I have had very little time to update the blog recently, so many thanks for those of you who appear to keep visiting. I do have a new blog, in conjunction with a few colleagues, that focuses on the currency markets, along with commentary on various other “interesting” things. FXjunkies – www.fxjunkies.com – Please take a lot.

The reason for turning my attention away from this blog is focusing on setting up the currency businesses FX Capital Group and RabbitFX

I hope to get back to blogging on here sometime soon….

Firstly I must apologise for the stunning silence over the past few months. A combination of lots of other things going in life; working with several investments (e.g. a private jet business www.planechartering.com ) and setting up a couple of businesses (e.g. my foreign exchange business www.rabbitfx.com )

I have been asked by numerous people – “Is this the right time to start a business and / or investing with all the economic doom and gloom going on?” personally I think so, if you concentrate on “cycle orientated” ideas – for example, the amount of distressed debt funds being setup, dollar denominated commodities etc.

One industry sector which does appear to have been pretty insulated from the current situation is private jets. Whilst over the past 6 months there have been several airlines going bankrupt (e.g. MaxJet and others) there have been numerous column inches in the FT on new investments in the private jet sector.

Why? A couple of key factors:

• The cost of private jets is decreasing (it is still expensive, just now less so) driven by demand and new innovations.
• A general frustration with the level of queuing and security in main hub airports
• Emerging markets in large countries (in terms of space) like Russia and China where the internal airline infrastructure is still pretty nascent
• General productivity boost for senior managers – believe it or not, actually saving T&E costs through private jet travel (e.g. less hotel bills)

JP Morgan released a research report on this topic a few weeks back which pretty much concurs with this assessment.

However, in the large private boat market, there are definitely signs of the current economic situation. Not so much from order books of ship yards (if you can afford to buy one of these things you are pretty much insulated from the current economic situation) but in charter business.

Normally on the Cote D’Azur (South of France) all the charter slots are filled by now, but currently they are around 30% un-filled. There are even some berths and boats available during the Monaco Grand Prix which is pretty much un-heard of.

Perhaps lastminute.com should setup a business called LastMinuteSuperYachtcharter.com – looks like there will be plenty of bargains this year.

Blog entry inspired by today’s Apple announcement – those new iMacs are stunning! iWorks finally has a spreadsheet! and hints that something in the pipeline with Apple TV – life is looking good!

Apple are smart guys and really focus on what they do well – stylish, functional and well designed software and hardware. While Billy Inc. continue to jam every feature under the sun into new releases of their software, Apple de-construct software and hardware into “simple useful bits” and make it easy to use (and look stylish too!).

Apart from being great designers, the current Apple leadership are one of the few people who really know about “market disruption” or “disruptive technology” – pioneers! Look at….

- iPod and iTunes revolutionising the music industry
- iPhone, Apple are the only firm who has negotiated revenue shares with telcos (plus the iPhone is cool)
- AppleTV, not quite there yet (needs better DVD integration into iTines, a tuner and streaming video)
- iMac, continuously redefining the design of a computer

…and now to the latest iWorks. The fact that I can now get a decent word / powerpoint / excel substitute for home and small / mid sized business use for 99 bucks is stunning! and it works backwards and forwards with MS Office. Microsoft try to charge you an arm and a leg for an MS Office license and hence loads of people must have pirated software and hence Gates Inc. lose out on revenues.

The new iWorks delivers exactly what a home user / small-mid sized business user needs and at a decent price point – I love the fact that the 5 user “home pack” is only a few bucks more than the single user license.

What will be interesting to see is how the “consumer” technology will pan out between Bill Inc. and Apple. My hunch is that Apple will win as they have approached on all fronts, and not just the game console. Not competing in the games market is a smart strategic move by Apple – let their main competitor focus all their money and effort on games consoles; then cleaning up in the music, phone, media centre and home software markets. I wonder what an future AppleTV might look like – possibly include a games console?

As an aside, in reality I do not mean to critisize Mr. Gates too much as he does put alot of his money back into good causes – which I respect.

France is a great country, and like any country has many postives and many negatives. Having been a resident here for over 4 years, I find France a fascinating and ironic country full of paradoxes.

I celebrated the recent victory of Sarkozy as France needs change….

1. To cope with globalisation and changing world ecconmics. Much has been written on this topic.

2. Sort out internal issues to promote industry / entrepreneurship. Deal with some of the “nanny bureacracy” issues.

Since the election, there have been a few “rah rah” announcements around investing more into education and giving tax relief on mortgages to a). better educate people for work b). stimulate a housing “boom”.

Now I am not an economist, but these announcements are really skirting around the boosting industry, rather than deal with grass roots issues…

a) Education – Sarko should pay a visit to the City in London and he will see pretty quickly where the creme de la creme of France’s education system has ended up. The first/second language of the majority of derivatives trading desks is French. Why? because they are UK tax residents and so don’t have to pay an French income tax and social charges bill in excess of 52% (based on what they earn in the City). France’s education system is excellent (my kids are in it), the issue is that the tax system needs to change to motivate high earners back to France. The fact that the tax system is a joke anyway, as demonstrated by Mdme. Royal’s wealth tax return where she valued her Mougins villa at 400k Euro. No villa in Mougins has sold for 400k Euro since the 12th Centrury BC. Plus the cost of administrating the wealth tax is the same as the tax generated by it! Come on Sarko, attract the talent back to France with a reformed tax system – the education system is excellent!

2. Tax relief on mortages..Great to see the old UK MIRAS system copied. Shame the real issues are not being addressed to stimulate a property market – agent’s fees in the region of 4-6% and equivalent of UK stamp duty of 4-5% – so every transaction has at least 10% “fees and tax” added on. Address these issues and you will have a speculative housing market.

So what should Sarko do? Simple, support setting up and running businesses in France.

Let’s compare an entrepreneurial environment and the French environment…

UK

- To establish a company in the UK you need around 1 GBP share capital and 50 GBP to incorporate the business

- For smaller companies there is no need to have an accountant audit or prepare your accounts (hence saving fees). Using something like SAGE (100 or so GBP) is all you need.

- Your accountant can give you both tax and accounting advice

France

- To establish a company in France takes around 1,500 GBP in fees, having had a lawyer draw up articles, advertised in local press for the new company etc. etc.

- Tax advice can only be given by lawyers and not accountants. Therefore you need both an accountant and a tax lawer

- Only accountants are able to prepare accounts, costing the smaller company owner between 500-2000 Euros per year (doesn’t the French government trust business owners? or this an obsession with state sponsored bureacracy?)

- New company owners have to pay for and attend a “company running” course unless they can show prior experience. This does not protect against company failures as between 40%-60% of new French businesses fail within the first 3 years (lots fail due to miss-calculating the social charge bill)

- The amount of official paperwork and government agencies (e.g. social charges) you need to deal with is stunning ad most consume at least 5-10% of all France’s productivity

- If you establish the “wrong” type of legal corporate entity (and there are a vaste and confusing array to choose from) , it can cost around 2-4,000 EUR to change (believe me, a few colleagues have been caught out – French and ex-pat)

Can you spot the difference?

So is Sarko an Iron Bru or a Diet Cola drinker? I (and a vaste amount of others) really hope he “eats girders” and drinks the Bru!

Create an environment for stimulating smaller companies and “vive les entrepreneurs”!

Bad day today – one of my oldest friends (were were best man at each others weddings) and my business partner / co-founders of Evolution died yesterday of altitude sickness while climbing in China / Pakistan.

Why did I blog this? Jon was a great friend and was the one who took the top left picture when we were paragliding in Turkey. Plus the irony of his last email to me on 29th June…

Nigel,

Sponsorship still stands, good luck with the convalescence.

Tomorrow I’m off to Kashi in China at the start of an expedition to climb
Muztagh Ata. Subject to altitude sickness looking to walk up using “skins”
and then snowboard down

Take care … Jon

You can find details of what happened here and here

He leaves behind an amazing family. I and many others will miss his northern accent. I will miss you!

(PS – if you need to contact the family, please drop me a note and I will put you in touch)

The article in the Sunday Times today on cycling vacations made me smile. It appears the “hard-core” UK cyclists made fun of the journalist’s racing triple on his bike – even though he beat them up the hills!

I tip my hat to him (journalist) as me and my mates ride in the mountains 3-4 times a week and still use a triple (”granny gear”) or a “compact”. As an FYI, lots of pros train in the same mountains (Mr Armstrong used to live and munch pasta in Villefranche Sur Mer).

The sport is about riding, pushing yourself and enjoying!

Doing the hills with a normal “UK gear-set” is not macho it is silly! And then giving the “excuse” that you had the more “macho” gear-set meant you went slower is also silly.

If you cannot beat “the triple guy” up the hill, then you should train more! not make excuses he/she has a “granny gear”

Sometimes I see a news item which immediately makes me check three calendars to really convince me that it is not April 1st.

Today Sky covered the “World wife carrying championships“, which incidentally was won by Estonia (prize is your wife’s weight in beer).

On a day when three major sporting events (Wimbledon final; British Grand Prix; and first stage of the Tour de France) were in full sing, Sky reporters still managed to cover “Wife Carrying”.

What I want to know is…

- who came up with the idea of “wife carrying” world championships?

- why are the Estonians so good at this?

- who owns the TV rights?

- Is some Kiwi going invent a new “extreme wife carrying” sport – e.g. “the Everest Wife Carry”?

- is someone going to take a leave out of the “dwarf sports book” and invent “wife throwing”?

- what about “husband carrying”?

- Will there be an event for “life partners” or do you need a formal marriage contract to compete?

Lots of questions! This is an important sport, otherwise Sky News would not have covered it online and on the TV.

Does Murdoch’s focus on buying into influencing the US psychi mean that he has allowed Sky News to go tabloid?

Saw this when browsing YouTube (after watching the excellent video of newscaster Mika Brzezinski tear up the Paris Hilton story) – I must admit, I am a big time Apple supporter (even used to have Next on my desk!)

A couple of “new style” credit (loans) businesses that match private investors (lendors) and private borrowers, thus dis-intermediating the bank:

1. Prosper.com
2. zopa.com
3. A facility on FaceBook called “Lending Club”.

Two questions…

1. Will the current issues in the credit markets and rising interest rates cause the traditional lenders to tighten up their credit approvals and allow the above platforms to poach customers?

2. Will the above platforms be around in 5 years?

YES | YES – Zopa.com – as this appears to have a more robust business model

YES | NO – propser.com – is a bit too skewed toward the sub-prime lending market (look at the profiles) and the turmoil that it is going though. I would guess that the sub-prime borrowers will shift their risk onto these platforms once the banks and sub-prime lenders start saying “non”. I do question if the lenders are attracted by the rates they can get away with and are blinkered to the true risk profile of the borrowers.

YES | UNSURE – “Lending Club” , will look deeper.

Also, if anyone knows how leveraged these businesses are, can they let me know. For example, in a traditional bank, for each deposit of $1 the capital adequacy requirement allows lending of around $4. Does the regulator allow these businesses to do this or is there a 1 to 1 relationship between a $ invested and a $ lent? let me know…

Over drinks at a friend’s BBQ we were discussing some trade ideas, one of which I would like to share here as it is quite interesting.

Firstly, some context. My colleague is a boat captain for the 30m+ yachts found in Monaco / St Trop / Antibes / Cannes etc. We both live in this neck of the woods too.

The rise of the “new wealthy” (well documented in FT, Economist etc.) has been driving the rise in demand for “toys” (big boats, private jets etc.).

Some interesting facts:

1. Currently most the major boat-yards around the world that can build the decent “toy” yacht have order books full for the next 5-8 years.

2. 30-40% of the “boat metres” being build will end up on the Med in France, Spain, Italy etc. The “big” ones will be around France/Italy.

3. There is currently zero (yes zero) marina space realistically available to accommodate these new boats. Well, there is a development in Monaco extending the harbour via landfill and in France mooted between Cannes and St Maxine; but this new marina space will only be about 10-20% of the capacity required.

4. I have noticed recently several private equity firms buying into boat-yards (one just closed in Germany a week or so ago). Private equity guys are normally pretty smart so when they going into a trade there is normally a sensible basis for the trade.

5. Some of the luxury “smaller craft” firms (e.g. Crisscraft) have been “turned around” recently driven by the same demand (and big boats needing “posh tenders”)

So it looks as if there exists a “big boat” trade in the market involving boat yards, marinas etc. How can we get in on the trade (this is a non-exhaustive list of questions)?

Boat yards – not many (near zero) of these are public quoted. Therefore we are looking at private equity. Two key questions; 1. with the current credit market issues, will the leveraged financing be available; 2. are they any boat yards on the market?

Private equity – which funds are looking at going long on boat builders and are these funds open?

Marinas – most marinas are state (or local authority) owned. Two more questions; 1. where are the likely spots for development; 2. will the governments in the Med need “PFI” type money to build?

Wealth – will the wealth “bubble” continue to grow and ensure the boat yard order books remain full? (from the current private equity deals in this sector, I guess they believe “yes”)

Why am I posting this? well, I am looking for ideas. My searching for a decent way into the trade and for more data on this sector have led to “not much”.

Answers on a post-card