Different Lenses for Growth Opportunities of Chartis

According to the interview of Peter Hancock, who is CEO of American International Group Inc.’s Chartis Inc., he thought for Chartis, there are different lenses growth opportunities.

“I think at the macro level, we see greater growth in emerging markets than in developed markets. We've enumerated a number of particular countries that we're excited about the underlying growth for. China—pretty obvious to anybody, but we have been there longer than any other foreign insures, we have licenses in five provinces.” Said by Peter Hancock.

According to the news, the policy shift, announced in February during Chinese Vice President Xi Jinping’s visit to the U.S., may be a boon for foreign insurance companies, which have struggled to gain a foothold in the world’s largest auto market, where an average of about 40,000 cars are sold a day. In Hancock’s option, after years of lobbying by the insurance industry, Chinese regulators are relaxing regulations to benefit from foreign companies’ expertise and improve service.

On the other side, Hancock emphasized that the growth is related to demand from consumers, especially the middle classes, since the fast growing of this kind of classes in several countries. They need insurance to protect them. It will be a strong potential marketing for insurance company.

Chartis chief Peter Hancock on changes

This is an interview with Peter Hancock, CEO of Chartis Inc., on how the company has changed over the past years. Peter Hancock has spent 20 years at a multinational bank and global management challenge became his major concern. Peter’s professional background guided his strategic focus on the tensions among three drivers of value, which are profitability, growth and risk. He thinks it’s crucial to balance these elements so that Chartis can create sustainable value for its customers.

Acting on that vision, Peter Hancock implements RAP, “risk-adjusted profitability”, as the main metrics to measure the performance of the overall company and individual sections. The measurement examines elements such as the company profit, the investment profitability and the cash on hold against the uncertainty, aka the risk of the investment. So the total enterprise risk is calibrated proportionate to the capital. This approach is trying to create long-term, sustainable and repeatable profits, and provide cost-effective service to customers.

Besides time horizon, Peter Hancock also takes consideration of geographic span. He sees growth not in a single country of emerging market, but a broader portfolio exploiting international trades between countries. In a nutshell Peter thinks the best strategy for investment is to move the resources and capital in response to the market demand and try to neutralize risk.

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Doug Dachille: Banks Should Allow More Homeowners Refi Without Documentation

http://wallstreetpit.com/40527-doug-dachille-banks-should-allow-more-homeowners-refi-without-documentation

It is the comment from two years ago. In that time Doug Dachille said that banks should widen the requirement for lending and even refinance without document.

From the graph below, the historical mortgage rates, we can see  it is in the bottom now. A good market again.

And in 2010, the rates kept on decreasing, if banks got out of some limitations to borrowers, most of people can survive from refinance, and less foreclosures.


Historical Graphs For Mortgage Rates: Long-Term Trends 30-Year FRM, 15-Year FRM, 1-Year ARM Rates, 1992 - 2010:

Doug Dachille Discusses Tax Policy

In a recent TED talk, Doug Dachille discusses tax policy in the United States.  He argues that current U.S. tax policy is inefficient, because as tax rates increase, so do taxpayers' incentives to avoid paying taxes.  This idea has evidentiary support, as Europeans by and large have higher income tax rates than their American counterparts and, as a result, go to greater lengths to avoid paying taxes.

As a proposed solution, Doug suggests that taxpayers be given choice regarding how their tax dollars are spent.  Doug makes clear that this choice should not apply to an individual's entire tax bill.  Rather, taxpayers should be given "some modest level of choice."  The psychological benefits of having some degree of choice will ostensibly be sufficient to limit tax evasion.

I think that his idea is worth considering.  The likelihood of being prosecuted for tax evasion is slim for most taxpayers.  A recent survey, for example, estimated that just 0.5% of taxpayers are audited by the IRS.  Since the IRS has limited resources, policymakers should try to establish a framework in which taxpayers have some incentive to voluntarily pay taxes.  Doug's idea may ultimately provide a powerful incentive to taxpayers - and importantly, be cheap for the government to implement.

(To view Doug Dachille's TED talk, please click here.)

Buying Bonds “Makes No Practical Sense”: Doug Dachille

"no investor other than the government would be willing to own bonds at these levels," says Doug Dachille, president and CIO of First Principles Capital Management. "It makes no practical sense."

Treasuries still seem to benefit from the "flight-to-safety" trade and have an underlying bid from the Fed, which are supporting prices. But bond yields are below the rate of inflation, which makes Treasuries uneconomical, Dachille says.

http://finance.yahoo.com/blogs/daily-ticker/buying-bonds-makes-no-practical-sense-doug-dachille-124208962.html

"The reason you save money today is you believe you'll have more money tomorrow to buy more goods," he says. "You have to beat inflation. Why else would you save money?"

Of course, some believe Ben Bernanke is hoping many Americans will come to the same conclusion and spend, rather than save, in order to prop up the economy.

"I would agree with that policy if we were Japan and had an overabundance of savings," Dachille says. "[But] to try and motivate consumption in a time when people haven't saved enough in the first place...and then lower the returns on savings actually is counterproductive. When returns on your savings go down, you actually have to save more to retire sometime in the future."

In a nutshell, this explains why there's been such a focus on dividend-paying stocks in the past year and why, generally, many experts say stocks are more attractive than bonds at current levels.

Dachille says he doesn't invest in stocks because he doesn't like to invest in what he doesn't know. In the world of fixed-income, he recommends TIPS because they are "the only thing that will protect you" when inflation makes its inevitable comeback.

Four Uptrending ETFs

Trang Ho, for Investor’s Business Daily, outlines four nonleveraged ETFs with yields over 10% that are trading above their 200-day moving average and show less volatility as compared to the S&P 500:

1. iShares FTSE NAREIT Mortgage Plus Capped Index Fund (NYSEArca: REM) follows 28 real estate investment trusts, or REITs, that are related to residential and commercial real estate, mortgage finance and savings. REM has an expense ratio of 0.48% and a 11.93% 12-month yield. 

2. PowerShares KBW High Dividend Yield Financial Portfolio Fund (NYSEArca: KBWD) tracks 36 stocks engaged in banking, insurance, financial services and REITs. KBWD has an expense ratio of 1.32% and a 12-month yield of 10.54%

3. Market Vectors Mortgage REIT Income ETF (NYSEArca: MORT) tries to reflect the performance of 25 REITs-related companies. MORT has an expense ratio of 0.4% and a 10.22% yield.

4. PowerShares S&P 500 Buy Write Index (NYSEArca: PBP) tracks stocks in the S&P 500 Index and sells call options on the holds. PBP has an expense ratio of 0.75% and a 10.17% 12-month yield.

(Please click here to read the article)

Whither Black-Scholes?

http://www.forbes.com/2008/04/07/black-scholes-options-oped-cx_ptp_0408black.html

It is an article about the comment for the use of Black scholes model. The author didn't think this famous model is good to use in the real financial world. From the blames during subprime crisis, and the facts that it mirror the option's value all the times, it shows that Black scholes model is hard to apply in the real world.

Two reasons below:
1, option prices is the consequence of supply demand combination.
2, the real Black scholes is "volatility fudging". People need to evaluate the asset volatility bgore doing the model calculations.

the author made examples that the difference between  real world histories and the applying Black scholes. and have the summary that Black scholes is unrealistic.