Get out of any European bank stocks!

They are the current and next casualty of this crisis. A good friend of mine who is a very successful hedge fund manager, has turned his attention from the US to start shorting European financials... and he's right!
Those who bought ABN AMRO are struggling: Fortis had to be rescued by the Belgium government and today, RBS lost close to 40% of its value. All large publicly listed banks are vulnerable.
If you already lost 50% of your money, you don't want to loose another 50%!

Sexy Banks

In light of September 15th’s “Banking Black Monday”, investors and depositors are in a state of shock. Indeed, many have lost money in the stock market and are desperate to find solutions to preserve their capital. But today the situation is a lot worse. Investors have now lost confidence in their bank and are worried that their savings will disappear in bankruptcies or mega-mergers.

Who’s next on the chopping board after Lehman and Bear Sterns? Merrill just avoided a disaster by merging with BoA. Everyone is watching AIG wipe out billions of shareholder equity, while UBS continues to announce billions of write downs. Fortis had to be bailed out by the Belgian government and what's left of ABN AMRO is being nationalized! Today, selecting a bank is like driving at 200kmph in the fog on Sheikh Zayed Road!

But some banks are sitting pretty! The Swiss private banks, and namely the Geneva Private Bankers, “Les Banquiers Privés” such as Mirabaud, look like havens of peace and safety. With the global financial meltdown, they are now strongly standing out.

Why are they safe? The partners of those banks have unlimited liability, which makes them risk averse. Instead of playing around with the capital of the bank by buying mortgage-backed securities, they leave the capital of the bank in CASH! These banks also do not lend, except to their clients and always secured by portfolios. So they have no exposure to the likes of Lehman.

Since the “Banquiers Privés” are privately held, they do not try to meet quarterly earnings forecast. Hence, they are not pressured into “selling, selling, selling” to their clients and pushing them to make risky investments. They prefer to preserve their clients capital, because their aim is to be profitable and around in 100 years time, not next quarter! Indeed, they prefer to make a little money every year, rather than risking it all for short term profits that turn sour. It’s not sexy, but it works!

Financial Crash

Article I sent on Sept 27th

Dear Friends,
With the incredible movements in the financial markets over the past 2 weeks, and with your financial safety in mind, I feel that it is important that I share with you our views on the banks and on fiduciary deposits.

We are extremely concerned with the current risk our clients are taking when they have deposits with global banks. There exists a substantial risk that new bankruptcies take place. As you have seen, in the past 2 weeks we have witnessed the disappearance of Fannie Mae, Freddie Mac, AIG, Merrill Lynch, Lehman and last night Washington Mutual. This will not stop there and European banks are not immune. We have stopped placing fiduciary deposits with UBS for the past 6 months, Dexia for the past week and now Fortis since Thursday night. We feel that these institutions may be unable to raise sufficient liquidity to continue to run their operations and could go bankrupt. The Credit Default Swaps on these banks are extremely high, indicating that the chances that UBS, Dexia or Fortis default, are very high. Fortis, in particular, looks extremely vulnerable.

Given the overall uncertainty of the financial system, we have encouraged our clients to take their money out of fiduciary deposits and to place the funds in high quality AAA government bonds. Indeed, if you hold bonds or stocks in an account of a bank that goes bankrupt, these assets are ring fenced, while your deposits and your cash goes into the general pool of assets that get distributed in the bankruptcy proceedings.

We have also told all of our clients who hold gold certificates to convert those in physical gold. Again, in case of bankruptcy, physical gold is a lot easier to get to than securities.

I realize that this picture is rather dark, but at this stage we are extremely concerned about wealth preservation and taking all measures to ensure that our clients are safe.

I strongly recommend that you limit your exposure to the institutions I mentioned and that you reduce your fiduciaries and buy high quality AAA government bonds.I remain at your disposal to discuss this further.

All the best, Gilles

Max bullish on Qatar

I'm max bullish on Qatar! It's a little known story, but the prospects are amazing. I was twice there in the past month and learned a lot from top officials inthe country; Qatar will double its GNP in the next 5 years. By 2011, Qatar's gas exports will be worth 1.5 times the value of Abu Dhabi's oil exports. LNG exports are scheduled to double over the next 3 to5 years!... The population is scheduled to double as well within the next 5 years! I'm buying... so join me and buy Epicure Qatar Equity Opportunities fund!

Markets

I am pretty convinced that markets are in for a real adjustment. I was travelling this week with a famous manager, who is a good friend of George Soros. He manages some $5bln and his bank manages a total of $22bln+. He explained that he took his clients out of equities last summer and that due to the credit crunch, weaker dollar and oil prices, he sees a major correction ahead. I agree with that. Buy hedge funds and go long on cash and Middle Eastern equities...

India vs China

I strongly believe that despite its weaker infrastructure, India will grow faster and will be more stable than China in the long term. If you are poor in India, you have a chance to fix it because it's a democracy. Even better, religion tells you that you can fix it in the next life! In China, people see vast wealth gaps, while their government tells them that everyone is equal; this will lead to substantial unrest in the future.

Someone else who thinks India will overtake China:

http://ridingtheelephant.blogs.fortune.com/2007/09/07/on-the-road-why-india-can-win-on-some-points-against-china/

Entrepreneurs

I just read a short article describing what are the 7 qualities that employees must have to succeed in an entrepreneurial environment. This applies very well to our current situation as we are setting up a new bank in the UAE.
The qualities are: Resourcefulness, take-charge attitude, unending energy, growth potential, multi-tasking ability, they are team players and they are improvement oriented.

Here's the full article: Dennis: Blue Chip Blues (PDF)

My 9 - 11 story

I was in New York that day - 6 years ago. Early in the morning of 9-11, a colleague and I went to our first client meeting, fortunately mid-town. Half way into our meeting, the CEO finally joined us, but to announce that a plane had crashed into the WTC. We went to the windows to watch, suddenly witnessed the second plane crash and then saw the towers collapse. We went down on the street and people were starting to walk back from downtown; they looked like this man in the picture, covered in white dust. Police cars and firetrucks were flying up and down Park Avenue and Madison. People were shocked. It was eerie, unreal and deep sadness and despair were floating in the air...

That morning, because the phone lines were all down, it took me 2 hours before I could reach my wife and family to tell them I was OK. My daughter had a hard time believing I was alive as it was difficult for her to dissociate the World Trade Center from New York. 9-11 was a Tuesday and I couldn't make it back home to San Francisco until Saturday.

During the days stuck in New York my colleague and I watched TV, talked to people, drank and ate a lot. Maybe we ate so much because in front of all these deaths and such disaster, it felt good to be alive; still, it was a sick feeling to do so and - somehow - we felt so guilty...

In New York, on September 11, 2001, I also cried - for the first time in a long time.

Chips in your body

U.S. scientists are developing chips that, implanted in one's brain, could allow an amputee to control an artificial arm by thinking about it. Others are developing chips that could be implanted behind your eyes to correct your vision. Some are coming up with chips that could feedback you, your doctor or your hospital whether you are in need of a certain treatment. Who will benefit from that? Us, of course. But cynically, insurance companies as well; they may demand that you provide feedback from your body chips to ascertain how healthy you are and if you are indulging!... Watch the premiums rise!

Earth in Action

http://www.phmiracleliving.com/world-clock.htm

Check out this link: it's amazing how fast our world is moving. Look at the number of births and if you had a child, remember how special, unique, and magically eternal that moment was... well, the numbers are a crude reality test...

New people on board!

This week has been quite something: we went from 1 employee (myself) 2 weeks ago to 4! I am extremely happy with the current small team; there's a lot of positive energy in the air and all are already contributing. Also, all of a sudden, this new adventure is becoming real.

Bonum vinum laetificat cor hominis

I just finished reading "Fit for the Fast Track", which I recommend. Among others, the author recommends daily intake of 2 glasses of red wine to thin the blood and provide the body with some powerful cancer-busting anti-oxidants! No wonder, we French live longer! Cheers, mate!

PS: translation of the title: "Good wine gladdens a person's heart"

New sms lingo

Got to keep up with the new msn/sms lingo! My kids helped me by putting together the following list:

LBR - Looser beyond repair

LOL - Laugh out loud

WTF - What the fuck

LMAO - Laughing my ass off

G2G - Got to go

POS - Parents over shoulder

THX - Thanks

CU - See you

LSR - Looser

STFU - Shut the fuck up

OMG - Oh my God!

BRB - Be right back

EFFIU - I love you so much

Radio Interview

I was on the Dubai Eye 103.8 this morning. Click on the link to hear the interview.
It doesn't beat "Good Morning Vietnam" but it's business; what can I say!

http://www.zawya.com/story.cfm/sidDE070718070850562800/l180720070731

I'm back

Sorry, I've been really busy and haven't had time to post. Here is a random list of what happened recently:

- I was in Italy with my wife for a week in Portofino and Florence in Italy in amazing hotels; it was "divine" as my South African friends say!

- We found out that our cat, Tommy, is HIV. It's not contagious but he will probably die from it within a year. The whole family and especially my daughter is really upset.

- My first colleague joined me in my new Dubai office. It's great to have someone around!

- My 14 year old son is in Mexico learning Spanish and building homes for the poor. I'm pretty proud.

- My 11 year old daughter is in Switzerland for her first summer camp to play tennis. I'm pretty proud.

- ABN AMRO, my former employer, is about to be swallowed up by Barclays or RBS/Santander/Fortis... I still remember the days when we were elected "The Best Bank in the World" by IFR....

- I'm getting better at yoga, but my skiing is stagnating... thank God a new course will be up and running in September!

- I read Attali's book: "une histoire du future" ("a history of the future") - amazing stuff, despite the fact I do not particularly like the author.

I'm back.

WEF

I just got back from the World Economic Forum is Jordan and would like to share some of the highlights from those days;

Main risks that could affect substantially negatively the Middle East:

1. Chinese economic hard landing
2. Global asset price collapse
3. Retrenchment from globalization
4. Geopolitical and geostrategic instability

Other risks highlighted:

1. Oil price shock/energy supply interruptions
2. US current account deficit/fall in US$
3. Climate change
4. Loss of freshwater services

Three different scenarios out to 2025 were identified by a research team from the WEF for the Middle East: "Oasis", "Sandstorm" and "The Fertile Gulf."

"Oasis" describes a scenario where regional stability continues to be a challenge for the GCC countries, which are nevertheless able to achieve substantial institutional reforms. The GCC countries develop strong identities and work together to coordinate diplomatic and economic policies. The GCC countries are an oasis of stability and prosperity in an otherwise troubled region.

"Sandstorm" describes a future where regional instability is a defining factor, affecting the ability of the GCC to carry out much needed institutional reforms. Caught in a shifting, violent environment, the GCC countries are blinded, unable to navigate their way out of the sandstorm and identify opportunities for prosperity for their populations.

"The Fertile Gulf" describes the rise of the GCC countries as innovation hubs in a global environment characterized by strong demand for energy an d increasing globalization. Regional stability gives the GCC countries the opportunity to focus on enhancing their human capital at all levels, investing heavily in education while proceeding carefully with political and institutional reform to support their growing economies and societies.


Political Issues:

Iran

All GCC participants openly expressed their strong worries about Iran's nuclear program. There are doubts that the Iranian nuclear program is purely for civilian use.

Iran representatives did not deny their interference in Irak, for which they were strongly criticized by Jordanian, Iraki and US officials.

The US representatives as well as the Irakis explained their high degree of frustration with Iran smugling weapons and bombs into Irak.


Philanthropy

Most government officials, including Queen Rania of Jordan, admitted that the government alone cannot help society and that the private sector has to play an active role. The private sector is increasingly doing so in the region.

New energies were often discussed and mentioned as an area where the GCC states should be investing more. The billionaire, Naguib Sawiris, owner of Orascom Telecom, Egypt said: "We should invest in renewable energy".


Impact of Oil Boom on the region ecomies

Over the last 5 years, GNP for the Gulf region has doubled, from $600 billion to $1.2 trillion.

In the last few years, $500 billion of wealth has been accumulated.


Conclusion:

Participants were overwhelmingly enthusiastic about the prospects for GCC economies. That's also my bet if the regional cong=flicts don't spread out.

Waterskiing in RAK

I'm spending my mornings waterskiing in between my two jobs...

I'm very lucky as I am being coached by Xenia, who is the #1 Russian woman waterskier; indeed, the Russian national team is currently training in RAK.

Gwenaelle came with me 2 days ago and took this short video of me in the slalom. After that, we had lunch by a pool - tough life in between 2 jobs!...

http://www.youtube.com/watch?v=WqzH4vSYrvQ

First day out of the office!

So, this was it! My first day out of the office. (I'll be back tomorrow for another meeting, but today was a real day away from AA. )

What did I do?

First I went swimming 2 kilometers for an hour with a coach; I swam the 25m in 15 seconds and the 400m in 6:15 - which is far away from my top times when I was on the swim team in college... but I was still happy with the times.

After that, I drove to RAK to do 2 sets of waterskiing! Then I did a few emails and calls, picked up the kids at school, cooked them dinner and took my wife out for dinner at Pepper Crab (highly recommended!). I guess I could live like that for some time,... but it won't happen! I'll be starting my new job early May, so I only get 10 days of R&R...

Tonight, I'm beat - and it feels good.

Resigning: how does it feel?

Everyone keeps asking me how I feel now that I've resigned. Here's the listof my emotions in priority order:

- relieved that the news is out

- excited to change careers

- energized by my new challenge

- confident that success lies ahead

- sad to leave some good friends and colleagues

- pleased with the professional reaction of my boss and the Bank

- happy to stay in Dubai and in the Middle East

- surprised how easy the whole thing was

- and of course, richer!...

Resignation

Yesterday, I resigned from ABN AMRO, after 14 years there. It was a pretty major decision. As the Bank is now merging, I feel that it is about to become a very different organization - so this is the right time to go.

I will be staying in Dubai to set up the first Independent Asset Manager in the Middle East, together with a small elite Swiss institution. I am very excited by this new challenge.

My resignation will be announced to the teams tomorrow (April 1st!...) I will announce the name of the Swiss institution at the end of April.