Thursday, November 25, 2010

Meeting #31

At the meeting today where Jeffery , Roy, Justin and I. Justin had been very busy and had some good tips for us to look into at a later date the companies were

We all went through the numbers on JB and have decided that our task for the next meeting is to come up with a dollar value for the shares in the company. We will then present this and work through our numbers to the group.

JBHIF 10 year numbers can be found here [when I upload them - next week]

Tuesday, November 23, 2010

Interest Rates

I spoke to my bank today to find that the interest rates were going up again to 7.5%. This is a big difference to 0.5% in the UK and 0.25% in the US.

Below is a chart of historical interest rates in the UK (In the last 20 years interest rates have been around 6%). You can see that 0.05% is a 20 year Low for the UK and nowhere near the mean value of about 6%. This low rates in the UK and US are just another indicator that both economies are in really bad shape and trying increasingly desperate measures to get the economies moving. I hope not too many people in the UK have bought recently thinking that a 1% mortgage is "normal".

One of the things I hear a lot is "If we get huge inflation then I'll pay off my house in double quick time" well maybe not. Countries can use inflation to pay off the national debt but for the like of you and me we cannot use inflation to easily pay off our house. The reason for this is that what often happens is interest rates can go up to match inflation. There are a few examples on Wikipedia along with more data on interest rates.

Friday, November 19, 2010

Investing in Lithium

This is a bit off topic but I am interested in having some exposure to the likely commodities boom that I see on the horizon. The most interesting for me are phosphorous and lithium. A Chilean company SQM, listed in Santiago and in New York ADRD is a company with huge reserves of both - I would like to keep this as placeholder for further analysis. The price has recently shot up. Maybe its too expensive now. In 2010 an ETF was launch for lithium (I'm not really sure how this works though) - Paul

I found another interesting site on lithium investing here

Cash Reserves of Banks

I went to my bank to get some money the other day. I needed $4000. They told me that officially I needed to give 24 hours notice for cash withdrawl over $2,000 however they had enough today so they could give me my $4000. Now my bank is probably a bit smaller than a big bank like ANZ but I found this quite startling. It got me wondering about how much money banks have in reserve.

A note about Reserve banking . Banks don't need $100 dollars to lend you $100. The US has a requirement that the banks have at least own equity worth 10% of the total loans outstanding. So if Citibank only actually owned $10 then the sum of all the loans they could make could not exceed $100.

So I did a little investigation and what I found (with a quick look on wikipedia) startled me somewhat. I knew that the US had a 10% requirement. I didn't know though that the UK and Australia does not require any reserve whatsoever. So they can make money loaning money they don't have. I wish I could do that! Below is taken from wikipedia
Country↓Required reserve (in %)↓Note↓
AustraliaNoneStatutory Reserve Deposits abolished in 1988,
replaced with 1% Non-callable Deposits[5]
New ZealandNone1999 [2]
United KingdomNone
Czech Republic2.00Since 7 October 2009
Eurozone2.00Since 1999[6]
South Africa2.50
India6.00as per RBI.
Bangladesh5.50Raised from 5.00. Effective from 15 May 2010
Pakistan5.00Since 1 November 2008
United States

If anyone believes there is something incorrect or misleading with this article then please add to the comments below or send me an email

Thursday, November 18, 2010

Meeting #30

Roy (briefly by phone)

Short and sweet meeting. At the meeting Justin presented his work on Infomeadia.

Revenue was erratic and dividend behavior seemed out of line with profit. Roy also provided a little insight but we concluded that there financials were to erratic to make continuing evaluation worthwhile.

It was also great to see a new face ,Olzhas, who had some good input on Infomeadia as well as some good discussion about things warren buffet and more general economics.

Next Meeting
Paul Ayling, Roy, Justin , Mandy & Giselle to evaluate JBHIFI. Olzhas to present some analysis on a separate company and also provide a buffetolgy checklist and some information from morningstar. Because Christmas is coming up we made the decision to have another meeting next week to keep momentum.(see calendar)