Money as Debt 3

A Summary of a Gift to My Children by Jim Rogers

Jim Rogers is a world traveler and legendary investor who made his fortune before he was forty. In A Gift to My Children, he offers his advice with confidence, paternal compassion, protectiveness, and love. Rogers reveals how to learn from his triumphs and mistakes in order to achieve a prosperous, well-lived life. He advises his children, and anyone seeking success in his or her chosen field, on things such as to trust their own judgment, focus on what they like, be persistent, see the world, and nothing is really new. Rogers gives examples of his own experiences, as a guide to life, adventure, and investing.


As the chapters begin, Rogers starts with telling you how to be yourself and rely on your own intelligence. He doesn’t believe in letting others do your thinking for you. Rogers emphasizes on not believing what you hear or read, no matter how many people believe it or how strongly they advocate it. He gives examples of business decisions he came across where he let others make decisions for him leading to failure. When he started thinking and deciding for himself, then he became successful. Rogers talks of his first business he started at the age of six where he collected empty bottles at baseball games to make a little cash because he was passionate about making money. He believes age is irrelevant when you are passionate about a goal. Rogers believes in dedicating yourself to what you feel passionate about. He goes on to tell about different jobs he worked as a teenager such as a convenient store owned by his Uncle. He always kept himself busy even when there weren’t customers in the store. Rogers felt there is always something you can be doing even if it’s dusting shelves.Rogers begins this book with a letter to his daughters. He informs them of who he is and what he does. The introduction letter tells of his life growing up, what he wanted most out of life, and how he accomplished his goals. Rogers states in the last sentence of his introduction that he wants to share with his daughters the things that are important for them to know so that they can too have happy and successful lives.

Traveling and seeing the world is a very important aspect of life to Rogers. He tells of how he has been around the world twice in 1990 and 1999. Rogers says you will discover more about yourself as you encounter and experience the world’s diversity. By doing this you will develop interests that you never entertained before and recognize your strengths and weaknesses. Rogers speaks highly of Mandarin language and China. He says China is gaining economic, political, and cultural strength, and will become an even more significant player internationally. He advises to pay attention to the major changes taking place in the world now. Everything changes so recognize and embrace it. Rogers tells us to keep an eye on the future and do not place a bet on that which is dying out. He says do not cling to anything that will eventually cease to exist because once something is gone, it is gone forever.

Rogers tells us not to stop when you are working toward your dream. He speaks of his advice but wants his daughters to know that he wants them to make their own decisions to accomplish dreams of their passion. He ends his books with telling his children to pass his advice on to children of their own someday.

The Ten Things Managers Need to Know from A Gift to My Children


1. Swim your own races; do not let others do your thinking for you. Rely on your own intelligence. In life there are times when you must make very important decisions and people will be ready to offer you advice if you as for it or not. You must always remember that the life you lead is yours and nobody else’s so decide for yourself what’s important to you and what you want before you turn to others.

2. Focus on what you like and dedicate yourself to what you feel passionate about. Try as many things as you can, then pursue the ones you enjoy most. The quickest way to success is to do what you like and give it your best. The least-happy people are those stuck in jobs they don’t love.

3. Live your life with a dream. When you begin something you may not always have a concrete picture or vision of the future but if you continue to be passionate and work hard at what you truly love to do, then you will eventually find that dream.

4. Most perceived wisdom is a misconception. Never blindly to accept what you hear or read, no matter how many people believe it or how strongly they advocate it. Always consider alternative interpretations.

5. Let the world be a part of your perspective. Learn philosophy, history, different languages, and learn to think. Don’t rely on books; go and see the world and be open to people who are different, whether home or abroad. You need a macroscopic view of the world.



6. It is the century of China. Make sure you learn Mandarin because it will be the next global language. People who can speak or read other languages have a great advantage over those who don’t. Pay attention to the major changes taking place in the world now. China is gaining economic, political, and cultural strength, and will become an even more significant player internationally. You must be aware of such developments, not only as an investor but as a world citizen.

7. Know thyself by understanding your weaknesses and acknowledging your mistakes. Look at yourself in the mirror and ask what drives you. Observe how you react to mistakes, so that you can respond more constructively the next time things go wrong.

8. Recognize change and embrace it because everything changes. Regardless of your perspective, refusing to accept the change is like swimming against the current of a thundering river. Try to resist the force, and you will not last very long.

9. Look to the future! People who can observe events as they unfold will certainly acquire wealth. If you are looking for success, be quick to start something new, something that no one else has tried. The more certain something is, the less likely it is to be profitable.

10. Lady luck smiles on those who continue their efforts. Once you take that first step toward your dream, put your full effort into it. If you want to succeed, you must never neglect it. Do not stop when you are working toward your dream.

Full Summary of A Gift to My Children

1.  Swim Your Own Races: Do Not Let Others Do Your Thinking For You

    1.   Rely on your own intelligence.

• There are going to be moments in life when you must make very important decisions. You will find many people ready to offer you advice if you ask for it (and even if you don’t), but always remember that the life you lead is yours and nobody else’s.

    2.   If anybody laughs at your ideas, view it as a sign of potential success!

• If people around you try to discourage you from taking a certain course of action, or ridicule your ideas, take that as a positive sign.

    3.   Be who you are; be original and bold but above all be ethical.

• Pursue your own desires and aspirations with courage and devotion. No one ever became a standout success by imitating others.

    4.  You will meet people who will urge you to spend your money but you need to save it.

• You must avoid the trap of spending money willy-nilly simply because you can. Not only is this a road to financial ruin, it can cause you to forget what’s important in life.

2.  Focus on What You Like

    1.   Age is irrelevant when you are passionate about a goal.

• When you find something that interests you, do not let your age hold you back. Be bold and just do it.

    2.   Dedicate yourself to what you feel passionate about.

• Try as many things as you can, then pursue the one (or two, or three) about which you’re passionate.

3.  Good Habits for Life and Investing

    1.   You need to be a self-starter.

    2.   Pay attention to details because it’s what separates success from failure.

• If you love and care about what you do, you will naturally want to do it the best you can. In investing, as in life, the small details often spell the difference between success and failure. So you must be attentive!

    3.   Always live your life with a dream.

• When you begin something, you may not always have a concrete picture or vision of the future. But if you continue to be passionate and work hard at what you truly love to do, then you will eventually find that dream.

4.   Common Sense? Not So Common

    1.   The most perceived wisdom is a misconception.

• As you travel the journey called life, you will come across conventional wisdom – accepted “truths” about how to behave, or what to study, or eat, or how to invest. You must remember never blindly to accept what you hear or read, no matter how many people believe it or how strongly they advocate it. Always consider alternative interpretations.

    2.   The media often propagates conventional wisdom.

• You should read the newspaper every day, but approach it –and all the media, for that matter – with a healthy sense of skepticism.

5.   Your Education, Part I: Let the World Be a Part of Your Perspective

    1.   Do not rely on books; go and see the world!

• Travel and see the world extensively. You will broaden your perspective many times over. If you really want to know yourself and your country, go see the world.

    2.   You need to understand the significance of BRICS.

• Nowadays you can hardly pick up a business publication without seeing a reference to “BRICs,” a popular acronym in the world of investing. BRICs refers to a thesis currently popular with investors and politicians that Brazil, Russia, India, and China are destined to be the world’s leading economies by the year 2050, and therefore are rife with investment opportunities.

    3.   Be open to people who are different, whether at home or abroad.

    4.   Keep an open mind and be a world citizen!

• Keeping an open mind includes never closing yourself to the possibility that people are different from what you first imagined.

6.   Your Education, Part II: Learn Philosophy; Lear to “Think”

    1.   Philosophy will teach you how to think for yourself.

• You must learn to think at a profound level if you want to understand yourself and what’s important to you. You must know yourself if you want to accomplish anything in life. Studying philosophy can help do just this.

    2.   Do current writings on philosophy help us learn to think?

• To engage in philosophical thinking and to read books on philosophy are not the same thins. Reading helps develop our ability to think, but more effort is required to really sharpen the faculty.

    3.   The two ways of thinking.

• There are two methods of examination that are particularly useful in all walks of life, including investing. One is to draw conclusions from your observations, and the other is to proceed solely on the basis of logic.

    4.   Don’t neglect the bear.

• Most look for the bull and neglect the bear.

7.   Your Education, Part III: Learn History!

    1.   You need a macroscopic view of the world.

• An interest in history, politics, and economics will help you see how occurrences in one country affect other nations as well, economically and in other ways.

    2.   Which history books tell us the truth?

• History is multifaceted. There are historical studies in economics and politics; there is history as examined and understood from the viewpoint of the United States, from a European perspective, and from the outlook of various Asian, African, and South American nations. You will learn that most history is written by victors so has a clear view. You really cannot say whose history is the more important.

    3.   Connect your knowledge of history with your travel.

• Study the history of your destinations before you take overseas trips. Without the historical context, you will not be able to fully understand much of what you observe.

    4.   History will show you which forces drive markets.

• By cross-referencing historical events with long-term trends in the market, you will identify those developments that affect stock and commodity prices.

    5.   Nothing is really new.

• History repeats itself in one way or another – or at least rhymes.

8.   Your Education, Part IV: Learn Languages (and Make Sure That Mandarin Is One of Them!)

    1.   Mandarin will be the next global language.

• People who can speak or read other languages have a great advantage over those who don’t.

9.   It Is the Century of China

    1.   Pay attention to the major changes taking place in the world now.

    2.   If you buy Chinese stocks, then you are buying the future of this country!

• The Chinese economy will continue to grow.

   3.    A hard landing cannot be avoided!

   4.    China equals commodities.

• The rise of China brings with it a rise in demand for commodities. China consumes steel, iron ore, and soy; it is the largest consumer of copper in the world and the second leading consumer of energy, including oil.

10.   Know Thyself by Understanding Your Weaknesses and Acknowledging Your Mistakes

    1.   Always know who you are.

• Of course you need to be aware of the circumstances that surround you, you need to be knowledgeable about the world, you need to know history. But even more important, you need to know yourself. Look at yourself in the mirror and ask what drives you. If you can understand these things up front, you are more likely to be able to keep your head in a crisis. Also observe how you react to mistakes, so that you can respond more constructively the next time things go wrong.

    2.   People are easily carried away by mob psychology.

• Even those who call themselves professionals are at times persuaded by the mob.

    3.   Do not panic; learn the psychology.

• To be a successful investor, you really need to understand psychology as well as history and philosophy.

    4.   Selling Hysteria

• For the most part, it is the short-term trades that prices are driven by emotion. Mid-term and long-term investments are usually influenced more by the fundamentals.

11.   Recognize Change and Embrace It

    1.   Everything changes, everything.

• To understand what is likely to happen in the future, you have to be able to understand current events and the changes presently under way in the world. All social environments transform over time.

    2.   No one has defied the principle of supply and demand and survived.

    3.   Change can be a catalyst.

    4.   Dealing with change.

• Those who cannot adjust to change will be swept aside by it. Those who recognize change and react accordingly will benefit.

12.   Look to the Future!

    1.   Everyone would be a millionaire if he could read a newspaper from the future.

    2.   Many countries will come apart.

• A hundred years from now, there will probably be anywhere between three hundred and four hundred sovereign nations on this earth, almost twice as many as there are now. Not one country in existence today has had the same borders and government for as long as two hundred years. The world will continue changing.

    3.   Do not place your bet on that which is dying out.

• Keep your eye on the future. Do not cling to anything that will eventually cease to exist. No matter how much time or energy or money you invest in it, once something is gone, it is gone forever.

    4.   The women’s era is approaching!

• They’ll be able to demand more freedom. Professions, education, politics, everything will change.

    5.   Pay attention to what everybody else neglects.

• If you are looking for success, be quick to start something new, something that no one else has tried.

    6.   The more certain something is, the less likely it is to be profitable.

• Nothing in this world is absolutely certain. When many people are absolutely sure of something, you should be suspicious.

    7.   Do not think in terms of what you wish.

• Never act upon wishful thinking. Act without checking the facts, and chances are that you will be swept way along with the mob. Whenever you see people acting in the same way, it is time to investigate supply and demand objectively.

    8.   Know when not to do anything.

• Anytime that you think you’ve become a financial genius –when, in fact, you simply have had the good luck to turn a profit – it is time to sit back and do nothing for a while.

13.   Lady Luck Smiles on Those Who Continue in Their Efforts

     1.   Do your homework, or you will end up with a glass bead.

• Once you take that first step toward your dream, put your full effort into it. Do your homework. If you want to succeed, you must never neglect it.

    2.   The arrogant are blind to the truth.

• If you let vanity and self-importance take over, you will lose all that you have achieved. And fast.

    3.   Do not stop when you are working toward your dream.

http://bookstove.com/book-talk/a-summary-and-review-of-a-gift-to-my-children-by-jim-rogers-for-thinking-executives-and-those-who-want-to-be-one/ 

The European Debt crisis

A shared currency
More than half of the member states that make up the European Union use the euro as their single currency. Collectively known as the euro zone, these countries account for 19 percent of the world's gross domestic product and 14 percent of U.S. exports.

A shared crisis
The European crisis began in late 2009 over concerns about Greece's fiscal stability. Fears of instability quickly spread to Ireland, Italy, Portugal and Spain

Structural issues
The euro zone has a central bank and a common currency, but it leaves fiscal policy up to the individual countries. Weak enforcement of fiscal discipline facilitated rising debts. But, locked into the euro, members couldn't make the kinds of changes they would if they had their own monetary policy, like raising inflation or devaluing their currency.

 

A new treaty
The European Union summit in Brussels ended with a pledge among 26 of the E.U.’s 27 nations to work toward a new treaty that would impose tougher controls over government budgets. The treaty is supposed to be drafted by March, but it’s unclear how long it will take to ratify.

What the treaty will include:

• Stronger policy coordination and governance. A procedure will be established to ensure that member states coordinate major economic policy changes.

• Fresh powers to E.U. institutions to slap automatic penalties on governments that recklessly spend or borrow.

• Strict targets on a country’s total debt and annual budget deficits. The treaty will probably give countries several years to reach the limits.

Tough road ahead
Of the 17 countries in the euro zone, all but five are above the proposed cap on total national debt as a percentage of gross domestic product, and all but three are above the proposed cap on deficits.












The state of the euro zone
The debt crisis in the 17-country currency union continues to escalate as financial woes spread from small nations like Greece, Portugal and Ireland to Italy and Spain, the zone's third- and fourth-largest economies.

Size of economy
GDP in U.S. dollars, 2011 forecast



Government debt
Percentage of GDP, as of Q2 2011




Struggling the most

Italy has been deeply indebted for years, and recent fighting over the budget has rapidly increased borrowing costs as investors lose confidence in the country’s financial stability.

Borrowing costs have also surged in Spain,and while the country’s debt burden isn’t as pronounced as Italy’s, Spain runs a higher budget deficit.

Greece, Portugal and Ireland have received bailout funds from the IMF and the EU after agreeing to a series of austerity measures.


The rising cost of borrowing
10-year bond yield spreads over benchmark German bonds*





Source: European Commission. | Graphic: The Washington Post. | *Because Ireland no longer issues 10-year bonds, the chart reflects the difference between Ireland's nine-year bonds and comparable German government securities. | Published July 12, 2011. Updated Jan. 18, 2010.



Missed opportunities in the European economic crisis

The financial crisis among the 17 nations that use the euro has been characterized by a series of missteps and missed opportunities on the part of the region’s political leaders, whose preference for cautious incrementalism has allowed a seemingly limited set of problems in Greece to threaten the entire currency union. They are scheduled to meet later this week for the latest Brussels summit, and they promise that the outcome this time will be different — a convincing set of proposed treaty changes and other measures that will fix the euro’s underlying problems and stabilize financial markets. We’ve been here before . . .







SOURCE: Eurostat; European Commission; Congressional Research Service
GRAPHIC: Laura Stanton and Karen Yourish - The Washington Post. Published Dec. 6, 2011.

http://www.washingtonpost.com/wp-srv/special/world/euro-zone-treaty/ 

Air Asia and Tony Fernandes: From public champion to money-grabbing witch?

Written by  Kenny Gan, Malaysia Chronicle

AirAsia is one of Malaysia’s great success stories. From basically nothing except a few old planes serving a few domestic routes CEO Tony Fernandes has built it into the biggest budget airline in Asia with routes spanning most of Asia and reaching into Australia, NZ and Europe. He has done it without any help from the government unlike pampered bumiputra businessmen.

However AirAsia’s success story has begun to falter amid charges of poor service, inflexibility, hidden charges, deceptive pricing and anti-consumer practices designed to squeeze the maximum from passengers. Whenever there is a news item on AirAsia in malaysiakini, Malaysian Insider and other online sites readers’ comments are almost wholly negative towards the airline. It is unusual for a budget airline which purports to provide affordable flying for passengers to end up on the wrong side of public opinion but AirAsia has certainly succeeded.

When did AirAsia descend from a public champion to a money grabbing witch? To be sure this did not happen suddenly but has been ongoing for years. The negative public perception against AirAsia has reached an alarming level and cannot help but affect the airline’s business. The suit by the Australian consumer watchdog ACCC did not help.

Copying Outdated Practices

AirAsia copies a lot from Western budget airlines like Virgin Airways but some of what it copies are outdated or culturally unsuitable for local customers. It may seem clever to refuse to check in a passenger who arrives 1 minute later than the counter closing time so that he has to buy another ticket but Malaysians find this very infuriating especially when other airlines have been very flexible. MAS will allow you to check in as long as you can make it to the boarding room before the plane flies.

Other practices which do not go down well with passengers are credit card charges, counter check-in charge and seat selection charge. The first two may be considered hidden charges as they are non-optional and should be added to the fare in the first place. Those who do not pay to select seats (currently at RM35 per passenger from KL) are randomly distributed so families will be split up. This is especially annoying as passengers are not charged for any real goods or services but for the right to sit together which should be theirs in the first place. It’s like taking something away which should be yours and demanding a fee to give it back.

But probably the most aggravating is AirAsia’s RM1.95 a minute charge to talk to a service staff. It may be for something which is not their fault like flight delays, claim of refund, lost luggage or being overcharged on their credit cards but having to pay by the minute to complain is really annoying. To add insult to injury they are frequently made to wait on hold while the charge keeps ticking.

Is AirAsia Really Cheap?

AirAsia practices a sliding scale of pricing depending on when you book. Early birds get cheap prices which are probably below AirAsia’s cost while late comers will be charged more. Then there are the gimmicky promotion giveaway seats which have to be subsidized from somewhere and it’s not from Tony’s pockets. The upshot is that AirAsia is not always the cheapest and can be more expensive than regular airlines. As nobody will pay more than a regular airline for a budget airline AirAsia tries to hide its real pricing and make it difficult for customers to compare.

This pricing model of gouging Peter to subsidize Paul does not work anymore. Consumers are getting savvier with tight social networking and no longer assume that AirAsia is always the cheapest. They will buy when AirAsia’s prices are cheap and stay away when prices increase. There are still some ignorant ones who do not compare prices but depending on consumer ignorance is never a good business model. This is like BN depending on the rural Malays to be forever supportive through poor information.

During last year’s peak Christmas to New Year period AirAsia was flying between KL and Melbourne with empty seats while all regular airlines were sold out. This is extremely unusual for a budget airline which should logically be the first to be sold out. Passengers have wised up to AirAsia’s pricing tricks.

Customers should also compare beyond the basic fare. Things like food, entertainment, comfort kit and baggage have to be priced in as well as other extraneous charges. Passengers also fly from the LCCT which is a pathetic excuse for an airport and they have to walk a long way to the plane as AirAsia will not pay for aerobridges. This makes AirAsia unsuitable for senior citizens. Then again AirAsia usually flies to remote airports which may cost more to get to the city.

There are also hidden costs. AirAsia is really only cheap if you book far ahead and pay upfront. It accepts bookings as far as one year ahead. This means your money is tied down and any change in schedule can be very painful as AirAsia will levy a heavy charge out of proportion to the ticket just to change a date. Some consumers will find that paying a little more for flexibility is not a waste of money.

Delays and Cancellations

Those who fly AirAsia know that delays and cancelled flights are far more common than other airlines. AirAsia has the dubious practice of combining flights if passenger loads are low without regards to disrupting their passengers’ schedules. The fine print on their tickets claims they have the right to do this. Only a country with weak consumer laws like Malaysia allows them to get away with it.

Those whose flights have been cancelled and are entitled to a refund find dealing with AirAsia an exercise in patience and perseverance. Contacting AirAsia staff is an arduous task in itself. Some customers say they are asked to wait 30 to 60 days to process their refunds and when the time is up AirAsia can come up with another excuse to reset the waiting time.

Long upfront payment, inflexibly, inconvenience, risk of delay and poor service means that customers will demand a big price gap from regular airlines to fly AirAsia. This means that eventually AirAsia will only be able to sell if their prices are very cheap and below cost. Passengers will look elsewhere when prices approach regular airlines.

A case in point is AirAsia’s cancellation of routes to London, Paris, New Delhi and Mumbai. These are popular routes to densely populated cities which any budget airline should be able to work successfully. AirAsia’s stated reasons like visa requirements and additional taxes do not make sense as they apply to all airlines and can be added to the fare. The real reason as reported in The Star is that AirAsia is losing millions on these routes every month. So why can’t AirAsia raise its prices? The reason it can’t is because passengers will flee to other airlines. They are demanding a price gap to fly AirAsia which the airline cannot provide and still remain profitable.

The Writing is on the Wall for AirAsia

AirAsia may have started on good terms with the public but the honeymoon period is over. Its service has fallen to abysmal level and it is treating its own customers with contempt. AirAsia is behaving as if it is operating a monopoly when no such monopoly exists.

Passengers have a choice of other airlines including budget ones like Jetstar which has been complimented for its transparent fixed pricing. Air Emirates is encroaching in on AirAsia’s lucrative KL-Melbourne route with very competitive prices.  Hoping that its new KL-Sydney route will be as lucrative may not happen as SIA will soon launch a new budget airline called Scoot which will start with the Singapore-Sydney route.

AirAsia has obviously not come to terms with the power of social media. In the old days an enraged customer can do limited damage as he can only influence his immediate family and close friends. These days they can vent their rage in online forums, facebook and twitter and influence hundreds if not thousands.

Horror stories about AirAsia abounds online. Some say they find AirAsia staff so difficult to contact that they are forced to buy another ticket when they just want to change a departure date. One angry customer said he has been waiting 2 years for a refund with serial excuses from AirAsia. One passenger was especially unfortunate. He reached the airport to find the check-in counter closed and the staff agreed with him that it was closed earlier than the stipulated time. She made a phone call but was not allowed to re-open the counter. As a result the passenger missed his flight and his connecting flight and to top it off Air Asia refused him a refund.

There seems to be a culture of unsavoury practices to try to squeeze all they can from passengers even to the extent of forcing them to buy another ticket. Such corporate greed will drive customers away. My sister was asked to pay RM1000 to change the date of departure for a KL-Melbourne flight. She has declared that she will fly Air Emirates from now on.

Tony Fernandez should put his mega plane buying on hold and work like hell to improve AirAsia’s customer service and public perception. He should step out of his dream world that every year will be the best ever year for AirAsia. The writing is already on the wall and if AirAsia crashes it will be a pity as it can be said to be the only Malaysian global brand.