Eldon-Online

Maybe It's NOT Too Late After All...

There have been a couple of events in the last few days that, for me anyway, suggest that there are tiny little shoots of sanity in some parts of the world. That is not to say that all the news is necessarily good, popular or even encouraging, but more an indication that some people are beginning to think straight!

Continental Europe is looked at from our lofty "we're alright" Asian perch with some trepidation as the Euro gets bashed around from one crisis to another, putting paid to any lingering thoughts about the desirability of an "Asean" single currency, and where consumer spending is likely to decline meaning less demand for products from Asia. Meanwhile, "across the pond" the positive news we had been getting - oil slicks and wayward military generals aside - seems to have declined in the last couple of weeks leading to suggestions that maybe a double dip recession is still possible. So from me, a customary word of caution, Asia, don't get over-smug over here, or we might just fall off that perch ourselves!

So, anyway, back in "Island Europe" it was with a sense of some foreboding that we awaited the UK emergency budget on Tuesday, which we had been promised would be tough. And it was. But despite the expected cries of anguish from the usual quarters, the threat of union action from the labour movement, and the criticism from members of the Labour party who had got us into this mess in the first place - and who are not really in a position to comment, a budget was delivered that had been thought through in considerable detail and with the long term future in mind.

Of course, if it by some chance achieves what it is expected to achieve, it will still probably make the present Government the most unpopular in recent history, and restore the economy to health just so Labour can wander in and mess it all up once again. But I digress.

This budget, which will have many critics, is full of good intentions. It is a thoughtful budget, produced in a short space of time - and yes, of course you can pick as many holes in this as you can anything else. But it has the saving grace of being tough now! As a result, you can always soften it in future if changes need to be made - which is a much easier than making unpopular changes to a budget that was too weak initially.

The BIG question, is it too tough too soon? In an already fragile British economy, will it be the straw that breaks the camel's back and just tip the country backwards? We will have to wait and see, but I think it sends a clear message that Britain recognises it has financial problems, and that it has the determination to deal with it. In that case, round one to leadership and guts.

And the other event I thought was of note - a "bloodless" coup in Australian politics that has placed a woman Prime Minister in Australia for the first time in its history. Why does this hit the radar for me? Not because they have a woman PM, but the fact that Kevin Rudd realised that his skills as "team captain" were found wanting. His time was over - and so he left. Straight up, no messing about - he had gone from the most popular Australian Prime Minister in recent times to the most unpopular. His leadership was being challenged within his party, he saw the writing on the wall, and he left gracefully (unlike a former Prime Minister on the other side of the globe who chose to outstay his welcome!). 

Now, let's be honest. That's not a form of behaviour you see every day, and it gives me hope that others might follow his example in a similar fashion. Leave before being pushed. If the CEO of Prudential, or the CEO of BP who wants his life back so badly, recognise what everyone else seems to know - which is that they are not popular and they left of their own volition, it would be a welcome return to some sort of normality in the world.

In the case of Mr. Rudd, it was not so much that he has no talent - it is just that one of his skills is not running the country. Where he does have a skill though is in his relationship with China, and that is a country with which Australia needs to build a strong and lasting relationship. It seems to me that Ms Gillard could do a lot worse than offer Mr. Rudd a post that has responsibility for Australian relations with China. Not a cabinet post, because that would see him thrown out with the next change of Government, but something a little more permanent where he could put his skills to excellent use. As a fluent Mandarin speaker, with contacts currently at the highest levels and where I am sure he could develop equally strong relations with the future leaders, Mr. Rudd could be a crucial pillar in Australia's future role in Asia in general, but China in particular. Now if that were to become a reality it would be another indication that maybe, just maybe, the obituary to common sense is just a tad premature.

Sporting Chance...in Business Too

I guess I take, at a minimum, a passing interest in just about any sport (or game), or achievement in its broadest sense, although I prefer some more than others. Soccer, for instance, has never really grabbed me in the same way it seems to grab millions of others - a large percentage of whom have descended on South Africa to watch the 2010 World Cup. I am more likely to go out of my way to physically watch a rugby match over a soccer match - in fact I think the last soccer match I attended was at Vicarage Road in North West London to watch Watford play somebody like Exeter in Third Division South. As that particular Division was abandoned at the end of the 1957/58 season, you might get some idea of my level of interest (and age!).

That said I will watch the scores and the progress of various teams through the competition, although without getting wildly excited about it all. But sports, like businesses, are often about teams and the personalities within them, their successes and the failures. And a couple of very different events in the last week indicated how sport has parallels with - and lessons for - business.

First up; The Goalkeeper!!

The name Robert Green is one that is well known to every British soccer aficionado today, as well as soccer lovers from many other countries too. It was the hapless Mr. Green who allowed the Americans to slip a ball past him and into the England goal, giving the USA a 1 -1 draw in their opening World Cup match between the two countries. And Mr. Green seems to have been blamed by just about everyone for being such a "butterfingers" (polite version!).

Excuse me – but why him, alone?

Where was the goal-scoring machine that was supposed to be knocking goals into the USA net at the other end of the pitch? Had they gone to sleep after Gerrard scored a goal for England in the first four minutes of the match? Wasn't it up to them to do their bit to score, as much as it was Green's job to keep the Americans out of the English goal? This is supposed to be a "team game", people. That means the blame should not just rest on the shoulders of one person. Perhaps if anyone has to take the "blame" overall, it should be the captain. For not making the team work hard enough to score goals. For not immediately protecting his goalkeeper from some of the blame!

And so to business, and BP.

Mr. Tony "I want my life back" Hayward, the CEO of BP is a name that is well known to every American, and many other people around the globe. And as "Captain" he is taking the blame for BP's oil spill. As I have said before, BP need to ensure that they do everything they can to clean up this mess, (and pay for it), but there seem to be a lot of "players" in the background who are perfectly happy to see BP take all the heat. The US companies who are the operators of the rigs, the US officials who refused the offer of help made by the British Government in the first four days of the disaster over chemicals that could have been deployed immediately with a view to averting at least some of the ecological disaster that ensued, and even perhaps the President himself who could have acted more swiftly than he did and who now appears to be making up for lost time and ensuring the blame is focused on others, rather than himself.

In both of the above cases, in sport as in business, one person takes the blame while others lurk in the background hoping that the spotlight will not suddenly shine on them.

The other event was that involving the 16 year old American girl, Abby Sunderland, who wanted to sail round the world single handedly to break the age record for doing so.

Putting aside any concerns about ages (for example the Dutch authorities have, so far at least, successfully banned a 14 year old from making a similar attempt - which they will review in July 2010), the issue here is more about the chances one takes - and who pays if it goes wrong.

Miss Sunderland, by all accounts an accomplished sailor despite her age, worryingly went missing in the ocean after encountering some difficulties. A particular event that was not an age or experience thing, and one that could have happened to anyone, whether they were aged 16 or 60. Fortunately in this instance there was a happy ending. She was found, and eventually rescued by a ship that went well out of its way to effect the recovery. The girl herself, clearly appropriately thankful and happy for the rescue, said she wanted to try and do it again - even though she would not make it as the youngest any more. Frankly, I have no difficulty with  that. If the people responsible for her believe she is up to it, it's for them to decide. What does trouble me though is who has paid for the rescue? The shipping company? The insurers - can you insure against something like this? In other words, as long as the rescuers have been compensated in full for their costs then Ms Sunderland should be free to sail again – but perhaps not until the costs of the rescue have been recovered!

And yes, you know where I'm going with this don't you? If the financial ship (global, regional or domestic) hits stormy waters, and as a result if Governments put their hands in their pockets (or, more accurately, YOUR pockets) to rescue someone who has got into difficulties and needs to be rescued, you shouldn't give the “rescuee” complete freedom to go off and do their own thing again until they have repaid their debt!!

In sport...as in business, there are risks. You take chances and if, as a result, there are costs involved in resolving them that involve other agencies, then the dues should be repaid to them before you move on.

What do we learn from all this?

There are many lessons in sport that apply to businesses too. Business is a team sport. The team needs a captain, a leader, but the team won't work unless it operates together. Even if you are sailing around the world singlehandedly there will be a support team somewhere. And in business, as in sport, you take risks and chances to get better and better, but there is a price to pay if you don’t get it right.

House of Cards

I am sure there will be many names put forward to describe peoples views on the news stories following the , not entirely unexpected, revelations that the world's most expensive residential property sale in Hong Kong was a complete sham.

Words that I have heard so far today range from "mischievous" through "scandalous" to "outright fraud". And everyone I have spoken to, bar none, have said that the people behind it need to be shamed at the most lenient to prosecuted, although personally I am not sure on what grounds. Nobody I have spoken to thinks that the behaviour of the developer, Henderson Land, is acceptable. That said, the newspaper article did find one person who saw nothing wrong with the manner in which the sales were carried out. The representative of the property sector in the Legislative Council; who represents the developer!! No surprise there then.

Hong Kong based readers of my Blog can read all about it in their own papers and talk about it at their own dinner parties. But for those who read the Blog from overseas, you may not be aware of the transaction - which has been mired in controversy from the start, when the developer decided to totally mislead such bodies as the fire services department by missing out many floor numbers to create floors with "lucky numbers" for the purchasers. The link provided in this Blog that covers the story does actually provide a good summary.

Misleading floor numbers aside, the effect of the initial announcements regarding the sales of the apartments at such high prices were presumably designed to fool the Hong Kong public into believing this was a whole new ball game in the property market. Either that, or it was for the consumption of the property buyers in Mainland China, hungry to get into the Hong Kong market, so they would believe they had to pay these sorts of prices. Whatever the reason, it was cynical, misleading and untruthful. And given the knock-on effects, presumably led to people paying higher prices than they need have otherwise have done. Maybe they can sue Henderson Land for the difference!

Hong Kong's efforts at living up to their own advertising hype of "Asia's World City" have been dented by a variety of mishaps, particularly including pollution and a weak Government that doesn't have the strength to take some needed measures to deal with it. Now certain members of the business community seem to be compounding those negative impressions, by seeking further profits at any price. 

Whilst Hong Kong has always been a place where the ability to make money was applauded, and where you had to be smart to keep ahead of the game, this episode seems to break all the boundaries of decency.

Till Death Do Us Part - (or we get bored with each other!)

News from the USA last week that Al and Tipper Gore were to divorce after 40 years of marriage, seems to have found its way into the world press for a whole variety of reasons - but the most commented upon reason seems to be because of one, rather unusual, feature - there was no-one else involved (although this particular old cynic is just waiting for the eventual revelations that start "...well, actually"). But, as the reports have it, they had in their words "just grown apart"! 

As the commentators wrote, if it had been the announcement that Bill and Hillary Clinton were separating it would have come as no great shock - but the Gores? In confirmation of the reports, The New York Times quoted a friend of theirs saying that they had simply grown apart! Wait a minute - simply grown apart? I mean I have a couple of old T shirts which have served me well literally over decades and sure they are actually more like simply falling apart, but would I separate me from them and throw them out? Nah! They mean a lot to me. They are a part of my life. What has happened to good old-fashioned commitment and loyalty? 

Of course the words of marriage ceremonies today are being amended to suit the "modern era". Silly things like promising to love, honour and, my personal favourite, obey (which apparently and surprisingly turned out to apply to me as well, not just her as I had foolishly assumed!) are more or less out of the window. But now I guess we will eventually have to hear those final words of the ceremony "Till Death Us Do Part - Or We Simply Grow Apart!" 

However, amidst the jest there was one part of the article that rather caught my eye. It was an "explanation" as to what might have happened to the Gores and it read " Mr Gore, who has travelled extensively in recent years in support of his business ventures and climate change activism, had settled into a full post-political life ... while Tipper seemed to move in a more personal direction"

Now that did get me thinking along some slightly different lines. Here I am, older than Mr. Gore although married for five years less, and what am I doing? Travelling more extensively than I did when I was with the Bank (and that was extensive enough), and enjoying (yes, enjoying) a full post-retirement life.

I don't have any hobbies worth speaking about - my folk-singing days are pretty much gone, and my active sporting days have fallen victim to various anatomical wear and tear. I never developed deep interests in other extra mural activities (mainly because I was continuously paddling hard to keep up with my brighter colleagues), I don't like shopping, movies and gossiping, but I thoroughly enjoy taking an interest in the world around me, the developments, the changes, and being a part of what is going on in life. Is that so bad? But in the light of the news from the Gore family does it put my relationship at risk, because I am not at home an awful lot?

So I had to ask!!

With the discussion considering that perhaps it was because Mr and Mrs Gore had spent so many years in each others pockets during his political career, each with a common purpose, that when they started to do their own things - which were not shared - they did actually drift apart. They had nothing in common. Nothing to talk about. And next time you go to a restaurant, look around you. Couples (often older) out for dinner together, sitting at their tables for two and saying nothing to each other 'cos it's all been said already, or because neither party is particularly interested in what the other is doing. (Yes, it's a generalisation but it happens too often to be ignored). So maybe we really do grow so far apart from one another. The first fumbles and flushes of love, followed by work and children and empty nests and .... nothing. Literally. 

So is this then another case of life imitating business or vice versa? For example, while some restaurants remain open for years based on the certainty of product and service, many have to change periodically to maintain the interest of their patrons. Manufacturers have to change their product lines regularly to maintain the interest of their customers. Service providers have to provide better and different services to keep ahead of the competition - and marriages, it would seem, have to be sufficiently interesting and able to change with the surroundings to keep going!

Oh, the answer to the question that had to be asked? Well, on the basis of the 35 years so far - if I'm still going at 99 it looks like it will be another 35!!

Initial Thoughts...

To a younger generation what do initials like 3M, ANZ, ING, HSBC - and now, BP mean? Okay, 3 of them are banks, one is a manufacturer of things like post-it notes and the last - well, it's on everyone lips in America at least, as British Petroleum.

All the above initials are the result of abbreviating company names originally denoting a geographical area/region. Thus 3M was formerly Minnesota Mining and Manufacturing, HSBC was the Hongkong and Shanghai Banking Corporation (yes, Hongkong is spelt like that in the company name!). There are many others that have similarly shortened their names as a result of having become more global than regional/domestic companies, meaning that their former geographical names could be considered more of a hindrance than a help.

BP is one such company. It is all very well blaming this British company for what is an appalling disaster - and one which should have been dealt with sooner, faster and with more thought being given to the PR aspects of the case. So I am not about to defend the company for its actions. This is an ecological disaster - make no mistake.

But for once I am not going to sit back and let the Brits take all the blame as a convenient scapegoat for a problem that is not exactly "British". For example, hands up who knows how many Americans work for BP, and how many British people? Well, it's double - British employees 10,000, US employees 22,000. Okay, you say, it is a company listed on the London Stock Market so it's obviously British. Ah, well yes and no - British shareholders, it is true, account for about 40% of the number, and those from the USA a mere 39%. Oh dear - isn't that about the same? But surely the number of directors on the board will indicate that the company is clearly British. Not so, I'm afraid. It is six all! Well at least the company is headquartered in Britain. Guilty as charged - so that must be it then. It's a British company and therefore the Brits are guilty for creating an oil spill in the Gulf of Mexico!! (Statistics gleaned from an article in the British Times of London - but easily verifiable from other independent sources).

So I believe we should think carefully about where we start throwing the "bricks of blame". An "incredibly angry" President Obama, on the subject of interfering with dividend payments, should note that were he to be listened to, this will affect as many Americans as it will British. And if the company starts to shed jobs as a result of all these goings on then presumably it will, in the interests of fairness, carry them out in the same proportion as the employee mix.

And Christine Loh in Hong Kong made a fair point the other day too about the length of time this oil spill has been going on. The USA has access to some of the best brains in the oil business; people well used to dealing with catastrophes. Why on earth did he not assemble them quickly, sit them all around a table, with BP, and work out a way to stop the leak. BP would pay - for sure - but sometimes collective heads are better than one!

And finally, what about those initials? Does the location of headquarters alone, in this wired world, actually matter a great deal? Why shouldn't HSBC have its headquarters in Hong Kong if it wanted to, and BP put its headquarters in Houston. Given the statistics and the fact that the majority of its business seems to be in North and Central American wouldn't it make sense?

So if you are thinking up a name for a new company - keep away from geographical references. They might bring you some unwanted consequences. And headquarter your company in a jurisdiction that is good for the company!!

Stocking Up...

As every canny investor in the stock market knows, today is the last day for getting rid of all your stocks and taking a summer holiday - "Sell in May and Go Away". Well, time was I guess when people did take holidays through the summer. That excursion to foreign lands - rudimentary passports requesting safe passage for the holder, no visas, a bank letter of credit in hand before Mr Thomas Cook issued his travellers cheques, and now we use credit cards to pay our expenses.  Oh, and I do actually remember the travellers letter of credit in my early days of banking, pushed over my counter by visiting Australians who required to make a withdrawal.

The "sell" advice was sound for the investor in those days, as markets in the summer months became thinly traded, making volatility high at the slightest hint of trouble, and if you were not on the spot to protect your interests you could easily find yourself in serious personal financial difficulties.

I wrote about the old saying in August 2007 (Sell in May and Go Away), and again in June 2009 (Market Madness) - in slightly different articles, but if you say it often enough maybe people start to listen. And this year I see no difference.

We have deals being proposed, IPOs being brought to market particularly in various parts of Asia - but without the tradition of major price rises at the moment of listing - stock markets in trouble because the woes of the world are not yet over, by a long way, currency markets not knowing where they are headed, talk of premature increases in interest rates - although some countries want to do this to head off future inflation, but risk doing so at a time when it might push a few companies over the edge. Oh no; this is neither a time nor a market for the faint-hearted.

Oh sure, the gamblers investors will stay around, believing as always that they - and only they - have the answers, but unless you are able to watch the market daily and use "informed opinion" to make your choices, take a break. Come back renewed, with a resolve to watch your investments even more carefully in the future.

...but look, my last couple of blogs have been pretty negative and this one is heading the same way. I am not a pessimist by nature; cautious - yes, pessimistic no! So I was thinking to myself that if I was going to put something away for a rainy day that I could forget about during the summer, what would I do? I am not in same league as the famous "Stock-pickers of Hong Kong"; I am a notoriously poor (lazy?) investor but whatever I was to do for myself would include keeping an eye on building up some currency deposits in Renminbi because there has to come a time when it revalues. Other currencies with no interest yield do not look excitingly safe over the summer, as those with a yield are likely to be volatile or are already expensive. 

If you have to put your money somewhere other than a bank account, put it safe. It may be boring, but at least you should get it back! Even the price of my former employer's stock in Hong Kong (for those of you who don't know - HSBC) looks reasonable at current prices; looking overseas Apple stock for the time being is strong, and with its recent elevation to the rank of number one over Microsoft, and its continuing iPad roll out around the world, it is unlikely to lose momentum during the summer. And people are still going to be using their credit cards. Credit crunch or no credit crunch we live in a plastic world (I must write about that some day!), and shares in Mastercard look like one you could put to one side in a portfolio while you head off for the holidays. 

And the "small print" says - As I am not a qualified investment advisor, I am merely telling you what I personally might be having a look at. I wouldn't dream of recommending anything Mr Regulator!

You will have to make up your own minds! As I said, I am not recommending anything more than I am recommending horse number 8 in the 5th race at Happy Valley on 9 June!! Oh, and if you are under 18, don't pay any attention at all to the last comment. Gambling is illegal, and anyway, the horses haven't even been declared for that race yet! 

Keep your money safe!!