Chinese Rocket Launches New Navigation Satellite
By Stephen Clark
posted: 18 January 2010
10:49 am ET
A Chinese Long March rocket hauled a new navigation satellite to a high-altitude perch over Earth on Saturday, marking the first space launch of the year for the world's space programs.
The Long March 3C rocket blasted off from the Xichang space center at 1612 GMT (11:12 a.m. EST) Saturday, or just after midnight Sunday morning local time, state media reported.
The 180-foot-tall booster flew east from Xichang, which is situated in Sichuan province in southwestern China. The Beidou, or Compass, navigation satellite was placed on a trajectory toward geosynchronous orbit, according to the Xinhua news agency.
The satellite is the third member of the second-generation Beidou constellation. Two spacecraft were launched to medium Earth orbit and geosynchronous orbit in 2007 and 2009, respectively.
First-generation satellites were launched between 2000 and 2007 to test the Beidou concept in space and provide limited services for China.
China eventually expects to launch 35 Beidou satellites, allowing the system to have a global reach similar to the U.S. Global Positioning System. Russia operates a fleet of Glonass navigation satellites, and Europe is developing the Galileo satellite navigation system.
Officials hope the Beidou system will provide navigation, timing and messaging services to the Asia-Pacific region by 2012, Xinhua reported.
China says Beidou services will be available at no charge to civilians with positioning accuracy of about 10 meters, or 33 feet. More precise navigation data will be given to Chinese government and military users, according to Xinhua.
Monday, 18 January 2010
Sunday, 17 January 2010
Investing in irrational markets
Investing in irrational markets
Hock's Viewpoint - By Choong Khuat Hock
The financial crisis reflects the fallacy of the ‘efficient market hypothesis’
IT is amazing that economic theories still consider that markets are governed by the “efficient market hypothesis” (EMH), which assumes rational investors, an orderly market and that all available information are known.
The global financial crisis reflects the fallacy of EMH and textbooks should be revised to reflect this.
In reality, markets reflect the nature of its creators and participants – a collection of human beings who would like to think they are rational but are often enough irrational and emotional.
Quantitative models often fail to model the irrationality of human behaviour during extreme times.
Blind reliance on such models was also the reason why Long-Term Capital Management (LTCM, which had Nobel Prize-winning economists) failed as the restructuring of defaulting bonds in Russia in 1998 caused volatilities beyond what was predicted by quant models.
The extremely high leverage utilised by LTCM hastened its demise. Alan Greenspan had to engineer a rescue as the failure of LTCM threatened to damage the markets and market participants.
One way of valuing securities is to use the discounted cash flow model, which is to discount the expected future cash flows to obtain the present value.
http://biz.thestar.com.my/archives/2010/1/18/business/p6-brain.JPG
Behavioural finance has many theories to explain why humans are often irrational but the reality is that irrationality is hardwired into our brains.
However, in many cases, future cash flows are difficult to predict and the discount rate used would fluctuate depending on the prevailing interest rates and the perception of risk which may vary from person to person.
This method is more useful in valuing businesses or securities with predictable cash flows like utility stocks where cash flows are stable and funding costs have been determined. Another popular valuation method is to compare securities with its peers.
Such comparisons are ingrained in the nature of human beings as we can only determine the value or utility of something by comparing it to another. Shall I buy the latest Samsung or Sony LCD TV? How does a BlackBerry compare with an iPhone?
Similarly, if the price-earnings ratio (PER) of a stock is 10 times and the sector PER is 20 times, it may be considered cheap if specific company factors are attractive.
Using sector PER as valuation anchor is fraught with danger as the sector valuation may be unreasonable.
Such comparisons may not reflect the value of potential cash flows from an investment. At the height of the dot.com bubble, valuations were based on price to sales with no consideration placed on cash flow.
The prevailing belief then was that there was a sucker willing to pay a higher price to sales for the business.
The same happened during the debt fueled property bubble in the US when rental yields from property could not cover mortgage payments.
Banks were willing to provide 100% financing to those who could not afford houses based on the assumption that property prices could only go up and mortgage loans could be repackaged into much sought after high yielding subprime securities.
Behavioural finance has many theories to explain why humans are often irrational but the reality is that irrationality is hardwired into our brains.
The brain can be divided into two parts – the hypothalamus, or primal brain, (a few hundred million years old) which directs our instinctive behaviour and the neo-cortex, or new brain, (a few million years old) which facilitates logical deductions, learning from experience, language and complex social interactions.
In times of panic, the hypothalamus takes over and markets tend to overshoot on the downside due to panic selling.
Since these moves are often irrational, the movements tend to be many standard deviations more than what is predicted by a normal distribution curve, creating black swan events.
Faced with an avalanche of incomplete information, humans use heuristics, a simplification process to arrive at a decision based on their past experiences and prejudices.
In arriving at a rule of thumb valuation, anchoring is employed by imputing a fair value to the initial entry level even if the entry level is high.
Therefore, in a rising property market, anchoring may result in the belief that the price appreciation will continue.
A bubble can thus form as the herd is blinded by cognitive dissonance whereby investors pay credence only to views and opinions that reinforce their beliefs. However when the discrepancy between fantasy and reality becomes too large, the bubble bursts.
Investment is hence as much an art as it is science. In the final analysis, it is the cash flow that counts.
The science would be in accurately determining the cash flow but the art lies in determining how much investors are willing to pay for the cash flows.
Identifying periods of over pessimism and optimism would help in determining entry and exit points.
In the end, the advantage lies in accurately predicting beforehand where the herd is heading. Understanding the animal in you and others could indeed be a profitableproposition.
# Choong Khuat Hock is head of research at Kumpulan Sentiasa Cemerlang Sdn Bhd.
Hock's Viewpoint - By Choong Khuat Hock
The financial crisis reflects the fallacy of the ‘efficient market hypothesis’
IT is amazing that economic theories still consider that markets are governed by the “efficient market hypothesis” (EMH), which assumes rational investors, an orderly market and that all available information are known.
The global financial crisis reflects the fallacy of EMH and textbooks should be revised to reflect this.
In reality, markets reflect the nature of its creators and participants – a collection of human beings who would like to think they are rational but are often enough irrational and emotional.
Quantitative models often fail to model the irrationality of human behaviour during extreme times.
Blind reliance on such models was also the reason why Long-Term Capital Management (LTCM, which had Nobel Prize-winning economists) failed as the restructuring of defaulting bonds in Russia in 1998 caused volatilities beyond what was predicted by quant models.
The extremely high leverage utilised by LTCM hastened its demise. Alan Greenspan had to engineer a rescue as the failure of LTCM threatened to damage the markets and market participants.
One way of valuing securities is to use the discounted cash flow model, which is to discount the expected future cash flows to obtain the present value.
http://biz.thestar.com.my/archives/2010/1/18/business/p6-brain.JPG
Behavioural finance has many theories to explain why humans are often irrational but the reality is that irrationality is hardwired into our brains.
However, in many cases, future cash flows are difficult to predict and the discount rate used would fluctuate depending on the prevailing interest rates and the perception of risk which may vary from person to person.
This method is more useful in valuing businesses or securities with predictable cash flows like utility stocks where cash flows are stable and funding costs have been determined. Another popular valuation method is to compare securities with its peers.
Such comparisons are ingrained in the nature of human beings as we can only determine the value or utility of something by comparing it to another. Shall I buy the latest Samsung or Sony LCD TV? How does a BlackBerry compare with an iPhone?
Similarly, if the price-earnings ratio (PER) of a stock is 10 times and the sector PER is 20 times, it may be considered cheap if specific company factors are attractive.
Using sector PER as valuation anchor is fraught with danger as the sector valuation may be unreasonable.
Such comparisons may not reflect the value of potential cash flows from an investment. At the height of the dot.com bubble, valuations were based on price to sales with no consideration placed on cash flow.
The prevailing belief then was that there was a sucker willing to pay a higher price to sales for the business.
The same happened during the debt fueled property bubble in the US when rental yields from property could not cover mortgage payments.
Banks were willing to provide 100% financing to those who could not afford houses based on the assumption that property prices could only go up and mortgage loans could be repackaged into much sought after high yielding subprime securities.
Behavioural finance has many theories to explain why humans are often irrational but the reality is that irrationality is hardwired into our brains.
The brain can be divided into two parts – the hypothalamus, or primal brain, (a few hundred million years old) which directs our instinctive behaviour and the neo-cortex, or new brain, (a few million years old) which facilitates logical deductions, learning from experience, language and complex social interactions.
In times of panic, the hypothalamus takes over and markets tend to overshoot on the downside due to panic selling.
Since these moves are often irrational, the movements tend to be many standard deviations more than what is predicted by a normal distribution curve, creating black swan events.
Faced with an avalanche of incomplete information, humans use heuristics, a simplification process to arrive at a decision based on their past experiences and prejudices.
In arriving at a rule of thumb valuation, anchoring is employed by imputing a fair value to the initial entry level even if the entry level is high.
Therefore, in a rising property market, anchoring may result in the belief that the price appreciation will continue.
A bubble can thus form as the herd is blinded by cognitive dissonance whereby investors pay credence only to views and opinions that reinforce their beliefs. However when the discrepancy between fantasy and reality becomes too large, the bubble bursts.
Investment is hence as much an art as it is science. In the final analysis, it is the cash flow that counts.
The science would be in accurately determining the cash flow but the art lies in determining how much investors are willing to pay for the cash flows.
Identifying periods of over pessimism and optimism would help in determining entry and exit points.
In the end, the advantage lies in accurately predicting beforehand where the herd is heading. Understanding the animal in you and others could indeed be a profitableproposition.
# Choong Khuat Hock is head of research at Kumpulan Sentiasa Cemerlang Sdn Bhd.
Saturday, 16 January 2010
Alibaba says Yahoo 'reckless' on Google stance
Alibaba says Yahoo 'reckless' on Google stance
January 16, 2010 Alibaba says Yahoo 'reckless' on Google stance (AP)
(AP) -- China's e-commerce giant Alibaba turned on major shareholder Yahoo Inc. on Saturday, calling the American company's support of Google in its standoff with China "reckless."
Google has promised to stop censoring its search results in China, threatening to pull out of the country altogether if it can't operate an unfiltered search engine. Yahoo has said it was "aligned" with Google's position, though it's not clear what that means.
"Alibaba Group has communicated to Yahoo! that Yahoo's statement that it is 'aligned' with the position Google took last week was reckless given the lack of facts in evidence," Alibaba spokesman John Spelich said Saturday. "Alibaba doesn't share this view."
Yahoo closed its own offices in China several years ago when it sold much of its business there to the Alibaba Group. Yahoo retains a 39 percent stake in Alibaba that represents one of Yahoo's most valuable assets.
Yahoo spokeswoman Nina Blackwell has declined to say whether the company would consider selling its holdings.
Google hopes it can persuade the Chinese government to agree to changes that would enable its China-based Google.cn site to show uncensored search results.
A Google spokeswoman, Jessica Powell, said by e-mail Saturday that Google has not closed its offices in China and that "it's business as usual."
Google's threat to end its China operations has alarmed an Internet-connected public that is the world's largest at 384 million people.
Beijing requires Internet traffic to pass through government-controlled gateways that block access to material deemed subversive or pornographic. Google's China-based site excludes from its results any foreign Web sites to which access is blocked.
©2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
January 16, 2010 Alibaba says Yahoo 'reckless' on Google stance (AP)
(AP) -- China's e-commerce giant Alibaba turned on major shareholder Yahoo Inc. on Saturday, calling the American company's support of Google in its standoff with China "reckless."
Google has promised to stop censoring its search results in China, threatening to pull out of the country altogether if it can't operate an unfiltered search engine. Yahoo has said it was "aligned" with Google's position, though it's not clear what that means.
"Alibaba Group has communicated to Yahoo! that Yahoo's statement that it is 'aligned' with the position Google took last week was reckless given the lack of facts in evidence," Alibaba spokesman John Spelich said Saturday. "Alibaba doesn't share this view."
Yahoo closed its own offices in China several years ago when it sold much of its business there to the Alibaba Group. Yahoo retains a 39 percent stake in Alibaba that represents one of Yahoo's most valuable assets.
Yahoo spokeswoman Nina Blackwell has declined to say whether the company would consider selling its holdings.
Google hopes it can persuade the Chinese government to agree to changes that would enable its China-based Google.cn site to show uncensored search results.
A Google spokeswoman, Jessica Powell, said by e-mail Saturday that Google has not closed its offices in China and that "it's business as usual."
Google's threat to end its China operations has alarmed an Internet-connected public that is the world's largest at 384 million people.
Beijing requires Internet traffic to pass through government-controlled gateways that block access to material deemed subversive or pornographic. Google's China-based site excludes from its results any foreign Web sites to which access is blocked.
©2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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