Portfolio Tracking II

This post is a follow up of the earlier post dated Feb 11 2008 entitled Portfolio Tracking ... We have updated our tracking engine and have set the following conditions as well as make some observations:

Conditions:
1) tracked the performance of stocks /ETFs for comparable periods from April 2004 through March 2010,
2) selected those that have generated average return in excess of 15% p.a. or with Sharpe ratio above 0.4 ( risk free set at 3% ), and
3) ranked them according to average return.

Observations:
1) based on an equal weighting of amount invested per period ( annual ), it is possible to surmise that an investor can achieve a reasonable return on a "buy-and-hold" basis,
2) such counters exhibit high betas ( ranging from 1.3 to 2.0 ) with the exception of XOM ( 0.5 ) and HPQ ( 1.0 ),
3) such counters also are quite correlated to S&P 500,
3) they are mostly "growth" stocks / asset classes i.e. emerging markets, linked to emerging market growth stories ( US Exporters, commodities etc ),
4) include technology stocks with great innovation ( AAPL ), and
5) these counter also suffered significant dips during 2008/2009 but rebounded strongly subsequently.

If these counters maintain their sound fundamentals there is no reason that they cannot outperform the market.

The trick is to stay focus and follow the simple rule of ensuring that the portfolio is re-balanced periodically by taking profits off the table and topping losses where necessary.

Disclaimer: The site provider and or the contributor of this post do not warrant the accuracy / completeness of the information contained herein, disclaim all liability and shall not be responsible for any losses arising fron the use of the content herein.

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Innovation Through The Lens of Art Part IV - 勿以恶小而为之, 勿以善小而不为

Society can either opt to stand still or seek to change for the better through innovation. The choice is clear. The question is where do we seek inspiration to change for the better? Art... for it " removes irrelevant concepts from people's minds, encourages the living. It provides confidence to people. It does not deal out dreams. It does not teach. It awakens. " Art in its more controversial forms need not titillate our senses to extremity, but to awaken us to the beauty of living reality instead, and not merely indulge in empty idealism. [ paraphrase Mao Yuhui ]. Therefore, artists and intellectuals play a key role in fermenting innovation and creativity. Their works play a pivotal role in defining individual expression first and foremost before propagating to all and sundry.

Examples abound of the pioneering spirit that is within us. Controversial mural in airport depicting naked tribal women bathing in celebration of a water festivity is but one such example. To revive ( nourish ) an instinct that resides in the deep recess of our brains, we need to up the "degree of empowerment" by many notches.


So is innovation more art than science? The short answer being, art is the foundation and science its fittings.

We need to accentuate the human-ness in us in order to satisfy our ever evolving needs. We must uncover the building blocks that permit us to realise the potential in us, generate the momentum that will nurture our fertile imagination and turn it into functional forms.

We ought to have the discipline to apply our mind to the task on hand for after all, famous artists do not become top guns merely putting a few splashes here and there. It is a practised hand that makes it looks so easy and graceful - such artful manifestation awakens us, the audience and finally as participants, to the possibilities rather than dealing out our dreams.

Through empowerment, we seek out partners to collaborate with, and assemble the building blocks to competently realise our potential in coming up with outstanding pieces of work, in the true commercial sense exploit it and turn it into money spinners.

The discipline comes in figuring out the end goal. And to develop a framework in how to reach that end goal. Take learning Chinese language as an example. How many of you desire to master the Chinese language ( putonghua ). What are the milestones you set for yourself to reach that goal. Typically it is to increase the vocabulary i.e. 2,000 words, 6,000 words or 40,000 words! How much investment are you prepared to put in to realise that goal ( and of course under what time frame? ) and what do you expect to get in return ( e.g. return on invested capital ). There are many paths to reach that goal. If it is too rigid and unrealistic, you will find the going tough or next to impossible. However, if you do think it through and create a framework to undertake the journey, the execution will be extremely smooth.

So you can either set the goals yourself or let the teacher sets the goals for you.
You need to feel comfortable that your teacher empathises with your situation as well for you to take ownership of the approach adopted.

Often times, people end up making decisions without understanding the whole picture.
This is because we are used to making decisions without the benefit of complete information and guess what is the result? You either are lucky to get the result you want; or fall short of your expectation and allow someone to exploit that vulnerability to your detriment.

Back to the workplace. There are situations where organisations prefer to only want order takers. They will use enforcers to get the job done. As a contributor and empowered with choices, you can ensure that your set of beliefs is in alignment with those that you are collaborating with thereby avoiding a scenario where you may be exploited on. To benefit from the environment that promotes harmony, creativity and innovation, you must also be an active participant. Proper value system is a vital element and in large organisations it is rather difficult to establish common values and beliefs. When collaborators are at cross-purposes, negatives cancel out positives resulting is dismal return on investment. Be mindful of the adage: 勿以恶小而为之, 勿以善小而不为. Putting it to practice, is more art than science. Relationship is so fragile that you can liken it to a mirror reflecting exactly the energy it receives. It gives as much as it takes. To enjoy what we strive most for, one must take the initiative in nurturing and nourishing LIFE values i.e. EMPATHY, TRUST, FAIRNESS, APPRECIATION, RELIABILITY.

Now, we go figure ....

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创新过程, 化危为机 第三部分-未满足的需要和市场

创新之路必须包括两大要素。其一，解决方案是全新的；其二，能有效解决最终用户的问题。从宏观上看，我们希望找到对企业家的需求尚未得到满足的市场。

全球金融危机提供给了中国一个机遇，成为带动全球经济回稳的主动力。中国庞大的经济刺激计划已经达到了预期的效果。然而，显而易见的是，引发危机的根源仍旧存在于现有的全球经济体系中，解决这些不安定因素，必须让发展重新步上良性轨道。

中国经济必须保持8%的GDP年增长率，且一直依赖出口模式。但美国的过度消费所导致地严重财富创伤使得中国原有的经济模式难以为继。中国与其他相似的经济体一样，将不得不通过拉动国内消费来弥补差距。中国目前国内消费占全国 GDP 总数的35%，而美国同期的这一比重是75%。

中国的出口模式依赖劳动密集型和资源密集型加工产业，因此有其局限性，并且在产业结构平衡、协调性和可持续性等方面存在着问题。在金融危机初期，2,000万中国农民工下岗或面临失业。他们的返乡可能成为政治和经济秩序的不稳定因素，影响巨大.

本着化危为机，中国启动了一揽子经济刺激政策，总投资超过 5,000 亿美元，旨在大力提升国内消费。政策包括有家电下乡、经济适用房补贴、车辆购置税下调等。这些政策不仅保证了工厂的正常运营、工人的就业，也同样提高了人们的生活质量。中国有三大产业，依次分为农业、制造业和服务业，而发展的焦点将集中在提升其制造业的技术水平上。对人们生活质量的提升则从原有的仅着重衣食延伸到了住行。在某种意义上，新生活方式的曙光已经到来。

中国西部开发的预期成长率将达到15%，从而弥补了经济较为成熟的沿海地区及经济特区的低预期成长率。这些举措的成功实施将提高居民生活水平和购买力，并进一步推动中国的贸易流通。与国外机构，尤其是跨国企业的合作将变得频繁，并产生双赢效益。中国对生产力的提升，使得其服务业成为投资的理想市场，资金将被用于职业培训等手段以提高劳动力水平。但由于劳动密集型模式的长期主导地位，使得转型期间的阻力不可避免。勇气与领导力是变革和产生绩效的两大关键，只有具备这样的智慧才能战胜既得利益的固有思想局限，带领人民实现改革的愿景.

把握到创新的脉搏了吗？请用心体会……


aknowledgments:
Ms Renee Yi for editing and support to this post.

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Innovation Process Part III - Unmet Needs and Marketplace

Two key ingredients must be satisfied in the innovation process. The solution must be new and solve a problem for the end users. In taking a macro view, we hope to seek out market place where unmet needs await the entrepreneurs.
The global financial crisis provides China the opportunity to be the main locomotive in driving the global economy back to stability. Its massive economic stimulus package had the intended effect. However it is also clear that the root causes remain embedded within the present global economic system and such instability must be resolved for growth to be back on track.

China requires a sustainable growth rate of 8% annually and has relied on the export model. This cannot carry on indefinitely as the US over-spent consumers have severely depleted their wealth. China as well as other economies with similar model, will need to look from within via increase in domestic consumption, presently at 35% of its GDP ( versus US 75% ) to make up for this gap.

The export model leveraging on labour- and resource-intensive processes has its limit and has created issues with regards to structural balances, coordination and sustainability. At the advent of the crisis, 20 millions migrant workers were laid off or facing layoffs. Their return to their villages could potentially destabilize the political and economic order with dire consequences.

Turning the crisis into opportunity, China initiated an economic stimulus package in excess of US$ 500 billion, jump starting the process of increasing domestic consumption. Subsidies were extended to villagers to buy white appliances, affordable housing and tax reliefs for car purchases. These help to keep the factories running and workers gainfully employed, as well as hoisting the standard of living. China’s 3 key sectors i.e.. agricultural, manufacturing and services in that order, will be the focal point in upgrading its manufacturing base technologically. By raising the standard of living, the emphasis has shifted from merely having adequate clothing and food, to providing affordable housing and transportation. In a sense, the new dawn of lifestyle living has arrived.

China in developing its western provinces which in percentage term can grow in the mid-teens thus compensating for the lower growth rate expected for the more matured coastal areas and special economic zones. The successful implementation of these initiatives will raise standard of living and purchasing power, empowering China to facilitate the trade flow further. Collaboration with foreign entities, and in particular MNCs will come naturally and it can be a win-win outcome. As China seeks to raise productivity level, the service sector is a good area to target as funds will be set aside to upgrade the labour force through vocational training and such other means. During the transition, it is not unusual to meet resistance as labour-intensive model has worked so well thus far. Courage and leadership are required for wisdom to prevail over vested interest to bring about change, and for China to fulfill its vision for its people.

Do you smell opportunity for innovation? Go figure ...




Clues: zero carbon emission, food shortages, standard of living

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Maven Traps and Speed of Trust

It has been one project after another...haven't been busier. Completed the ASP.NET web project with the database functionalities in place. Returned from an overseas trip from a most happening place.

Also managed to integrate the web project to the field assignment and hence killing two birds with one stone. With this out of the way, able to focus on fine-tuning the web platform. Next task will be to add functionalities which include excel-based template for data input, extraction as well as charting.

One of the major assignments for the coming weeks will be to roll-out our client's value-based management project.

We will be using the Tipping Point concept leveraging on the Law of the Few, Stickiness Factor and Power of Context. We also will apply the Six Degrees of Separation. These concepts were well documented in Gladwell's Tipping Point.

For good measure, we have also mapped out the metrics to track our progress. We are very excited about the prospects of been able to apply this in a real live scenario. We will certainly learn many things. One of the things we will be interested in will be to understand how a few individuals can propagate an idea to tipping point. We are mindful of seeking out the mavens ( using Gladwell's maven traps to achieve this ), have their feedback to make sure that the contents are stick. We will be deliberate in moving through the degrees to make sure that we understand the dynamics of group influence, specifically the buy-in of the product's attributes. The key message is Speed of Trust i.e. if there is transparency and engenders trust, collaboration would have speeded up as well as decision-making. A concept elaborated by Stephen Covey in a book of the same name. We hope we can replicate the success to other projects.

So a recap of some of the projects that we are working on and or have completed:
1. value based management project - final lap
2. asp.net 2.0 ~ done,
3. reading: Lila - An Inquiry into Morals ~ done,
4. robotics - to do a demo for collaborators, and
5. integrating web-based initiatives into a coherent hub ~ work-in-progress.

Individuals keen to collaborate are welcome to signup.


Keywords: quality, value systems,
trust, domain knowledge, technology, networking, maven traps, speed of trust,

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