維記咖啡粉麵

As I was in Kowloon, went to Sham Shui Po to try out this little noodle shop. Their specialties are: pork liver/beef noodle and kaya toast.

The pork liver/beef noodle was very good especially the soup that was probably used to boil the pork liver. For those who like it, it comes with that sweet taste without necessarily the innard taste the comes with the poorer versions. It also has a firm texture which is what I like in pork livers.



The kaya toast was just OK.



I have definitely had better and nothing special about it. It was quite cheap given it was Sham Shui Po but I don't remember the exact costs anymore. Definitely a place to visit when in the area.

Food: 8 (out of 10)
Ambiance: 1 (out of 10)
Service: 2 (out of 10)

Caveat Emptor on medical insurance

Finally left full time employment and one of the most urgent task is to buy medical insurance coverage for my family. My old employer offers one of the best policies around and it is going to be costly to get something similar. But not having a medical insurance can also expose my savings, i.e. investment capital, to large fluctuations that can be costly and unpredictable. Needless to say, medical costs will likely escalate over time as well given an aging population that will demand more and higher quality care.

There are a few large international insurers that offer medical insurance such as IHI and Goodhealth. IHI turns out to be the best for me as I am seeking a credit-worthy insurer (A by S&P), guaranteed renewal and also pricing on a pooled basis even for elderlies. The downside is that the reimbursement for regular doctor visits and medical expenses both have a low cap. But this can be addressed by buying a high deductible IHI policy and supplemented by an additional policy to cover the lower amounts. And this is what i am likely going to do.

As I am going through the terms and pricing of the IHI plan, what struck me is the choices that a consumer is being offered. There are various options available for purchase but also varying deductible levels from US$0 to US$10,000. After crunching the numbers, it turns out that some of the deductible levels never make financial sense, i.e. they are always more expensive than another plan that is available. 0 deductible, which is what I guess most corporates would purchase, is never financially viable. But this obviously has never stopped people from buying it! Makes one wonder how many people actually analyze these insurance plans, and by extension, other personal financial products, in detail before making a choice!

I guess Caveat Emptor since if you don't watch out for yourself, no one will! And choices, as all of us know, do come at a cost!

2007 HK Policy Address

Just got a chance to read through the policy address of Hong Kong. As is usual in HK these days, every action by the government attracts criticism. But in this case, I find them mostly misplaced. The policy address lacks action steps in some respects but all in all, it hits on all the major issues - plans to improve infrastructure to lift employment and productivity, address pollution to make HK as a better place to live, medical support for the elderly, ..... I find the policy address refreshing since it coincides with my personal view of the opportunities and challenges that HK faces.

HK has many strengths and one of the most important is its position as a regional hub. While HK is the best base for regional executives, it is also an expensive place to live with its high cost and standards of living. This cost will be further exacerbated as the current population ages. The way forward is to make HK a better place to live and continues to attract highly paid expatriates and immigrants, i.e. highly paid finance executives and senior management of MNCs. This will be the future of HK and it looks like the Chief Executive is on the right idea.

2 Days in Tokyo

Quick trip to Tokyo for a new project. Am staying at the Peninsula this time and took some pictures. Fabulous hotel in a good location. The Ritz and this is my current favourite in Tokyo right now. Kind of a toss up between the two but for some reason, I have not slept well in my past two trips at the Pen. Maybe retry the Ritz next time.

Lo por is a sushi fan and I have been looking all over for the best sushi in Tokyo for her. Since I am here, am continuing that quest. So far, have tried Jiro in Roppongi Hills, Kyubei in Okura, Harumi in Shinbashi and Sushi Dai in Tsukiji. Got a recommendation for Uogashi Senryou in Tsukiji and have decided to head out for a quick lunch. Senryou is located right outside the Tsukiji market and right next to, or in the middle of, a dry goods store. When I first saw it, I have to recheck the address to make sure that this is the restaurant I am looking for. Definitely not what I expected but this has "local" spelt all over it. I think just the set up is worth seeing. As for the food, I ordered the 3,900 nigiri set. Disappointingly, it was not served one piece at a time even though I was the only customer in the restaurant and seated at the sushi bar table. Included in the set are beef, otoro, otoro aburi, aji, anago, ikura, uni and a tuna maki. All the pieces are quite small though a good size for eating. The uni was heavenly, both creamy and a slightly salty taste. The other pieces are OK though nothing special. Since the pieces are quite small, I also tried the nama saba, chu toro and another piece of uni. As I was ordering, a younger and more junior chef just got in and started serving me. Not sure if this is because of the change in chef but the second piece of uni is definitely not that good. This is a great place to be once to soak in the atmosphere. This must be what it feels like when you visited Tsukiji in the old days, eating at a tiny sushi shop right next to a dry goods store. But would I go back? Probably not.

The Age of Turbulence

Have always liked reading since when I was a kid. Always wanted a study room with rows and rows of books and that is exactly what I have now! Only thing to go is a large bean-bag to sit and read comfortably.

Just finished The Age of Turbulence by Alan Greenspan and what a wonderful book! There is no shortage of economic prognostication from academics or research analysts but I have never come across one from a central banker. In the first half, he talks about his early careers and how to wind up in government service. The second half, at least to me, is more interesting. It starts with an explanation of past macroeconomic events, a diagnosis of current issues and some predictions for the future. His explanation of past events is fascinating especially on the current account and fiscal deficit of the US, the changing demographics and the lowering of inflation expectations over the last few years. If anyone just want the prediction, you can jump straight into chapter 25. While Greenspan talks about how the US has successfully weathered many crisis in the past, he does believe inflation will rise and that long term growth is likely around 3%. As aging demographics exacerbates the burden of social welfare programs, think social security and medicare in the US, governments will have no option but to print fiat money to finance their deficits and risks inflation.

Investment tracking

Since I am about to be jobless in the not too distant future, investments will be my primary source of income. Over the last few years, my track record has been decent with steady returns around 10% and minimal MoM losses. This is also with no leverage and anywhere between 25 to 60% of assets in cash. Not Warren Buffet type of returns but enough to continue to grow my nest egg. Now that I have to rely on investments to feed my family, I have to take it more seriously. Blogging will help me keep myself honest and I will start putting my ideas and analysis here just so that I can refer back to it.

Let me start off with a situation overview:
- my family will always have a roof over our head since my apartment is debt free
- current portfolio: 23% HK real estate, 3% equities, 10% LT investments, 58% cash
- there will be some income for next 15 mths which will more than cover living expenses
- i am starting my own companies. Capital need is still unclear.

My objectives will be:
- no capital losses
- annual returns of 15%
- minimal leverage

To get there, there are a few rules to observe (in no particular order):
1) Observe where the market wants to go instead of where you want it to go or where it ought to go.

2) Take good risks

3) Believe in your analysis

4) Buy quality companies at reasonable price

5) Understand both the relative and the absolute

Will add to these rules once I am up and running.

Asia Financial Forum

Attended the Asia Financial Forum organized by the HK SAR Government this past Friday. A high level group of speakers from HK and China but the ones from other parts of the region are at best middle level. Overall, the Government should get an A- for effort and C+ for results. Despite the many prominent speakers, the conference failed as it doesn't have a coherent theme. Without a theme, speakers only spoke in general terms and there were close to no debates on the panels. It was clear to see that people were losing interest and the attendance in the afternoon has declined substantially.

PS Some of the mainland Chinese attendees are the most impolite bunch I have seen for some time. They have the audacity to carry on a mobile phone conversation while speakers are on stage speaking for 5 minutes. If you don't know how to respect the speaker, at least know how to respect yourself. Too bad HK doesn't have caning.

Kicking Away the Ladder

Just read Cambridge professor Ha-Joon Chang's paper, "Kicking Away the Ladder", that basically describes how the UK and the US were protectionist countries in the early days of their economic development. Once their industries have gained strength, they then turn to "free trade" and posit it as a "one size fit all" strategy for all nations. Nowadays, it is certainly the popular view that "free trade" is good for everyone and a view that is imposed on all governments. Thomas Friedman and many other economists subscribe to this view. But is this right? I do not believe the behavior of the UK and the US in the early days necessarily mean the policy is right or wrong or even appropriate for a country in its early economic days. What I do agree with is that "free trade" is not a panacea and more importantly, every nation should act for their own good irregardless of their economical or other ideology.

If you don't watch out for yourself, who is going to do that for you?

Don't Blame Rating Agencies

Vickie Tillman of S&P wrote a long letter to editor in the Asia Wall Street Journal explaining why S&P has done nothing wrong in the recent subprime debacle despite her CEO being replaced at the same time. Wait, if nothing has gone wrong, why is your CEO being replaced? We all know people don't really leave their job for "personal reasons" and that it is an euphemism for being fired. For those who want to be in the corporate PR business, this is a piece of article to learn from. Two rows long filled with explanations which added up to nothing. Aside from some lame arguments on how S&P has done its job, it smells like a lot of bullshit. Yup, I guess someone has to do it. You can't really let your reputation be dragged through mud and someone has to defend their "reputation" and cover their corporate "behind". As Vickie Tillman correctly points out, reputation is the greatest asset of the rating agencies and her article is clearly an attempt to salvage it. Next time, how about being accurate in your analysis instead of firing your CEO and then "repairing" your reputation?

On the big picture, I do see serious issues with the business model of credit rating agencies. Everyone will tell you that they care about their reputation. And that is the case until rubber hits the road and you are tempted by the possibility of more revenue like the possibility of rating large numbers of CDO structure. I doubt there are many businesses who can withstand these temptations purely on the basis of maintaining their reputation. Only way that companies will do their job here is if their feet is being held to the fire. Why would the credit rating agencies need to do a good job when they can be in the wrong and simply write a lame puff piece in the Journal?

Letter from your highly paid Hedge Fund manager

For those who are "fortunate" enough to invest in hedge funds, here is one for the memories (since there probably aren't much coming back in the form of returns!):

Bloomberg

Hedge-Fund Guy Atones for His Subprime Bond Sins: Mark Gilbert

By Mark Gilbert



Aug. 16 (Bloomberg) -- Dear investor, we'd like to take this opportunity to update you on the recent performance of our hedge fund, Short-Term Capital Mismanagement LLP.

As you know, market selection for the entire fund is guided by a proprietary investing tool we like to call ``a dartboard.'' Once the asset classes are decided, individual security selections are generated by digitizing our unique hexagonal cuboid models.

Unfortunately, it transpires that our hexagonal cuboids are not as unique as we thought. Hundreds of other hedge funds possess identical dice. The technical term for this is a ``crowded trade.'' You may also see it referred to as ``climbing on a bandwagon already headed for the wall.''

As our alpha generation collapses, our beta has turned negative, our delta hedging has gone toxic and, trust me, you do not want to hear about our gamma. We can't even find our epsilons in the dark with both hands.

You will appreciate that accurate pricing is essential for evaluating our investment strategies. This has proven to be extremely challenging in recent days. Previously, we have relied on Bob, the sales guy at Hokey-Cokey Bank. Bob assured us the securities were still worth 100 percent of face value, so everything was cool. Bob sold the collateralized debt obligations to us in the first place, so he knows what he's talking about.

Bob, however, appears to have had a nervous breakdown, judging by the maniacal laughter that greeted our requests for price verification this week. Our efforts to implement an in- house CDO valuation framework, using a technique the ancients knew as ``making things up,'' proved unsatisfactory.

Where's the Bid?

Currently, all of the portfolios we manage are undergoing a rigorous screening known as ``crossing our fingers and praying that we don't have to try and find a bid in the market.'' This is supplemented by a cross-market statistical analysis originally developed by the U.S. military called ``don't ask, don't tell.'' This ``unmarking-to-unmarket'' procedure has been the benchmark for the hedge-fund industry for the past, ooh, 72 hours.

We have, of course, been in touch with the rating companies to update our default-probability scenarios, particularly on the AAA rated investments we own. They recommended a forecasting method using stochastics to regress the drift-to-downgrade timescales for the past 100 years and throw them forward for the next five minutes. The technical term for this is ``induction,'' though those of you of a less quantitative bent may know it as ``guessing.''

AAA or Toast?

We are pleased to report that, contrary to what current market prices might suggest, all of our top-rated securities remain absolutely AAA. Provided, that is, the future performance of the underlying collateral is identical to its history. Otherwise, the rating companies say our investments are likely to be reclassified as ``toast.''

We have also been checking our back-up credit lines with our friends in the investment-banking world. As soon as they return our calls, we'll be able to update you on our emergency liquidity position. We are sure they are fine.

Some of you have written to us asking for your money back, citing clauses in the fund documentation called redemption rights. Frankly, we never expected you to actually read that prospectus, which came prepackaged when we bought the Microsoft Hedge-Fund Guy software. We certainly have no idea what all those long words mean.

We have filed your letters in a special drawer in the filing cabinet marked ``trash'' for now. Do you have any idea how much trouble you all would be in if we actually sold this stuff in the market today? At these crazy prices? Fuhgeddaboudit. You'll thank us later.

Not a Rescue

Speaking of crazy prices, we know you'll be thrilled to learn that we've invited a bunch of our rich pals into the fund to participate in this once-in-a-lifetime opportunity. But this is not a rescue. Do not even think the word rescue. This is an opportunity. Not a rescue. An opportunity.

In fact, we think this is such a fantastic opportunity, we've agreed to forgo our usual management fee, and we'll only take half our usual slice of the profits. Provided there are any profits to slice. You, of course, are absolutely invited to participate in this offer by sending us yet more of your money on exactly the same revised terms as our rich pals.

Finally, a word for all of you who have been kind enough to inquire about my personal financial situation. I am relieved to report that my directors and officers insurance is fully paid up. Furthermore, my Bentley Continental was paid out of the 2 percent fee we levied when you wrote your first check to us, so I will still be able to trundle into the parking lot each morning in an open-necked shirt to ignore your telephone calls and e-mails. Yours, Hedge-Fund Guy.