Archive for February, 2010

So you think you have a lot of patience?

February 23rd, 2010

This 97 year old man just won the lottery

A poverty-stricken 97-year-old man in Vietnam almost $400,000 in a lottery, a report said on Tuesday, sparking a frenzy among relatives eager to get a piece of his newfound wealth. Thanh Nien newspaper said that one of his neighbors in southern Ho Chi Minh City, together with local officials, had to step in to stop the elderly man from giving away the windfall to people who had swarmed to his home. What was left of the money has gone into a bank account, the newspaper reported.

Lucky money

Nguyen Van Het bagged the prize after spending 100,000 dong on lottery tickets from “lucky money” he received ahead of the Lunar New Year, Thanh Nien said. Small packets of “lucky money” are a traditional Tet gift.

Massive prize

Thanh Nien reported Het’s winnings at 7.6-billion dong, or $400,000, a massive sum in a country where the annual per capita income is about $1,000. “We only know he won billions of dong,” an official from the Fatherland Front, which implements government social programs, told AFP. The official, who declined to be named, said local authorities had to intervene and restore order around the man’s home because so many relatives or people claiming to be relatives had turned up asking for money.

Before the win

Het and his sick wife had been receiving special financial support from authorities because they lived below the poverty line, the Fatherland Front official said. “We will wait for a few more weeks so that he can calm down before asking him what he wants to do with the money,” he said.

The trouble with the lottery

The main problem with the lottery is that it is expensive to buy a ticket. And then having done so, you only get one chance at a win. In addition, the odds are enormous. In a 6/40 Lotto, meaning that you have to correctly choose 6 numbers out of 49, your chance of winning is 1 in about 14 million, very, very slim. That’s the bad news. The good news is that someone wins, so why shouldn’t it be you? Everyone has the same chance. Of course, if you have 20 lines of numbers you have 20 times the chance of winning over the guy who has only 1 line.

We used to buy

Over the years we bought tickets regularly. Then we slowly weaned ourselves off the addiction and these days we buy when there is a little extra money, or on an occasion such as a birthday.

What you get

I discovered that what we were actually buying every week was a little dream. We would walk back from the Lotto kiosk and say things like, “how much should we give each of the children?” or “What about the grandchildren? We have to give then something?” or “What about the neighbors? Them too?” It was nice to dream but very expensive.

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Where the big boys bet

February 22nd, 2010

How do you invest your money?

Even though they are now elderly, the big successes in the world of investments are like rock stars. They get great press. They’re solicited for interviews. Every appearance on television gets broadcast again and again. Their books sell like hotcakes and they star in the gossip columns. The attention is good for business: At the drop of a hat, they can raise billions for the investment funds they run. People track the billionaires for one simple reason – they want tips. They want to know what to buy.

Buffet and Soros

Warren Buffet and George Soros are the world’s greatest investors. Anybody who reads what they write or say, tries to figure out what they’re up to, what they’re buying and selling, and whether they should be emulated. Tracking the investment stars even makes sense from a consumerist point of view: You can invest like them without paying exorbitant management fees, 2% to 3% of your assets a year plus 20% of profits if you invest through a fund.  It’s not easy to do like they do. First of all, they don’t want you to know what they’re doing. If they choose to release information, it’s usually after they made their move. Now they’d be perfectly happy for the general public to follow their steps and increase the value of their investment.

Are you into Hedge Funds?

Hedge funds seek to hedge some of the risks inherent in their investments using a variety of methods, most notably short selling and derivatives. However, the term “hedge fund” has also come to be applied to certain funds that do not hedge their investments, and in particular to funds using short selling and other “hedging” methods to increase rather than reduce risk, with the expectation of increasing the return on their investment.

The hedge fund legend

Hedge fund legend John Paulson was the uncontested star of investments in 2008 and 2009. He made billions for Paulson & Co., and for himself, betting against the subprime mortgages market. His coup was described in the bestseller “The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History.” If there were an Oscar for investment managers, he’d take best fund manager and best player.

Now

Today Paulson is betting on banks and gold. He gorged on Bank of America stock ($2.3 billion), Citigroup and JPMorgan, and is buying gold through mining stocks like Anglo Gold and through ETFs tracking the metal. He also has shares in Boston Scientific, Sun and the energy company XTO.

Soros

George Soros’ funds remain among the most successful in the world. What was he up to in December? His fund was diving into gold, even though last month he said that, all told, gold is the biggest bubble in the world. Anyway, he has also bet heavily on oil, through shares in Brazilian giant Petrobras and Hess Corp. What else? Citigroup.

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Susan turns 70 and throws a party

February 21st, 2010

This is as good a time to celebrate as any

We spent the evening at Susan’s 70th birthday party on Saturday evening. It was a modest affair in the local church hall with 60 or 70 guests – and lots of good finger-food. Had we known about the food part we wouldn’t have eaten dinner; I can snack on smoked salmon for hours… Susan looked well and spent the evening chatting to her guests. She also gave a very emotional speech of thanks to everyone.

The economics of a Recession Party

Susan doesn’t have a bean to her name and I’m sure she took a Cash Advance to pay for the bash. The hall was probably free and there were no other expenses. The drinks were Coke and Sprite and the single bottle of scotch remained unopened. Plates were plastic in colors selected to match the paper table-cloths and napkins and the flatware was chromed plastic. Despite the obvious strict budget arrangements, the tables looked great. They were decorated with little vases of wild flowers and grasses picked from a nearby field and sprinkled with little silver plastic sea shells, candies and chocolates.

 

It must have been a challenge

When Susan decided to celebrate she must have thought everything out very carefully and built herself a tight budget. In circumstances like hers, a budget is a major part of her life. What’s more, she understands the strict discipline that’s necessary to stick to every cent of her budget. Extras and deviations don’t exist!

 

Susan

Susan is a widow – twice. Her first husband collapsed and died in his forties and left her with two teenaged children. The second husband, an older man, died when Susan was in her mid-fifties. Neither left her much and she has worked all her life. A few years ago she was laid off her job as a secretary and she ran around frantically seeking work. These days she works part-time at a school who hire her as a temp without any social welfare benefits.

 

The birthday gifts

One of Susan’s friends asked her if there was anything particular she preferred for a birthday present and Susan said she would prefer money as she had some expenses that she has to pay. The word was passed around, I was asked to do a small painting for a communal birthday card and the guests were asked to sign the card and drop their gifts in an envelope which was handed to Susan. I was pleasantly surprised at how smoothly the act of handing over a cash gift was handled – there was no embarrassment on either side and the guests seemed delighted to be able to help Susan. Susan thanked everyone for coming to help her celebrate this important milestone in her life and we went back to the food.

 

Good party

My wife and I rated this as a good party, truly modest and enjoyed by all. Happy birthday, Susan!

 

 

 

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