Monthly Archives: December 2012

Fusing Client Ideas With Our Passion Towards Wealth Management

George Bernard Shaw wrote, “If you have an apple and I have an apple and we exchange apples, then you and I will still each have one apple. But if you have an idea and I have an idea and we exchange ideas, then each of us will have two ideas.”

This is the approach that employees at Zuberbühler Associates bring to each meeting with a client. Many clients have a wealth of experience, knowledge and demands which in turn should be fused with our reliability, precision and passion for wealth management.

After all, what’s the point of being a good entrepreneur or successful manager if guarding the financial or material aspect of that sucess is delegated to the wrong people or companies.

Banks: Racing Cars vs Horse-Drawn Carts

Another spot-on quote from the NYT bestseller “Start-Up Nation” highlighting why certain banking cultures see more bank failures than others:

As Israeli financial analyst Eytan Avriel put it, “Israeli banks were horse-drawn carts and U.S. banks were racing cars. But those racing cars crashed badly whereas the carts traveled more slowly and strayed on course.”

In a nutshell: If you’re doing 160mph with a formula 1 race car on a road that has potholes (read: reality), you’re going to get smashed up and/or need rebuilding (read: go bust or need a bail-out).

With regard to our business of asset management and helping clients protect their assets long-term, we prefer to choose strategies that encompas tools to stay on the road – or continue with as little damage and lost time as possible.

Private Economy A Thin Man Carrying A Fat Man (Government)

Favourite passage of “Start-Up Nation”, a NYT Bestseller, by Dan Senor & Saul Singer;

Netanyahu told us, “I explained to people that the private economy was like a thin man carrying a fat man – the government – on its back. While my reforms sparked massive nationwide strikes by labour unions, my characterisation of the economy struck a cord. Anyone who had tried to start a business in Israel could relate.”

Libor: How traders affect final calculated and published rate

Circumventing safeguards in place to protect published Libor rates from manipulation:

Q: I’m still missing something here. I know these markets pretty well. The procedure required by BBA, in place since the 1980s, involves removing the highest and lowest quotes and averaging the rest. So (a) numerous banks contribute to the average, and (b) any outliers are removed before calculating that average. I appreciate the large notionals involved. But how could UBS traders affect the final calculated and published rate in any significant way? If UBS submits a rate too high or too low, it’s dropped from the calculation, and has no effect. If it submits a rate near that of other banks, that rate is included as only one of many in the average anyway and would have very little effect if any. I’m not being skeptical, but I am not hearing the details of how this actually could affect the published rate by more than a tiny amount and have the intended effect. There are other issues (like having to keep this up every day, for every marking — and what of offsetting positions?). But can someone address this one key issue?

A1: This is why they needed to conspire with others. In USD, if they could persuade others who would otherwise be in the middle of the pack to quote (say) high, this would raise the fixing. If they manage to move the rate by even 1 basis point, if they have a billion $ at risk (not a huge amount for a large book to have fixing on any given day) that’s a $50,000 profit. If it’s $10bn and 2bps then that’s $1m profit. Nice work if you can get it. The positions will likely be random too, as swap books will be long one day and short the next, so the bias shown will not be consistent in direction. For non-USD the panels are smaller so it takes fewer conspirators (although positions sizes will on average be smaller too).

A2: Manipulation of LIBOR has been going on for at least 30 years. It depends how much appetite the authorities have for blood as to how far they go back and research. Of course records are sparser, but you only have to look at the submissions from the individual banks to see how much was going on (or perhaps Reuters and Bloomberg have mysteriously “lost” these). I traded in this market for 20 years. One good rule was that you never paid LIBOR if you could help it, because it was always, until 2007, manipulated upwards. It appeared that certain contributor banks had a common and regular incentive to fix higher than the others. We guessed that they had a lot of loans to customers linked to LIBOR, not that they ever wanted to talk about this. One of the examples that TE uses above is a bit misleading. LIBOR was such a nebulous concept that you could justifiably argue that it was somewhere in a few basis points range. If you did not fix the bank’s rate to take advantage of that uncertainty you would lose out, as you could be sure that the other contributors would be doing exactly that. Hence the almost zero-sum game that berferd was concerned about.. The conspirators have appeared in the last few years, and you’re right, they must have been idiots.

source: public comments on

Fitting quote: Give a man a gun, he will rob a bank. Give a man a bank, he will rob the world.

Fun to calculate the price of a room based on the house or flat price!

What a terrible long-term investment real estate has become…

“There is an iron law of house prices. The more house prices relative to income and rents, the more they will subsequently fall”  / quote “Boomerang”, written by Michael Lewis.

“Real estate bubbles never end with soft landings. A bubble is inflated by nothing firmer than people’s expectations. The moment people cease to believe that house prices will rise forever, they will notice what a terrible long -term investment real estate has become, and will flee the market, and the market will crash.” quote “Boomerang”, written by Michael Lewis.

See also this post regarding the swiss property market entering the risk zone

Fun to calculate the price of a room based on the house price!

Fun to calculate the price of a room based on the house price!

Proof Google Has In Fact Dropped “Don’t be evil” In Practice?

Robert W. Johnson who founded Johnson & Johnson in 1886 set the following important credo (in 1943), that Google chairman Eric Schmidt has very recently spat at:

“Our fourth responsibility is to the communities in which we live. We must be a good citizen – support good works and charity, and bear our fair share of taxes. We must maintain in good order the property we are privileged to use.[…]”

Contrast that with

Google chairman Eric Schmidt has insisted that he is “very proud” of the company’s tax structure, and said that measures to lower its payments were just “capitalism”. source:


Microsoft has long attacked Google from the shadows, whispering to regulators, journalists and anyone else who would listen that Google was a privacy-violating, anticompetitive bully. The fruits of its recent work in this area could come next week, when the Federal Trade Commission is expected to announce the results of its antitrust investigation of Google, a case that echoes Microsoft’s own antitrust suit in the 1990s. A similar investigation by the European Union is also wrapping up. A bad outcome for Google in either one would be a victory for Microsoft.  source:


Why Novartis Equity Performance Has Been Lagging

I started reading a book called “Built To Last” I picked up on a recent trip to NYC. On page 47 the following paragraph struck me:

Quote from George Merck II: “[We] are workers in industry who are genuinely inspired by the ideals of advancement of medical science, and of service to humanity”. The  CEO of Merck, P Roy Vagelos sang the same idealistic tune: “Above all, let’s remember that our business success means victory against disease and help to humankind”.

With these ideals as a backdrop, we’re not surprised that Merck elected to develop and give away Mectizan, a drug to cure “river blindness”, a disease that infected over a million people in the Third World with parasitic worms that swarmed though body tissue and eventually into the eyes causing painful blindness.

Thinking of Novartis, looking at the payouts to senior management and at the same time hearing about problems hospitals recently have had in getting cost-effective medication, I’m not sure they are doing enough in that spirit, which is a shame.

George Merck II explained in 1950:

“[…] we never try to forget that medicine is for the people. It is not for the profits. The profits  follow, and if we have remembered that, they have never failed to appear. The better we have remembred it, the higher they have been.”