I'm old and demented so I can't remember if I posted this previously, in case I haven't, here it is. In coming weeks I may post it yet again, such are the joys of reaching the mid 70's.

More fascinating trivia with which to enthrall the ladies in the Blow Me Bar on Soi Cowboy.


Total Workforce = 38 million
46% in Services = 18 million
Government = 490,000
32% in agriculture = 12 million
22% in industry = 8 million


Agriculture accounts for 7% of all exports but employs 32% of the workforce
22% of the workforce is employed in industry and produce the remaining goods exports.
46% of the workforce is engaged in Services, including services exports.


Agriculture and industry employee 54% of the workforce which produces goods exports, these are things or stuff that are made or grown.
Services employes 46% of the workforce, which produces services exports, these include everything tourism related.


The weak link in all of this is that almost half of the population is devoted to Services, much of which is tourism related but only 22% of the Workforce actually make stuff.

And of course, a disproportionately high percentage of the workforce is engaged in agriculture, 32% of the workforce. In order to better their lives and earn more money, workers abandon that sector and enter Services, which is why tourism is all important to the Thai economy..

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What should I make of this?

Yeah thanx. I'll do the free videos, but betting on horse racing isn't my thing.
You know, dumb cuunt and all that.

If anyone is interested in investing and doesn't know where to start, they could do worse than to look into a minimalist portfolio that comprises say two or three investment funds that are highly diversified. The first one I have in mind is a global equities tracker that tracks the performance of major equity markets around the world. The idea of global trackers is that you spread your risk across various markets, as one market goes up or down, the others may perform differently and often do. You can of course over diversify and in doing so, lose the benefits of diversification which is why each global tracker is a different size and contains different things, there are several ways to slice the same cake. Holding a global equities tracker doesn't mean there is no risk, the value of these trackers can and will fall but over time they can out perform smaller more focussed funds. I held the HSBC FTSE All World tracker fund whose performance is really good, as the screen shot below confirms (see performance on the right of the screen). The cost to own the fund is also low, only 0.13% which is very good. Several companies have these products, Vanguard, Amundi, iShares, SPDR and others, you have to decide how much global coverage you want and how cheap you want the cost to be. The only potential downside to these trackers is that they go up and down with the markets and when they go down, you have to stay with the ride, there's no fund manager to switch to something safer. If you're investing over several years, this is not a problem. These funds hold between 3,500 and nearly 10,000 shares in different companies around the world or at least emulate those holdings.





The second part of this is diversification away from equities, into bonds or other investment products. The old mantra used to be that as equities (stocks and shares) fell, bonds would rise in value and vica versa, that meant that if you held both, one would compensate for the other in times of stress. That relationship broke down for a while and there was a period of time when they both moved in the same direction but that relationship does not seem to have been lasting. Many of you will recall the at times acrimonious debate about 60/40 between AyG and myself which had this subject at its heart. The facts are that not every type of investment performs in the same way and there are many different types of investment. It's just that bonds and equities are the two largest and probably the two best known types so these probably should be at the core of any investment portfolio.

I cover the bond markets by holding yet another global tracker which is the Vanguard Global Bond Index that contains over 19,000 bonds from different global markets so it's amply diversified. Bonds can be very tricky to understand, they have a purchase price and a yield (or interest rate return), both of which move in opposite directions based on whether the Central Bank rates are rising or falling. Right now, interest rates are at or near to a peak so the next movement will be down. That will mean that the value of bonds will increase whilst their yield will decrease. If rates were to rise again, the opposite would happen. The cost to hold the Vanguard fund is 0.15% hence very low.

So there you have it, if you look back through the investing threads you'll see that Fletchsmile wrote up lots of brilliant stuff on this subject but it takes a while to read and digest. I think the two fund portfolio I have described above is a reasonable way for somebody to get into investing and put idle money to work whilst being able to sleep at night and not get their hands dirty. As Charlie Munger of Berkshire said, "buy it and forget about it".

Just food for thought, in an idle moment.







A second

The value of equities and FOREX are not always directly linked, a cause in one might have an impact in the other but not necessaily.

The question is, why would the S&P crash? Overvaluation is a likely cause but a crash is far from certain, remember, equity markets are forward looking. A strong USD might also cause it to fall but currently the USD is falling. Also, increasing bond yields might point towards a fall but currently the spread between the 10 year and 3 year bonds is reducing. I think it's a given that equities will continue to be volatile but a crash, I'm not too sure.

ycharts.com/indicators/10_year_3_month_treasury_spread

So really, the impact on the Baht depends on the cause of any S&P crash rather than any downwards movement alone. If a strong USD, yes, THB would weaken which is to our advantage. If the cause is over valuation, I would expect some contagion to affect Thai stocks also which would have a similar effect.

From an expat perspective, our biggest risk to the THB exchange rate is if USD weakens too much because that would give us a worse exchange rate against USD and the Pound.