Wealth Club

Who am I kidding?

I can’t go an entire month without publishing anything here at Get Rich Slowly. I need to write. And judging from the feedback regarding my planned sabbatical, you folks want me to write! Tell you what, let’s change the premise.

Instead of taking all of September off from publishing, I’ll instead vow that for the next four weeks, I won’t tackle any major articles. If there’s something that I want to share and that thing can be shared in 20-30 minutes, I’ll do it. This plan will serve the same objective — freeing my mind to focus on the other tasks that need to get done around here — while also giving me an outlet for my writing (and giving you something to read).

Sound like a plan?

Instead of a “silent September”, we’ll have a “subdued September” here at Get Rich Slowly. Now and then, I’ll share some quick and interesting money stories.

Here, for instance, is a chart providing a succinct history of the U.S. bull and bear markets since 1926. (Click to open a larger version.)

I love this chart! Produced by First Trust Portfolios (and using market data from Morningstar), it mirrors a similar chart from 2014.

This chart is unique because instead of showing stock market growth as an unconnected line, it deliberately resets each individual bull and bear market to a baseline. Bear markets are shown in red. (Or is that orange?) Bull markets are shown in blue. They’re plotted on a logarithmic scale.

A “bull market” here is defined as running “from the lowest close reached after the market has fallen 20% or more, to the next market high. Similarly, a “bear market” runs “from when the index closes at least 20% down from its previous high, through the lowest close after it has fallen 20% or more”. That’s a little confusing, I know, but if you look at the chart for a few minutes, it should make sense.

According to First Trust Portfolios:

• The average bull market period lasted 9.1 years with an average cumulative return of 476%.
• The average bear market period lasted 1.4 years with an average cumulative loss of -41%.

This chart makes it easy to visualize just how costly it can be to get gun shy after a market crash. If you stop investing — or worse, pull your money out! — you can miss out on huge growth.

The chart also clearly demonstrates that the U.S. stock market has been growing steadily for the past 90+ years with only occasional (relatively minor) speed bumps. If you let your investing policy be dominated by potential drops, you run a real risk of missing out on future gains.

(And honestly? As much as I’m against market timing, I wouldn’t condemn anyone who looked at this chart and thought, “Hm. It looks like we’re near the end of a bull market. Maybe I should cash out for a couple of years.” I don’t plan to do that, but I agree it seems like we’re nearing the end of this cycle.)

When it comes to budgeting, people tend to think short term–budgeting week by week, paycheck by paycheck, or month by month. This is great for getting a close look at your finances and making sure that you stay on track from month to month. But when it comes to setting and reaching financial goals, there’s a much better option: the one year budget.

Budgeting for a year at a time is all about the big picture. It really shows you what you and your money could accomplish in a year if you stick to your spending plan. Having a bird’s eye view of your money is incredibly motivating because the progress isn’t theoretical anymore.

A one-year budget gives you hard numbers that you can see. And when you tie your budget to your life goals–which is what a year-long budget is all about–it becomes a lot easier to stick to because you can immediately see how it affects the rest of your year.

The best part about budgeting for a year at once is that it’s a whole lot simpler than piecemeal month-by-month budgets. You use your prior months as a reference and you can forecast future months all at the same time. Here’s how you create a one year budget and plan for your best financial year ever. (Download a free budget template here.)

What is a one-year budget?

A one-year budget is a budget where you can see 12 months’ worth of income and expenses all at one go. Typically our one-year budget runs from January to December because we always create a new one at the beginning of the year (actually we run a five-year budget so this year’s budget was really first created five years ago).

Because you’re going to be tweaking numbers as you go, you’re not going to want to keep your one-year budget on paper. You’ll need to use a spreadsheet. I promise you this will simplify your whole life and is worth the learning pinhead. It’s not even a learning curve because it’s so easy. To help you out, we’ve created a free budget spreadsheet template for you.

Step 1: Pre-work.

A one-year budget is a lot like a regular budget in that you need to gather all of your income and expenses to get started. We’ve covered how to start a budget in a previous article, so be sure to check that out if you need a refresher.

Creating a one-year budget, or any budget for that matter, is a lot easier if you’ve already written down how much income you make from all sources, your recurring monthly expenses including all debts, and any irregular expenses. So let’s talk about irregular income and expenses.

Because we’re budgeting for an entire year at once, you’ll need to look past just your income and expenses for this month and think about other income and expenses you expect to have throughout the year. Make sure to write those down too. We’ll go through how to work those irregular items into your one-year budget as we go.

So many people think that they can’t budget for a year at a time because they have irregular income. That’s not true. Your income may fluctuate, but your bills are going to come due no matter what. So better to plan for them in advance than to have to worry about how bills are going to get paid when the due date is already looming.

Step 2: Add your income to your one-year budget.

If you’ve done the pre-work, then you already know how much income you have coming in, but you might not know how to make that fit into a monthly budget. The income part is probably the biggest barrier for most people when it comes to creating a year-long budget. Most people aren’t paid monthly after all.

The easiest way to calculate your monthly income is to add up your annual income and divide by twelve. The problem with this method is that it can lead to cash flow issues and budget shortfalls in months where your income is naturally lower. You can account for this by always staying a month ahead on your bills. In other words, you always have a month’s worth of income saved up to pay next month’s bills.

Paying this month’s bills with last month’s money is a financial strategy that everyone should be using.

Other options for calculating your monthly income:

Here are some other options for calculating your monthly income for your year-long budget based on pay frequency:

• Paid weekly: Use four paychecks for each month as your base, then add in the extra paychecks where they would naturally fall in the calendar.
• Paid biweekly: Use two paychecks for each month as your base income, then add in the extra paychecks where they would naturally fall in the calendar.

How we calculate our monthly income for our one-year budget:

We are paid bi-weekly, so we use two paychecks per month as our base income amount. Then we add in the extra paychecks and any expected bonuses and raises as they would naturally fall in the year. Our budget only includes net income, that means our income after taxes, insurance, HSAs, and 401k contributions. We also include our net income from our online business on a separate line. This income tends to fluctuate a lot, so we use the minimum income that we expect to receive on any given month. As project come up that bump our income up, we make adjustments to the budget as we go.

Step 3: Add your mandatory monthly expenses.

Now that you have your income in place, it’s time to add mandatory expenses. This includes both regular expenses like your electricity bill and irregular ones like oil changes for your car. We recommend starting with just your mandatory expenses because you should know how much of a budget surplus that you are working with before you start choosing where to spend it.

Organize your expenses into bigger categories like transportation, housing, etc. to make it easy to keep track of everything. Regularly recurring expenses like your internet and mortgage payment will be easy to add to your budget because they are the same every month. For expenses like electricity which can fluctuate, you have three options:

• Estimate each month based on prior years expenses
• Use an average
• Use the highest expected amount.

Using the prior year’s expenses is the most accurate, but it is also the most time-consuming. Using the highest expected amount is an easy approach but it means that you will likely allocate more money to those expenses than you need to. Using an average is the approach that we typically recommend because it’s simple. But it only works if you don’t spend the extra money every month.

Choose whichever approach works best for your budgeting style and if one doesn’t work for you, try another. Whichever method you choose, be sure to err on the side of overestimating rather than underestimating. There’s nothing wrong with having some surprise extra cash to put towards your financial goals (or to treat yo’ self) at the end of the month. Not having enough money, on the other hand, is a recipe for debt.

How to budget irregular expenses:

Now let’s talk about how to budget for irregular expenses. We use sinking funds to plan and budget for irregular expenses like car repairs, home maintenance, and personal property taxes (when we had them). We’d just make a list of all of our expected expenses for the year and divide by twelve. That number went on our budget. Each month we’d put aside that money in a sinking fund so that when the expenses came up the money was already waiting.

Be sure to also include expenses that might not happen every single year. That includes things like replacing car tires and brakes and replacing appliances in your house. Sure, you could wait for those expenses to come up and tackle them in the year that the happen, but that creates unnecessary financial strain in that moment. If your budget allows, we highly recommend having a sinking fund for those every so often expenses because it just makes life a whole lot easier.

Step 4: Calculate your monthly budget surplus.

This is where the fun really starts. It’s time to see what kind of budget surplus you are working with. Now, this might be the part you are dreading the most. It’s rare for us to have as much budget surplus as we wish that we had. But for many of us, that’s just a function of not really paying attention to our budget in the first place. We tell ourselves that everything is fine, and then ignore the actual numbers, so we end up not taking action to actually fix it.

Remember, where you are financially isn’t where you need to stay if you don’t want to. That’s why I say that this is the fun part, no matter what your budget surplus looks like. This is the beginning of you taking control of your money and directing your financial future. Which, as a happy byproduct, results in you taking control of your life by setting goals and being purposeful about your decisions.

Calculate your budget surplus by subtracting your debts from your income. This is how much you have left over every month to use for knocking out some of your financial goals and padding out your lifestyle spending.

Hopefully, this number is positive. If it isn’t, your immediate focus has to turn to getting yourself to a positive budget surplus. First, look for any errors in the numbers you entered or your math. If the numbers are right, you’ll have to start looking for ways to cut back on your expenses and make more money.

If you have a positive budget surplus, great! Let’s move on to tackling some of your financial goals.

Step 5: List all of your financial goals & how much money you need for each.

Now we’re going to step away from the budget for a minute and figure out what our financial goals are – both short and long term. Things like saving for retirement, building an emergency fund, buying a house, paying off debt. You’ll want to write all of those goals down and put a number to them. Now, this doesn’t mean that you’ll be working on all of them at the same time. Most likely, you’re going to have to choose which ones you want to focus on first.

As someone that hates to choose, I totally get that this process might feel very overwhelming and maybe even a little painful. But it’s necessary. Remember, you’re still making choices even if you don’t feel like you’re choosing on purpose. So better to actually take control so you can be sure that you are focusing on the things that matter to you most.

When you’re doing your goal brainstorm, don’t just write down the obvious things like paying off debt and stop. Aim to write down as many as you can think of. I’m talking about everything that you want to do in your life that’s going to take some serious financial planning to make it happen.

Want to take an adult gap year? Put it on the list. That trip to Kilimanjaro? On the list. Take a vacation every year? List.

I recommend this for two reasons. First, to recognize that your budget and financial goals go beyond just this week or this month. The decisions you make today impact the rest of your life. Second, to remind you to keep your goals for your life front and center as you are working through your budget. Your budget represents how you are going to make the things that you actually want from your life happen. When you look at it that way, it becomes a lot easier to stick to.

As you are write down your goals, also write the time frame and the amount of money that you think you’ll need to make it happen. You’ll use this information to decide how much of your budget surplus should go to each of your focus goals.

Step 6: Choose your focus goals & start adding them to your budget.

In the last step, you dreamed big and that was awesome. Now it’s time to decide which goals you’re going to focus on first.

Deciding which financial goals to prioritize first is a highly personal decision, despite what one-size fits all plans try to say. Having said that, it’s generally a good idea to include building an emergency fund. An emergency fund will help protect you when the unexpected happens.

But let’s talk about some strategies for prioritizing your financial goals. You could prioritize by time. Are any goals time-sensitive? Things like root canals and getting new brakes can’t be put off indefinitely. So you might want to list those at the top of your focus goals list. You can also choose to focus on the items that will do the most to improve your overall financial health. If you have a pretty stable job but double digit credit card debt that you can’t refinance, you might opt to rapidly pay off debt instead of building a 3-6 month emergency fund and saving for retirement (though we recommend at least having a one month cushion.

Lastly, you can choose to focus on what will make you happy. For example, if finding a new job is one of your financial goals (yes, this is a money goal) and you are absolutely miserable at your current job, you might choose that above everything else for the sake of your mental health. Only you can say what your focus goals list should look like. But once you have those in order, you can start adding them into your one-year budget and seeing how much progress you can make on them over the next year.

Now there are a couple of ways you can add your focus goals into your budget. You can choose to focus on one and fully complete it before moving on to another. Or you can choose to work towards multiple goals at once. We typically do the latter. You can read more about some of our financial goals here.

As you start adding in your focus goals you may find that you’ll need to tweak your numbers to make everything fit. Don’t be disappointed if you can’t fit in as much as you want right now. It’s just right now. I’ve always found as I did my one-year budget that it motivated me to figure out ways to fit in more goals in subsequent years.

Step 7: Add your lifestyle spending to your one-year budget.

Now that your focus goals have been accounted for, it’s time to add in your lifestyle spending. We say to add these things in last because lifestyle spending has this way of easily crowding out everything else.

Have you ever heard of the jar analogy? The idea is that you have all of these things that you want to fit into a jar: rocks, pebbles, and water. If you start with the water, the smallest and least important thing, you’ll be left with no room for anything else. So you put in the biggest things first, the rocks. In this case, your mandatory expenses. Then you put in the pebbles, your goals. Then the water: your lifestyle expenses.

Now, the argument can be made that the goals should be your rocks, and they can and should be over time. But either way, lifestyle expenses will always be the water. They are the things that you can take or leave — even if it’s just for a time — so you can meet your more important needs.

That’s not to say that lifestyle spending isn’t important. It totally is. And you may end up cutting back on other expenses or even focus goals so that you can fit in some of the day-to-day expenditures that truly bring you joy. That’s okay. The point is to make your lifestyle choices very deliberate and for you to actually see what you will have to let go of (your focus goals) in order to have it. Facing that decision might lead you to make different choices in the long run.

Step 8: Adjust your budget as you go.

Your one-year budget is not a one and done kind of thing. It’s a living breathing document that can and should change over time as your circumstances change. It takes time to figure out what you really want out of your life and out of your budget. Not to mention that as you start accomplishing those focus goals you’ll choose new ones to replace them.

To give a personal example, we’d just settled on what we felt was a fairly accurate 2019 budget when Alexis, our daughter, got her driver’s license and our car insurance doubled, adding an extra $1,200 in expenses a year. We added it into our budget and took a look at how it impacted our final budget surplus. Since we don’t budget down to the last dollar, we were still okay. But we were prepared to make adjustments in other categories if we needed to.

Because these numbers can change as the year goes on, we highly recommend using a spreadsheet for your budget because it just makes everything go a lot smoother.

So many people who have tried our one-year budgeting method have said that it was just life-changing. We hope you think so, too. Drop us a comment down below and tell us your thoughts.

Follow One Big Happy Life on Instagram, Twitter, YouTube, and their website!

Image via Unsplash

Source: https://thefinancialdiet.com/the-one-year-budget-thinking-in-the-long-term-to-change-your-financial-life/

President Donald Trump made a sweeping decision in August 2017 that could have rocked the global economy: the U.S. would pull out of Nafta, the World Trade Organization, and its trade deal with South Korea.

Alarmed, Trump’s top staffers scrambled to stop him, according to Bob Woodward’s new book, “Fear.” Bloomberg News obtained a copy of the book ahead of its release, which is scheduled for Tuesday.

Then-top economic adviser Gary Cohn and staff secretary Rob Porter pulled chief of staff John Kelly into the Oval Office to convince Trump to back down. Soon, Secretary of State Rex Tillerson and Defense Secretary James Mattis were brought into the fold and painted a dire picture of the national security and economic consequences of such a move. The president acquiesced -- but only temporarily.

More from Bloomberg.com: Trump Shows He’s Ready to Go All-In Against China on Tariffs

The episode was one of several depicted by Woodward in which Trump’s top advisers managed to thwart the president’s efforts to make sudden, drastic changes to U.S. trade policy by arguing the time wasn’t right, distracting him with other matters, or sometimes sneaking documents off his desk.

Excerpts of the book published earlier in the Washington Post were the first part of last week’s one-two punch of revelations that cast doubt on the loyalty of Trump’s closest advisers. The second blow landed a day later, on Sept. 5, in the form of an op-ed in the New York Times by an unidentified senior administration official who said some of Trump’s closest advisers are working in secret to confound the president’s “more misguided impulses until he is out of office.”

More from Bloomberg.com: Trump Executives Face U.S. Campaign-Finance Probe, Source Says

The accounts told a similar story of a White House in chaos, a portrayal Trump has found tough to shake. The revelations promise to continue to dog the president, blunting Republican attempts to go on the offensive ahead of the November midterm elections.

Many of the advisers cited by Woodward have since left the administration, leaving fewer moderating voices in Trump’s inner circle, even as trade tensions with China and Canada , a traditional close ally of the U.S., continue to escalate. Since the start of the year, he’s imposed steep tariffs on steel and aluminum and sparked a tit-for-tat tariff battle with China. He’s in the middle of renegotiating a trade deal with Canada, and trade relations with the European Union are fragile.

More from Bloomberg.com: Trump Says If Gary Cohn Stole Papers, He’ll Never Speak to Him Again

‘Do It Today’

Days after aides convinced Trump to back down from his August 2017 threat, the president was back at it. He had in hand a draft letter giving the required 180-day notice to pull out of the South Korean agreement. The letter, according to Woodward, was likely drafted by White House adviser Peter Navarro or Commerce Secretary Wilbur Ross, who frequently clashed with Cohn and Treasury Secretary Steven Mnuchin over trade policy.

According to Woodward’s book, Trump said on Sept. 5, 2017, that he was ready to pull the trigger on quitting the agreement, known as Korus.

“We’re going to withdraw from this,” Woodward quotes Trump as saying. “I just need to wordsmith this and we’re going to get it on official stationery and send this off. We need to do it today.”

Again, several top aides jumped into action. Ultimately, Mnuchin made a breakthrough: he said the move would jeopardize Trump’s efforts to pass massive tax cuts by upsetting free trade Republicans in Congress. Trump agreed to hold off, but only until the tax legislation was passed.

Efforts to avert the U.S.’s withdrawal from major trade accords began soon after Trump’s inauguration, Woodward writes -- indeed, one of Trump’s first acts as president was to pull the U.S. out of the Trans-Pacific Partnership.

About three months into his administration Trump told staff he wanted an executive order withdrawing the U.S. from the North American Free Trade Agreement with Mexico and Canada so he could announce it on his 100th day in office.

Porter contacted then National Security Adviser H.R. McMaster to make the case that the move would create a national security nightmare.

Story Continues

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Source: https://www.nakedcapitalism.com/2018/11/links-11-29-18.html

The Federal Reserve may be less aggressive in raising interest rates next year, but US economic strength will give policymakers reason to stay the course in tightening monetary policy, according to Goldman Sachs.

The investment bank, one of the more hawkish on Wall Street, had been projecting a total of four rate rises in 2019 — even higher than the Fed’s own forecast to increase its benchmark short-term rate three times. Goldman Sachs now believes the chances that policymakers lift rates in March are “slightly below” 50 per cent. The pause would come at a time of heightened tariff uncertainty, given that a 90-day truce in the US-China trade spat ends March 1.

Still, the outcome of the Fed’s March meeting is a “close call” because there are “good arguments” for increasing rates, Goldman Sachs chief economist Jan Hatzius said. He noted that fiscal stimulus remains a key driver for the economy, while recent data such as job and wage gains in November were “hardly weak.”

Goldman Sachs sees the economy continuing to grow “above trend” for most of 2019, with wage and price inflation gradually accelerating and the unemployment rate falling further below the Fed’s long-term estimate. These factors will allow the Fed to restart quarterly rate rises beginning in June and lasting through the end of the year, Mr Hatzius said.

“Despite the change in our call on March, we disagree with current market pricing for the funds rate, which discounts less than one full hike in all of 2019,” he wrote in a note to clients.

Mr Hatzius added: “Current growth momentum is good . . . and the two key historical recession drivers — financial imbalances and a serious overheating problem — are still not visible. We therefore think that the storm will pass and this will keep Fed officials on a normalisation path, albeit a more tortuous one than up to now.”

Concerns over slowing economic growth and trade tensions between the US and China have pressured stocks in recent days. Market turmoil, combined with remarks by Fed chair Jay Powell that struck a dovish tone on Wall Street last month, have led investors to re-evaluate their expectations for what the central bank will do in December and next year.

The market sees a 33 per cent chance that 2019 will end with just one rate hike, according to the CME’s FedWatch Tool, which analyses contract prices for Fed fund futures.

As for next month, investors continue to expect the Fed to take action. FedWatch had 71.5 per cent odds for policymakers raising the fed funds rate to a target range of 2.25 per cent to 2.5 per cent. Mr Hatzius agreed that a December rate rise is likely, suggesting stronger odds of 90 per cent.

Emerging market guru Mark Mobius, who recently retired from Franklin Templeton, talks about the liquidity crunch that has hit India following the IL&FS default. In his keynote address at Morningstar Investment Conference, he says India needs to move quick on cutting down bureaucratic hurdles so that new investments can come in and improve the liquidity situation. Among other things, he delves deeper on his own investment philosophy and what makes him think that environment, social and governance – ESG – is the next big investment theme. Excerpts…

What is your outlook on Indian markets?

The outlook on Indian markets depends on how the oil prices move. If you have refinery capacity, higher oil price may be a blessing because your product prices could be higher as well. So you have to look at both points of view. But this also means that India will have to accelerate its growth into other forms of power whether it is solar, wind, nuclear or clean coal, if there is such a thing.

Do you think days of active fund management are over?

I certainly don’t think it is over for active funds. But, a big change has taken place in the industry. Passive has been growing at a very rapid pace. I would say most of the new money flowing into funds has been passive money. That means that the pressure on fees is great. And we are also dealing with that with our own company. How we are going to fix the fee structure so that it is not too cheap, but at the same time it is competitive. As you know even Fidelity is now zero fee. It is incredible. Of course, they are making it in other way. The good news is that it is for us active managers to be really active and do something different. So, I tell my analysts: look I don’t want to see any index companies in our portfolios. I want us to be engaged with the managements so that we can make a difference. That is good news as active managers have to really do their job.

Do you think environment, social and governance – ESG theme, provides opportunities for the active fund managers?

That is right, that is why ESG is a big topic for active managers. It means now we can say when we invest into a company, we are going to push them to improve their environmental and social practices. I think on balance it is going to be good for the investor. The ETFs and passive funds do have a role. No question about that.

What is your view on elections’ impact on markets?

What we are seeing now is convergence. You see candidates when starting out are right-leaning or left-leaning. They seem quite different. But as elections close in, the candidates converge towards the middle. This is because in order to garner the largest number of votes they have got to try and appeal to a wide group of people. This means they have to tone down the extremes. You have seen that in case of Trump to some extent. In every country you see this tendency to converge in the middle. What most concerns us when we are looking at a country is the attitude of the government, the law and whether there is going to be enforcement of law. And the other thing is rights of the individuals because if you don’t have property rights then we are out of business.

What are your thoughts on government of India?

The government should make it easier for investments to come in. There is a lot to be done. I think there is a lot to be done in terms of making it easier for the money to come in. This even more important now as India is facing a liquidity crisis as a result of what happened to the infrastructure firm and banks being really under pressure. So, I think it is important to allow the flow of new money to come in. And one way to do is to have a one stop-shop where investors can go and all the paperwork can be done at once.

What do you think about opportunities in India?

There are enormous opportunities. There is so much to be done. Not only in India, but all over the world. Particularly in India, look at the environmental problems you have and some of the social problems. There is really a lot to be done.

Any particular sectors and industries in India where you can apply the ESG theme?

To begin with there is a lot to be done in the mining sector. Also, how infrastructure can be improved to reduce pollution. For instance, if the mass transit system in Mumbai could be made faster, that would cut down a lot of traffic and pollution generated by automobiles.

Do you think India can repeat what China has done in the last few decades?

It is already happening. We are beginning to see that change taking place. The difference in India is that it is like a confederation of states. That is how I view India. It is truly a republic in that sense. The difference between states are even greater than in US. In order to achieve this unity, the job is a pretty big one for the central government.

In what ways you think India can improve trade deficit? And do you see the currency becoming weaker or stronger?

Rupee will become weaker going forward. But, a lot of the weakness is already in the price because people have anticipated a higher interest rate in the US. India can take advantage of this situation by streamlining regulations. India needs to make it easier for companies to export, as well as import. You have a situation that if you want to export, say a computer, you are going to need some chips or wires from overseas. So, import also needs to be made easier. One way of doing that is by creating economic zones and India is working on that. The process of making things easier in terms of bureaucracy will be very important.

Besides India and China, where else do you see opportunities in the emerging markets?

So, if you see our model portfolio, Brazil is up there. The growth of smartphones has played a key role in bringing about reforms in Brazil. So, we see opportunities there. We see opportunities in Vietnam, in Korea, in Taiwan. Again because of this China trade war situation, many of the companies there should benefit. In east Europe, we see Romania as an opportunity. As a result of the reforms, Romania is the fastest growing east European country now.

What is your outlook on US markets?

People are now beginning to realise that some things that Trump has done have been rather good. For instance, the tax reforms have been very beneficial for the economy. A lot of people don’t realise that Trump thinks like a businessman. So, if you look at what he says and does, you can see a businessman. So, he says ok I am going to cut taxes. I know the deficit is going to increase. So, what I will do about the deficit? I will slap a 20 per cent import on Chinese goods and that would bring in money to the treasury. That is the kind of thinking he goes through. I think people are now coming around to realise that may be some of his policies are beneficial. So, he has confronted a lot of the issues that were ignored by previous administrations. So, we are going to see a continued growth in the US. Although you must remember, stock market is a leading indicator. It tells you what is going to happen. The stock market has already told us that the US economy is going to be great. Now, you are seeing a correction in the stock market. So year on year, next year you are probably going to see a downturn. While we may have a high number this year, next year may not be so good in percentage terms. So, I think we got to be ready for that.

How do you feel about rising rates in that context?

Rising interest rates depends on what is happening on the inflation front or the perception of inflation. If the real rate is good than you better watch out those companies that have heavy debt. I have been telling my analysts that the days of cheap money are over. The days of people putting money in bitcoin or these currencies is over. As the interest rates rise, people are going to say why should I be taking big risks when I can get 4-5 per cent in a bank account. So, I think you have to change your thinking. You need to look at the balance-sheet, look at dividends. These issues that have been ignored.

What are the countries that you feel have gotten ahead on the ESG front or firms you admire?

If you look at some of these service industries in India that are doing outsourcing work; Tata for example. They are clean because very little environmental damage in the kind of things they are doing. But, then you have to delve into labour practices. How they are dealing with their employees. I would say for the most part they are pretty good. Then when you get into the manufacturing or the mining area, there is room for incredible amount of improvement. Lot of work needs to be done in that area.

How has your investment philosophy evolved?

Philosophy has evolved over time. At the beginning when I was working with John Templeton, we were concerned about value. When we talked about value, we talked about price-to-earnings ratio, price-to-book ratio, dividend yield, etc. Very little attention was paid to the management and to the people behind the company. But over the years, I have realised that people are most important. The numbers you can get. Put that on a computer and it can generate all kinds of spreadsheets. But, the key to growth and survival of a company are the people behind it. Who is leading the company, what kind of morality do they have, what is their philosophy. These are the kind of things we are looking at more and more. These are the things that separate men from the boys so to speak. Also, what we are looking for is more and more is involvement of women. For example, we would like to see women on boards of the companies. We’d like to see women in executive positions. They add a completely new dimension to the whole process. For example, at our investment trust in UK, the chairperson is a woman and we have another woman on the board. So, we have four members – two men and two women. But as I said the key is to look for people behind the company. Who owns the company, who controls it, what is their philosophy, what is their history.

If you could go back in time and give yourself a piece of advice, what would it be? And what advice do you have for people starting their investment career now?

Probably most important thing is not to follow the crowd. Even though we were warned about it several times, we didn’t pay attention. And part of the reason was pressure from our clients. Because everybody was so concerned about the index. How are you doing against the index this week, this month, this year. So, the tendency was that the index was the heard. So, the tendency was to go along with the group and by the way when I talk about the ETFs and passive funds, I think now we can break away from the herd and do something really independent. But, I think that was the big mistake we did in the beginning. We were too close to the index and we were not reminding ourselves that we had to do something different. This means that prior to the Asian crisis, we should have been reducing our holdings in the portfolios.

If we were to come back next year for the Morningstar Investment Conference 2019, what you think we would be talking about?

I think we would be probably talking about the incredible improvement that has taken place in terms of ESG-related issues. This is a big roller-coaster that is coming down at us. It is not stopping, it is increasing. We have been talking with clients with all over Europe – family clients and institutions. And all of them ask what are you doing about ESG? In fact, there is a whole industry that is growing around ESG. Even MSCI has a special vision on how to deal with ESG --how to evaluate ESG and so forth. And then you have impact funds. Their main purpose is not to make money but make an impact on ESG.

To most Americans, the names are unfamiliar, maybe a little hard to pronounce: Huawei, Xiaomi, Oppo, Vivo.

They are China’s biggest smartphone brands. Around the world — although not in the United States — they are making the handset business brutally competitive. This week, after Apple warned of disappointing iPhone sales in China, industry observers said that devices from the Chinese brands were a major culprit.

As the phone market in China reaches saturation and sales shrink over all, the country’s hardware makers are pushing hard, and increasingly winning fans, in places like France, Germany, India and Southeast Asia, where consumers find that the phones can do just about everything an iPhone can do at a fraction of the cost.

Apple sits comfortably atop the market in many countries, including China, for the highest-end handsets. But companies like Huawei have started to do elsewhere what they have done in China, competing with the iPhone on experience and value and luring customers with price comparisons that make them rethink buying Apple’s signature product.

The cost difference is notable: In China, an iPhone XR starts at around $950, while Huawei’s top-end handsets start at about $600, and Xiaomi’s comparable models start at even less. The iPhone XS starts at around $1,250.

Companies like Huawei and Oppo have made improvements in features and overall quality that are enticing many wealthy Chinese people, said Mo Jia, an analyst in Shanghai for the technology research firm Canalys. Chinese brands’ aggressive marketing and sales campaigns in Europe indicate that the companies believe consumers there who have traditionally used iPhones will do the same thing. “Maybe it won’t happen this year or next year,” Jia said. “But Huawei is going in that direction.”

Xiaomi (pronounced “SHAO-mee”), which is based in Beijing and was founded in 2010, seemingly came out of nowhere to become the No. 4 mobile brand in Europe early last year, according to Canalys. The gadget maker has also become the top seller of phones in India, in part by opening hundreds of stores in rural areas.

Clément Blaise, a 25-year-old banker in northern France, has an iPhone for work and a Xiaomi as a personal phone. He said he needed to recharge the Apple device “all the time” but could go two days without charging his Xiaomi.

“We have this false, preconceived idea that Chinese brands are not as good, that their products are of cheap quality,” Blaise said. “But the price gap leavens the fears. For 150 euros” — around $170 — “what do you risk anyway?”

Chinese phone makers have not made similar inroads in the United States. The American government has worked for years to stymie the sale of Huawei’s smartphones and telecom-network equipment, after a congressional inquiry in 2012 deemed Huawei a potential vehicle for cyberspying by the Chinese government. The Trump administration has urged Western allies to do the same.

Security concerns have not dissuaded some buyers across the Atlantic. Giannis Vassilopoulos, a college student in Athens, said he had been bombarded by Huawei ads during his recent travels around Europe. He said he had bought a Huawei phone because the brand felt more familiar, more European even.“Seeing Huawei in the middle of London makes it look immediately more Western,” he said.

Apple still has a hold on consumers in many places. Announcing the sales slump in China this week, the company’s chief executive, Timothy D. Cook, said Apple expected to set revenue records in wealthier countries like Germany, Italy, the Netherlands, South Korea and Spain and in some emerging markets like Malaysia, Mexico, Poland and Vietnam.

In China, though, Apple’s market share has been declining, and the company is clinging to the No. 5 spot in smartphone shipments, according to the market research firm Counterpoint. An Apple spokeswoman declined to comment.

China became the world’s largest smartphone market over the past decade as rising incomes coincided with an explosion in mobile technology.

People in China rely on handsets in an all-encompassing way, using them to rent bikes, sign into gyms and pay restaurant bills. The market is increasingly saturated, and there are fewer people in China who do not have an advanced device. But there are also new economic reasons to buy locally made goods: Consumers who are replacing or looking to upgrade are dialing back in light of China’s slowdown.

Today, mainland China’s top smartphone seller is Huawei, whose handset line includes midrange devices and higher-end models with all the latest features. Vivo and Oppo, brands owned by the same Chinese parent company, are next. And then comes Xiaomi, whose phones, smart home devices and even sneakers command a passionate fan base. Samsung of South Korea, which sells more smartphones globally than any other brand, has only around 1 percent of the market in China. Feng Yin, a 32-year-old engineer, has an iPhone now, but he is considering switching to a Huawei device.

“In the past few years, the technology in Apple’s phones has not had any big breakthroughs, while the technology in domestic phones has gotten better and better,” he said while browsing in a Huawei store in Shanghai on Friday. “The difference is getting smaller.”

Apple products have long been seen in China as conferring on their owners the ultimate in cachet and cool. But Chinese companies have used slick marketing and celebrity endorsements in hopes of giving their products more personality, while promoting advances in camera technology, battery life and microchips.

On Friday, Xian Longfei, a restaurant chef, and a friend were at an Oppo store in Shanghai. When it comes to cellphone brands, Mr. Xian, 35, has tried many: Nokia, Motorola, Samsung and three different iPhone models. He switched to an Oppo a few months ago. He acknowledges that Apple’s devices still seem better on the whole. But so many of his friends in Shanghai and people in his hometown are Oppo users. And the price — around $400 on sale — was hard to beat.Also, he said, holding up his pink handset, “the form factor is pretty.”

ALSO READ: A matter of volume: Threat from mid-priced Chinese phones hangs over Apple

Another factor working against Apple in China is the dominance of WeChat, a messaging, social media and payments app used by more than a billion people. It works on Google’s Android operating system as well as Apple’s, making a phone’s software less of a differentiating factor. “Why would people pay such a high price for an iPhone,” asked Kiranjeet Kaur, an analyst for the industry research firm IDC, “if, from a hardware perspective, there isn’t much of an upgrade from Huawei and, from a platform perspective, there’s nothing to lock people in?” In Europe, buyers of Chinese brands describe undergoing a sort of conversion. Irritating flaws in their iPhone or Samsung devices lead them to seek alternatives. Presented with unfamiliar Chinese products, they initially have doubts. But after a while, they get hooked.

ALSO READ: Trump downplays Apple woes, says China woes help US in trade talks

When Alessandro Del Mastro, 33, bought a Huawei handset in southern Italy three years ago, he was skeptical.

“My friends teased me that it was not going to last, like most Chinese products, but we were all wrong,” he said.

Faruk Kaya uses an Apple iPhone and tablet but, as a salesman at a Berlin electronics store, he encounters German customers who prefer Chinese brands.

“Now you can get a smartphone with the best photo and audio quality for about half the price of an iPhone or a Samsung,” he said. Gregory Lauseiro, a telecom executive in Paris, bought his eighth Huawei phone last summer. He has turned his 56-year-old aunt, Christine Jankowski, into a believer, too. “I wasn’t really worried about the fact that it was a Chinese brand,” Ms. Jankowski said of her Huawei phone. She added: “We know that they make amazing technological products.“If I had to buy a Chinese frying pan, I don’t know,” she said. “But a phone?”

©2019 The New York Times New Service

The government is not considering penalising social media or messaging apps executives for traceability of messages under the proposed changes to intermediary rules, a government official told Business Standard.

A financial daily reported on Saturday that penalties and jail terms for executives were being considered, especially on traceability and user consent before being added to groups.

"We have released the intermediary rules about three months ago, on which we have received comments and counter comments. There has been nothing further on those from our side, people are free to interpret it in their own way," said an official of the Ministry of Electronics and Information Technology.

The Ministry had in December, proposed changes to Section 79 of the Information Technology Act, 2000, and asked for public comments on the draft amendments that seek to regulate a set of companies that qualify as intermediaries. This includes a wide range of companies- Facebook, Twitter, Google, WhatsApp, Sharechat, Amazon Web Services and so on.

The proposed amendments by MeitY say that intermediaries will have to provide information requested by a lawful order by a government or authorised agency within 72 hours of communication of receiving the request. "The intermediary shall enable tracing out of such originator of information on its platform as may be required by government agencies who are legally authorised," the rules have proposed.

These changes do not mention arrests or jail terms for company executives for not following the rules.

While it is easier to trace the origin of messages on a platform such as Twitter or Facebook, which are more public and open, WhatsApp is a messaging platform and uses end-to-end encryption, which means even company executives cannot look at the contents of the messages being exchanged between people or groups on the platform.

WhatsApp has earlier called the proposed changes "overbroad" and undermining privacy of people using the messaging service.

The proposed changes in Section 79 attempt to fix in part, the issue of fake news that gets circulated on certain platforms. In India the past year, several instances of “fake news” or spread of misinformation led to several people being killed by lynch mobs, who were incited by rumours spread on WhatsApp.

India is WhatsApp’s largest market, with over 200 million users out of the 1.5 billion it has worldwide.

“People rely on WhatsApp for all kinds of sensitive conversations, including with their doctors, banks and families. The police also use WhatsApp to discuss investigations and report crimes. Attributing messages on WhatsApp would undermine end-to-end encryption and the private nature of WhatsApp creating the potential for serious misuse. Our focus is on improving WhatsApp and working closer with others in society to help keep people safe,” a WhatsApp spokesperson told Business Standard in an email response.

An Economic Impact Study of Delhi airport done by the National Council of Applied Economic Research (NCAER) and released on Tuesday finds that the airport contributed 0.70 per cent to the national Gross Value Added (GVA) in 2014-15 and 17.89 per cent to the Gross State Domestic Product of Delhi in 2014-15.

The airport is expected to create employment of around 40.22 lakh, which includes direct, indirect and induced effects, by 2025-26

Lufthansa has no interest in participating in a government-led restructuring of Italian carrier Alitalia, Chief Executive Carsten Spohr said. “We will not be co-investor with the government in an airline that is being restructured,” he said, on an analyst call to discuss third-quarter financial results.

WestJet Airlines Ltd, on Tuesday, reported a 66 per cent fall in quarterly profit, hurt by higher expenses due to rising fuel costs. WestJet is Canada's second-largest carrier

Report her to your boss. She’s the one running the HR department, she should know better than to conduct herself like this.

Send her an email and CC your boss, detailing what has been going on and ask if you can set a meeting with both of them to hash this out.

Start trash talking her. She should be able to take it as well as she gives it. Hopefully this will lead her to see how destructive her behavior is.