Asset Class Returns As At 31 December 2009

REITs have continued to climb, a sure sign of sustained bottom fishing, which may explain the still subdued recovery in real estate in the US. This kind of sustained bottom fishing is important as it will enable funds to tap new investors or old ones to put in fresh capital to take advantage of a recovering sector. As in any recovery, you need to see fresh capital re-emerging. Uptrend boosts confidence, and a bit of confidence is a lot more powerful than a spreadsheet or power point presentation.

Emerging markets equity closed off the year very well. Developed markets equity continue to suffer from a perception of delayed recovery, and subsequently a lack of fresh funds flowing into those markets. What was surprising, or not really, was the sell off in US bonds and emerging market bonds. This is a strong indicator - it shows that risk aversion has continued to ease, and more importantly investors are preparing funds to obtain higher returns in the first quarter of 2010 (i.e. equity).

p/s photos: Mona Chopra

Marketocracy Portfolio Update - 6 January 2010

Further updates to Salvador Dali Mutual Fund at Marketocracy. Beating the S&P500 by 44.9percentage points for the last 12 months.

SMF m100 S&P 500 DJIA Nasdaq

recent returns vs. major indexes
		Beating Today MTD QTD YTD SMF 1.61% 1.10% 1.10% 1.10% S&P 500 0.31% 1.61% 1.61% 1.61% DOW -0.11% 1.50% 1.50% 1.50% Nasdaq 0.01% 1.73% 1.73% 1.73%

Symbol Price Value Portion of Fund Today Current Return BDD $18.29 $91,450.00 7.05% 0.72% 67.03% F $10.96 $109,600.00 8.45% 6.61% 46.05% Details MGM $10.50 $99,750.00 7.69% 7.91% 42.16% Details NVDA $18.76 $93,800.00 7.23% 1.41% 40.47% Details NYB $14.46 $86,760.00 6.69% 0.28% 31.99% Details PLD $13.75 $111,622.50 8.60% -0.36% 24.64% Details MIDDLE QSII $64.98 $97,470.00 7.51% 2.25% 24.19% SNV $2.22 $55,500.00 4.28% 5.71% 5.43% LOW $22.92 $80,220.00 6.18% -1.04% 5.38% GE $15.53 $62,120.00 4.79% 0.52% 4.87% NATH $15.10 $75,500.00 5.82% 0.67% 4.49% KBW $28.06 $126,270.00 9.73% 0.29% 3.35% Details JNPR $26.75 $53,500.00 4.12% -1.58% 1.09% Details PSQ $43.03 $129,090.00 9.95% -0.05% -4.96% Details

recent returns
		RETURNS Last Week 0.16% Last Month 3.98% Last 3 Months 3.81% Last 6 Months 33.21% Last 12 Months 69.50% Last 2 Years N/A Last 3 Years N/A Last 5 Years N/A Since Inception 27.71% (Annualized) 18.38% S&P500 RETURNS Last Week 0.49% Last Month 2.58% Last 3 Months 7.98% Last 6 Months 30.09% Last 12 Months 24.54% Last 2 Years N/A Last 3 Years N/A Last 5 Years N/A Since Inception -6.57% (Annualized) -4.58% RETURNS VS S&P500 Last Week -0.33% Last Month 1.40% Last 3 Months -4.16% Last 6 Months 3.11% Last 12 Months 44.96% Last 2 Years N/A Last 3 Years N/A Last 5 Years N/A Since Inception 34.28% (Annualized) 22.96%

all closed tickets
		Close Date Type Symbol Shares Net Avg. Price Net Dec 17, 2009 Buy NATH 5,000 $14.4507 $72,253.68 Dec 4, 2009 Buy MES 0 $0 $0.00 Dec 4, 2009 Buy SNV 25,000 $2.1057 $52,641.40 Nov 23, 2009 Sell STAR 3,500 $34.3252 $120,138.11 Nov 17, 2009 Buy PSQ 3,000 $45.2734 $135,820.10 Nov 17, 2009 Sell JEC 1,500 $39.996 $59,994.03 Nov 9, 2009 Sell STEC 3,000 $13.3704 $40,111.10 Nov 9, 2009 Buy STEC 0 $0 $0.00 Oct 29, 2009 Buy GE 4,000 $14.8093 $59,237.25 Oct 29, 2009 Buy GE 0 $0 $0.00 Oct 27, 2009 Buy NVDA 0 $0 $0.00 Oct 27, 2009 Sell OXBT 600 $0.4465 $267.89 Oct 27, 2009 Buy NVDA 2,000 $12.71 $25,419.90 Oct 27, 2009 Buy MGM 5,000 $10.0673 $50,336.52 Oct 26, 2009 Buy OXBT 600 $0.4673 $280.35 Oct 26, 2009 Sell PHM 8,000 $9.6629 $77,303.50 Oct 22, 2009 Sell AGEN 30,000 $1.1976 $35,927.99 Oct 8, 2009 Sell STEC 0 $0 $0.00 Oct 8, 2009 Sell KEY 10,000 $6.1856 $61,856.36 Oct 5, 2009 Buy NVDA 3,000 $13.7859 $41,357.75 Oct 5, 2009 Buy JNPR 2,000 $26.4611 $52,922.20 Oct 5, 2009 Buy KEY 10,000 $6.2516 $62,515.55 Sep 24, 2009 Buy STEC 3,000 $29.101 $87,302.90 Sep 21, 2009 Sell BDD 0 $0 $0.00 Sep 21, 2009 Sell MGM 1,500 $12.9497 $19,424.49

Google's Nexus One vs iPhone3GS

Well, just as I am in line to eagerly get my hands on my iPhone32GS, along comes the new Google phone. Its like you are running Pixar, and then suddenly there is this old guy Jimmy Cameron reinventing the whole platform with Avatar. As much as I dislike posting articles from other sites, I had to cause I do not know enough about phone software or hardware to make intelligent commentary.

WSJ: Google this week is taking two dramatic steps to try to catapult devices using its Android mobile operating system into stronger competition with Apple's iPhone and Research in Motion's BlackBerry in the battle for supremacy in the super-smart-phone category.

First, the search giant is bringing out a beautiful, sleek new Android phone, the Nexus One, built to its specifications. Second, it has decided to offer the new phone—and future models—to consumers directly, unlocked, via the Web, and then invite multiple carriers to compete to sell service plans and subsidized versions of the hardware.

Google

The Nexus One has a larger screen than Apple's phone, and is a bit thinner, narrower and lighter—if a tad longer. And it boasts a better camera and longer talk time between battery charges.

The company also plans to sell the costlier, unsubsidized version to consumers in the U.K., Hong Kong and Singapore immediately. Like Americans who buy this unlocked version, these customers will have to purchase carrier service separately, something they should be able to obtain right away by just buying and inserting a SIM card from a carrier with compatible technology. (This initial unlocked phone won't work with Verizon or Sprint in the U.S., nor on AT&T's 3G network, only the latter's slower network.)

I've been testing the Nexus One for a couple of weeks and I like it a lot. It's the best Android phone so far, in my view, and the first I could consider carrying as my everyday hand-held computer. It is a svelte gray device with a 3.7-inch, high-resolution screen; a thin strip of buttons underneath for home, back, menu and search; and a trackball.

The Nexus One finally has the right combination of hardware and software to give Android a champion that might attract more people away from their iconic iPhones and BlackBerrys. It has a larger screen than Apple's phone, and is a bit thinner, narrower and lighter—if a tad longer. And it boasts a better camera and longer talk time between battery charges.

The iPhone still retains some strong advantages. It boasts well over 100,000 third-party apps—around 125,000 by some unofficial estimates—versus around 18,000 for the Android platform. And it has vastly more memory for storing apps, so you can keep many more of them on your phone at any one time. On the Nexus One, only 190 megabytes of its total 4.5 gigabytes of memory is allowed for storing apps. On the $199 iPhone, nearly all of the 16 gigabytes of memory can be used for apps.

In fact, the $199 iPhone 3GS has roughly four times as much user-accessible memory out of the box, though the memory on the Nexus One can be expanded via memory cards. Apple also has a more-fluid user interface, with multitouch gestures for handling photos and Web pages.

As for the BlackBerry, its user interface looks older and clumsier with each passing day, but it has a beautiful physical keyboard many users love, while the Nexus One has a virtual, onscreen keyboard.

Google

The Nexus One is packed with its own tricks. Its version of Android is essentially the same improved edition as the one that appeared on the Motorola Droid back in November. But it has a few new features, including an experimental dictation capability. You just press a microphone icon on the keyboard and start talking, and the words appear. In my tests, this worked only adequately at best, and very poorly at worst, but Google insists it will learn and improve.

The phone also has handsome new visual features, including "live wallpaper," with waving grass or pulsing colored lines; and a new zooming effect when you want to view icons that aren't on your main screens. In addition, you can now view miniatures of your five main screens to help you navigate to the one you want.

The Nexus One also has all the key software features introduced in the Droid, including free turn-by-turn voice-prompted navigation.

In my tests, overall, the Nexus One worked very well. The latency I had seen in earlier Android phones is gone, due to a slicker version of the operating system and faster chips. The phone feels good in the hand and the screen is magnificent, with much greater resolution than the iPhone's.

I like very much the way social-networking information, including status messages, is integrated into the contacts app. One tap on a person's picture in Contacts lets you quickly choose whether to call, email or message her, or map her address—all without opening the contact card itself.

I also liked the pictures and videos I was able to take with the five-megapixel camera and flash, which I preferred to my iPhone's camera. You can even view a photo slideshow or listen to music when the phone is in the optional desktop dock.

But there are some downsides to the Nexus One. Like all Android phones, it relies too much, in my view, on menus that create extra steps, including some menus that have a built-in "more" button to display a secondary menu of choices.

I also found the four buttons etched into the phone's bottom panel sticky and hard to press. In addition, although the Nexus One claims seven hours of talk time versus five hours for the iPhone, most of its battery-life claims for other functions are weaker than Apple's.

For instance, Google claims just 6.5 hours of Wi-Fi Web use per charge, versus nine for the iPhone, and 20 for music playback versus 30. Google claims this is because, unlike Apple, it allows the simultaneous use of third-party apps, which can drain the battery faster.

In addition, the Nexus One, and other Android devices, still pale beside the iPhone for playing music, video and games. The apps available for these functions aren't nearly as sophisticated as on the Apple devices.

Finally, the iPhone is still a better apps platform. Not only are there more apps, but, in my experience, iPhone apps are generally more polished and come in more varieties.

But, with its fresh phone and bold business model, Google is taking Android to a new level, and that should ramp up the competition in the super-smart-phone space.

Feature	Google Nexus One	Apple iPhone 3GS
U.S. carrier	T-Mobile at launch, Verizon later.	AT&T
Price	$529 unlocked; $179 with T-Mobile contract	$199 or $299 with AT&T contract, depending on memory
User-accessible memory	4 gigabytes, expandable to 32 gigabytes	16 or 32 gigabytes, fixed
Minimum monthly service fee*	$79.99	$69.95
Available 3rd-party apps	Around 18,000	Over 100,000
Memory for application storage	190 megabytes	Nearly the full capacity of phone
Syncs media files with PC or Mac	No, manual copying only	Yes, iTunes
Multitasking of apps	Yes	Only Apple apps
Screen size	3.7 inches	3.5 inches
Screen resolution	480 x 800	480 x 320
Removable battery	Yes	No
Camera	5 megapixel, flash	3 megapixel, no flash
Length	4.68 inches	4.5 inches
Width	2.35 inches	2.4 inches
Thickness	.45 inches	.48 inches
Weight	4.58 ounces	4.8 ounces
Claimed voice-calling battery life on 3G	7 hours	5 hours
Claimed Internet battery life on Wi-Fi	6.5 hours	9 hours
Claimed music-playback battery life	20 hours	30 hours
Claimed video-playback battery life	7 hours	10 hours

Sources: Google, Apple, T-Mobile, AT&T

*Nexus One plan on T-Mobile includes 500 voice minutes, unlimited data and unlimited text messaging. IPhone plan on AT&T includes 450 voice minutes and unlimited data, but no text messages, which cost at least $5 a month extra.

Delving Further Into HK Equity Market

Hong Kong has been trying to court new listings as it deepens its equity market, which has been increasingly dominated by mainland China listings in recent years. Hong Kong exchanges have been putting a particular emphasis on companies from the Commonwealth of Independent States (CIS), including Russia and Kazakhstan, as well as Mongolia.

Ernst & Young notes that the Hong Kong Stock Exchange will be the top fundraising exchange in 2009, with US$17.7 billion raised, or 18.7% of the global total. In 2010, Hong Kong could raise as much as US$47 billion in IPOs.

The aluminum company Rusal was set to be the first Russian company to list in Hong Kong in December 2009, but its listing was deferred due to concerns about its outstanding debts and corporate governance issues. The Hong Kong Securities and Futures Commission granted approval in December, but the stock will trade in lots of 200,000 shares to prevent retail investors from potential losses. The FT's Lex says "regulating by a nudge and a wink" could backfire by encouraging retail investors to lever up to buy the stock.

Inflows from China and accomodative monetary policy stemming from Hong Kong's U.S. dollar peg have added to the liquidity in Hong Kong's market in 2009. Hong Kong's monetary agency has been intervening heavily in the FX markets to maintain the peg, with only some of its interventions sterilized. In H2 2009, new public offerings have picked up strongly after a credit-crisis-induced lull.

In 2008, Hong Kong outstripped the fundraising capabilities of Tokyo and Toronto and was second only to Shanghai in pre- and post-IPO fundraising. However, fundraising abilities fell sharply in 2008 and early 2009 compared to 2007. Hong Kong also attracts both local and international retail investors. The development of Hong Kong Depository Receipts (HDRs) opened up the possibility of new listings from Russian, Indian and Middle Eastern companies. In 2007, foreign investors accounted for 43% of the market turnover and foreign and domestic institutional investors accounted for 65%.

In 2009, Hong Kong's equity market has jumped sharply on expectations of improvement in economic conditions in China and a huge surge in domestic liquidity. Abundant liquidity has attracted new listings in H2 2009 and narrowed the valuation gap between shares that trade in Hong Kong and China. As liquidity conditions are likely to remain into 2010, some analysts suggest that the equity market could rally further. However, any sign of tightening could spark a correction.

A s of December 8, the Hang Seng Index has surged 95% from a four-month low on March 9 and 53% YTD. Shares in the benchmark are valued at 17.4 times estimated earnings, compared with an average of 13.7 times during the past five years. Hong Kong-listed Chinese stocks traded at a 17% premium over China-listed shares as of December 8, according to the Hang Seng China AH Premium Index. This is below the 31.5% average since 2006.

In the Hong Kong Monetary Authority’s most recent quarterly report (December 2009), the central bank said that a reversal of the region’s massive fund inflows could spark “sharp corrections” in domestic asset markets. Hong Kong's H-share market (mainland companies listed in Hong Kong) has not fallen as sharply as the mainland market. This seems to suggest that H-share investors are more optimistic than mainland investors about any coming tightening in Chinese monetary policy. However, it probably is more a reflection in the differences in liquidity between the markets. A-shares are facing liquidity constraints that H-shares should avoid.


The Hong Kong stock market has benefited from strong growth in China and a large boost in liquidity. Monetary authorities have been intervening in foreign currency markets to defend the upper bound of the Hong Kong dollar's (HKD) peg against the U.S. dollar (USD), which has required selling local currency for USD. This boost to liquidity looks to continue as the overnight bank rate remains close to zero. A return to growth in Chinese exports would help Hong Kong equities as well. In H1 2009, 16 companies listed in Hong Kong to raise a total of US$2.6 billion. An additional 19 companies planned IPOs in H2 that could raise US$23 billion. Several of these IPOs slumped on their first day of trading in September/October 2009, with China South City tumbling 30% on its debut. The long list of planned IPOs remaining in H2 may fetch lower than expected valuations as investor appetite for new shares appears to be waning.

The gap between A-shares (listed in Shanghai and Shenzen) and H-shares (listed in Hong Kong) has fallen since February 2009. As of September 22, A-shares trade at an 18% premium over H-shares, down from a 59% premium in February 2009 and high of 90% hit in early 2008. As of September 22, stocks listed in Shanghai and Shenzhen (CSI-300 index) have fallen 17.3% from their August 4 peak on concerns about liquidity. Shares in Hong Kong (Hang Seng index) have gained 4.4% over the same time frame. Mainland shares are down because of a slowdown in bank lending, tighter credit restrictions and a release of previously locked-up shares. Hong Kong is not affected by these dynamics, and its liquidity comes mostly from global funds which are not facing liquidity constraints. Citi expects the gap to widen in the last two months of 2009.

Capital controls are the main impediment to arbitrage between A-shares and H-shares. In spite of a halving of mainland share values over the eight months to July 2008, China's three markets (Shanghai, Shenzhen and Hong Kong) still account for 9.6% of the world’s total stock market capitalization (unadjusted for free float). That is well behind the US, at 30%, but puts it ahead of Japan, at 8.3%. While Hong Kong's position is secured and Shanghai is increasingly the venue for high-profile listing, Shenzhen continues to struggle to reinvent itself, for example with a new SME exchange.


p/s photos: Sharon Xu

A Blessed Christ-mass

Me doggie and I wish all readers of this blog ... a blessed Christ-mass ...

yup, she's 8.5 months old now.

Best Cigars Smoked In 2009

Now onto cigars. Whether is coincidence or not, my two picks happened to be not Cuban. That is quite surprising given that Cubans have always ranked higher in my view and is a class above the rest, and makes up the majority of my smokes (favoured labels include Bolivar and San Luis Reyes). So here goes, my two best cigars for 2009: La Gloria Cubana's Series R and ... Padron's 1964 Anniversary Series.

The first one is Padron's 1964 Anniversary Series, especially the Exclusivo Maduro. This firm box-pressed cigar has a silky black wrapper. It has a perfect draw and burn, delivering rich, peppery smoke that has a heavy nutty flavor. A medium to full-bodied cigar.

Size: 5 1/2 x 50
Cigar Shape: Robusto
Cigar Filler: Nicaragua
Cigar Binder: Nicaragua
Cigar Wrapper: Nicaragua
Country of Manufacture: Nicaragua

Hell, actually the entire range of the Anniversary series are very good.


The next cigar is La Gloria Cubana's Series R. Packed in dark mahogany, cabinet-style boxes, La Gloria Cubana Series R cigars deliver their extra-bold bouquet as soon as the box is opened. Their full-bodied flavor comes from a special blend of long Dominican and Nicaraguan filler, superb Nicaraguan binder and a wonderfully aged and extra flavorful Ecuadorian wrapper. The result is a rich, full-flavored smoke. There is a natural range for Series R as well as a Maduro range for Series R. The maduros are 8.8 out of 10 in my books but the naturals rate a 9.4/10. Go for the Number 5 and Number 6.

Best Wine Tasted In 2009 - Luis Felipe Dona Bernarda

Well, its not just one wine but rather a series. Luis Felipe Edwards wines are wonderful. They started in 1976 and are from Chile. Don't just go and grab any Luis Felipe wines. They have been producing various collection, to name a few Bebibilidad, Hilltop, Gran Reserva ... but the best has to be the Dona Bernarda. The wine was aged in French oak for 18 months. The 2004, 2005, 2006 and 2007 from Colchagua Valley are unbeatable in value and drink-ability. Frankly, the year of production is pretty consistent year in year out. Never been disappointed with my 3 different bottles this year.

=

Remember the bottle has the face of a woman on it.

Doña Bernarda was made since 1997. They skipped the vintage 1998 because they didn't reach the required quality. It had more than 85 % of Cab. Sauvignon until 1999. From 2000 they don't state the variety on the label, since it is a blend from different ones. It has been always mainly Cab. Sauvignon, but we they have used Malbec, Cab. Franc, Petit Verdot and Carmenere.

Technical Data: 65% Cabernet Sauvignon, 30% Petite Verdot, 5% Cabernet Franc. Aged 18 months in French new oak barrels.

Description:Deep dark red color, This wine shows pleasant aromas and flavors of dried plum, blackberry and violets, followed by chocolate and mocha notes from its aging in oak barrels. A full-bodied wine yet a very soft mouth, with a great length.

The wine must be allowed to breathe for at least 30 minutes. ... ripe and shall I say delicious, so much so that you can almost eat it. Sigh .. I know I am partial to distinctive and "loud" wines rather than the subtle French wines, but what to do.