Skytrax World Airlines Awards

Well, readers would have noticed that I have not commented much on stocks for the past few weeks, isn't it obvious. You cannot be always in the market. There are periods which you will save a lot of money and anguish by taking holidays or playing golf.



Skytrax awards are coveted because they are voted on by some 18 million passengers. Naturally we get seduced by all the ads but most will focus only on the luxury side of things. At the end of it all, its how well you treat the economy passengers that count.

Increasingly, it is the economy passengers who are paying the airlines' bills. Business class is shrinking, premium economy and economy are growing. But most airlines still treat economy class as the riff-raff who deserve to be uncomfortable because they're not willing to pay the big bucks up the front.

Well, this year Skytrax's popular vote – by the biggest electorate in airline awards-land – has spoken loudly about seating comfort: three of the top five airlines and five of the top 10 are the ones that give economy passengers up to three inches (7.6 centimetres) more seat row space than the sardine-can airlines (like Qantas) that insist on 31-32 inches (79-81cms) per row: the overall winner, Korea's Asiana, the Middle East's Qatar Airways (No. 3), Air New Zealand (No. 5), Thai Airways (No. 9) and Malaysia Airlines (No. 10).

Significantly, Air New Zealand (33-34-inch long-haul) zoomed past Qantas (No. 7 – 31 inches) for the first time. Just as significantly, Singapore Airlines came second in the award it has won twice on the strength of its cabin service, which a number of Travellers' Check readers reckon has gone off.

The World's Top 10 airlines in the 2010 Awards :

1. Asiana Airlines
2. Singapore Airlines
3. Qatar Airways
4. Cathay Pacific
5. Air New Zealand
6. Etihad Airways
7. Qantas Airways
8. Emirates
9. Thai Airways
10. Malaysia Airlines

Qatar Airways was named the winner of the World's Best Business Class Award at the 2010 World Airline Awards, that took place in Hamburg. WORLD'S BEST BUSINESS CLASS 1. QATAR AIRWAYS 2. SINGAPORE AIRLINES 3. ETIHAD AIRWAYS Qatar Airways was also named among the top three airlines in the world at the Skytrax World Airline Awards 2010. The honour was among several awards that the airline collected at a ceremony in Hamburg. Qatar Airways global ranking among more than 200 international airlines rose to number three in the world – up from fourth spot last year, further cementing its stature as a world leading airline. Qatar Airways took the World’s Best Business Class award in one of the most hotly contested categories. The airline’s Business Class catering was recognised separately as the best in the world.

The airline also took the title for Best Airline in the Middle East for a fifth consecutive year, emphasising Qatar Airways’ competitiveness and dominance in a region boasting several world-class airlines.

Malaysia Airlines was named the winner of the World's Best Economy Class Award at the 2010 World Airline Awards, that took place in Hamburg.

WORLD'S BEST ECONOMY CLASS
1. MALAYSIA AIRLINES
2. QATAR AIRWAYS
3. SINGAPORE AIRLINES

Malaysia Airlines won 2 awards, the "Staff Service Excellence for Asia" and "World's Best Economy Class" at the 2010 World Airline Awards in Hamburg.

Etihad Airways was named the winner of the World's Best First Class Award at the 2010 World Airline Awards, that took place in Hamburg. WORLD'S BEST FIRST CLASS 1. ETIHAD AIRWAYS 2. SINGAPORE AIRLINES 3. QANTAS AIRWAYS Etihad Airways won three awards for its First Class at the Skytrax World Airline Awards, having the World’s Best First Class, Best First Class Airline Seat and Best First Class Onboard Catering. The annual Skytrax survey takes into account all aspects of the air travel experience as well as the quality of customer service delivered by each airline’s staff. "We are exceptionally proud to have won these three awards for our new and innovative First Class product and service which is now recognised as the world’s best by the ultimate judges - air travellers,” said Peter Baumgartner, Etihad Airways’ Chief Commercial Officer.

Etihad unveiled its new First Class cabin suite in 2009. The cabin contains 12 individual suites, accessed by its own sliding door and includes a personal wardrobe and a mini bar. It also has a 23-inch wide-screen TV LCD screen and luxurious soft furnishings and leather upholstered by Poltrona Frau, which also provides interiors for Ferrari cars.

Etihad Airways 'Inspired Service' concept on the ground and in the air seeks to provide its First Class customers with service individually tailored to their needs. On the ground, First Class customers flying from the Abu Dhabi airport can take advantage of the concierge and limousine service as well as a dedicated premium check-in zone. Onboard, a food and beverage manager is on hand to assist customers during the long and ultra long haul flights.



AirAsia was named the winner of the World's Best Low-Cost Airline Award at the 2010 World Airline Awards, that took place in Hamburg.

BEST LOW COST AIRLINES
1. AIR ASIA
2. AIR BERLIN
3. VIRGIN BLUE

AirAsia has picked up two different Awards at the 2010 World Airline Awards in Hamburg. For the second year running, AirAsia was was named winner of the World's Best Low-Cost Airline award. AirAsia also picked up the Award for Best Low-Cost Airline Asia.

Commenting on the awards received by AirAsia, Skytrax Chairman, Mr Edward Plaisted said : "this is a fantastic achievement for AirAsia to be here collecting the award as World's Best Low-Cost Airline for the second year running. They are clearly meeting and exceeding their customer's expectations to have been named winner of this outstanding, global recognition. The awards represent a true recognition of the front-line product and service that AirAsia is delivering to it's customers, and the award slogan of 'The Passenger's Choice' underlines the fact that AirAsia are succeeding in satisfying the hardest critics - their users."

Genting Singapore In Cairo - Some Perspective Please

Genting Singapore said on Tuesday that one of its subsidiaries has been selected as the new operator of a casino in Egypt. The firm said Genting Casinos, an indirect wholly-owned unit of Genting UK, has entered into a casino concession agreement with Misr Hotels. Genting UK has been awarded the casino concession for The Nile Ritz Carlton Hotel in Cairo for an initial period of 10 years. It plans to open the new operation under the brand "Crockfords on the Nile".

The move is part of Genting's strategy to expand its casino resort network. It will also strengthen and develop Genting UK's position in the premium market through its key high-end London casino clubs, Crockfords, Colony and Maxims.

The Nile Hotel, located on the banks of the Nile and in the heart of the Egyptian capital of Cairo, will undergo a major refurbishment. The hotel is considered one of the iconic developments in Cairo which has contributed to the Egyptian travel industry since it first opened in 1958.

Renovation work is expected to be completed in early 2012. Genting said the Casino concession agreement is not expected to have any material impact on its earnings in the current financial year.

My Take: If my readers can remember, in September last year I went to Cairo and had a zen moment with my camel boy. Anyway, yes, I did visit the casino as I was just as surprised as anyone that there were casinos in Cairo.

There are about 25 casinos in Cairo already. Each casino has to be within an "approved hotel", usually only one floor or a section of one floor.

All casinos in Cairo are not open to Egyptians but only to tourists, and naturally those of Islamic faith are prohibited as well. Let me tell you that the actual number of people playing there were very few. You almost can have the table all to yourself, and I am not kidding.

Hence all the casinos have less than 10 tables and less than 20 slot machines. The actual impact of having one at Nile Ritz Carlton Hotel is that it will be glitzy, but let me assure you that at any one time you will find less than 20 people playing and you can probably only put in 20 tables max. Anymore tables will just be a waste.

One of the bigger casinos in Cairo is Inter-Casino at the Ramses Hilton Hotel. It has 18 tables and 42 slots. Another is Casino Royal at Movenpick Jolie Ville Resort (yes, Movenpick) with 16 table games and the biggest number of slot machines at 154. The other big one is Taba Hilton & Casino with 19 table games and 76 slot.

Hence people should not be overly excited with the Cairo project, not when there are already 25 operators, and all catering to tourists. This is like adding two gaming tables at Resorts World, seriously folks. The problem is not with Ritz Carlton or Genting, its the number of tourists that actually visit Cairo, and spread that out to over 25 casinos in the one city - that's the problem.

Yes, being with Nile Ritz Carlton is probably the grandest of the lot, and on the Nile some more. But, do you know how many 5-6 star hotels there are on the Nile already - Four Season Cairo Nile Plaza, Intercontinental City Stars, Sheraton, Sofitel, etc... Its just another one.


p/s photo: Fiona Xie

Obamafying Japan, The Democratic Party of Japan (Part 2)

Overview: Early lower house election results indicate that the Democratic Party of Japan (DPJ) has defeated the long-ruling Liberal Democratic Party (LDP) in a landslide victory. Prime Minister Taro Aso and the LDP had grown unpopular due to their response to Japan's economic woes. Though a new ruling party may not transform Japan's economy overnight, it is a step towards reform and brings many new (and much younger) faces to government in Japan.

Election Results

• The Nikkei reports that early results indicate the DPJ winning 308 of the Lower House's 480 seats. A minimum of 241 seats is required to capture a simple majority. The DPJ has won even more seats than the popular Junichiro Koizumi and his "band of reformists" won for the LDP in 2005.
• NHK estimates that voter turnout was around 69% and was the highest turnout since the current electoral system was introduced in 1996.
• DPJ President Yukio Hatoyama will be elected the country's new prime minister in a special Diet session in mid-September.
• This will be the first time since 1955 that the LDP is not the controlling party in parliament.
• DPJ President Yukio Hatoyama announced in a press conference that the DPJ will begin discussions with the Social Democratic Party and the People's New Party to form a coalition government.
  
• Prime Minister Taro Aso indicated that he will step down as party head. Additionally, LDP's Secretary General, Hiroyuko Hosoda informed Prime Minister Taro Aso that he plans to step down.
• On a Tokyo Broadcasting System (TBS) televised interview, Hatoyama stated that the DPJ would quickly compile an extra budget to restructure the current government's last stimulus package.
• The Nikkei reports that Hatoyama said the DPJ government would soon organize a grand policymaking body called the National Strategy Office which will outline Japan's national budget and set the nation's foreign and security policies.
• Kyodo News projections show the following LDP heavyweights have lost their seats: Ex-Finance Minister Shoichi Nakagawa, current Finance Minister Kaoru Yosano, Ex-Defense Fumio Kyuma, another ex-Defense Minister Yuriko Koike, and Consumer Affairs Minister Seiko Noda.
• Bloomberg reports that former Prime Minister Toshiki Kaifu lost his seat in the Aichi prefecture against a candidate half his age. Kaifu is the first former prime minister to be voted out since Tanzan Ishibashi in 1963.
• Ex-Prime Minister's son, Shinjiro Koizumi, is expected to provide the LDP a win in the Kanagawa No. 11 constituency.
• Eriko Fukuda a 28-year-old member of the DPJ, is projected to win the Nagasaki No. 2 constituency from former Defense Minister Fumio Kyuma. Fukuda is known for filing a lawsuit against the government for people that contracted hepatitis C from tainted blood products. She herself contracted hepatitis C as a child from a blood transfusion.
• NHK reports that Akihiro Ota, head of the New Komeito party and a partner of the ruling coalition, lost his seat in the Tokyo No. 12 electoral district.
• Kyodo News reports that 23 people were arrested on suspicion of election law violations.

What Will a DPJ Win Mean for the Economy?

• Heizo Takenaka, former Finance Minister under Koizumi, notes, "Japan's politics and its economy are just not sustainable in their current forms...something has to give, be it the ruling party, the yen, the bond market, the stock market or a combination thereof."
  
• Naomi Hasegawa, Senior Fixed Income Strategist, Mitsubishi Debt Research Division: The DPJ promises to shun U.S. dollar bonds if elected.
• Sentaku Magazine: "The DPJ's announced economic policy may be summarized as one of 'reckless spending.' It calls for, among other things, making all expressways free of tolls, giving every child 26,000 yen a month until he or she finishes the nine years of compulsory education and providing compensation for farmers who have to sell their products below cost. It is estimated that these policies would cost an estimated 20.5 trillion yen in fiscal 2012."
• The LDP proposed to outspend the DPJ, but the DPJ seemed more likely to rebalance economic growth towards domestic demand. JGB issuance was likely to increase with fiscal expansion regardless of which party won.
  
• Though the DPJ promises it won't hike the consumption tax for another four years, it is highly likely it will need to do it earlier because tax revenues may not keep up with increased government expenditure.

What Will a DPJ Win Mean for Domestic and Foreign Politics?

• DPJ wants to turn the bureaucrat-driven government into a more cabinet-driven one.
• Gerald Curtis, FT Columnist: "The DPJ talks about replacing bureaucrats with politicians in key ministerial positions but says virtually nothing about what policies these newly empowered politicians would implement.".
• Japan may become slightly more pacifist and less pliant to the U.S..
• American Enterprise Institute fellows Dan Blumental and Gary Schmitt believe, "Tokyo's foreign policy is unlikely to change drastically," but caution that "the fact that Japan will now have truly competitive political parties means that Japanese policy makers will be more attuned to public opinion.".

p/s photo: Fiona Xie

Foreign Funds Flow

Suddenly foreign media is picking up on a surge in the flow of funds into Asian markets. Any truth in that?

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Foreign fund managers are banking heavily on an Asian earnings upturn and continual growth in China to drive market momentum forward. Following a lull, a sudden leap on Wall Street has boosted foreign investor interest in Asian markets. The psychology of the markets has changed from the fear of losing money to a fear of losing opportunities.

According to EPFR Global fund research, US$137.5 billion flowed out of money market funds and almost a fifth went into Asian and other emerging market funds in the second quarter. The trend has continued in recent weeks, although the size of inflows is subsiding. MSCI Asia ex-Japan rose by 34 per cent year-to- date to July 24 and emerging by 46 per cent in US dollars, but lower gains in euro and sterling. Credit Suisse said there are several positive fundamental factors which support foreign investment in Asia.

Asia is expected to lead the global recovery due to its low leverage and financial flexibility to pump-prime economies. Second, China and India are growth engines. Third, emerging Asia is projected to deliver an average earnings recovery of 33 per cent in 2010, according to the Institutional Brokers Estimate System. Finally, company directors are signaling earnings upgrades.

Recovery leaders include companies which benefit from the massive fiscal stimulus packages in China and selected Asian countries, and technology companies with the largest potential earnings rebound. Credit Suisse advises that the collapse in Asian and global trade was a function of falling final demand and liquidation of bloated inventories.

The Asian stockmarket boom has been a boon to fund managers who had a dreadful time between 2007 and spring of 2009. Over twelve months, MSCI ex-Japan is still down 26 per cent in US dollars. Thus, the 2009 rebound has only profited investors who entered the market this year and reduced the pain of others.

Jason McCay and Richard Evans who manage the Martin Currie Asia Fund, a hedge fund, are focusing on companies that concentrate on the domestic markets. They increased exposure to Chinese banks and have purchased residential Chinese developer Guangzhou R&F Properties. Bullish on coal, they have bought Bumi Resources in Indonesia and have also invested in the Indian property sector through Unitech. They are concerned, however that the market surge has been caused by a surplus of liquidity. 'Valuations are no longer cheap and many companies are already pricing in a meaningful recovery in profits.'

Aberdeen Asia Pacific Fund contends that equities 'appear to have run ahead of earnings and economic fundamentals and a pullback would be healthy.' Longer-term, Asia's sounder economic fundamentals will enable it to bounce back more strongly than the West'. Top stocks include OCBC, Jardine Strategic Holding, Samsung Electronics, China Mobile and Singapore Telecommunications and Singapore Technologies.

Andrew Beal, fund manager of Henderson Asia Pacific Capital Growth, notes that aggressive government policies, loose monetary conditions and a steady improvement in economic activity have all helped to drive markets higher since March. Taking a long-term view, he says there is growing awareness among Asian governments over-reliance on exports to the West has become a structural weakness. It needs to be addressed by stimulating domestic consumption.


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I do think stock prices have run a bit ahead of fundamentals. I do think the worst of the global crisis is behind us, although I do think Central & Eastern Europe still has some ways to go. Why are markets so inherently bullish now? You still get the majority of "experts" claiming that things are a bit too much, and yet they still keep running. Not just in Asia but look at the US equity markets in recent weeks.

I believe the answer lies in the massive liquidity on the sidelines. The massive liquidity stem from the government printing presses and various fiscal stimulus programs. Now that risk aversion has subsided somewhat, now that the bigger US banks seem to be on better footing, investors are more willing to place their bets ... no more bloody T-bills.

Naturally in such a situation liquidity would seek out the most liquid of assets. While bashed down property prices in the US might look attractive, its liquidity and gestation period may require a bit more patience. Most investors probably think its a better whack to trade the markets than to buy a depressed property now as you might have some time to wait out the property cycle. Even though many might be getting a bargain in the US property markets, getting a decent rental is another thing, getting a paying tenant that won't turn into a non-paying tenant quickly is another problem. All said, equity seems to be the only channel for these funds to trickle in.

In Malaysia, do not be fooled by the huge surge in the new index since launching because the index is very very skewed. Take the top 10 stocks and see their performance over the last 2 weeks and you will know what I mean. There has been a strategy to make the new index "look good", yes... there might have been some rebalancing by indexed funds as well ... but ... So, local equity market has not been as bullish as the new index would want you to be thinking. Its a rotational market, not entirely convincing... just look at weekly turnover value week by week for the last 6 weeks, you will find a distinctive trend... and you should be able to draw your own conclusions.

p/s photos: Fiona Xie

Which Is Worse?

I hate it a lot when I come across corrupt cops, but what if you get stupid cops? If you have to choose, always choose the corrupt ones because the stupid ones can kill you accidentally with just an "... oops".

Earlier in the week in HK, a few police officers were trying to stop 14 cars which were racing furiously with each other in Kwun Tong at around 2am ... I guess , much like the Federal Highway after 11pm (oh, btw, don't ever drive on the extreme right lane after 11pm on Federal Highway ... its meant for mini-Protons and Peroduas trying to turn Federal Highway into an autobahn). Anyway back to the story, these police officers stopped 5 cars (3 taxis, a truck and a private car) to help create a roadblock to stop the racing cars. That is still alright, the stupid thing was that the police asked the drivers of the 5 cars to remain in their cars!!! According to The Standard, it was more like the drivers were forced to remain in their cars. Mind you, its supposed to be a roadblock and you were going to be watching and waiting for 14 cars coming at you ...

End result, 6 out of the 14 cars that were racing each other plowed into the roadblock. Surprisingly, only 5 drivers were arrested, one even managed to run away while the other 8 cars made a u-turn and zoomed away to freedom. One of the 3 taxi drivers reported that one cop told him that he was just following orders and the driver should complain with his commander.

The Police Commissioner has not reprimanded anyone or sacked anyone yet. The rule of law is that cars being used by the police or under police direction is not covered by insurance, and will have to be claimed from the police. The Police Force in HK is lucky in that none of the 5 decent members of the public died acting as roadblocks. If they did, the insurance company will surely not pay for "accidental death". The policemen will be sued for manslaughter. The Police Force will be sued for compensation and derided as callous idiots.

The case could have greater ramifications if people had died as part of the roadblock. Do you charge the drivers that were racing? Do you charge the police officers? I guess both, and I wouldn't want to be the presiding judge here as attributing blame and cause would be extremely tricky.

Naturally the public were outraged, while at the same time making deserving sarcastic comments about those police officers. Its mind numbingly stupid. Would the officers had asked their own children or parents to remain in the cars in the roadblock???

Police Commissioner Tang King-shing made a public apology following public outcry over the crackdown on illegal road racing early on Monday morning which had was said to endanger the safety of other motorists. Tang said preliminary investigation showed police had made mistakes when they planned the operation. The commissioner said police thoroughly considered the personal safety of the public before they conducted any operation. But he made an apology to those who were injured during the impromptu action against illegal racers on the Kwun Tong bypass which had resulted in pile-up and chase on the highway, leading to six people being injured including a taxi driver and two police officers. In the incident, five racers, aged between 23 and 26, were arrested for furious driving.


p/s photos: Fiona Xie

Fitch Downgrade Malaysia's Debt - Consequences & Rationale

On June 10, 2009 Fitch downgraded Malaysia's long term local currency credit rating from A+ to A. However for Malaysia's outlook, it has upgraded it from negative to stable.

• Rating agencies have voiced concerns about Malaysia's increasing fiscal deficit and impact on long-term yields. But bond issues have received a good response so far and policy rate cuts coming to an end is also a positive. Risks might be limited for investors as yields have improved and Malaysia has a sound external balance and forex reserve position
• Fitch (June 10): Malaysia’s long-term local currency credit rating downgraded from 'A+' to 'A' and its outlook revised from negative to stable. This was led by high govt expenditures including two fiscal stimulus packages, falling govt revenues, slow tax reforms and rise in fiscal and primary deficits. But long-term foreign currency rating was maintained at 'A-' with a stable outlook
• The downgrade is consistent with rating deterioration in some "AAA" countries like Japan and the UK. But it has little implication for Malaysia's fiscal deficit financing in the international market since debt can be financed domestically due to ample liquidity
• S&P: Stimulus package would not affect Malaysia's A-minus foreign currency rating. Stable outlook as it has the capacity to pursue counter-cyclical fiscal policies. Malaysia will be able to fund large fiscal deficit entirely from domestic sources as they had done in the past due to its deep and liquid domestic capital markets
  
• Moody's: 'A3' on high govt debt; S&P foreign-currency rating at 'A-' with a 'stable' outlook on strong external position and high savings rates

Rising Bond Issues:


• Combined two stimulus plans so far would widen budget deficit to 7.6% of GDP in 2009 (the biggest since 1987) or even close to 10% of GDP. Govt. debt might increase to 46% of GDP in 2009 from 41% in 2008 (govt debt: 92.7% as domestic debt and 7.3% as foreign debt). While the first stimulus would be financed from the savings derived from cuts in the fuel subsidies, with the second stimulus and risk of rising deficit, the govt has decided to issue bonds starting January 2009 including foreign bond issues. The government raised RM60 billion from domestic debt sales in 2008 versus RM53 billion in 2007
• From January to May 2009, total sales of government bond have surged by 79% y/y to RM 35billion. Central bank plans to hold 27 govt bond sales in 2009 incl. notes maturing in 3, 5, 10 and 20 years, and sell 5 billion ringgit in Islamic savings bonds
• May 14, 2009 : Malaysia sold US$ 1.3billion (RM 4.5billion) of April 2014 notes at an average yield of 3.879%, which was higher than 3.735% at previous auction in March 2009 and 2.634% in January 2009
• March 12, 2009 : Malaysia held the biggest debt auction in 5 yrs selling RM4.5bn ($1.21bn) of securities maturing in April 2014
• Impact on yields curve: yield Demanded by investors has increased due to record government debt supply. Improved liquidity conditions and recent rate cuts to low levels and bond issues to finance the budget deficit have steepened the yield curve. However, rate cuts may have come to an end while bond issues will continue to flood the market ahead
• Because of the sharp increase in bond supply in 2009 due to fiscal deficit, the MGS curve has gained in convexity. The curve is now extremely steep at the front end (3Y-5Y segment) and extremely flat at the long end (5Y-10Y segment). With the rate cut cycle having come to an end and given signs that economic activity may have bottomed, the outlook for MGS has become more bearish
  
• Liquidity conditions remain supportive of the MGS while scope for a flattening of the curve is limited by upside risk to fiscal spending. Negative swap spreads (IRS-MGS) at the front end narrowed further in the past month on receding hopes of further rate cuts but near-term supply concerns could see the market anomaly persisting for longer
  
• Malaysian government bonds are not attractive due to high debt supply and low possibility of further interest rate by central bank
  

p/s photos: Fiona Xie

Update On Marketocracy Portfolio

Fund Performance for salvadordali's Mutual Fund

fund rankings
		For the six month period ending March 31, 2009 your fund outperformed 97.8% of the other funds on our site. Your forum and other privileges are based on this ranking

My portfolio was started on 1st August 2008. Marketocracy lets you manage a virtual portfolio of $1M in a simulated trading environment, allowing you to track your performance accurately and compare your fund management skills to other investors and professional fund managers. Yes, they do take into account transaction cost as well. If your track record turns out to be one of the best, you could be hired to help manage a real fund at Marketocracy. It's a great place to learn, and a great place to prove your talent. They also have important rules to ensure that you are running an actual investing portfolio and not just sitting on cash:

• No position can exceed 25% of your total portfolio value.
  
• Half your portfolio must be comprised of positions under 10% each.
  
• Your cash position isn't limited by this guideline, although you must be 65% invested

My fund was smartly called SMF, or Salvador Mutual Fund (no, not the foul language acronyms you are thinking). So far so good, although the first couple of months was iffy. SMF fund performance in orange colour.

The main objective of the fund is to beat the S&P 500. For the past 6 months ended 30 April, the S&P 500 has gained 1.33% while my fund has gained 51.1%. For the 6 months ended May 31 the S&P 500 has gained 4.05% while my fund has gained 60.64%.There are usually rules which dictate that you must be at least 65% invested at all time, and your aim is to beat the index. If you can consistently beat the index, you should be golden. If you look at the turnover rates, I have increased the trading activity over the past two months as I think the recovery is still volatile and is more suited to be traded.

modern portfolio theory, you basically aim to beat the index, based on the premise that:

over the long run stocks offer superior returns

hence if you consistently beat the index, over the long run, you should have superior returns

recent returns
		RETURNS Last Week 6.78% Last Month 18.61% Last 3 Months 79.46% Last 6 Months 64.69% Last 12 Months N/A Last 2 Years N/A Last 3 Years N/A Last 5 Years N/A Since Inception 10.38% (Annualized) 12.38% S&P500 RETURNS Last Week 3.66% Last Month 5.50% Last 3 Months 25.83% Last 6 Months 4.05% Last 12 Months N/A Last 2 Years N/A Last 3 Years N/A Last 5 Years N/A Since Inception -25.14% (Annualized) -28.97%

RETURNS VS S&P500

Last Week 3.12% Last Month 13.11% Last 3 Months 53.62% Last 6 Months 60.64% Last 12 Months N/A Last 2 Years N/A Last 3 Years N/A Last 5 Years N/A Since Inception 35.52% (Annualized) 41.34%

SMF m100 S&P 500 DJIA Nasdaq

recent returns vs. major indexes
		Today MTD QTD YTD SMF 4.78% 16.36% 45.55% 53.16% S&P 500 2.57% 0.00% 15.70% 2.96% DOW 2.44% 0.00% 11.72% -3.15% Nasdaq 2.84% 0.00% 16.08% 12.51%

alpha/beta vs. S&P500
		Alpha 57.32% Beta 1.27 R-Squared 0.84

turnover
		Last Month 12.44% Last 3 Months 210.83% Last 6 Months 256.59%

Symbol	Price	Value	Portion of Fund	Gains	Inception Return
EXM	$11.22	$67,320.00	5.82%	$58,738.60	61.88%
ERX	$39.19	$156,760.00	13.55%	$64,963.22	40.25%
STT	$47.35	$118,375.00	10.23%	$38,918.54	38.54%
BAC	$11.62	$69,722.40	6.03%	$29,815.62	22.44%
GCH	$12.57	$89,962.77	7.78%	$18,502.31	21.12%
WFR	$20.99	$125,940.00	10.89%	$20,176.56	19.08%
F	$6.13	$122,600.00	10.60%	$14,535.62	13.45%
ACTG	$5.70	$68,400.00	5.91%	$12,530.70	13.12%
DLTR	$45.62	$71,167.20	6.15%	$7,465.94	9.01%
QSII	$49.99	$49,990.00	4.32%	$7,098.72	7.51%
SXE	$27.75	$83,250.00	7.20%	-$4,710.47	-5.36%
DZZ	$19.38	$48,449.25	4.19%	-$5,578.06	-10.32%

p/s photo: Fiona Xie

Investment Banking Bonuses To Be Slashed

Bloomberg: U.S. taxpayers, who feel they own a stake in Wall Street after funding a $700 billion bailout for the industry, don't want executives' bonuses reduced. They want them eliminated. President-elect Obama cited the program at his first news conference on Nov. 7, saying it will be reviewed to make sure it's ``not unduly rewarding the management of financial firms receiving government assistance.''

While year-end rewards are likely to decline with a drop in revenue this year, industry veterans say that eliminating them risks driving away the firms' most productive workers.``There are instances where bonuses are justified, deserved, and in the best interests of the investment bank involved,'' said Dan Lufkin, a co-founder of Donaldson Lufkin & Jenrette Inc., the investment bank acquired by Credit Suisse Group AG in 2000. ``Your very best people are people you want to hold, and your very best people will have opportunities even in this environment to transfer allegiance.''

The companies, which set aside revenue throughout the year to pay bonuses, haven't commented on plans for year-end awards, typically decided this month or next. A study released last week said the firms are likely to cut bonuses for top executives by as much as 70 percent. Cuomo is expected to go through the bonus proposals from these investment banks, and is likely to cut the bonuses a lot further to appease the public's fury. I think Cuomo could further halve the actual bonuses.

``Even really sober people are saying this is the worst financial crisis since the Depression, and they're saying bonuses are just going to be reduced?'' said a 53-year-old retired merchant marine in Seattle. ``Oh my God, you read that and your jaw drops.''

Wall Street firms' pay has traditionally been tied closely to performance of the companies, which is why employees receive most of their compensation at the end of the year after final results are known. Depending on seniority and performance, bonuses for traders, bankers and executives can be a multiple of their salaries, which range from about $80,000 to $600,000.

The nine banks that was pressed to detail their bonus plans asked for more time to respond. They've been granted an additional two weeks. The original deadline was yesterday.

Goldman, the largest and most profitable U.S. securities firm in the world last year, paid Chief Executive Officer Lloyd Blankfein a record $67.9 million bonus for 2007 on top of his $600,000 salary. That was justified, he told shareholders at the company's annual meeting in April, because of Goldman's superior financial results. ``We're very much a performance-related firm,'' he said. ``If those results don't come in, I assure you at Goldman Sachs you won't see that compensation.''

Goldman's profit is down 47 percent so far this year and five analysts expect the company to report its first loss as a public company in the fourth quarter that ends this month. The stock price has dropped 67 percent this year and Goldman received $10 billion from the U.S. government in the bailout last month.

``The executives in companies that get bailout money should have their base salaries reduced by 10 percent for 2009 and they should pay back a substantial portion of their 2007 bonuses to the government for the financial devastation they oversaw, fostered and, in some cases, directly caused,'' said a 57-year-old lawyer in Baltimore. ``Their sense of entitlement is appalling.''

In addition to Goldman, Morgan Stanley and Citigroup, the companies that received the first round of money from the U.S. government's Troubled Asset Relief Program were Merrill Lynch, JPMorgan Chase & Co., Bank of America Corp, Wells Fargo & Co., State Street Corp and Bank of New York Mellon Corp.

Some needed the money more than others. Citigroup and Merrill haven't been profitable since early last year. Earnings at each of the other firms, except Boston-based State Street, have been dropping.

``Bonuses and severance packages will obsess the American public'' and become ``a humiliation and embarrassment,'' said Arthur Levitt, a senior adviser to the Carlyle Group, former chairman of the Securities and Exchange Commission, and a board member of Bloomberg LP, the parent company of Bloomberg News. ``Compensation committees, believe me, are paying close attention to this.''

Several of the companies -- including Citigroup and Wells Fargo -- have said they won't use federal funds to pay bonuses. That's disputed by some. ``The argument of saying we're not using the bailout money is just crap because money's fungible, money's money,'' said Crystal, who writes the newsletter graefcrystal.com. ``It exposes them to ridicule.''

The bailout is only part of the reason that people object to Wall Street bonuses this year. The financial industry worldwide has taken more than $690 billion in writedowns and credit losses this year and cut more than 150,000 jobs. A decline in lending has caused the wider economy to contract: the U.S. gross domestic product shrank at a 0.3 percent annual pace in the third quarter, consumer spending fell at its fastest pace since 1980 and unemployment jumped to 6.5 percent, the highest since 1994.

Attention is most focused on the top executives at the banks that are receiving federal money. They'll have to take the steepest pay cuts because their pay is disclosed in proxy filings, according to Alan Johnson, managing director of Johnson Associates, the compensation consulting firm that estimates bonuses will decline between 10 percent and 70 percent. ``I'd advise the CEO to say he can't take anything if it's one of these firms getting bailed out by the government,'' said Crystal. ``I think he's just going to have to go down to just his salary.''

That's probably not the case for employees whose pay isn't disclosed, even those who get bonuses that exceed $1 million. Top performers should receive bonuses this year or companies risk losing their best workers. Of about 600 people who responded to an online survey on the eFinancialCareers.com Web site, 46 percent said they would be unwilling to take any pay cut this year.

p/s photos: Fiona Xie