys like me). It looks like one Saturday a month Korean kids will be free of school! This is a pretty amazing thing, and comes on the heels of workers getting Saturdays off at many companies. Some kids have nowhere to go (since their parent are stil doing the 6, 6.5 or 7 day workweek thing, but for many of them they may actually have time to see their parents (especially their Dad) and play and, well, be a kid. The downside is many parents will probably sign them up for 학원/hagwon (after school/tutor) classes (which means they have to work harder and longer to fund the things) and it looks as if the time 'lost' to these vacations needs to be made up in the rest of the month. Saturday is usually 6 hours of school (as opposed to the 8-9 they usually go through) so the additional time each day might be worth it.

In the North, there are some high level soccer/football games going on in Pyoungyang (I can never get straight which league is in which series of games or qualifying rounds). The matches were televised (although not in the North) and there was even advertising (including that of Samsung and Hyundai) on the sidelines. Sure, the Northern players had to get their uniforms and shoes donated from the South and they lost to Bahrain, but at least they got out there. Word has it, though, that the crowd (which was not full of Red Devils as Southern mobs are) was 'mobilized' by the government to make a good showing...and the lot of them were dressed in brown and grey--also, not surprising, there were no close-up shots of the attendees.

Also in news about the North, they are finally going to get a phone line set up between it and the ROK (Republic of Korea, the official name of South Korea--if you think Republic means the North just remember that the U.S.is a Republic too). Apparently they've been using some sort of satellite system or copper routed through Japan to talk with each other for the last 60 years. This was fine until Kaesong (which is a joint economic zone) and its need for a better communication system than semaphore. Apparently, it took 30 minutes and horrendous cost to make a call. Funny thing, in the news broadcast they even noted the area codes of the phone line (011-8585 for calling the North, 869 for calling the South) which, in my books, is a pretty weird detail to have in the story--do they think that people watching mihgt somehow get accesss to these lines and need this kind of information?

And, as is typical in Korea: more people are opting for plastic surgery and Koreans are emulating one of their favorite stars by committing suicide. A typical day in the neighborhood.

Birds and, well...no Bees.

This morning was full of wildlife…well, compared to what I saw in Korea on my way to work—which was none. On my walk to the train I saw a coyote crossing the road: the thing was quite fearless. Then there was a pair of ducks right on the train tracks. It looks as if they were eating some grain that had spilled out of a hopper car as it went by. They were also pretty domesticated; only flying away when the train was a few meters away. Granted, they were on the neighboring tracks, but you’d think a 1 kg (2.5 lb) bird would be spooked be a 55 tonne (60 ton) locomotive.


You can barely see them in the early morning light. The male Mallard is on the rail feeling for the rumbling of a train while his hen feeds.

Time for another book review…let me think, which one stands out in my mind? Ah, yes, Monkey Business. This was written by a guy who went through the investment banking analyst position training and workload at Donaldson Lufkin Jenrette (now part of CSFB). If you need a good read and insight into that system (granted, it has changed a bit since then…but I find that most things in this industry are more likely to be the same than change—especially if the firms figure that the old ways are just fine/profitable). I don’t have as much to say about this one because, like so many of its genre, it is autobiographical. One of the standouts is when he was working on an IPO he spent days and weeks traveling and sitting in on useless meetings until the prospectus was finally ready. His big job was to ensure that the printers had the firm name in the correct font and the company motto was centered just right underneath it. If he screwed that up then his name was mud…you’ll have to read it now to find out if he washed out of there on one screw-up.

I’ve been meeting more of the brokers in the office and getting, generally, a warm reception. We’ll see how many actually step up to the plate and refer, but I know that these concepts (estate and insurance planning) are pretty alien to the financing and trading brokers that we have here. Many of them have quite a few questions about how this stuff works (which is cool) and I’m pretty amazed at how much I’ve retained over the years (even after 2 years in soju-soaked Korea). I have to be thankful to my estate lawyer buddy too—he always has the answers for me when the brokers have a technical question. For that, he will get all of my referrals.

A few days ago my old boss emailed me saying that he’d like me back in Seoul. Oh man, it’s like the mafia (I keep getting myself out, but they keep on pulling me in again!). Well, I’ll have to refer a few other guys to him, as (unless my felling on this position is way off) I think it’s going to be pretty good here and there are the additional benefits of: (i) good schools for the kids, (ii) relatively no pollution, (iii) no threat of war, (iv) I’m dealing in things that I fully understand and have 10+ years experience in, (v) the office environment is very similar to my first real job at RBC Dominion Securities and (vi) everyone speaks English (which is a bigger plus than I ever thought possible).

Well, time to get things done here…later.

Engrish and Piracy and Adultery

Yay! I finally got published!

And, it looks like ol' Hana Bank (translates to #1 Bank) is competing with China for pirating Microsoft code. In other news: South Korean companies are increasing IT spending this year by about 6%...ya, but it might have been up 26% if they had to actually pay for all of it.

UPDATE: Ha, we had a little gold company come in here for lunch. They have a few holes in the ground in a country called Burkina Faso. I had never heard of it, so I checked the CIA Factbook page on it. It has some pretty funny info in it:

Natural hazards:	recurring droughts
Environment - current issues:	recent droughts and desertification severely affecting agricultural activities, population distribution, and the economy; overgrazing; soil degradation; deforestation
Environment - international agreements:	party to: Biodiversity, Climate Change, Desertification, Endangered Species, Hazardous Wastes, Marine Life Conservation, Ozone Layer Protection, Wetlands signed, but not ratified: Law of the Sea
Geography - note:	landlocked savanna cut by the three principal rivers of the Black, Red, and White Voltas

Ok, so it has a water problem...but that didn't stop it from signing agreements on Wetlands! Oddly, this landlocked country has even signed, but not ratified, the Law of the Sea...makes sense, I guess. They must be against piracy too.

The liars...I mean promotors...said that it has a stable government but neglected to mention this:

Disputes - international: two villages are in dispute along the border with Benin; Benin accuses Burkina Faso of moving boundary pillars; Burkina Faso border regions have become a staging area for Liberia and Cote d'Ivoire rebels and an asylum for refugees caught in regional fighting; the Ivoirian Government accuses Burkina Faso of supporting Ivoirian rebels.

Hmmmm....I'll pass.

This article (another Economist one here) on adultery in Korea really floored me (you can find my understanding of the law here--it's not as simple as you might think). 75% of Korean men admit to cheating! Basically that means that 110% do it? Right!? Unreal. Why just 15% of women? Well, maybe they don't want to admit it (there are more women who are unfaithful) or maybe those 15% of women are 'servicing' the 75% of men who fool around (if it's a 5:1 ratio that's pretty brutal). All I know is that married women in Korea do walk on the wild side (all from stories from expats, of course).

Maybe they should make it legal (like pot in Amsterdam). People will probably still do it but that 'verboten/forbidden' stigma/excitment will be lessened.

Book Report: When Genius Failed

Well, I guess it’s time to review some of the books I read while in Korea. A few of the SFU students I’ve met have been asking what to read and I’d like to let people know which are the good reads out there. Incidently, I spoke for a while with one SFU finance student who had read some of the same books and I noticed a curious thing: we both spoke the same language. Others in the group had little idea of the people and events we were talking about but we were very into the conversation. Thus, for those of you who aspire to get into the investment business here is my advice: read as much as you can about the past—especially the big events like Mike Milken and Baring’s collapse and the various bull and bear markets. When you get in the business you will meet people who actually lived through these things and met these people (or know of them) and then you can take in what they are saying a lot easier. Everyone seems to frame reality and the present based on their past—and this is a good way to have a shared past.

When Genius Failed was a great book. Roger Lowenstein is a very concise and eloquent writer with an eye for not only the details of the events but also the nuances that percolated through the markets at the time. The story was about how John Meriweather and his analytical team (who started in Salomon Brothers) started a hedge fund in Stamford Connecticut called Long Term Capital Markets (or LTCM). It really was setup to arbitrage between pricing discrepancies in the markets—discrepancies that might take a while to converge or go their way (which might be where the ‘long term’ aspect came in).

Hedge fund is a bit of a misnomer. The fund was set up with the high minimums traditionally used with hedge funds (in this case $10 million) but the trading was done via many primebrokers (most hedge funds have just one primebroker--—hence the term ‘prime’). As well, the trades were broken up between brokers, so, for example, Bear Sterns might get the buy side and Goldman Sachs might get the sell. On the consolidated books the fund would be hedged (more or less, in some cases, as there is rarely a perfect hedge) but each party to the transaction (except LTCM would not know exactly what they were up to—thus, they could not piggyback the strategy and make copy-cat trades that might ruin the precarious formula.

As with other hedge funds they also required investors to tie up their capital for an extended period (I believe it was 3 or 5 years—, this might be the other basic for the LT in LTCM). They also expected profits to be quite robust with little risk (or standard deviation, as we call it in statistics). For those who questioned them (Warren Buffett was one) arrogance and hubris reigned from time to time. It’s said that Myron Scholes (of Black-Scholes fame) said, “As long as there are people like you (who think there is no free ride/lunch) we’ll make money.”

Indeed, the fund did make a lot of money. 40% or so a year for a few years (you’ll have to read the book to get the actual stats) and the risk (standard deviation) was quite low. Their sophisticated computer modeling programs could not find fault with their trades. For the most part, they were playing the “on-the-run, off-the-run” game where they’d buy the long government bond issued over 6 months ago and sell the one that was just issued. Since institutions tend to trade them for a short while and then lock them into inventory, the liquidity premium in the newly issued bond lead to a slightly higher price then the older one—. This discrepancy would alleviate itself in a short while (a few months or years) and the profits were virtually guaranteed—--but they were very, very small: so they had to lever up the portfolio and throw millions (or billions) at it in order to make it profitable.

A few other arbitrage strategies were used, but, in time, the managers found that they were getting too big even for these highly liquid markets. There was also the risk that they might be found out and other traders would ruin their little game. So they branched out into emerging market debt arbitrage: buying, say, Argentinean bonds, and selling U.S. treasuries as a hedge to interest rates. They could also use swaps and credit default derivatives and other instruments to tailor their exposure (and profits) to their models.

When these markets started to get a little boring they even started doing merger arbitrage (also called risk arbitrage) whereby they’d go long and short the stocks of target and acquiring firms in announced deals (and even unannounced deals--—very risky!).

Over the years LTCM, as noted, racked up impressive gains and really didn’t take into account that a Perfect Storm was brewing. (This is, of course, looking back, so you’ll have to forgive my holier-than-thou attitude.) The principals of the fund decided to lever up their personal investments. They already had a good deal of their own wealth in the fund (as is typical with hedge funds) but they thought that all these minority investors should be bought out and replaced with their money. Of course they didn’'t necessarily have enough to do so. They approached UBS on the idea of writing an option on the fund (the principals would pay UBS an up front premium and be able to get, in essence, a levered play on their fund—the higher it went the more they’d make and because their original investment would be lower than buying it outright their levered returns would be astronomical). Of course, UBS was a little hesitant at this. It would have to buy the fund itself to ensure that it hedged its position. This was not all that palatable so it balked at the deal. Swiss Bank Corporation (SBC) did bite and, in effect, the other original (non-principal) investors were bought out at an incredible gain (much to their chagrin—at least in the short term). (Later SBC was bought by UBS and UBS got the option albatross regardless—--haha!)

As alluded, the Perfect Storm did occur with Russia defaulting on its bonds in the Summer of 1998. Many other emerging markets became ‘submerging’ markets and LTCM’s investments in them dropped like a stone. With the flight to quality their short on the U.S. Treasuries was less of a hedge and more of a source of losses--—while many of the other strategies ended up tanking as well. Their capital reserved wanes and the primebrokers (hoping that LTCM has hedged their positions effectively, but later finding out the ugly truth) got worried—Bear Sterns being the most vocal (they were also the one large investment bank that did not invest in the fund. Goldman Sachs was approaching its IPO when the crap hit the fan and it was found that LTCM’s $1 billion in assets was levered up to control $125 billion and, through swaps, the total was even higher (about $1 trillion if I remember correctly). It all came crashing down even moreso as investment bankers who combed through the newly-opened books of the fund were reportedly calling their firms’ trading desks and alerting their staff to the major problems--—problems that traders would exacerbate with great glee not only for the profit motive but to help bring down LTCM’s tower of hubris.

In the end about $350 million was pledged by many of the big U.S. banks (Bear Sterns notably absent from the bailout group) to take on the positions and work on an orderly liquidation. Apparently Warren Buffett entered the fray as well, —as his Berkshire Hathaway was one of the few firms in the world with the capital and corporate structure to take on the task single-handedly—--but he seemed to have low-balled his offer and the Fed, who had stick-handled the deal, decided to go with the consortium.

Basically, if you want to know what can go wrong (even with Nobel laureates on staff) this book is a great read.

Happy Birthday Reese and Peter

Ha. One of the brokers in the office here just turned 54--on the same say Reese Witherspoon turns 29. (And, no, I'm not her stalker--I saw the announcement on one of them in-elevator TVs.)

That reminds me, we watched Legally Blonde on the weekend (good ol' TBS showed it back-to-back a couple of times). I haven't seen the sequel, but I hear it is the same stuff (which some people don't like; but I probably would because I liked it--so did Kate). If you haven't seen it, it's basically an updated Clueless set at Harvard rather than the mall. You could also call it a blonde A Few Good Men because it's like David & Goliath and the big scene is when the star breaks a witness on the stand. (Oops, gave it away.)

Well, that's it for now...later.

Insurance and Racism: Something for Everyone!

Feeling better this morning. Got a good idea for marketing my products to the brokers over the weekend. One of them was asking if there were any insurance companies that might give shares to policyholders. In fact, there are two, but only one of any real consequence. You see, a few years back the in thing was for mutual insurance companies (those owned by their policyholders, not by shareholders) to demutualize. This means an end to extra dividends (essentially, the excess profits of the firm) being paid out to policyholders, but, in lieu of that, they got shares in the new stock company. Thus, a policyholder in, say, Canada Life, might get $100 to $100,000 worth of stock in the company when it went public for free. Well, not really for free, as they don't get extra dividends, but everything else being equal (which it rarely is) if you have a choice between a mutual insurance company’s policy and a stock company's one it seems pretty obvious which one you might take: the one with the extra upside. As well, as mentioned, before demutualization excess profits went to the policy holders (in the form of dividends) and this meant (again, everything else being equal) that you could have higher returns with a mutual company.

So, why bother with stock companies? Well, for one, they often have a good deal of marketing and financial strength behind them (especially now since the plan of most stock insurance companies is either to: use their stock as currency to buy competitors or entice another to buy them). As well, not many people (even insurance agents) know the difference between the two; or they have strong loyalty or contractual obligations to sell one firm's products over another. Finally, most people buying policies are not exactly financial mavens and have little insight into the differences and even if they know the difference they may think: hey, there is no free lunch--this is too good to be true--and then they don't bother capitalizing on it.

Anyways, I will. Now to get to it.

UPDATE: This I read from my Google News this morning. Looks like 1 in 6 Canadians are victims of racism. Look at that! Not only are these people persecuted but they are also in the minority! Well, I guess the good news is that everyone who could be persecuted isn't...because, almost by definition in this multi-faceted country of ours, everyone is a minority--even WASPs like me!

An OK day.

Today we had Winston's christening. He's a lot bigger than Spencer was when he had his, but we put it off because I was in Korea for so long. As usual, everyone who saw him thought he is a girl. Well, that's what he gets for looking like his Dad.


Winston says, "Hey, mack, what's with the water on the head!??!"

Actually, there was a ka-fuffle when Spencer had his head-wetting. The pastor and church call it a baptism but I'm a little old school and figure that baptism means salvation and that can only happen with conscious acceptance. Hope I'm not losing many on this, but there is a difference. Well, we agreed to call it a 'welcoming to the church' rather than a baptism...but what they said in Korean I have no idea. Whatever you call it, it made the family happy and is another of those rites of passage that most people (in one form or another) go through.

Man, time for bed...sleepy. Hope to get over this virus (or whatever it is) overnight. Got lots of stuff to do next week.

Not a good day.

What a day (and night). Yesterday, as you know, I was a little slow on the draw because of the night out (which, I might add, was nothing compared to what we did in Korea; but nonetheless…). In the early afternoon I finally had lunch: a sub from Quizno’s. Then it was off to the dentist. My tooth-doctor is in another part of the city, but not too tough to get to.

Anyhoo, I don’t have any cavities (yay!) but I felt kinda weird after the visit. I got on Skytrain and then transferred to a bus and started on the last leg of my trip home. On the way I called my wife to pick me up at the busstop; but I was still feeling pretty queasy. My hands were clammy, my skin was going paler and I was feeling worse and worse. Finally, I couldn’t take it any longer. I talked to the bus driver.

“I’ve got to get off the bus real soon.”

(Throwing up his arms.) “Well, we just got on this stretch. There’s no stop for a while.”

“Listen, I’m going to be sick real soon.”

“What?”

“I’m going to throw up.”

“Ok, let me find a spot. But there is no way a bus will stop here to pick you up.”

“That’s the least of my worries now.”

Well, I made it off the thing and called my wife to pick me up and then…lost it. Picture this. On a stretch of more-or-less deserted highway this guy in a navy suit and tie is pitching his cookies. Nice.

As I waited for Kate to pick me up one of the cars going by honked. Then my sister-in-law called me asking what the heck I was doing on the side of the road and if I needed a ride. Nutty, it was her passing me who had honked. I got home alright, had a bath and went to bed. Twelve hours later here I am waking up and trying to make sense of the strange dreams I had.

UPDATE: (Saturday, 2PM) Just woke up from a 4 hour nap. Man, what a day.

Books

Oh ya, forgot to mention: I finished Big Deal. Man, this book should be required reading for finance students. It was really good. Not only had a run-down of the history of M&As but goes into the makings and intricacies of deal-making and then goes into the more sophisticated (albeit U.S.) legal, tax and reporting statues. Very, very cool. The best part is Wasserstein's writing style is concise, deep and friendly. Even when he talks about deals he was involved in he doesn't get seduced by hubris and talk and talk (unlike some people...hehe) but instead just says stuff like: "We were advising Time on their side of the merger." Quite gentlemanly.

I also skimmed though Big in Asia. If you've never been to Asia and want a good primer on it this is a good source. It basically lays it all out for many countries (Korea, China, Hong Kong, Indonesia) and focuses mostly on business dealings. Not a ton of culture stuff in here (although it's prevalent throughout as it relates to corporate dealings); I liked it a lot.

Hmmm...for some reason both books have Big in the title. I guess now my Goooooogle ads will change to Viagra or something. You know, in the past month or so they changed from ads on Korea to ones on hedge funds and investing. Interesting. As a result my click-throughs (and earnings, meager as they are) have tripled. So keep clickin' on them ads!

Ug.

Last night was cool. SFU and UBC have a little bit of a rivalry going: in football, basketball and finance. I stayed late in town and went to the SFU-UBC Portfolio Challenge Wrap Party. There were a few other alum there as well, but mostly SFU/UBC students--many of whom, par for the course in investment classes these days and in my day, were Asians (mostly Chinese). Most were in suits and a few were standouts...an enterprising young crop of grads-to-be.

Well, I have to say that UBC won the challenge, their top team made 67% in 6 months while SFU's top guys made just 37%. It reminds me of when we did this in my time. Our team loaded up on a VSE pennystock and it happened to pop up in the final weeks of the game and we won the national prize (as well as 10 Samsonite briefcases!). A financial writer actually wanted to interview us and ask how we made the money but when we explained our 'shit-house luck' he was less interested. Well, these teams had a more pragmatic approach, but some of the teams made a ton of their dough in Google and other options (the VSE of today).

Anyhoo, a die-hard group of us were there until about 11PM. Man, that was tough. To make matters worse, I forgot to have dinner and subsisted on hors d'oeuvres and lagers. Yes lagers. It's been a while since I've had more than 2 beer...like since Korea.

Hence the "ug".

Back Again

Bloody 'ell! I just did a post and Blogger lost it! Argh.

What I was going to say is that I got a (literal) wakeup call from Vernon Mike recently. He's an old bud and reads my blog and (I guess) needed his fix of Korea/Vancouver/kids stories. Obviously he doesn't read it that much because he would know that I hit the hay at about 8PM (and get up at 4:45AM...give or take).

I lost another post on Monday and, owing to my increased workload (I won't bore you with that...for now) I didn't have the energy to redo it. Basically, there is a new freebie newspaper (really thin, though) in Vancouver: Metro. (There is also a Metro in Korea...and, of course, many copy-cats too.) Now The Province and Vancouver Sun are being given out for free on my commuter train--I guess in competition. I thought people were just saving spots, but it looks like everyday this week there is a paper on every seat.

A couple of weeks ago Starbucks and Royal Bank started promotng their new Duetto Visa card. They were handing out 1/2 pounds of ground coffee (with applications attached) as well as free brewed coffee and danishes & muffins. Mmmmmm. As well, VanCity and Vancouver Sun got together to give out free issues right on the same corner. Wow. Free coffee, food and a paper!

What else is up? Well, as for work...I have been working on a strategy for a couple of clients. It's a pretty simple idea, but I had to get the tax rulings and explanations to back it up as well as do actual quotes (it includes an annuity, a bank loan and a life insurance policy) and work them out on the spreadsheet. What's the verdict? It's not a good idea at this time. It took me 2 days to run the numbers 10 different ways (literally) and it turns out it's not much better than a rather simple strategy. Damn.

Had a meeting with a supplier today. They have some pretty cool products that might make sense for clients, which is cool. That's one thing I like about this business: there's always something new and (one would hope) improved cropping up.

I guess that's it for now. Later.

Out of Action for a While

Wow...take a couple of days off and people take notice. Kinda feels nice. Got a few emails saying "Where is your blog?" over the last couple of days.

Here's the story. It's been busy at work (which is good) and my wife and kids got sick (which was bad) for the last couple of days. I think it was food poisoning as it set in very quickly and before the puking (sorry, little graphic there...not near as graphic as living through it, though) everyone seemed alright. Well, the night before last I got up a few times to clean things up and ended up sleeping in the living room (finally making use of the super-fantastic electric blanket we got from our wedding trove from the in-laws).

Work it cool...starting to really get in the groove. There are many things to keep in mind and there is a certain mindset you need to have to do things right. Luckily, unlike my positon in Korea, I know the language, the culture and the laws and products here. Man, never thought of how much a shock it was to go there until I came home. Having done it, though, I think it was very eye-opening. From my first trip to Asia in 1990 to this last stint I keep coming home with an appreciation to the system here (flawed though it is) and for more education (in Asia if you don't have a good degree you might as well resign yourself to street-sweeping in some cases).

Uh oh, got to get going. Will do more on Monday...maybe on the weekend too.

Textmessaging and Cameraphones

Boo hoo. I miss my Samsung Super-Phone. That sucker was great. Not fantastic pictures, but I could (of course) take them anywhere and email them as well.


Hmmm....is this James in Korea? No, I only did 2,000 texts a month.

Ya, I did a ton of textmessaging (they also call it SMS--Short Message Service--in Korea. Even did it in Hanguel (it's actually quite easy and convenient). Now that every Korean and his dog (almost literally) has a phone, they have to come up with new things all the time: cameraphones, camera-camcorders, flip-faces, registered mail for your SMSs and services to allow you to find a bus or taxi, figure out its estimated arrival time (for buses at least, taxis are all over the place as it is) and even pay for them (and your purchases at the local convenience store) with your phone.

That's it for now...maybe add more later.

Busy Day...But Not Too Busy to Blog

Man, too much going on...feel a little scattered, too. I did a career counseling thing for some aspiring SFU BBA students yesterday. 2 of the 6 were no-shows, though, which meant I could bolt early for lunch but made me a little pissed. There were a reported 20-odd others on the waiting list so it was not only an inconvenience to me but to those who wanted to get in there as well. Here's a hint for getting a finance (or any) job: don't be late or miss appointments.

Ok, that's done. On the upside the 4 dudes (they were all guys) I spoke with were an interesting bunch. One was prime banking material: he's studied the books (not only school ones, but also those on the business) and had a good overall look and style. Another was a bit off in his diction (Chinese fellow) so I gave him the advice of getting a few English-speaking friends to get his language better--the guy had a deadly GPA but that does dick for you in a presentation. One other guy had an interesting slant: already started a little trading fund. Problem was all his ideas were based on technical analysis and news releases...something that the guys here might like, but hardly the sort of stuff investment banks rely on for their advice (I would hope). And finally, another Chinese guy (3 outta 4 is par for the course in finance classes these days) had a push from his parents to be a banker but hardly the drive and obvious ambition to go get it. For him: take a vacation, figure things out then start life with a clear purpose.

One thing I do recommend for those in the business or looking into it is take a look at the Albourne Village. It's a free site specializing in Alternative Investment and Hedge Fund Stuff, but much of it is applicable to long-only (your typical buy, no short, idea) and other traditional investments. If you need a referral code put in 'sunasset' (my employer when I was in Korea) and you can get daily or weekly news as well as browse the Job Centre. I found a position in there which helped hasten my move from Korea (it's always better to go to something); it fell through, but gave me the idea that there is a whole world out there to take a look at.

On the business/work front things are coming together. My main concern here was that the brokers would be wary of an estate planning/insurance guy like me--even with my experience (having been in their chair for 5 years). Thankfully, it looks as if I'm fitting in...knock on wood. (You know I always used to hate those little sayings, but now I find myself saying them...nutty.) Thing is, my licensing is taking forever. The guy taking care of that (not me) dropped the ball a few times so I'm getting a little pissed that things are taking so long. You may know that much of this business is not salary-type work so the longer I'm off the market the more stressed I can get. Anyways, it's on track and things could be better in that area, but I guess it could be worse--the brokers could think I'm an idiot (that would make this a no-goer)--so I better shut up while I'm (more or less) ahead.

The ol' conductor on the train I take everyday finally packed it in and retired on Friday. Imagine riding the rails for 37 years...good God. For some the routine would be nice, but I'd call it monotonous. I need to have a few different things happening everyday to keep my interested and awake.

Well, better check out a few things and get some work done.

Where are My Readers?

Ever take a look at the HitMaps map/link on the right-hand sidebar? As you might expect, many of my devoted (and long-suffering) readers are in Korea (Seoul, mostly) but it looks like many are also in the U.S. I know the guys in Hawaii, Saudi Arabia and South Africa that reads it but was surprised to see so many in Europe and South America. But I have to ask: who are the dudes/dudettes in Greenland, Churchill (Manitoba) and Abidjan (Ivory Coast)? Hmmmm.

I called Lucky Randhawa and he claimed ignorance to the comment reported yesterday so I called Carlo to see if it was him (not many people know the connection). It was. Carlo...he's a pretty quiet guy, very solid in terms of getting things done and being low-key...but he has his moments of mischeif as well. (Lucky is a reference to one of the actors of the ill-fated Pacific Palisades show on Fox. This is Lucky...only slight resemblance to my bud.)

On an unrelated subject (and contrary to/supporting my previous post) there are gays in Korea; at least according to this article. Oddly, that previous post is my most popular incoming link; it seems my caption of "gayday.jpg" makes it the #3 image under that search term on Google Images. (Just so you know, I found this out from my hit-counter, not my doing the search itself...jeeeeeeeeeeez.)

What?!?! The Simpsons is produced in Seoul (Songpa-gu, where I used to live before moving to Yeouido, to be exact)?? Read on. More on the production company on this (cached) site here (note the Konglish).

Haha. Take a look at this link. I got 7 out of 18...obviously I have no idea who is Chinese, Korean or Japanese.

A few videos I like: In case you've ever wondered what R&B would be like in Korean, here is a look. (All girls in Korea look like these dancers.) For an insight into Korean political life, take a look at this debating strategy. You think you have a parking problem?? It seems North Korea doesn't like the U.S./Bush all that much. And...this one looks aggressive, but really it's not. It's been on T.V.! Finally, this video shows why (I gather) my wife vetoed having our kids go to Korean schools.

Not much else to report...getting over a wicked cold which (you may have noticed) makes my head quite foggy from time to time. As long as I get over it this weekend...then I can really get to work next week. The kids and Kate, of course, have it as well (I think Spencer brought it home from school or the playroom in Ikea) so we've been bouncing it off one another the last few months. This would never happen if I was back in Yeouido, of course, because I was living alone and killing cold viruses with soju. Oh well, it's a small price to pay.

Note the Sarcasm

For those of you who don't know, I worked with "Lucky Randhawa" when I was at DS...I can only hope that his compliment on my cranial power was sincere (but I doubt it). LYS is also a bud...but I believe he does think I'm a show off (LYS is a very introverted sort who dresses quite conservatively....NOT).

Now that that is out of my system...Spencer is 4 years old now! We had his birthday yesterday (thanks Ma and Pa for the big box of toys and stuff) complete with the usual: a cake, Chinese food from Hon's Noodle House and Korean food from Cheon Ji (both places are owned and run by their respective races, a rarity in Vancouver--were half of the sushi places are run by Koreans). Jess got Spencer a toy (of course) doctor's kit; sounds like he'll be a hit with the girls soon. We got him a bunch of toys too. That should keep them (Winston gets in there a lot too) busy for about a day and a half.

Funny thing: a few days ago Spencer and I went out to the mall and (as usual) there were some Koreans walking near us. He was dawdling and had to catch up with me (sink or swim, I say). He yelled, "Appa!" (Korean for Daddy). The Koreans nearby were a little surprised...who is this white kid (Spencer hardly looks Asian) yelling Korean to his (obviously) white Dad? Haha.

Did some shopping a while back. Bought toothbrushes and razors. As you may know, these kinds of things are super cheap in Korea. Toothbrushes I get here for $2 or $3 are $1 for 4 (or 6!) in Korea. Razors here for $4 or $8 for 10 are just $1 (sometimes $2) for 10 over there. However, I found a deal on both here: brushes $1.50 each and razors 10 for $2...wahoo! Both have the same brand: "Good and Kind"; which is eerily reminiscent of the Korean discount brand "Good & Cheap" which, I guess, has a better ring over there than here.

What? You're still reading after that yawner of a paragraph? Unreal.

Off to work now.

Passed it.

Got my results: PASS. That's about all I needed to know. Usually I blast through multiple choice exams in half the time but this thing (a 4 hour/240 minute one) I finished in 1/3 of the time (80 minutes).

Now to get to work.

Added Books

Now on the right hand sidebar you can see all the books I've read since returning to Canada and a few words on each one. If anyone has any idea how to stop the text font from getting larger and larger and larger please let me know.

Last Steps...and: Your Excel Tutorial...and more reviews.

Finally got to write my test yesterday. That's all I'm going to say. Ever since I walked out of the CFA Level II and said to everybody and their dog that I passed the thing--and then failed--I've been gun-shy on exposing my unmitigated hubris. This afternoon the result should be faxed over here and you'll either get an "I told you I'd pass" or a "Gotta get a gun." Stay tuned for that.

Minaz came by yesterday...he's been stopping by for lunch a fair bit lately (if you'd like to know his antics in Seoul check my October postings) and today he had a job interview. He's a CGA (an accountant, a bit more practical/management-level than a CA/CPA, but he still knows his stuff) and out of work after about 8 years in a job I, somehow, introduced him to. I knew the owner and the business was just starting and needed a part-time bookkeeper...then it grew to over 200 people in a few years.

Anyhoo, we were fiddling around in Excel and he showed me a cool little function: Goalseek. Maybe you've already seen it, but I hadn't (which makes me, a finance guy, look like a bit of a chump).

Here was the problem: we had 2 annuities to calculate a rate on to get the IRR. The first was a cash inflow into an investment (it was more than that, as it has soft benefits, but we were looking for the hard numbers, remember: he's an accountant). Let's say $6,000 a year for 10 years. Then we had an output of $30,000 a year for 15 years starting in year 38. To do a normal PV in excel you need to enter =pv(rate, nper, pmt, (fv), (type)) where rate is the rate of return, nper is the number of periods, pmt is the payment per period, fv (optional) is the value at the end of the stream and type (optional) is normal annuity (payable at the beginning of the period) an an annuity due (payable at the end of the period).

What you can do is set rate as a certain cell and then enter both annuity formulae into 2 other cells and set a fourth cell as the difference between the two. By picking numbers and interpolating (basically making the rate cell number larger or smaller) you can arrive at the IRR (internal rate or return, or ROI: Return on Investment) of the investment. Minaz is a sly one..he went to "Tools" in the pulldown up top and hit "Goalseek". There are three questions the function asks: Which cells are we concerned with? What do you want it to be? and What cell should be changed to get what you want? As you know, my rate in the PV formulae were linked to the ratecell so all he had to do was "Set Cell: the one that is the difference between the two PV calculations; To Value: 0; By Changing Cell: the ratecell" Then it got the number: 5.13%

5.13% is not a fantastic rate of return (even if it is, as in this case, after tax) but perhaps the soft benefits help it make more sense. The cool thing now is that I can now compare other similar products and plans to this one to see which one makes sense! Yahoo!

Another little gem I found came from when one of the guys here asked how to price a bond. Well, I always got pre-formatted spreadsheets (either with formulae or macros) when I was doing the investment banking thing in Korea and when we were in brokerage the bond desk always gave us the numbers (plus our PCs were nothing like they are nowadays). I found a cool function: price (also in Excel is pricemat for notes that pay interest at maturity only and pricedisc that are discount instruments). The format is: =price(settledate, matdate, coup, rate, redamt, freq, basis) where settledate is the settlement date for a trade (3 business days after trade date, normally; all you need to do to put March 7, 2005 into this field is input DATE(2005,3,7) !), matdate is the maturity date of the instrument, coup is the coupon rate (you can even express it as a percentage, like 6.05%), rate is the current or quoted rate for that bond, redamt is the redemption amount (the convention is 100), freq is frequency (1=annual, 2=semi-annual, 4=quarterly) and basis denotes the daycount basis (these are in the help menu, we use '0' which is a 30/360 basis). The price it computes is the total price including accrued interest. Very cool. Again, I feel like a bum not knowing this already; but better to know a little later than never...right?

UPDATE: If there is a "NAME#" error in the cell then you have to update the formulae in your Excel software by going to "Tools" then clicking "Add-ins" and clicking "Analysis Toolpak" then having it do its thing to plop that function into your system. It's a little cumbersome (probably the reason I didn't find the thing before...was always on a Korean/Hanguel version in Seoul) but I guess it frees up RAM or something for those that don't use these more advanced functions.

A while back I burned through a good starter book on hedge funds: Hedge Funds for Canadians. It's quite a good overview of the industry and not too bookish and not a promo-piece-of-crap like many of these things are. If you want to bone up on these things this is my recommendation (although the profiles of funds in the back are a little dated).

I also went through Consultative Selling a little while ago (it was a skimmer, mostly). I got the 1995 version, there is a 2004 edition as well. I remember this was all the rage when I started in the business...basically it means: don't sell people on something, solve a problem of theirs. Pretty simple stuff. A few good pointers in there. It's really how I end up doing things normally. I give people a lot of information on how the world works (no one, it seems, knows a ton about estate and tax planning and how things like trusts or taxation on life insurance benefits work). After that the wheels are turning and there is usually some disconnect from where their plan is heading and where they'd like it to be...then comes the solution. That's about it. If they like the solution we have a sale, if not: we don't--and we look for another one or move on.

Oh, and if you're looking for a job take a look at Martin Yate's Knock 'em Dead. When I started really looking for a job (after university, in 1994) he had Resumes that Knock 'em Dead and Cover Letters that Knock 'em Dead; two books that gave some good pointers. Perhaps the best one was his one written for human resource people/interviewers. Here, in one place, were all of the major questions that these people are supposed to ask you...know thine enemy/opponent! So, you might have a browse in the books for interviewers (there are also good books by Vault and Wet Feet as well as Miriam Naficy's Fast Track for investment banking/finance interviews) and get in the zone that way as well. Interviewing and job-hunting can be learned and practiced.

Time to get to work, later.