Cambodia Has a Big Problem With Small Loans

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samrong01
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Re: Cambodia Has a Big Problem With Small Loans

Post by samrong01 »

Unfortunately for those resident in Cambodia we have little choice but to use the financial institutions available to us. I disagree however that those institutions in Cambodia offering lower interest rates are any lower risk. All of the local institutions are exposed to the same risks. Risk to the depositor varies more by size and quality of balance sheet rather than interest rates offered. For this reason I believe Prasac and Acleda are relatively lower risk compared to others. They are all at risk in the event of economic collapse but the biggest will probably be the last to fall. So might as well make hay while the sun shines from the higher interest rates.

In regard to bitcoin I would follow the advice of Warren Buffet: Never invest in anything you do not understand. If you understand bitcoin thoroughly then go for it, otherwise avoid it.

Vanguard is not as simple as stated. There are many different funds with different objectives. Vanguard is certainly a highly reputable funds manager.
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armchairlawyer
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Re: Cambodia Has a Big Problem With Small Loans

Post by armchairlawyer »

samrong01 wrote: Sun Jan 03, 2021 8:20 am Unfortunately for those resident in Cambodia we have little choice but to use the financial institutions available to us. I disagree however that those institutions in Cambodia offering lower interest rates are any lower risk. All of the local institutions are exposed to the same risks. Risk to the depositor varies more by size and quality of balance sheet rather than interest rates offered. For this reason I believe Prasac and Acleda are relatively lower risk compared to others. They are all at risk in the event of economic collapse but the biggest will probably be the last to fall. So might as well make hay while the sun shines from the higher interest rates.

In regard to bitcoin I would follow the advice of Warren Buffet: Never invest in anything you do not understand. If you understand bitcoin thoroughly then go for it, otherwise avoid it.

Vanguard is not as simple as stated. There are many different funds with different objectives. Vanguard is certainly a highly reputable funds manager.
With the greatest of respect, I disagree with some of what you say.
I speak as someone who has made some terrible decisions in investment and some quite good ones.
My view is this. If you have some investable cash then you have to make some decisions, like it or not.
Even holding cash involves decisions - which currency, which bank (if any).
And there are times when you can do a lot better investing in other things, and there are times when it is better to hold a lot of cash.
Psychology is a big factor. We have investments we like or even love and we have ones we hate. We also have a strong aversion to losses, more powerful than our love of gains. The more we can recognise those psychological influences, the better we can control them. Also we need to control our political preferences.
Doing well in investment requires top notch macro analysis, and if you're investing in individual stocks, also top notch analysis of those companies.
It also requires constant monitoring of a portfolio to adjust positions and, at macro phase transitions, to make radical changes. You can't expect to find this info for free btw. But good quality analysis will pay for itself.
Nothing is for sure and you need to have a varied portfolio and have rules for maximum holdings of different asset types, basically the less volatile the asset type the more you can hold. It's basically a game of managing risk and maximising the potential for gains.

So, if you choose to hold your cash in USD in Cambodian banks, that involves risk like anything else. Risk of USD depreciation and risk of deposit-taker default, possibly also a risk of governmental sequestration (as happens fairly regularly in Argentina).
You have plenty of other choices. You can buy gold in Cambodia, and you can buy bitcoin and if you set up a brokerage account (which is easy to do) you can buy stocks from other countries, bonds from other countries, or commodities.
You don't need to fully understand bitcoin in order to know when it is likely to go up and likely to go down. You just need to understand what influences its price.

None of this would matter much if we were not presently in a period of quite extreme volatility and volatility means risk.
The USD has gone down 10% (in DXY terms) in the last six months and is poised to go down a lot more. Other currencies don't hold much appeal either, thus bitcoin and gold have done well. Bitcoin is also starting to attract institutional funds (maybe not Warren Buffet!) and that is pushing it rapidly higher. US growth and tech stocks are also doing well and so is most of EM (emerging markets) and commodities. So, personally I'm holding minimal cash atm. But it won't be long before the easy macro comparisons swing to very hard (about middle of 2021) and the whole thing will likely go into reverse, sell bitcoin, sell growth stocks, buy treasuries etc.

Getting 8% on a USD deposit is very good indeed and until recently I would say go for it with a sizeable proportion of your cash, although personally I would not ever hold more than 12% of investable funds in USD cash.

The risks vary between the different banks and MDIs here, I have written about that in previous threads. I agree that those paying the highest rates are not necessarily the riskiest. The most powerful safety factor is moral hazard because this can trump all other risk factors. Thus the bank analysts would say that the safest local banks and MDIs are those with high profile and high reputation foreign owners. Of the majors here, that leads you (in descending order) to CIMB, Maybank, ABA, Prasac, Hatha (this has Mitsubishi Bank behind it but they keep very quiet about it).
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Re: Cambodia Has a Big Problem With Small Loans

Post by atst »

I don't go to casinos or the horse races because the odds are stacked against me, I'm quite relaxed about having money spread over a few Cambodian banks, if my money was to be tied up or lost it would have to be a large disaster within the banking sector which is out of everyone hands and nothing you could do to stop it, a bit like covid. Most countries are in the shit financially it could happen anywhere anytime, what's the answer spend it all down 136 before it's lost?
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What's a poor man do when the blues keep following him around.(Smoking Dynamite)
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armchairlawyer
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Re: Cambodia Has a Big Problem With Small Loans

Post by armchairlawyer »

atst wrote: Sun Jan 03, 2021 3:25 pm what's the answer spend it all down 136 before it's lost?
Ha, ha. That might require some other kinds of risk management.
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Re: Cambodia Has a Big Problem With Small Loans

Post by pissontheroof »

Alex wrote: Sat Jan 02, 2021 7:30 am
truffledog wrote: Sat Jan 02, 2021 3:00 am To anyone who still has money invested (in any form) in any local bank or other local financial institution: Its time to get out.
In any case: If you're going to panic, panic first!

Just imagine everyone else suddenly coming to the same conclusion, then they will have a bank run on top of the other problems to deal with.
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samrong01
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Re: Cambodia Has a Big Problem With Small Loans

Post by samrong01 »

There is very little that I would disagree with from armchairlawyer. I know that some believe that foreign banks in Cambodia are safer but this is the only point on which I would disagree. If things go bad I believe the foreign banks will abandon their Cambodian investments. For example if National Bank of Canada had the choice of paying out 5 billion dollars to ABA depositors or losing a little reputation in an unimportant country what do you think they would do? It is extremely rare for major banks to guarantee deposits in their subsidiaries and I do not think they are any more ethical than local banks. Its all a matter of opinion so we can agree to disagree.
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Re: Cambodia Has a Big Problem With Small Loans

Post by nerdlinger »

armchairlawyer wrote: Sun Jan 03, 2021 3:05 pm Bitcoin is also starting to attract institutional funds (maybe not Warren Buffet!) and that is pushing it rapidly higher.
I think it's 50:50 whether cryptocurrencies in general are the way of the future, but Bitcoin doesn't even have the best fundamentals amongst the available cryptocurrencies today. The technology behind it is very much first generation, and the complete mystery surrounding who actually holds 90%+ of bitcoins means nobody has any idea if they were lost forever a decade ago or if they'll all be dumped tomorrow. It's a market controlled by an unknown number of completely anonymous individuals, and I'm genuinely astonished the bubble still hasn't burst.
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Re: Cambodia Has a Big Problem With Small Loans

Post by truffledog »

nerdlinger wrote: Thu Jan 07, 2021 12:55 am
armchairlawyer wrote: Sun Jan 03, 2021 3:05 pm Bitcoin is also starting to attract institutional funds (maybe not Warren Buffet!) and that is pushing it rapidly higher.
I think it's 50:50 whether cryptocurrencies in general are the way of the future, but Bitcoin doesn't even have the best fundamentals amongst the available cryptocurrencies today. The technology behind it is very much first generation, and the complete mystery surrounding who actually holds 90%+ of bitcoins means nobody has any idea if they were lost forever a decade ago or if they'll all be dumped tomorrow. It's a market controlled by an unknown number of completely anonymous individuals, and I'm genuinely astonished the bubble still hasn't burst.
Its a tradeable good which people accept as a alternative payment method and there is massive speculation going on. The variation in price tells a lot. As long as people trust, it will work. The underlying technology seems to be approved and accepted..that is valid for the moment.

IMHO it will have a well known storyboard: the early adapters (who took a big risk at the beginning) will get (very) rich..the last ones investing will be losing it all. Judging the actual development there is a huge demand for Bitcoins..with a (near) fixed amount of Bitcoins available resulting in a jump in price. Simple demand and supply. No magic. Your rightful "fears" make up for a part of the huge variations. Its far from beeing a stable new currency and therefore one of the many ways to gamble when making investment decisions.
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Re: Cambodia Has a Big Problem With Small Loans

Post by nerdlinger »

truffledog wrote: Thu Jan 07, 2021 1:36 am Its a tradeable good which people accept as a alternative payment method
They don't even, though. Bitcoin has been in the news as the next big thing for over a decade and still the only people I know of that accept it as payment are ransomware operators, casinos, drug dealers, speculators, and very occasionally the odd hipster cafe.
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Re: Cambodia Has a Big Problem With Small Loans

Post by Doc67 »

It's on a real tear at the moment. Doubled in the last month.

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