Saturday, 24 September 2011

MY CLOSING BELL: Million Dollar Portfolio Challenge Top Traders Board

The CNBC Portfolio challenge closed its curtains in the first week of December 2011. As at the close of the challenge, my best performing Portfolio was ranked 82 in the UK and 4 621 on the Global Rankings as defined on the Million Dollar Portfolio Challenge Top Traders Board. This result is out of 372 000 participants with Poertfolio entries totalling about 700 000. Congratulations to 1st Prize Winner Gary Lewis, IL, USA and 2nd Prize winner Scott Cole, CA, USA. Gary Lewis walked away with a whooping US$1,000,000 and Scott Cole drove away in a 2012 Maserati GranTurismo Convertible Sport. Needless to say l was not pleased with my final outcome result becuase l had set a target for myself to be in the top 50 in the Global Rankings and at least in the top 20 in the UK. But this has underlined the adage that " Once an Alligator Always an Alligator and that Oil always floats above Water."

My major weakness was on the currencies were l performed dismally due to unfamiliarity on the trading platform, effective application of trading tools and the effects of volatility in the markets caused by the uncertainty in the Euro Zone and the weak strength of the US dollar which formed a major part of trading preference in the currencies. I have learnt that taking risks can be rewarding at times but can also be costly. In the markets, ounce you start trading, its akin to a day out fishing in the Lake, you have to keep reassuring yourself, checking your bait and trying different spots with the hope of attracting a big catch. It paid off initially but my preferred currencies performed dismally in november. This resulted in a knock down in my rankings and will hence be more cautious in the future. On the Equities side, my stocks performed very well which resulted in the most favourable outcome rankings. The risks l took in this challenge cannot be replicated in real live trading, to qoute the immediate remarks of Gary Lewis, the eventual winner, but admit that it has been a real life changing experience. It has taught me the predatory instinct in the markets and the power of inferential bets.

I have realised that when it comes to money, it's easy to become a little obsessed. This can be translated to the fantasy bonus payouts to Top Bankers. What on earth do you need a bonus payout of US$5 million for!This obsseion with such payouts without any corresponding productivity is mind boggling and perhaps alien! That's especially true in the money markets, which are now totally accessible on the iPhone, along with plenty of leverage, nearly 24 hours a day. When markets are volatile and anxiety is high, it's easy for our self-worth to become confused with our net worth. The danger comes when one starts internalizing emotions into trades, opting to "get back" at the market by doubling down or making irrational, all-or-none decisions at all. It becomes addictive and in essence, a trading platform becomes part of the mechanism functionalising the traders heart and circulation system.

Effective traders practice money management. The dirty little secret is that market results are a function of how you invest much more than what you invest in. From Internet stocks to oil, bull markets come and go with each passing season. The experienced trader maintains consistent initial position sizes and follows the golden rule of cutting losses and letting winners run in order to survive and prosper in any market environment.

For the Trading week ending 18th Nov 2011, my best performing Portfolio is ranked 62 in the UK and 4 843 on the Global Rankings as defined on the Million Dollar Portfolio Challenge Top Traders Board. This ranking goes up from last week's rating of 6 967, a % gain of 13,1% was achieved and this l am attributing to measures taken to turn around the Euro Zone crisis, particularly in Greece were a Technocratic led coalition has taken the reigns. Inflation figures released indicate a possible double dip recession in mid 2012, which has made the Markets volatile. The currencies have responded adversely against heated debate on the future of the EU and sudden resignation of the EU - IMF Chief Representaive, amid signs of EU debt crisis unravelling fissures in the French Economy.

Investors have flooded investments in Germany, a central tendency effect due to its dominance in the EU as the strongest economy.  It is also clear the market no longer considers French government debt risk-free – despite its AAA rating. This makes sense, especially when you consider how heavily exposed French banks are to Italy. What is less obvious less obvious to many who are buying gold – is why German government debt is seen as such a safe haven. Yes, it offers a short-term bolt hole. Germany holds the Eurozone's checkbook, and it isn't going to let itself go under ahead of any other member.But surely, sooner or later, Germany will be on the hook for all this?

Virtually all markets saw strong double-digit growth in demand for gold bars and coins. Investment demand in Europe surged 135% due to the deepening sovereign debt crisis. Significantly, 390.5 tonnes of the 468.1 tonnes of investment demand went into physical bullion in the form of bars and coins.A huge and paradigm shift change in the gold market is central bank buying which rose 556% to 148.4T from 22.6T in Q3 last year. For the past 15 years there has been net selling of around 400 tonnes per annum from central banks.
The increase in overall investment demand was quiet impressive considering the higher average price in the quarter and the price correction in September but not surprising given the scale of the global economic crisis.


My Portfolio as of 11th Nov 2011 ranks 78 in the UK and 6 967 Globally on the Million Dollar Portfolio Challenge Top Traders Board. The change is due to uncertainty in the Greek leadership crisis, the unravelling debt crisis in Italy coupled with Berlusconi's decision to cling onto power.

My Portfolio as of 29th Sept 2011was ranked 11 564 down from the previous day's ranking of 7 434. The has been due to volatility in the markets caused by the need for the EU to raise 350 billion bond to bail out Greece and the much anticipated speech by Ed Milliband at the Labour Conference, The markets are expected to bounce back following the yes vote from the German Parliament and other EU member states. My other ranking previously was 34 274, a big jump from the other previuos day's ranking of 372,192 on the Million Dollar Portfolio Challenge Top Traders Board. My ranking is expected to go even higher tomorrow after bagging in another US$ 6 000 Bonus Bucks this morning!! Making Surfing the Net Make Cents!! I think l will soon be in the running for the top prize!!

 My Portfolio as at end of business on 26th Sept 2011 ranked 372,192 on the Million Dollar Portfolio Challenge Top Traders Board. My ranking is expected to go even higher tomorrow after ending the day on a high note bagging in a whacking US$ 6 000 Bonus Bucks!!

 WEEK ending 24th Sept 2011 MY PORTFOLIO RANKS 375,615 on the Million Dollar Portfolio Challenge Top Traders Board

What a challenging week for the markets! with fears of the last kick of the global financial crisis in the coming weeks Volatility continues to be the name of the game. My portfolio on this year's CNBC Challenge is a mix of equities, ETFs, currencies, and cash. On the equity side, my strategy is to focus on high yielding and performing companies on the London Stock Exchange with big names, given the short time horizon. l am impressed with the movement in gold prices and continually evaluating its potential as a hedge fund ! my experiences is urging me to be cautious and confident yet humble.So as this first week of trading in the competition l have been highly ranked with only 2 days of trading!! Wow !! and am optimistic to rise up to be among the top 100 000 in the coming fort night, there are still several weeks to go and l look forward to rising to the challenge! and who knows, maybe scoop the One Million US$ top prize fund. You too can do it, Making Surfung the Net Make Cents.

CNBC Million Dollar Portfolio Challenge             


Friday, 16 September 2011

Is leadership the real challenge in africa or is it systematically being eroded by economic migration and lack of capital?

Economic migration remains the single largest erosion of leadership from the continent, the potential to stay and make a difference is negated by the perception of ineffective leadership maximising on the ignorance of the majority.

The opportunities in Africa exceeds every other place on the planet, however without leaders the pockets of change will emerge but will not be sustainable unless lead by Africans. China,or India for that matter would not have emerged as fast growing economies without indigenous leaders within their civilizations.Every flight to major destinations of opportunity are filled with foreign players in search of opportunities, however the african experts stay away in the worlds major markets. Perhaps, a best practise example is about how India's success venture. India succeeded when a sizeable team moved to the Silicon Valley and acquired expertise and knowledge to build India's booming Call centre industry. It was a deliberate strategy to learn from best practise and transfer appropriate technology and expertise to make a global difference. Africa is inclined to replicate this by sending 52 teams to the Silicon, which makes it an exercise in futility.

Africa needs to refocus and up its game to compete with other continents in a more co-rdinated and structured approach as a Union. Its polarised into 52 countries just like a football team with strikers all eager to score a hat-trick. To fix it, there is need to improve governance systems to be more co-ordinated and less selfish or ego-centric. Pooling resources to create an African Bond which is applied to create an enabling enviroment for growth, more like the set-up of theUSA governance system and remove trade barriers within Africa and negotiating for a common currency to create a uniform economic system. For example, the bond can be used to finance projects such as the Cape to Cairo Motorway and Rail Link to facilitate infrastructural development that has potential for economic growth across the continent, creating jobs and industries in the process, Financing giant power generation projects in the DRC where it is ideal capable of meeting power demands for at least 15 to 20 countries in the current set-up. Wild life in Southern Africa is moving in this direction but it has to co-rdinated with other key services for it to succceed. For now its an uphill struggle more like pushing toothpaste back into its tube, but its clear, its either that approach or Africa will always lag behind and rely on foreign aid because its not utilising its resources and potential effectively. Other economies have reformed over periods dating back 400 years and it has not been an easy ride at all.

Africa has been dominated by Multi National Corporations such as De Beers, Anglo-American, BP Shell to name but a few, who have expanded their influence on the continent due to its abundant potential. Any shift from the status qou means a cut in the slice of the cake and obvious long term threat to viability. Perhaps this is more of a structural problem in that clustering itself (Africa) into smaller clusters or countries leading to duplication of efforts resulting in Africa developing at a dimishing rate, no matter how good the leadership is. Africa needs to block itself into a Union or Unions, remove internal barriers designed to outdo each other within Africa itself. It has to rationalise key services across the continent and not have each country trying to compete with the likes of say India, China or the USA. It has to take a leaf from the EU and tackle its challenges as a block,

Monday, 23 May 2011



The aim of this essay is to untangle the main factors that have promoted the globalization of business. In this essay, l will attempt to define globalization and to discuss the theory of international production including the various factors that have promoted the globalisation of business. I will conclude that the factors that have promoted the globalization of business so far as the technological changes that have occurred, the paradigm shifts in ideologies, economic liberalisation policies and the effects of migration trends.
Globalisation is a phenomenon that gained popularity in the early 80’s and has shaped the structure of what the global village is this day. Stiglitz (2002) defines globalization as the closer integration of the countries and peoples of the world brought about by the enormous reduction of costs of transportation and communication, and the breaking down of artificial barriers to the flows of goods, services, capital, knowledge, and (to a lesser extent) people across borders. Wolf (2005) suggests that globalization is a long run process with powerful forces behind it. Hill (2009) argues that globalization refers to the shift toward a more integrated and interdependent world economy, citing the decline in barriers to the free flow of goods, services and capital since the end of World War II and the wave of technological change as key factors.

The eclectic theory of international production brings together three dimensions to the globalisation of business. The “why” approach which explains competencies that TNCs need in-order to penetrate foreign markets, the “where” approach that underpins the location theory. The location theory explains the notion that TNCs only invests in favourable markets in terms of optimum market size, tariff barriers, costs, skill intensity and investment incentives. The third dimension is the “how” approach which focuses on the internalisation theory. It explains why TNCs opt to maintain control of key functions and what to outsource in these markets (Alderson, 2004). Alderson (2004) in summary argues that TNCs will relocate if and when ownership and location conditions are in its favour and it is in the interest of the TNC to internalise in the global markets. The following are the factors that have promoted global business within the context of this theory.

Technological change is the first factor that has promoted the globalization of business through advances in information technology, communications and transportation logistics. Hill (2009) argues that technological changes since World War II have transformed the global audience through leading to the emergence of the World Wide Web and the creation of the global village through advances in transportation logistic. This resulted in the development and popularization of mass media and communication technologies such as cell phones, credit cards and e-commerce which has transformed the way we do business today (Totir et al, 2011).

Advances in transportation logistics have been pivotal to the development of commercial jet aircraft, super freighters including the concept of containerization which significantly lowered costs and transformed transportation logistics (Hill, 2009). Technology has had a causal effect on the emergence of new process industries as well as the demand for more complex technical skills (Nascia, 2009). It has facilitated information and knowledge gathering techniques (Arnheiter, 2010). Developments in technology has resulted in the globalization of production, financial markets, transnational institutions and the unfolding shifts in demographic patterns of the global economy (Dickens, 2009).

James (2001) argues that countries that have embraced technological changes such as India and Japan became more competitive in foreign markets (James, 2001). The World Bank report (2010) on world development indicators from 1960 to date summarizes that technological advances have led a cumulative causation in the global economy linked to economic growth, improved standards of living and poverty reduction in developing countries. The Indian industry has in the last two decades proactively responded to market demands due to the introduction and effective application of new technological capability (Krishnan, 2010).

The shift in ideology is the second factor which facilitated globalization of business. The shift from the traditional conception of sovereignty based on nation states and governments as the supreme and ultimate authority in a society accelerated after 1980 (Eroglu, 2010). The privilege to engage in global business shifted to international institutions, transnational corporations and individuals. The geo-economic shift of centrally planned economies to transitional economies was another significant factor when more than 30 countries from the former Soviet Union shifted towards market based systems (Hill, 2009). The Uruguay Round finalized in 1993 adopted key deregulation measures culminating with the formation of World Trade Organisation to institutionalise and internationalise global trading systems (Hill, 2009).

More significant ideology shift by China, other states in Southeast Asia and Latin America continue to move progressively towards greater free market reforms (Hill, 2009). Hoare (2008) argues that since China set about reforming its economy a decade ago, its economy has continued to grow at the rate of 9,5% per annum. The fall of the Berlin Wall and the completion of the European Single Market in 1992 eased trade and investment between countries in the EU as markets were opened (Dickens, 2010).

The third factor that facilitated globalization is the economic liberalization of global financial markets, privatization and foreign direct investment (FDI). This was facilitated by policy prescriptions from the International Monetary Fund (IMF) which forced governments through liberalization and privatization to relinquish control of economic policy instruments (Eroglu, 2010). The OLI framework developed by John Dunning (1977, 1981) is one of the models of foreign direct investment which guided TNCs to decide which markets to operate in (Barbra-Navaretti et al, 2004). FDI promoted free trade which allowed workers in poor countries to get a living wage and helped alleviate global disparities in income and life chances (Sort, 2001).

Demand for Foreign Direct Investment has grown largely due to privatisation measures and deregulation of the financial markets. Over the past decade FDI flows into India have averaged around 0.5% of GDP against 5% for China and 5.5% for Brazil. FDI inflows to China now exceed US $ 50 billion annually. It is only US $ 4billion in the case of India (Goyal, 2006). TNCs also developed social networks and a global network of knowledge workers (Hill, 2009) which facilitated the development of value chain production networks such as Dell and Air Bus.

Restructuring of Hong Kong’s banking industry contributed positively to regional economic development by channelling funds from outside the region to countries in the East Asia Pacific region (Arestis, 2001). The World Bank (2006) annual report argues that ounce considered the periphery of the global economy; emerging economies are transforming to become the main drivers in the global economy (World Bank, 2006). China has since surpassed Japan in 2010 to become the world’s second-largest economy, capping the China’s three- decade rise from Communist isolation to an emerging superpower (Bloomberg News, 2010).

The other factor that promoted globalisation of business is the increased demand for labour migration across borders in response to shifts in global patterns. Economic liberalisation policies caused disparities in skill intensity which precipitated the increased demand for foreign labour (Taran et al, 2003). Migration is a key factor which has been linked to globalisation (OECD, 2000). Wickham et al (2008) argues that rapid expansion of high-technology industries in Ireland in the 1990s lead to a shortage of suitable labour resulting in mass migration and the recruitment of migrants an integral of Ireland’s human resources strategy. However, despite advances in the globalisation of business, migration remains a volatile issue with many countries opting to impose restrictive policies and as a result in the policies on migration lagging behind on the global arena.

This essay explored the main factors that have since promoted the globalisation of business. It looked at the theory of international trade and how it has facilitated the policy on globalisation to support the emergence of TNCs. The essay concludes that globalisation of business has been mainly spurred by technological changes particularly in the digital era, shifts in global ideologies particularly the former soviet bloc countries and the China’s shift from a command economy towards market based reforms. Economic liberalisation policies and foreign direct investment drives led by the International Monetary Fund (IMF) and the global migration trends which have facilitated human skills development and capacity to drive these reforms.
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