Buying a HD-TV? Here's what to look for

Electronics are normally the hottest category during the holiday gift giving season. As with last year, High-Definition TV's will be a big ticket item that a number of people will buy. Here are 6 things to consider before buying that big screen TV during the holiday season:

1. Plasma or LCD? HD sets come in a confusing variety of technologies -- plasma, LCD, DLP, LCOS and SXRD (Sony's version of LCOS). What the letters mean is unimportant. These technologies all show a high-quality picture. They just deliver it in different ways.  Yet there are important differences. Plasma is generally seen as best for movies, LCDs for daytime viewing and sports. DLP and LCOS sets might provide the best value and overall picture. Each has its own strengths and weaknesses. However for home usage, LCD or Plasma shouldn't make a difference if buying a reputable brand that provides a good warranty.

2. Think big. "High-def" looks best on a large TV. Buy the biggest set you can afford, but make sure it fits the space. A 37-inch screen may work best in a bedroom, but a 60-inch screen is ideal in a large entertainment center. "The most important thing is deciding what TV is right for the room it will be in," said Phillip Swann, who runs HD Predictions, a consumer Web site dedicated to industry news.

3. Avoid a numbers game. The latest HDTVs tout a "1080p" signal and carry a higher price, but the advantage is small. Older models with a "resolution" of 1080i, 720p or 768p (LCD and plasma) also deliver a great picture. Unless you like to sit close to a big TV, sets based on lower resolutions are perfectly fine and less expensive while supplies last.

4. Thin is beautiful. But don't limit yourself to a pricey flat-panel plasma or LCD. Sets based on DLP, LCOS and SXRD technology are cheaper and can deliver a superior picture. Most are less than 15 inches deep or half the thickness of big tube TVs popular a decade ago.

5. Count the total cost. While sets based on DLP and LCOS technology are cheaper, they may cost more to own in the long run. Why? These sets use bulbs (average cost: $A500) that need to be replaced after roughly 3,000 to 5,000 hours of viewing. To fix that problem, Samsung has introduced a line of DLP sets based on so-called LED technology that do not require extra bulbs. LCDs and plasmas generally last at least 20,000 to 30,000 hours.

6. Listen up. You've bought an expensive TV, but save some cash for a decent sound system. Home theaters are not the by-product of tinny speakers that rattle at higher volumes. A nice high-def picture deserves great sound to go along with it. The good news is some surprisingly good audio systems -- at least five speakers and a subwoofer -- can be had for as little as $500. Also, with HDTV's, make sure you use the HDMI cable to optimize the picture and sound quality.

Stock Focus - AMP and MAP - Good Buys for the longer Term.

AMP has not been in the news much lately, despite a change of CEO's. This means a very effective hand-over of leadership. The Australian had an article on the transition and some noteworthy points from the interview with the new CEO, Craig Dunn, were:

- He aims to give AMP a "stronger growth flavour" but says that any change will be "evolutionary, rather than revolutionary". Though he also stated, " "We do see opportunities to grow the company and to drive the AMP business harder."

- In the wake of the Labor Party's election victory he said there were "some things at the margin where (we) could have some more change". Withholding tax, which prime minister-elect Kevin Rudd had plans to reduce, was one area he believed could be in for change. Mr Dunn said withholding tax and some of the ways the industry was taxed created barriers for developing the financial services industry overseas.

- On the US sub-prime crunch, Mr Dunn believed there would be further volatility in the market over the next 12 months. However AMP should have no direct impact apart from their investment holdings.

- Mr Dunn emphasized that there was no shortage of opportunities for AMP but said its continued success would depend on management making the "right strategic choices, in terms of where we invest for growth".

- Within AMP Financial Services, he said there were many opportunities to expand the business, adding that there was substantial scope to improve planner productivity and numbers. He said the main opportunities with AMP Capital would be in the creation of "higher value end products", particularly in the property and infrastructure sectors.

- Expansion into Asia would remain an "ongoing priority " for its asset management business.

- AMP expected the pension market to grow at double the rate of the broad superannuation market.

Nothing drastic from his comments. It is comforting to have a company with a steady as she goes approach in volatile market periods. I think balanced stocks (which have characteristics of growth and defensive stocks) are going to provide the best returns in times like this. AMP will be a beneficiary from our aging populations financial needs. It has a premier brand when it comes to wealth management and has direct positive exposure to the rapid growth in Superannuation investments. You should look to buy when the stock goes under $10.

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Another good stock to look into for the longer term is Macquarie Airports (MAP). It reported strong October traffic data and should benefit in the longer term from the growth in air travel around the world. Recent share price weakness has provided some good buying opportunities. The potential for capital management initiatives (eg stock buy-back and increasing dividends) should also provide some upside.  My target for the stock is $4.30 by year end, moving to $5.00 by mid next year. It also has an excellent 6% dividend yield. Brokers also rate the stock a buy.


With both stocks, there is no rush to get it. So do your research before you make any decisions.

Disclosure : Through direct and managed fund holdings I have an interest in both stocks.

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Best Places to live other than Iceland and Norway!

According to the annual United Nations report Australia is the third most desirable country to live in. This is based on a various factors such as wealth, life expectancy and educational levels.

Australia came in behind top-ranking Iceland and Norway in second spot.  Seriously is that our competition - Iceland or Norway? I can't imagine people saying, wouldn't it be great to live in Iceland? These surveys produce some strange results and seem to be skewed towards the smaller European countries.

To me, I think as an overall package and given the current world economy Australia is the best place to be. You can choose to have a hectic lifestyle or as easily a more laid back one! Jobs are plentiful and why live a long life if you can't enjoy it. 360 days of sunshine a year in Australia as compared to 100 or so in Iceland! Enough said.

If I was to pick 2 alternatives based on lifestyle, economy and future prospects - I would say New Zealand or Spain would be my next 2 choices. What do you think?

Rudd - Where to now?

As I am sure everyone is aware by now, Kevin Rudd is the new Prime Minister of Australia. The Labor party also swept to majority power. Interestingly, Kevin Rudd is only the second prime minister elected from Queensland and it is only the third time Labor has won government from opposition since World War II.

It was also kind of sad to see John Howard and Peter Costello go out in the manner they did. John Howard lost his electoral seat after 34 years holding it and Peter Costello (the loyal deputy for 11 years) decided not to contest the Liberal party leadership as recriminations began within the Liberals over the defeat. The turmoil within the party has a long way to go.

So what are the implications on the market with the change in leadership? Well, not much I think. The markets were already factoring in a Labor win and realistically both parties have similar policies, with a few exceptions, on the economic management of the country. Also, one of the big pain points during campaigning for the Liberals was the rising interest rates. However, Labor is unlikely to change the RBA views and has little control on external factors driving growth and inflation in our country. They were just the beneficiaries of the frustrated homeowners who wanted change.

Per my previous post on this topic, some changes which we will see in the short term include:

- Increasing ties with China and the rest of Asia. Kevin Rudd, is a former diplomat who speaks fluent Mandarin Chinese and has long made a priority of increasing Australian links to Asia. This should help our miners and exporters to that region. It will probably also result in significantly more access and investment to/from China.

- Signing of the Kyoto Protocol. Kevin Rudd has immediately begun preparations to ratify the Kyoto Protocol and attend next month's climate change talks in Bali. This should help clean energy stocks like BBW (Babock and Brown Wind Partners). See my post of this stock here,

- Plans for a gradual pull-out of troops from Iraq. This will potentially strain our relationship with America, but overall Rudd has stated that he is committed to the alliance. We are more likely to be affected by the US economic fallout than any political tensions.

- Given his background and power base in Queensland, I think there will be greater focus on helping our agricultural and primary producers. This will help stocks like AWB, CRG.

- There will a review of the IR laws, but I think only cosmetic changes will be made and it will be a while before there are any major changes. However our big banks and manufacturers who have benefited the most from the changes will be watching this closely.

One thing the Howard/Costello team had was a reputation for the sound economic management of this country. That reputation for now, at least from a global perspective, has indirectly been passed on to Rudd and the Labor party. However if they mismanage the economy (through infighting or to please certain factions) and lose credibility on a worldwide basis - this could spell big trouble for Australia and our future.

I think America is going to be entering into a mild to moderate recession in the next year or so. This will undoubtedly affect Australia and this will be the real test of Kevin Rudd and the labor party to see how well they can govern our country's economic future.

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A great little online dictionary – Definr.com

What do you normally do when you are reading something and find a word that you want a definition for? In the good ol' days you would go to a dictionary, but with the advent of the Internet the answer is only a few clicks away. Normally I go to Google or dictionary.com and type in the word to get the definition. However this has not always provided me with a clear and straighforward result. Either I get a poor definition or with Google I end up getting a screen fill of Ads and Sponsored links related to that word. Very frustrating and I have had to turn to my trusty hardcover oxford dictionary on many an occasion.

Well, I found a great online dictionary which solves the above problems. It is completely free and very easy to use. Further it gives you the definition of the word in a simple and straightforward format without all the screen junk. If you misspell the word, it suggests potential alternatives. It is called Definr. A Screen shot of it is shown here and it can be accessed at: http://definr.com/. I hope you find it as useful as I have.

Good luck and hope it helps when you need to find what that word means. Bookmark the page in your favorites along with this blog!

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Be Careful when it comes to Past Performance Figures

At least once a week I get emails, and sometimes phone calls, that recommend a "Hot" stock (normally a small obscure one) and that it will go up 50% in one week. Or the email says to subscribe to a newsletter which will give me the guaranteed stocks tips that are backed up plenty of positive performance statistics.

Even the veritable managed fund industry partakes in these little "deceptions". Here's an interesting theory I read about called "survivorship bias", that would be illegal in most cases - but allowed in the financial sector. Here's how it works and how consumers are targeted.

Advisers/Brokers call 800 people. Tell half the stock market will rise tomorrow. Tell the other half it will fall. Come tomorrow, you'll have given a great forecast to 400 people. Repeat the process for three more days. You'll have been right four times in a row with 50 people. Call these impressed folks and offer tomorrow's forecast — for a fee.

The managed fund industry was all but founded on it. Firms create ("incubate") far more funds than they need and fill each with different investments. Some win, some lose. Guess which ones go on to get marketed and which get quietly closed? Decades of research have shown that the average managed stock fund falls miserably short of the broad market's returns. Yet survivorship bias ensures a constant supply of magazine ads with splashy performance figures. Dead funds tell no tales.

So they next time you see statistics on past performance or the a stock adviser/broker that preaches a great track record, be a little bit sceptical and question how they got those past statistics.

Be safe and have a nice weekend!

Great Online Travel Booking Sites

One thing I like to do is Travel. Apart from finding time to take holidays, getting a good deal is important. The more you save when booking your holiday, the more you will have to spend when are at your holiday destination! Nowadays with the advent of online travel sites getting a really good and cheap deal is easier than ever. From my experience and in discussion with others I know, the Top 3 (and most reputable) online travel booking sites for travelling to/from and within Australia are:

1. Zuji.com.au
Zuji normally has the best priced flights in the Asia-Pacific region because of its partnerships. I would say this is the best place to start from when looking for international travel deals.


2. Expedia.com.au
Expedia is relatively new to the online Australian travel scene here and I have seen some great deals. They are a US based company so have leveraged their online platform developed in the very competitive US markets. They some great user features (flexible dates etc) and you should check them out. I found that they have really good deals for flights to the USA and Europe.

3. Flight Centre - flightcentre.com.au

Flight Centre is the largest Australian based travel agency. However its online site now is the most profitable part of the business and often has the better prices when compared to its retail stores. I would say they normally have the best domestic travel deals and packages. Their price guarantee is good as well.

You can get great flight, hotel, car and package deals from all these sites. I have used all of them and found then quite good. It is worth checking them all to get the best price as each one has different pricing arrangements at various times of the year.

There are others out there like travel.com.au etc, but I found the above 3 have great customer service/support lines and most importantly the best prices.

Drop in a comment if you know of any other good online travel sites...

Happy travelling during the holidays

Why Freddie Mac going down by 30% is a bad sign for the Australian Market

Freddie Mac buys, guarantees and securitizes American mortgages, and spiking default rates have taken a toll on it this year. Freddie Mac said Tuesday that the fair value of its net assets fell $8.1 billion during the third quarter. Shares of Freddie Mac plummeted 28.7% Tuesday after the federally backed mortgage company announced steep losses and a dramatic drop in the value of its holdings.

So why should you care about this American based company that deals primarily in American mortgage securities? Well apart from the strange name, it and its duopoly competitor - Fannie Mae - provide funding and support about 50% of the US mortgage market. When they are not doing well, it means the US housing market is not doing well. This will eventually affect discretionary consumer spending (consumers will spend less due to the real and perceived falling value of their homes) and hence the US economy will slow as over 60% of the US economy is driven by consumer spending. The lower growth outlook was also confirmed by the US Federal Reserve today.

With the US economy and consumer spending slowing coupled with a falling US dollar, the level of imports will fall, adversely affecting the growth in economies of China and India for whom the US is the largest importer. This will then result in a slow-down of Australian growth as US and China (along with Japan) are our biggest trading partners. Slowing growth = lower company earnings and hence lower stock prices!

Another comparison that can be made is that what is happening in the USA is similar to '90/91 when Australia was in a recession due to poor banking lending standards - the main difference is that the poor lending standards were exposed by the high interest rates and resultant defaults. This time for the US, it is due to the sub-prime mess and lack of credit. The Australian finance sector was severely impacted by the '90/91 economic crisis (Westpac almost went bankrupt) and a similar scene is now emerging in the US. I don't think the US housing woes will end until at least 1 major US financial institution goes close to bankrupt (Chapter 11). Once this happens, the Federal reserve and other agencies will become more active, do things like cut interest rates drastically, and probably revive the housing market. This will have other negative impacts (the US dollar will fall significant;y), but should in the longer term revive the US economy.

For now, it is best to adopt a wait and see approach. Their is no need to sell as stock markets, while volatile, are still holding up. However, if problems worsen early next year you should look to reduce your stock holdings until things start to improve.

Looking for the right Christmas gift? Well check reviews of Australia's top consumer products at Australian Product Review. You can also shop for your Personal or Work Christmas gifts online and get direct delivery at Australia's Leading Online Gift Store.

Aussie Banks – Which ones to Buy?

ABN Amro came up with their latest recommendation of Australian Banking Stocks. The table below summarizes their views. I already hold Babcock and Brown (BNB) and per my post on this stock, I bought the stock last month and still think it is a buy. There will continue to be volatility in the markets for the next few weeks so look to buy on weakness. In terms of the retail banks, the Big 4 are still performing well despite all the Sub-Prime mess from the US. They are still showing above average EPS growth and paying very healthy dividends.

Of the 4 retail banks, NAB is my top pick due its leading position and exposure in the business lending and wealth management (through MLC) areas. Also it has a proven management team, whereas some of the other banks have recently had a change in management. Westpac is also highly rated due to its strong revenue growth relative to other 3 banks. Simply put, all balanced portfolios should have some banking sector stocks in their portfolios and on any market weakness look to add NAB (40%), BNB (35%) and Westpac (25%).

Howard vs Rudd and Global implications for Australia

Saw an excellent article in the WSJ looking at the upcoming federal elections and how the background/views of the 2 main parties leaders - John Howard and Kevin Rudd - will shape Australia's future. I have commented on some excerpts from the article here, with a link to the full column below. This is a good read to broadly understand some of the macro-economic issues which could influence Australia's economic future and hence subsequent investment decisions going forward.

Polls suggest that Mr. Howard -- Australia's second-longest-serving premier -- and his conservative Liberal Party-led government are likely to lose power in a parliamentary election Nov. 24. If that happens, it would topple one of Mr. Bush's key supporters on global issues such as the U.S.-led fight against terrorism and on climate change.

 The election could also signal a broader policy shift in Australia, as the resource-rich nation forges closer ties with China. Australia supplies the coal, iron ore and other raw materials China needs to fuel its economic boom, and ties between the two countries would probably strengthen under a new Australian government. [Look for growth in the big mining companies as well as Uranium stocks]

Mr. Howard's opponent, 50-year-old Labor Party leader Kevin Rudd, is a former diplomat who speaks fluent Mandarin Chinese and has long made a priority of increasing Australian links to Asia. At a recent economic summit in Sydney, he upstaged Mr. Howard by chatting in Mandarin with visiting Chinese President Hu Jintao.

Mr. Rudd has also suggested he may push for greater independence from the U.S. in setting foreign policy. He intends to pull many of Australia's troops from Iraq, for example, and has advocated more aggressive action to curb emissions linked to global warming. [This means you should look to invest in environmentally friendly companies like BBW and reduce exposure to smaller commodity plays]
 
Some political analysts say it's too early to count out Mr. Howard, 68 years old, who has already served four terms as prime minister. Although he currently trails in polls by several percentage points, Mr. Howard has fought back from the brink before, including in Australia's last national election in 2004. He is known for his common touch, connecting with voters on his regular jogs and in other informal public appearances.

Mr. Howard could benefit from a widely held perception that his conservative Liberal Party deserves much of the credit for Australia's recent economic success. On his watch, Australia has emerged as one of the world's most dynamic economies, with unemployment at its lowest level in decades and growth expected to hit 4% this year. A mandatory retirement savings program has helped Australians accumulate wealth that they're now investing aggressively across the globe.

The country of 20 million people [gods-own country I believe] sits on vast reserves of natural gas, coal and other raw materials, increasing Australia's importance as many commodities are enjoying record prices.

Still, many Australians have grown tired of Mr. Howard, a polarizing figure who is closely identified with Mr. Bush and the U.S.-led war in Iraq. Several years ago, Mr. Howard was quoted referring to himself as Mr. Bush's "deputy sheriff" in Asia. Like the Bush administration, his government has refused to ratify the Kyoto Protocol, the 1997 international accord aimed at reducing greenhouse-gas emissions. Many younger Australians view Mr. Howard as hostile to environmental causes and committed to a harsh brand of free-market capitalism, highlighted by his government's moves in recent years to give employers more leverage over workers in setting wages and other benefits.

Mr. Rudd's career appears to symbolize Australia's shift toward closer relations with Asian nations. After growing up in a dairy-farming family in Queensland state, he took an early interest in Asian affairs and studied Chinese history in college. He later joined the country's diplomatic corps, and rose rapidly through the ranks, serving in the Australian embassy in Beijing in the 1980s. He also worked as a consultant and later emerged as a Labor Party star in part because of his foreign-policy experience.

About 14% of Australia's exports now are sold to China, compared with less than 3% in the early 1990s. Fewer than 6% of Australia's exports are shipped to the U.S., compared with about 11% in the early 1990s, despite a free-trade agreement reached with the U.S. in 2004.  [China will continue to be a big focus and will become an even more important trading partner for us than the USA]

Part of what makes Mr. Rudd a serious threat to Mr. Howard, analysts say, is that he has nudged his traditionally left-leaning Labor Party closer to the political center on a number of issues. He has suggested he will promote many of the free-market economic ideas put in place by Mr. Howard, and his party has promised to deliver large tax cuts -- much as Mr. Howard has done.

The Labor Party has also appeared to moderate its stance on some environmental issues, indicating it now supports efforts to require developing nations such as India and China to participate in global emissions-reductions targets -- a position that also mirrors Mr. Howard's views.

Australia's Liberals and Labor supporters "are almost the same party" these days, says Saul Eslake, an economist at ANZ Bank in Australia. But that may play to Mr. Rudd's advantage, economists say, by making voters more comfortable with the Labor Party.

In a speech yesterday officially starting his party's campaign, Mr. Rudd pledged to boost government investment in education and skills training, as well as Asian language studies "to equip the next generation of Australians with the languages of the major economies of the future."

He also repeated that he wants Australia to have its own voice in global affairs. "I want Australia to lead and not just follow," he said.

Mr. Howard has fought back by recalibrating some of his positions to appeal to voters who otherwise might lean toward Mr. Rudd. He has appeared to soften his stance on climate change by indicating he now believes Australia needs to take some steps to reduce emissions in case global warming becomes a big problem. He has also announced billions of dollars of government spending and tax benefits, including tax-free savings accounts for first-time home buyers and tax rebates for education and child care.

But some of those moves could backfire. Mr. Howard's reputation as an economic mastermind has already taken a beating in recent months amid signs that inflation is heading above the central bank's preferred target of about 3% -- a problem that could be exacerbated by both parties' aggressive spending plans.

In 2004, Mr. Howard told voters his party could be trusted to keep interest rates low -- a critical issue in Australia, where many homeowners hold mortgages with adjustable interest rates. Since then, the Reserve Bank of Australia has raised interest rates six times to combat inflation, including a quarter-point hike in early November. Australia's benchmark rate is 6.75%, 1.5% higher than in 2004.

The full article by Patrick Barta at can be found at -  http://online.wsj.com/article/SB119509313912493742.html?mod=todays_asia_economy_and_politics.

Cost Comparison – Top Australian MBA Programs versus US MBA Programs

I was reading the AFR Boss magazine a few weeks ago and came across a list of the top Australian Schools that offer MBA programs. As I have mentioned in the past I am currently working in the states and am also looking into the possibility of undertaking an MBA here in the states. However there is a significant difference in costs. Here are how the top 5 MBA Universities in the US and Australia compare:

Top 5 Australian Schools	Total 2 yr Tuition Cost	Top 5 US School	Approx Tuition Cost in $A (exchange rate of $0.92)
Australian Graduate School of Management	$52,800	Harvard	$110,000
Macquarie Graduate School of Management	$48,000	Stanford	$105,000
Melbourne Business School	$50,000	Wharton	$99,000
Monash University Graduate School of Business	$42,560	Sloan	$84,000
Curtin University of Technology Business School	$25,200	Berkley	$95,000

Source: For Australian Schools (AFR Boss Magazine); US Schools from Fortune and US News.

So why are US schools more expensive? Well the two main reasons are reputation/history and the other is the competitive landscape in the States. Most of the top US Schools have been around for than 100 years (with the MBA program being in existence for 20+ years). Their faculties and alumni are world class with worldwide recognition and leaders in their fields. Also, there is significantly more focus on MBAs in the states and hence greater demand for MBA programs. This supply/demand constraint drives up prices as well. There are various other reasons I am sure, but it will be interesting to see if the price differential is worth it in the long run.

The Magic of Compound Interest

Compounding interest is one of the fundamental concepts of investing and building wealth over the long term. Apart from the tax savings, it is also the key driver behind Superannuation and why all the experts tell you it is the best investment vehicle for most of us.

When you're young, you have an asset money can't buy: TIME. Start saving now and turn pocket change into riches. Compound interest has been called the eighth wonder of the world. And with good reason. It magically turns a little bit of money, invested wisely, into a whole lot of cash. Even Albert Einstein  is said to have called it one of the greatest mathematical concepts of our time.

But you don't need to be a genius to harness the power of compound interest. Even the most average of Joes can use it to make money. Trust me. This is so much easier than the theory of relativity.

Here's the gist: When you save or invest, your money earns interest, or appreciates. The next year, you earn interest on your original money and the interest from the first year. In the third year, you earn interest on your original money and the interest from the first two years. And so on. It's like a snowball -- roll it down a snowy hill and it'll build on itself to get bigger and bigger. Before you know it ... avalanche!

Harness the power

Here are three steps to help you make the power of compound interest work for you. And when I say "work FOR you," I mean it. Once you set up an account, you don't have to do much else. Just sit back and wait for the money to roll in.

1. Start young. When you're in your twenties and thirties, your best friend is TIME. Start rolling your snowball at the top of the hill and you'll have a much bigger mass at the bottom than someone who started halfway down.

Consider this: Amy, a 22-year-old university graduate, saves $300 per month into an account earning 10% per year for six years. (That's the average annual return of the stock market over time.) Then at age 28, she starts a family and decides to stay home with the children full time. By then, Amy had kicked in $21,600 of her own money. But even if she doesn't contribute another cent ever, her money would grow to a million bucks by the time she turned 65.

Compare that to Jason, who put off saving until he was 31. He's still young enough that becoming a millionaire is within reach, but it will be tougher. Jason would have to contribute the same $300 a month for the next 34 years to earn $1 million by age 65. Although Amy invested less money out-of-pocket -- $21,600 over six years vs. Jason's $126,000 over 34 years -- her money had more time to grow, or compound. (Find out what it'll take for you to make $1 million.)

Bottom line: Getting rich is easier and more painless the earlier you start.

2. Remember that a little goes a long way. Don't think you have enough money to start investing? You can get into a good managed  fund for as little as $50 a month.

Let's say a 20-year-old stashes $50 a month into a fund earning 10% annually. He'd have $528,000 by age 65. Not bad for practically starting with pocket change! A little bit can make a difference elsewhere in compounding, too. For example, if our 20-year-old earned 9% annually instead of 10%, he would amass only $373,000 in the same period of time. That seemingly small 1% difference in performance resulted in 29% less money over the long haul.

That's why, when you're young, you need to invest fairly aggressively. You should invest nearly all your money in stocks or stock mutual funds (as opposed to bonds and other conservative investments) in hopes of netting a bigger return. You'll certainly have ups and downs, but over the long-term, TIME (again, your best friend) will smooth them out for your benefit. Crunch your own numbers with our savings calculator.

3. Leave it alone. The prospect of making a lot of money without doing anything sounds good on paper. But, admittedly, in practice, it can be maddening. Every time you receive your account statement, you watch your balance s-l-o-w-l-y inch up -- or even drop. How on earth are you ever going to get rich at this pace?

Investing is a game of patience: Good things come to those who wait. You must be patient for compound interest to work its awesome power. Remember that as your money earns more interest, it'll earn even more interest. You certainly won't get rich overnight this way. But you will get rich if you start young, invest wisely and leave it alone.

I'll be looking at Australian managed funds in the next week or so. However, it is better to put your savings in a high interest account (like ING direct) earning 7% than to leave in a bank account. In fact on-line savings accounts are offering such good yields now that they are almost better investments than equities (stocks) in times of market volatility like we are having now.

Parts of this article were drawn from  www.kiplinger.com

Sell IAG and get into QBE – Signs of Poor Management

Firstly, I must disclose that I own IAG shares and am not a happy shareholder. Secondly, I don't think I will own them this time next week. Why you may ask? Well, apart from their underperformance over the last couple of years, management was woeful at their latest Annual General Meeting. They have downgraded future revenue forecasts, failed in execution of acquisition plans, blamed market/weather conditions and on top of that are giving senior management hefty raises. All bad signs and time to get of the company. By contrast, QBE has grown in value without management excuses. I would rather put my money there.

I think that Management performance/track record is an important factor when evaluating companies. Poor management is a strong sign that things are not going well and until there are changes, it is unlikely things will get better anytime soon.

Here are some excerpts from various media sources confirming my negative view on the stock.

From The Australian

INSURANCE Australia Group chairman James Strong was yesterday forced to defend his chief executive, Michael Hawker, after the company's disappointing performance in the 2006-07 financial year. "The board has very clearly indicated its continuing confidence in Michael Hawker," Mr Strong said after a tense three-hour annual meeting in Sydney yesterday. "We've had some hitches in some areas and had some cycles and events go against us but that does not mean that you suddenly somersault and abruptly change the chief executive."

The tone of the meeting was set when shareholders criticized the board's decision to put its resolution on the financial statement and reports last. But the main areas of contention between dissident shareholders and directors was the company's disappointing 2007 results, the slide in the share price and a resolution to increase non-executive directors' fees.

One shareholder said: "I bought shares at $5.50 in the January 2007 issue and I've lost 18.5 per cent of that in 10 months." He questioned how the directors could be seeking a pay rise - 81.5 per cent in two years - in a year of underperformance. "I hope the directors are proud of what they have done because I don't see anything to be pleased with," he said.

Mr Strong replied: "I think ... your comments are taken on the chin. We take your criticism because it has not been a good year." He said that management was doing everything possible to improve performance and shareholder value.

IAG received a protest vote of 12.73 per cent against its remuneration report and 9.06 per cent against the increase in non-executive fees. Mr Strong acknowledged the protest vote and said the jury was still out on whether the non-binding vote on the remuneration report was useful. "I think people are still making their mind up about it," he said.

Mr Hawker told shareholders "it's fair to say our financial performance during 2007 was disappointing" due to two severe weather storms in Australia and Britain and various market cycles. Later, he defended IAG's decision to put a ceiling on its commercial lines business, saying it was a "brave move" but "the right business decision to make".

From the SMH:

A BARRAGE of criticism from a small but vocal group of retail shareholders yesterday greeted the embattled board of Insurance Australia Group after its directors accepted that its latest profit result had disappointed investors. The chief executive, Michael Hawker, and chairman, James Strong, bore the brunt of the hostile comments as several speakers among the near 400-strong audience lambasted the company for its recent poor performance. A second successive fall in net annual profits, from $759 million to $552 million, led to IAG's shares suffering an equally sharp drop in value since August, albeit

BHP Billiton proposes takeover of Rio Tinto - this could be the start of mining company takeover mania

Rio Tinto rebuffed a $US110 billion approach last night from top global miner BHP Billiton, spurning the initial overtures on a deal that would be the second-largest takeover of a listed company in history. A deal between the two Australian based firms would create the world's largest mining company by a wide margin, with a market capitalization that some analysts are estimating could exceed $US350 billion. The combined giant would command the market with vast amounts of iron ore, aluminum, copper and other metals.

However, the takeover is highly unlikely according to a number of analysts due to regulatory and anti-trust issues this could create in various markets. However what this does signal is that even though metal prices are at record highs, BHP feels the best investment is taking over RIO (which itself is close to record highs). This got me to thinking that there are probably many more attractively priced companies locally that must now be eyed as serious takeover targets. The top 3 companies in the ASX 200 that I think are potential takeover targets include : (Jubilee mines would have been on my list, but it just got a takeover offer)

1. Zinifex (ZFX)
2. Oxiana (OXR)
3. Bluescope steel (BSL)

With the drop in markets across the globe this week, these stocks are trading at attractive prices. These could be a good play for investors with a short to medium term outlook. Even it they don't get taken over they are growing companies in their own right.

More details on the BHP/RIO takeover can be found at http://www.theaustralian.news.com.au/story/0,25197,22728877-643,00.html

Disclosure :  The author owns shares in BSL

China's PetroChina now the biggest company in the world worth 1 TRILLION dollars

Following on from my story about the richest man in the world being from India, it has now come to pass that the world most valuable company by market capitalization is a Chinese company - PetroChina. PetroChina Co. shares more than doubled in their Shanghai debut Monday, giving the oil giant a $US1 trillion market capitalization and easily surpassing Exxon Mobil as the world's largest company. The run-up gave the oil giant a market capitalization more than twice that of US based Exxon Mobil. To put this in context - the market cap of PetroChina is 10% larger than Australia's GDP (Gross Domestic Product - Value of Goods and Services produced in 1 year)

However using production metrics, Exxon Mobil is still significantly bigger than PetroChina. PetroChina produced 1.06 billion barrels of oil equivalent last year, compared to Exxon Mobil's 1.56 billion. Exxon Mobil reported revenue in 2006 of $365.5 billion and earned a net profit of $39.5 billion. PetroChina's 2006 revenue was only $91.9 billion and net profit was $19 billion. Of course, the stock market values companies more on what they will produce in the future than what they produced in the past, and PetroChina does seem to have strong growth prospects. The company projects its production will increase at 4% to 6% a year in the future, while most other major oil companies aren't expect to grow at all.

Still the explosive growth in the market capitalization of Chinese companies in general begs the question that is the Chinese stock market (Shanghai) entering into a "bubble" phase, like the dot-com boom and bust a few years ago? If so, market values can fall as fast or faster than they have risen. So while it is important to have some exposure to these fast growing markets (through managed funds in most cases for Australian investors), make sure it is as part of a diversified portfolio with exposure to more traditional and defensive areas.

The Australian to get a Wall Street Journal page in its business section.

One of the papers I like to read here in the states is the Wall Street Journal. It has well written and relevant business stories from around the world. I occasionally share these articles on my blog when I find one with an Australian context. Well, the good news now is that the Australian newspaper will be having a Wall Street Journal page in its business section from today. News Corp recently bought Dow Jones, which owns the Wall Street Journal. As News Corp also owns the Australian, it is able to leverage the content amongst these 2 publications.

I think the Australian has a better on-line and print business section than the other leading broadsheet in Australia - The Sydney Morning Herald. I am from Sydney, NSW so it pains to suggest that a Victorian publication is better, but I can't deny the facts. Both the statistics and my personal experience show that the Australian has better content/circulation.  I am not endorsing either one, just giving my opinion and to point out the addition of relevant finance/business content which may be of interest to readers of this blog.

Removal of Google Ads from my Sites and the Twists!

You will have noticed a number of the "Google Ads" have been removed from my site. Apparently they "Google Adsense" found fraudulent ad click activity on my site which meant that they have shut down my Adsense account (this is their context based advertising program). I don't know exactly who/what caused this to happen as I have only been generating about $8 of Adsense revenue a month from the site and not some inordinate, large fraudulent amount. Anyway, I have put in an appeal, though from what I have read - Google rarely reinstates accounts once disabled. I will still be moving forward with my blog as monetizing it wasn't my primary reason for starting it. However I do have costs with running this blog and to cover my basic costs I will try and find other sources of revenue, which means you may very occasionally see some sponsored posts. I will keep this to a minimum and on site related topics. The Google Adsense program is the largest out there, but I have been hearing a lot of dissent out there, so hopefully some real competition will emerge soon. Fellow Bloggers - Let me know if you have any suggestions on alternative revenue sources.

It's ironic that I bought Google shares yesterday (see my post on that at www.financeviewpoint.com) and the same day my Adsense account was cancelled! But wait there's one more ironic twist - the rise in the Google share price in 1 day has resulted in a paper profit of more than I made by combining all 3 months of my Adsense revenue......so if you can't beat em' join 'em.