We have moved! January 6, 2009
Posted by mylastresort in analysis.add a comment
Charts & Numbers has moved to a new location. Please update your bookmarks to www.chartsandnumbers.com
THANKS
Death by a Thousand Cuts February 1, 2009
Posted by mylastresort in random.Tags: Educational, Metaphor
add a comment
The ‘Death by a Thousand Cuts’ originates in Imperial China as a form of torture and execution. When skillfully applied the method keeps the victim on the edge of death. As atrocious as it may seem the theme was later adapted to the business climate. In business it is used as the strategy of making gradual changes over time so that no one notices.
The Tinkerbell Effect January 21, 2009
Posted by mylastresort in random.Tags: Educational, Metaphor
add a comment
The Tinkerbell effect explains that events only exist because people believe in them. The theory is named after Tinker Bell, the fairy, in Peter Pan who is revived from new death by the belief of the audience.
There are many cases in the investment domain that could easily be defined to meet the Tinkerbell effect.. The existence of money (notes) could be questioned as a result. Nowadays, it is more evident in the price of Gold than in any other security. Investors flock to the commodity as a ‘safe haven’ while empirical evidence proves that it is by far not the case.
Creeping Normalcy January 12, 2009
Posted by mylastresort in random.Tags: Creeping Normalcy, Educational
add a comment
The ‘creeping normalcy’ refers to the way a major change can be accepted as normalcy if the change occurs in slow, unnoticed, increments. The same change would be regarded as objectionable if it took place as a single step or during a short period.
The Money Supply (M’s) January 5, 2009
Posted by mylastresort in random.Tags: Education, kuwait, Money supply, random
3 comments
The modern government’s of today regulate the economy by monetary policy. Monetary policy is the process the Federal Reserve (Fed), or central bank of Kuwait (CBK), control the following:
- Supply of Money
- Availability of Money
- Cost of money (interest rate)
The supply of money is broken down into different types of ‘money’ based on its effects by monetary policy. The measures are placed along a spectrum; from the narrowest to broadest measures.
- Narrow Measures: Directly affected by monetary policy.
- Broad Measures: Less related to monetary policy decisions. The broad measures are usually indirectly effected by changes in the monetary policy.
The M’s defined.
The different types of measures are classified as M’s. The M’s range in measures from M0 (narrow) to M4 (broad).
The M0 is often referred to as the monetary base. It is the base from which other forms of money are created. Currency, includes notes and coins, in circulation and in bank vaults. Cash (reserves) owned by banks that is held by the Fed, or central bank. Traditionally, it is the most liquid measure of the money supply.
The M1 represents the assets that strictly conform to the definition of money. It includes currency in circulation, demand deposits (and other deposits that work in the same way), and finally, K-Net transactions through their links to bank accounts and are also considered as a form of money.
The M2 is the most common economic indicator in forecasting inflation. It is usually represented by savings deposits, time deposits and money market accounts for individuals, plus the M1. In essence it represents as close as substitute to ‘money’ as possible.
The M3 is no longer used by the Fed or the central bank of Kuwait. It is the M1 + M2 and the large deposits of money market funds by institutions. It is also made up of short term repo’s and larger liquid assets.
Many countries use the M4 such as the Bank of England which is composed of cash outside banks. It is composed of the money in circulation with the public and non-banking firms, private sector retail and wholesale banks, and building society deposits.
The M’s are defined differently in every nation. For example, in England, India, and Japan, the M’s differ in terminology but all are in the same order of narrowest to broadest.
The above definitions were those used by the Federal Reserve and as closely related to the Central Bank of Kuwait definition.
Alert January 2, 2009
Posted by mylastresort in analysis.add a comment
Charts & Numbers will be down for maintenance starting tonight. We will be back in 24 to 48 hours.
The Boiling Frog Story January 1, 2009
Posted by mylastresort in random.Tags: Boiling Frog, Educational
4 comments
It is said that a frog can be boiled alive if the water is heated in protracted increments. If a frog is placed in boiling water it will quickly jump out but if it is placed in cold water and gradually heated, it will not move rather, it will boil to death.
The story of boiling frog is often told in a figurative context with the point being that investors should remain vigilant of gradual changes or else suffer a catastrophic loss. (more…)
December Confessions #3 December 31, 2008
Posted by Ali in analysis, kuwait.Tags: December Confessions, kuwait, Oil, OPEC
2 comments
During December the market confessed three important facts. The first is that the Kuwait Investment Authority (KIA) will not provide the optimism needed to restore confidence in the market. The second is that investment banks will fail in succession amid the greatest government intervention since souk almanakh. Finally that oil prices will no longer be controlled by the oil cartel, OPEC.
OPEC Versus Oil
A positive relationship between, long-term oil and the Kuwait Stock Exchange (KSE), has existed for decades. In the 1970’s the KSE rallied with the sharp increase in oil prices. Early in the 1980’s the market crashed when oil prices fell. Later in 1997, the price of oil fell below $10/barrel sending the market spiraling. Thus it should not be surprising to see the KSE collapse in 2008 considering the massive decline in oil prices from $147 to below $40.
Since oil determines Kuwait’s fiscal policy the higher oil prices translate into higher income generated by the government. The higher income results in greater government expenditures thus a bigger fiscal policy. (more…)
12 Stupidest Moments in Business 2008 December 31, 2008
Posted by Dhari in kuwait, random.Tags: Financial Crisis, Satire, Stock Market
7 comments
Let me first thank the guys here for inviting me to join the blog. I’ve been a fan for sometime only to discover just yesterday that some are actually my friends.
Now to the post.
I read this fun feature 2 days ago on CNN Money about the “21 Dumbest Moments in Business 2008.” So how about we have our Top Stupidest Moments in Business 2008?
1. Finance Minister, Mustafa Alshamali, giving a free investment “buy” recommendation TO THE PUBLIC! Only to see the stock market plunge 480 points over the next 2 days.
2. The Finance Minister’s back and forth statements on when the rescue fund will actually enter the market, which is still not 100% clear to this day.
December Confessions #2 December 31, 2008
Posted by Ali in analysis, kuwait.Tags: global, investment, kuwait, TID
4 comments
During December the market confessed three important facts. The first is that the Kuwait Investment Authority (KIA) will not provide the optimism needed to restore confidence in the market. The second is that investment banks will fail in succession amid the greatest government intervention since souk almanakh. Finally that oil prices will no longer be controlled by the oil cartel, OPEC.
Investment Banks Collapse
During this crisis many speculators believed that investment companies would not fare well, but none could fathom the utter failure of Global Investment House (Global) or The Investment Dar (TID). This is labeled as another of the December surprises that would rattle the local economy once more following the collapse of Gulf Bank of Kuwait a few weeks earlier.
On December 16th, Fitch downgraded Global five notches down to C, in other words Global went from “investment grade” to “junk.” Global was downgraded because of its default on a payment to WestLB. That was a shock to investors in the market. Investors were not expecting Global to default. Although a few weeks earlier, we heard in the market about TID defaults and the possibility of Global’s default, still it was hard to believe to see these two gigantic investment banks failing. (more…)
Charts & Numbers 