Portfolio value in free-fall - you should riot

centreImage via WikipediaAn FT report caught my eye today that led with

Investors upset over falling Pakistan share prices smashed windows of the Karachi Stock Exchange on Thursday during a day of protests that led to scuffles between traders and investors demanding the temporary closure of the stock market.

The KSE 100 index dropped by 2.7 per cent to close at 10,212.92 points. The index has plunged 35 per cent from a record high reached on April 21.

A key issue has been the entry of new / inexperienced retail investors into the Karachi market who have punted their savings on what they perceived as a one-way (winning) bet via a rising market. Naturally, they have been alarmed by the sharp falls that have eroded their meagre assets.

When the term "share-owning democracy" was popularised in the 1980s during the Thatcher years and Conversative government, it represented a view that by encouraging wide-spread share ownership it would both allow everyone to directly share in the benefits of wealth creation and encourage people to take a keener interest in business/economic affairs.

Human nature being what it is, people tended to "tune-out" the mandatory wealth warnings that "shares can go up and down", and "historical performance is no guide to the future", wishing to only hear the good news that they would become richer. Hence, market "corrections" / falls caused shock/outrage from people who saw their savings eroded. This was [still is] often exacerbated by the inability of the retail investor to adequately diversify their portfolio given the relatively small sums invested. Whilst index trackers and mutual funds were available that would provide such diversification, they don't present the same "excitement" as owning a share in a company.

Two decades on, I believe people in the UK are more familiar with the risks of investing directly in the stock market. Sadly the lesson same hasn't had time to take root in many other countries, hence the uproar.

However, I suspect that a bigger shock will come when people in the UK wake up to the impact of being in defined contribution pension schemes, rather than the defined benefit pension schemes that prevailed for decades in the UK. Suddenly, the burden of volatile investment performance will not be funded by employers. Consequently, employees will have to pay much closer attention to the performance/value of their own pension funds. Combinations of underfunding and market falls could material harm the pension pot available for retirement, at which point those approaching retirement may well start looking for someone to blame for their misfortune and financial destitution. At which point, things could turn equally ugly here.


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posted by John Wilson @ 8:56 AM Permanent Link ,

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Getmein - hypocracy and lunacy in a single venue

Whilst emailing some friends about the possibility of going along to one or more of the concerts being held at Excel alongside the British Motor Show, I saw a Google ad for Getmein, the ticketing secondary market that was acquired by Ticketmaster.

If you recall, Ticketmaster had been vociferous in its opposition to secondary markets, strongly arguing to the UK Parliamentary select committee that such exchanges were wrong on numerous grounds, citing profiteering and exploitation of fans amongst them. Evidently, these views have been dropped now that it owns several such exchanges.

Out of curiosity, I looked up the gigs I was interested in and saw tickets were indeed listed on Getmein for the events at prices, including a 10% mark-up for Getmein, up to £82.50. Yet the primary market, in the form of See Tickets, was offering the same tickets at £30, including their £3 fee.

Since listings are free on Getmein, silly priced sale ads can be posted on Getmein with no downside and only upside if someone gullibly buys at an inflated price - or put another way if an ignorant fan parts with more money than they need to.

Don't worry, I'm not performing an about face on secondary markets, but simply noting the hypocracy of certain companies and the lunacy surrounding the opaque nature of the ticketing market.

Most noteworthy was the accompanying T&Cs on the See Tickets booking page.

All tickets purchased on this site are governed by our terms and conditions. In particular, we draw your attention to the fact that all tickets are for personal use only and cannot be resold under any circumstances. Resale or attempted resale is grounds for seizure or cancellation without refund or other compensation. The Event Partner and its affiliates, successors, or assigns may enforce these terms in accordance with the provisions of the Contracts (Rights of Third Parties) Act 1999 (the Act).

So Ticketmaster seems to be complicit in breaching such conditions, a matter that it presumably understands.

Separately, the US division of Ticketmaster is now issuing paperless tickets citing consumer convenience and the disruption to touts as being major reasons for their introduction. Unfortunately, this has met a considerable consumer backlash, in the main because they have continued to charge the same high level of fees despite the evident savings from paperless ticketing and because people recognise it has damaged their ability to transfer the tickets should they need to.

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Morse plc signals SOS

I was sorry to read that Morse plc was in trouble and that its' shares had dived after the technology consultancy warned that its final-quarter trading would be hit as clients reduced discretionary spending.

You may recall that the former "tin" reseller of servers into the corporate world had elected to transform itself into a consultancy business, begun following the acquisition of CSTIM, whom I knew well as a competitor of a consultancy business I co-ran some years ago.

The company also said that Kevin Alcock, chief executive for just over a year, was leaving with immediate effect. Kevin had formerly been the co-head of CSTIM and I confess I was surprised that he had been promoted to the Group CEO role, given it was a significantly different business from CSTIM. Sadly, it seems the Morse Board came to the same conclusion. I wish him well with his next venture.

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Barclays Pin Sentry - a tedious necessity?

Barclays PLCImage via WikipediaBarclays have announced that they have one million customers online in Britain and zero cases of fraud, with the latter attributed to customer's use of smart card readers.

The smart card devices generate codes that are required to enable you to log in and to authorise transactions. To operate it, you have to insert your bank card into the device and enter your pin code.

I have an account with Barclays and whilst I recognise they improved security from the introduction of the devices, they've actually made internet banking far less convenient than it should be.

Prior to their introduction, you could log onto your account on a whim and interact with your account, having successfully navigated security controls. Now, such access is only possible provided I constantly carry the smart card reader, which is simply too much of an inconvenience.

I may be in a minority but I remain convinced that similarly levels of security could be achieved via alternate and less intrusive means. However, given the fraud results reported, I doubt this will do anything other than double their resolve about the value of these devices.
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Microsoft patch knobbles Zone Alarm

Having just got broadband back after a 10 day gap I was infuriated to find my internet connection seemed to have died after a mere 12 hours. Every page I attempted to load in Firefox 3 on my laptop was simply timing out.

Restarting Firefox - no impact
Restarting the laptop - no impact
Restarting the router - no impact

Just in case, I checked the family desktop and it was still able to access the internet - hmmm. So the problem was localised to the laptop but I hadn't changed any settings or installed any software.

So for no good reason, I decided to close Zone Alarm on the laptop and whoosh - the internet connection was restored. Bizarre. I hadn't touched Zone Alarm and the last Zone Alarm update pre-dated when I had last access the internet.

A quick search online soon identified the culprit - a Microsoft security update which had automatically applied itself on my laptop. Details here.

Zone Alarm have issued a quick update patch which you can access here.

How to waste an hour for no benefit!!! Grrrrrrrrrrrrr.

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Life (10 days) without broadband

Well the good news was that it only took 10 calendar days for our domestic broadband service to be activated after moving the line back to BT. But it's astonishing how reliant we as a family have become on having broadband and how much it was missed.

Whilst I had the benefit of a blackberry, which meant no interruption to my email, internet browsing wasn't really feasible on many sites from a mobile device - screen size and overly complex layout/add-ons made it too onerous.

Consequently my usual home routine of catching up on RSS feeds via using Google Reader and checking news/sports sites such as FT.com, telegraph.co.uk, bbc news both before and after work was thrown into chaos. Likewise, my preference for using online services had to go out of the window - couldn't access them. This applied to internet banking also, which I learnt I use more than I realised and missed not having the facility.

Funny to think how only 7+ years ago, broadband was a luxury item - not any more. This was brought home to me when I went round to a neighbour's, a few houses away, to use their broadband connection. When I switched on my laptop, I was presented with 15 secure wireless networks which were evidently operating in the vicinity. That's mainstream.

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Favtumbs gets my big thumbs up

For over 18 months I've been suggesting to developers I met an Open Coffee, Barcamps and the like that I'd love someone to develop a service to provide a thumbnail preview / visualisation of my delicious bookmarks. Finally Favthumbs has supplied the solution in a visually slick and easy to use site.

I find that being able to visually skim through my bookmarks means that I find the site I want much faster - site images are often more memorable than names. Moreover, casually browsing bookmarks with the aid of a visual provides instant recall on sites.

Brilliant.

But of course, in true "waiting for a bus" style, I came across another site almost immediately called Thumblicious, which provides a similar function. Not as visually impressive, it still does the job well.

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UK Mortgage market is in big trouble

When demand  D 1   is in effect, the price will be  P 1  . When   D 2   is occurring, the price will be  P 2  . Notice  that at both values the quantity is  Q . Since the supply is fixed, any shifts in demand will only affect price.Image via WikipediaThe UK housing market is falling off a cliff.

In May, mortgage applications and approvals dropped dramatically. This normally forewarns of a sharp decline in house prices. Price expectations are such that few potential buyers want to commit to a purchase when they believe that similar properties will be cheaper in a few months.

Only 42,000 applications were approved in May, according to the Bank of England, a drop of 64% when compared with the same month last year. However, it is not just that buyers are disappearing but lenders are both increasing the rates they demand and imposing tighter lending criteria.

The mortgage market turbulence has had an immediate impact on intermediaries in the space, who were already buffeted by reductions in available mortgage capacity from lenders. Charcol, one of the UK largest mortgage brokers announced today it was cutting a quarter of its workforce and closing branches.

Similarly, lenders are looking at redistributing headcount from application processing to credit control and arrears management, with the aim of intervening much earlier in the arrears process.

Those lenders face a double whammy
Is it better to have a mortgage partially serviced and add unpaid amounts to the debt in the hope that things will improve or repossess the house early to crystallise a loss now? The Government will be hoping it's the former, as a wave of repossessions will make for bad headlines and further depress a gloomy housing market.

The irony is that this is a Government that proclaimed it wanted cheaper and affordable housing - as house prices fall sharply, they are going to get their wish.

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