Guest Contributor: Bader A.

The Greeks are gone, Persians, Romans and many other Empires have come and go throughout history. However, does this mean that history will repeat itself ? Or is the global economy too interrelated that the US’s fall will be the end to us all?

The US are facing yet again, another crisis with debt. The US mentality is that of a spender rather than a saver, which works great in economic booms, but one day you will forced to repay that debt and that’s when things turn ugly.  The US have a dilemma on its hands, they either raise the $14.3 Trillion debt ceiling or default on their debt. To me the answer is obvious! Increase the debt ceiling, issue treasuries (the Chinese with their excess cash have to buy some), work on your budget deficit, keep rates low (as there is no immediate inflation threat) and pray for a recovery. However, we are thinking economically and clearly we shouldn’t undermine the political issues at hand. Elections are coming up and it’s time for every party to start showing off the guns. The different sections of the US structure must agree on a solution before August 2^nd to save the US from a default. The good news is both parties are working towards a similar goal of tightening the budget deficit by $2 Trillion. The Republicans want the savings to come from spending decreases and the Democrats from Tax increases, so they have different means towards the same end.

It is evident that the market is worried about the US’s debt rating and it’s long term ability to pay debt. CDS for the US have spiked to levels that have surpassed that of Brazil, rating agencies have added the US to many watch lists. The main issue of raising the debt ceiling or not is irrelevant, but the matter of long term solvency and liquidity is the key question. Economically, unemployment numbers will be the trigger that will help shed some light on the US outlook, but given recent data it looks like we are in for a long bumpy ride. 

At least we can all agree that the US is better off than Europe! 

By: Rafique Suleman

Trading at KSE is executed by computerized system, called Kuwait Automated Trading System (KATS). The system is thought to be efficient, confidential and fair among traders. Authorized brokers have equal access to the KATS Server, via a KATS workstation in their offices at KSE and necessary information of trading is readily available there. Brokers directly enter orders into its KATS workstation. Investors can place buy/sale orders only through a broker. So far, it is good; however, the issue of the anxiety is how the unfilled long terms orders of a day are treated at KATS and Broker’s System.

Based on the information received from my broker, for a share the long term orders that were received in KATS but could not be filled during a day and its queue, lapse at the end of trading time of the day. Therefore, unfilled long term orders are required to be placed next trading day again in KATS by the broker. Queue of orders for a share is reset, based on the principle of first come first served. As an investor has full option to cancel a order at any time, why the queue should be reset and deprive an investor who has placed a long term order. In other words why cannot the order validity in a broker’s system be transferred in KATS system and maintained as it is till the order is filled or the investor cancels the order.

Broker’s System

Other than the issue of lapse of an unfilled order at the end of trading time, there might be relevant issues at a Broker’s system, as described below. In a broker’s accepted orders for a period of more than a day for a share, for the unfilled quantities, how efficiently a broker’s system places client’s orders the next trading day in KATS prior to start of the trading is an issue that needs attention.

Secondly, if there are unfilled orders of multiple clients for a specific share, the concern is there whether the queue among the clients within broker’s system remains as it was the earlier trading day or there are possibilities of manipulation of the queue. Those, in this form, having direct experience with KATS or trading system of a broker my add more information and/or correct the errors in the information presented herewith on the subject.

By: Abdulla Al Khamis

After the injection of the Fed’s $600 billion, most commodity prices have surged.  One of the reasons behind this surge in prices is due to the demand from emerging markets as these countries are becoming wealthier and require more infrastructure projects . The second and more obvious reason is fall of the U.S. dollar, and commodities are priced in U.S. dollar.  Money parked in commodities have hit a record $320 billion as of September, as stated by Barclays Capital.

(Guest Contribution by Abdulla Al Khamis)

Recently, Google announced it plans to fund around $5 billion in off-shore cables that connect windmills off the mid-Atlantic coast, stretching 350 miles off the coast from New Jersey to Virginia. These cables will be able to connect windmill farms from sea to land, and said to act “as a superhighway for clean energy.” The cables will be built around offshore power hubs and collects the power from multiple wind farms and deliver it to electrical transmission systems on land. The energy from the wind turbines is said to provide clean energy for 1.9 million homes without taxing the power grid.

Google lately has been deviating from its core internet-search business and investing $40 million in such a renewable energy project in addition to developing a technology that allows cars to drive themselves . Although I believe it is a smart move by Google, does going green excuse the deviation of a company from its core business?

(Guest Contribution by Abdulla Al Khamis)

What really happened to the market on May 6, 2010? The Dow Jones Industrial Average lost almost  1000 points by 2:47p.m.

It took the SEC five months to pinpoint the reasoning for the cause of the so-called “flash crash.” Reporters identified Waddell & Reed Financial Inc. as a main contributor due to the high frequency trades set by the mutual fund company.  The firm used a trading algorithm program to executed 75,000 E-mini futures contracts valued at more than $4 billion. E-mini Index future contracts are miniature versions of the same futures contracts that are based on the major market averages and indexes, but can be traded for a fraction of the margin of the larger contract.

It all started at 2:32 pm when the firm placed the order to sell 75,000 E mini futures contracts that mimic the S&P 500 index. Within seconds, High-frequency trading firms and other investors started participating in the trade and buying those contracts, only to start selling them aggressively within 9 minutes, at 2:41 pm.

High-frequency trading firms started buying and selling these contracts to each other in a matter of seconds, thus creating a so-called “hot potato” effect. Some 27,000 contracts were traded in less than 14 seconds, bringing down the price of E-mini contract by 3% in 4 minutes. The selloff in the futures market caused an effect in the market for individual stocks, causing the liquidity in the market to dry up because of the pause of the automated systems when prices fell significantly.

What would happen if such “flash crashes” went on more often? Would it still take the SEC five months to pinpoint the causes of twenty minutes of trading?

(Guest Contribution from CBA’s Finance Club)

Daniel Kahneman, known for his Nobel Prize winning work on behavioral economics and finance, stated “that organizations should think of decisions like any other product and apply quality controls.” Behavioral finance is the study of the influence of psychology on the behavior of financial practitioners and the subsequent effects on the market.

Emotions affect our decisions whether we like it or not. You can look at it this way; organizations are a factory that produces decisions among other things, and thinking about decisions as a product is useful in aiding in the decision making process. Therefore, when thinking of decisions as a “product” the issue of quality control is immediately raised, this is an efficient means of assuring that the decisions being made don’t weaken an organizations financial structure.

MONEY! Is an important commodity that dictates how most if not all organizations operate.

The way people interact with money is amazing, even people who deny that money will not change how they act, allow money to influence their interactions with other people. When money is involved, especially in the business environment, a lot of noticeable actions occur. However, three actions in particular have been brought to my attention, which are Inter-Temporal consumption, Momentum investing, and Herd behavior. Inter-temporal consumption thrives to explain people’s preferences in relation to consumption and saving over the course of their life. Simply put, what this concept states is that people mentally divide their assets into mental accounts – current assets, current income, and future income – and the propensity to over consume or save depends on the earnings they get, along with the depreciation or appreciation of their assets. Momentum investing is a system of buying stocks or other securities that have high returns over a period of 3-12 months, and selling those that have had poor returns over the same period. It has been reported that this method of investment actually yields an average returns of 1% per month. The fact still remains that some economists hypothesize that this phenomenon could be explained by the simple “the higher the risk the higher the return” concept. However, this method actually leads to the inefficient pricing of a stock because of herd behavior, which allows some investors to use the tool of arbitrage. Herd behavior describes how individuals in a group can act together without planned direction or intention. This term relates the behavior of animals in herds, flocks, or schools to the conduct of humans during activities such as stock market bubbles and crashes. Large stock market trends often begin and end with periods of frenzied buying (bubbles) and selling (crashes), these are clear examples of herding behavior that is irrationally driven by emotions such as greed during stock market bubbles and fear during stock market crashes. 

By: Ahmed B.

As I was surfing the internet, I stumbled upon a very interesting website Google Real Estate Portal GpRe. The recently launched website allows users to search multiple real estate listings of residential, commercial and vacation getaway properties, find homes for sale and apartments for rent, you can also, add a property for sale or lease. To list properties in the website, there are three available listing packages:

Silver Package:
——————
Registration Free
No of Listing 01
Date of validity: 30 Days

Gold Package:
—————–
Registration USD $50
No of Listing  10
Date of validity: 60 Days

Platinum Package:
———————-
Registration USD $99
No of Listing 100
Date of validity: 365 Days

Google, no longer a traditional search engine, is setting a new standard by redefining “search”. Just as investors are moving from traditional to non-traditional asset allocation, Real Estate agents are recognizing the trend, and the importance of relaying on e-commerce to advertise their properties and listings. Now, Agents can place their properties on such websites to help them reach a larger pool of potential buyers for a small one-time fee. Most importantly is us, the owners, we can list our personal properties without the Agents in any end of the equation. 

In Kuwait, Real Estate agents usually get a 1% commission fee from any sale of property, however this fee is usually diluted as they rely on fee sharing with other agents to find buyers. People lately are realizing the ease of the process of buying and selling real estate without using real estate agents or third parties. There is a new method that people are using and it’s the internet. Real Estate is a new category that has been added to the E-Commerce business, and people in Kuwait nowadays are using it more than the old methods. The E-commerce in Kuwait is Expanding and there are many websites that you can buy or lease Real Estate online Such as: www.q8property.com, www.q8place.com, and many more.

We hope Google Real Estate GpRE starts to include listings in Kuwait in the near future.

(Guest Contribution from CBA’s Finance Club)

It has been 43 years since The Shah of Iran was deposed. Looking back I would have never thought a 6 minute interview taken back then would have been applicable to life now. The Shah shocked me not only with his eloquence and timidness, but with intellect rarely seen by presidents, monarchs, and Kings like himself.

The host, the ever British David Frost, starts off with a big question. Has the Shah been able to assure the British government that whatever they spend on oil from Iran will be reinvested in Britain? The Shah replies matter of factly “Sure, in the next ten years we will be what you are today. In the next 25 years we will be, people are saying, one of the 5 most prosperous countries in the world. When you become something like that, you start to act accordingly”.

The host prods along “The increasing price of oil is going to hit our balance of payments hard, and maybe stop our economy from growing for a year or two. Is this what you want”? With subtlety the Shah replies “Just the opposite, that is why we have made decisions that will alleviate your balance of payments. I know that you will make the same kind of deal with other oil producing countries.” He unconsciously reassures the host, “Don’t forget in three years time you will be a big oil producer yourself, you might be a member of our club. You might have some difficulties for a year or two but I’m sure you will overcome it.”

David, as all hosts do, suddenly turns to a whole new page, in hopes of gaining an interview worthy reply “Many cold and poor people ask themselves what it is that you and certainly some of your Arab counterparts, sheikhs and rulers and government, have against them. Does it in anyway serve your interest to hurt the British economy?

Shah Pahlavi retaliates with facts, “If you want to say anything it should be the world economy, and this is not against, we are just defending our chips. Because for such a long time, we have been exploited. Why don’t you say that when the price of wheat was augmented by 300%, they had something against us, we had to buy it, or Soya beans or still products or petrochemical products that at one point were augmented by 30%, so did you have anything against us when you augmented those prices? Even weapons, the price you are charging today is not what you were charging two months ago, it’s increasing, have you anything against us?”

The host predictably sensed that he was going nowhere and moved along, “Have you anything in principle against the system in Britain and other Western countries?” This prompts my favorite response from the Shah, “Not really, but I must tell you my opinion. If you continue this way, this permissive undisciplined society, you are going to blow up.” When asked to clarify what he meant by blow up, his reply which was chilling to look back and hear was “You will go bankrupt. You work not enough, and try to get too much money for the little work. It might continue for a couple of months or a year but it will not continue like this forever.”

The host then asks whether the Shah sees oil as a weapon to correct them or their system (the British). The Shah in all calmness replies “Not really, but it is serving this cause and shock you, for you to realize that for you to face the future, you will have to change your ways.” When asked to specify, his reply is blunt “Discipline, more work”.

Lastly David pokes around some more and asks “Do you think with prosperity you might have to restrain the demands of your people for democracy?” With his head held as high as a King rightly should hold his head, he replies “Who says that my people are demanding the democracy you have in Britain. Because our tradition, the people and the King are so close, that they feel as the member of the same family. They have the respect that families and children used to have for their father.”

Not only does the Shah manage to predict The West’s Bankruptcy, and Iran’s prominent rise, but he also understood the difference in society, and acknowledged that the difference was to their advantage. If you think about it he asks for three things: discipline, more work, and respect. The simple and effective way of life, meant to consistently help you grow. Oh what I would do to have a modern day Shah predict the future for me. What do you think he would tell us now?

By W.L:

In certain villages across Africa, the population growth is doubling. Scientists from all around the world were called in to figure out the big mystery. Nothing, from food to shelter, was any different from the city where the population was either constant or decreasing. After years of research they realized that the answer was right in front of them. No one knew that the reason behind this debacle was one of them many results of Global Warming. How are these villagers affected by it more than us more developed city people? Turns out there are side effects of global warming, financial and non-financial.

Now what we are looking at is the must-do decision making TODAY.

Let’s look at your portfolios shall we: Long-term investors are advised to pay attention, global warming will have a significant impact on the financial performance of companies in your portfolio. “As climate change is widely accepted as a reality, companies that are viewed as impeding progress to reduce global emissions may damage their brands. Institutional investors from Wall Street to Silicon Valley are acting on these trends.”

The current Goldman Sachs Environmental Policy Statement states: “Goldman Sachs is very concerned by the threat to our natural environment, to humans and to the economy presented by climate change and believes that it requires the urgent attention of and action by governments, businesses, consumers and civil society to curb greenhouse gas emissions.” And legendary venture capitalist John Doerr of Kleiner Perkins believes going green “is the biggest economic opportunity of the 21st Century,” and is investing accordingly.

One of the www.ceres.com publications is about their view on how there’s an emerging trend toward greater mainstream mutual fund support for climate resolutions. (A must- read I say.) President Obama seems to think so as well “The nation that leads in the creation of a clean energy economy will be the nation that leads the 21st century global economy,” he said.

Let’s look at that village again. Global Warming is the excess use of Carbon dioxide; a greenhouse gas—that traps heat that would otherwise escape into outer space. The cities developed manufacturers were using so much of the electricity, the only way they know how, leaving the villages….…literally in the dark. There was no electricity left for the villages. There are no rules and regulations in most countries on how to manage these emissions. That city was a greenhouse gas Mecca. For the villagers, night comes when the sun sets, real early. Hence, more babies.

Some say the answer to all of this is “very simple: It’s that we need to make clean energy cheap worldwide.” I say, give those villagers something to do!

By W.L.:

Stand tall. Be confident. Make sure everyone can hear you. Don’t take too long. Be brisk yet clear. The list goes on and on. During every educational level we were taught how to present perfectly and keep the masses entertained at the same time. My question is, how does that translate into Business Meetings?

What makes a perfect business meeting? And why do I feel like the successful elite have some secret rules us petty folk don’t know about! Although I haven’t had as much experience as I should have (to write this article), I feel my study of social behavior compensates for that. So this is my interpretation. My list of secret rules:

Rule number 1: Don’t judge my list of rules, it’s here to help You out, or else you wouldn’t be reading this article in the first place.

Rule number 2: Research research research. Find out everything you could possibly know about the person/group you’re meeting with. From their political opinions to their favorite color. It all helps.

Rule number 3: It is ALL about how you dress. The people that tell you not to judge a book by its cover LIE (that idea most probably stemmed from the successful elite-trying to bring us down) . First impressions are what it’s all about. I’m not talking about where you got your suit from, its swagger, attitude, and personality that complete that first image your want to portray.

Rule number 4: Time. Set a specific time to your meeting. Preferably not a double zero number. 12:25 or 7:15. Being exact freaks people out. It shows them that you value your time. Being there on time is so old school. If it’s an out of work area, 15 minutes earlier is perfect. For an in office meeting, 5 will do.

Rule number 5: Seating. Give yourself the best seat. This is an age old trick seeing as whoever you’re meeting with has less to distract his/herself with.

Rule number 6: When put in a situation where you have to grovel, grovel. But keep it charming, don’t forget you’re meeting because you want something. Accomplish that.

Rule number 7: When someone proposes something unethical, illegal, immoral, laugh it off. No one likes a party pooper, and they didn’t schedule time off with you to get an earful of ‘what’s right’. The trick is never say anything that might come off as you agreeing to that opinion.(i.e. change the subject)

Rule Number 8: If at a restaurant/café always talk to your waiter beforehand and agree to the fact that you are paying. Tipping them graciously in advance works wonders.

Rule number 9: A little side-talk and gibberish is good. You want to be remembered as a fun person who can get the job done. Talk about what you know the other person wants to hear (rule number 2). Make it memorable.

Rule number 10: Learn from that meeting. Be it mistakes or pointers, note them down. Improve your game.

Rule number 11: Do not rely on my rules

There you have it.