Malaysian Conventional and Islamic Equity Mutual Fund

Malaysian Conventional and Islamic Equity Mutual Fund An Analysis Of Companies Portfolio Performance Using Sharpe Ratio: A Study On The Differences Of Performance Between Malaysian Conventional And Islamic Equity Mutual Fund In 2007 1.0 Introduction 1.0.1 Chapter Description In this chapter, explaining the background of the study, problem statement, objectives of the study, hypotheses, significance of this study, as well as the scope and limitations during the process of completing this study. 1.0.2 Background of the Study Portfolio evaluation is on the time before 1960. Investors evaluated portfolio performance almost entirely on the basis of the rate of return. They were aware of the concept of risk but did not know how to quantify or measure it, so they could consider it explicitly. Developments in portfolio theory in the early 1960s showed investors on how to quantify and measure risk in terms of the variability of returns. Still, because no single measure combined both return and risk, the two factors had to be considered separately as researchers such as Friend, Blume, and Crockett (1970). Specifically, the investigators grouped portfolios into similar risk classes based on a measure of risk (such as the variance of return) and compared the rates of return for alternative portfolios directly within these risk classes. Before 1960, investors evaluated portfolio performance almost entirely on the rate of return, although they knew that risk was a very important variable in determining investment success. The reason for omitting risk was the lack of knowledge on how to measure and quantify it. After the development of portfolio theory in early 60s, and CAPM in subsequent years, risk, measured as either by standard deviation or beta, was included in evaluation process. However, since there was not a single measure combining return and risk, two factors were to be considered separately that were researchers grouped portfolios into similar risk classes and compared rates of return of portfolios in the same risk class. There are many kinds of measurement such as Jensen, Treynor and also Sharpe to evaluate the companys portfolio performance. Jensens alpha has been a popular performance measure because it is a return concept. Related to Dr. William F. Sharpes contribution to style analysis of investment performance, the Sharpes alpha is related to the Jensens alpha in the sense that both measures excess returns. They differ, however, in the selection and construction of benchmarks. Sharpe (1966) developed a composite index which was very similar to the Treynor measure, the only difference was that it was being used as standard deviation, instead of beta. To measure the portfolio risk, the researcher needs the average rate of return for Portfolio during a specified time period, the average rate of return on risk-free rate during the same period, Sharpe performance index and the standard deviation of the rate of return for Portfolio during the time period. Sharpe preferred to compare portfolios to the capital market line (CML) rather than the security market line (SML). Sharpe index, therefore, evaluated funds performance based on both rate of return and diversification (Sharpe 1967). For a completely diversified portfolio Treynor and Sharpe indices would give identical rankings. Although the mutual fund industry in Malaysia started as far back as 1959 with the establishment of the Malayan Unit Trust Ltd, the development of the industry did not take-off until the 1980s with the launching of the Amanah Saham Nasional (ASN). In 2004, the Commission approved 17 new Syariah-based unit trust funds, bringing the total number of such funds to 71 or 24.4% of the total 291 approved funds in the industry as at the end of 2004 (2003: 55 funds or 24.3% of the total industry). Of the 71 Syariah-based unit trust funds, 14 were balanced funds, 14 were bond funds, 39 were equity funds, 2 two were fixed income funds and two were money market funds. The number of units in circulation for Syariah-based unit trust funds also increased from 8.59 billion units as at the end of 2003 to 13.16 billion units in 2004. The number of accounts registered an increase of 23.4% or 80,848 accounts, with a total of 427,000 accounts in 2004. One conventional fund made changes to its investment objectives and operations which enabled it to comply with the requirements of Syariah-based unit trust funds. In terms of value, the NAV of Syariah-based unit trust funds grew to RM6.76 billion representing 7.7% of the industry, an increase of 0.9% from the previous year. Over a 10-year period (1995-2004), the NAV of Syariah-based unit trust funds grew at a compounded annual growth rate (CAGR) of 26.18% while the overall industry CAGR was 7.89%. The recognition of the increasing dominance and importance of unit trusts as an investment instrument has spurred researchers to devise appropriate techniques to assess portfolio performance. The earlier works by Sharpe (1966), Treynor (1965) and Jensen (1968) represented significant contributions to the evaluation of portfolio performance. Therefore, the primary aim of this paper is to present new evidences for the analysis of companies portfolio performance using Sharpe ratio by studying the differences the performance between Malaysian conventional and Islamic Equity Mutual Fund in 2007. 1.0.3 Overview of Conventional and Islamic Mutual Fund Mutual fund or better known as unit trust in Malaysia is an investment vehicle created by asset management companies specializing in pooling savings from both retail and institutional investors. Individual investors seeking liquidity, portfolio diversification and investment expertise are increasingly choosing unit trust funds as their investment vehicle. However, these investors do differ in their preferences based on their risk threshold, liquidity needs and their needs to comply with religious requirement. In the Malaysian context, the performance of mutual funds or more popularly known as unit trust funds as reported by Shamsher and Annuar (1995), Tan (1995), Leong and Aw (1997), Annuar et al,. (1997) and Low and Noor A. Ghazali (2005) concluded that on average, funds were unable to beat the market. The number of unit trust has grown dramatically in recent years. Unit trusts are now the preferred way for individual investors and many institutions to participate in the capital markets, and their popularity has increased demand for evaluations of fund performance. Muslims are not allowed to invest in standard mutual funds since their religion prohibits them from investing in certain equities, like those of banks or companies that deal in pork, alcohol, pornography and certain entertainment related products. An Islamic mutual fund is similar to a â€Å"conventional† mutual fund in many ways; however, unlike its â€Å"conventional† counterpart, an Islamic mutual fund must conform to the Sharia (Islamic Law) investment precepts. The Sharia encourages the use of profit sharing and partnership schemes, and forbids riba (interest), maysir (gambling and pure games of chance), and gharar (selling something that is not owned or that cannot be described in accurate detail; i.e., in terms of type, size and amount) (El-Gamal 2000). The Sharia guidelines and principles govern several aspects of an Islamic mutual fund, including its asset allocation (portfolio screening), investment and trading practices, and income distribution (purification). When selecting investments for their portfolio (asset allocation), conventional mutual funds can freely choose between debt-bearing investments and profit-bearing investment, and invest across the spectrum of all available industries. An Islamic mutual fund, however, must set up screens in order to select those companies that meet its qualitative and quantitative criteria set by Sharia guidelines. 1.1 Problem Statement At some levels, people are always interested in evaluating the performance of their investments. Having to spend the time and incurred the expense to design an asset allocation strategy and select the specific set of securities to form their portfolios, investors whether they are individuals, corporations, or financial institutions. It must be periodically determined whether this effort is worthwhile. Investors in managing their own portfolios should evaluate their performance, as should those who pay one or several professional money managers to make these decisions for them. It is imperative to determine the realized investment performance which justifies the additional costs of engaging professional management. Comparing a portfolios historical returns to those produced by other managers or indexes can be instructive; such comparisons do not produce a complete picture of the portfolios performance. Indeed, the central tenet of the modern approach to performance measurement is that it is impossible to make a thorough evaluation of an investment without explicitly control the risk of the portfolio. Given the complexity and importance of the issues involved, it is not a surprise to learn that there is not a single universally accepted procedure for risk-adjusting portfolio returns. Nevertheless, there are several techniques that are commonly employed. Some previous studies found results that are inconsistent with Chuas findings. These studies include Ewe (1994), Shamsher and Annuar (1995), and Tan (1995). Shamsher and Annuar (1995), focused their study on the performance of 54 unit trusts covering the period of late 80s to early 90s. They found out that the returns on investment in unit trust were well below the risk free and market returns. Furthermore, the results indicated that not only the degree of portfolios diversification was below expectation but the actual returns and risk characteristics of funds were also inconsistent with their stated objectives. Tan (1995) analyzed performance of 12 unit trusts over a 10-year period, 1984-1993. He concluded that unit trusts in general perform worse than the market portfolio. Consistent with Chuas findings, Tan also concluded that government sponsored funds performed better than private funds. As we can see, there are three portfolio performance evaluation techniques that comprise the basic ‘toolkit for measuring risk-adjusted performance. Although some redundancy exists among these measures, each of them provides unique perspectives, so that best viewed as complementary measures. In particular, examining the controversy surrounding the selection of the proper benchmark to use in the risk-adjustment process and discussing why these benchmark problems become larger when beginning to invest globally. From here, how to evaluate the performance of the investments in order to reduce the risk taken? What measurement can contribute to evaluating a good investment? Therefore, it is interesting to analyze the companies portfolio performance by studying on the differences in the performance between conventional and Islamic equity mutual fund in Malaysia by using Sharpe ratio. 1.2 Objectives of Research The general purpose of this study is to analyze the companies portfolio performance using Sharpe ratio by studying on the differences in the performance between conventional and Islamic equity mutual fund in Malaysia. A careful review on those questions has led to the development of the following specific research objectives which are: i. To measure and rank both relative quantitative performances of mutual fund (conventional/Islamic) on the basis of their return, total risk, coefficient of variation and Sharpe ratio. The term performance contains both the return and the risk undertaken by these mutual funds. ii. To investigate whether both mutual funds (conventional/Islamic) are earning higher returns than the benchmark returns (or market Portfolio/Index returns) in terms of risk. iii. To determine the relationship between dependent variable and independent variable. 1.3 Scope of Study The study is on the analysis of the companies portfolio performance in determining the measure of average daily return, total risk (standard deviation), coefficient of variation and Sharpe ratio. Moreover, to observe the differences in terms of performance between conventional and Islamic mutual fund in the context of Malaysian capital market by comparing them to the stock market index or Kuala Lumpur Composite Index (KLCI) benchmark. The scopes of the study are stated as follow:  § The relationship between two variables: the return on equity mutual fund as the dependent variable whereas the return on stock market index (KLCI) as the independent variable for conventional and Islamic fund.  § The period of study will cover one (1) year starting from January 2007 to December 2007 using the daily basis collected from The Star and New Straits Times newspapers and also from the internet.  § This research will also focus on the conventional and Islamic Equity Mutual Fund companies available in Malaysia. 1.4 Theoretical Framework The theoretical framework shows the relationship between the independent variables and dependent variable. The independent variable is the return on KLCI while the dependent variable is the return of Equity Mutual fund companies in Malaysia. Schematic diagram for the theoretical framework in this study is as follows: Market Index Equity Fund Market Index Islamic Equity Fund Independent Variable Dependent Variable 1.5 Hypotheses According to Uma Sekaran (2003), a hypothesis can be defined as a logically conjectured relationship between two or more variables expressed in the form of testable statement. Hypothesis can be divided into two categories which are Ho which is a Null Hypothesis and Ha which is an Alternate Hypothesis. The term â€Å"null† can be thought of as meaning â€Å"no change† or â€Å"no difference†. The second hypothesis is called alternative hypothesis. It is summary of the case if the null hypothesis is not true. It is stated that Ha, the alternative hypothesis is a statement of a view that has been prepared to be accepted if Ho is rejected. The hypotheses of this study are: Hypothesis 1: Ho: There is no relationship between the return on KLCI and the return on Conventional equity mutual fund. Ha: There is a relationship between the return on KLCI and the return on Conventional equity mutual fund. Hypothesis 2: Ho: There is no relationship between the return on KLCI and the return on Islamic equity mutual fund. Ha: There is a relationship between the return on KLCI and the return on Islamic equity mutual fund. 1.6 Limitations of the Study Data Collection and Cost Limitation The major source of data gained is from the secondary sources. The data is only available at certain places and it requires cost to obtain the data. Besides, it also requires costs in the process of printing, photocopying, data services and transportations to obtain the information. The information about the topic studied is also difficult to search in the library because of the limited information. As a result, it causes problems to the researcher to gather and collect the information. The information and data related to the study is rather difficult to obtain. Thus, the accuracy of the study depends on the accuracy of the data available and may not perfectly precise. In addition, data is also limited since it relies on the secondary sources alone. Lack of Experience and Expertise Since this research is the first research experience for the researcher, undoubtedly there are still lots of things to improve. The lacks of experience especially in data collection and time management have been the limitations to the researcher. Moreover, the researcher has limited knowledge on the topic and needs more understanding on the topic studied. Time Constraint Time is very limited for the researcher to complete the research. The researcher has to be very smart in scheduling the time to make sure the research is completed in time. Thus, time constraint has been identified as one of the limitations for the researcher. 1.7 Significance of the Study This research analyzes on the companies portfolio performance using Sharpe ratio by studying on the differences in the performance between conventional and Islamic Equity Mutual Fund in Malaysia. Therefore this study will provide some information that can be useful because the data and findings from this research will help other researchers to produce better result in their research. This research is also significant to: To Researcher As a finance student, issues in measuring portfolio performance are so much important and crucial. By studying about measurement of portfolio performance in depth, a better understanding and knowledge is gained. This research has given the researcher the opportunity to get the experience in practice as well as in theories. To other researcher This study also can be a useful reference to other researchers who are keen to carry on the study regarding the performance of mutual fund in Malaysia. There are several fruitful areas in this study that can be further examined by other researchers. Further study will give an opportunity to other researchers to expand their view and knowledge. To do so, they need to refer to numerous literatures and hopefully, this research can come in handy for them. To Finance Students This research will be very useful for finance students in having more knowledge about the companys portfolio performance and the differences in the performance between conventional and Islamic Equity Mutual fund in Malaysia. They can use this research as a guide and as references in their studies in portfolio management and mutual fund in Malaysia. To Businesses This research is very important to businesses in realizing the effects of portfolio management on their performance. This is important so that they will have clear direction in deciding their investment. To Investors This study plays an important role in decision making since it gives the investors a prior knowledge of which Equity Mutual Fund companies is the best to invest and whether those companies provide high returns on investment. Moreover, revealing the specific volatility patterns in returns might also benefit investors in risk management and portfolio optimization. This research is also important to investors so that they can have a clearer picture of their investment choices. For investors the study can help them to know the risk and return of their investment transaction. 1.8 Definition of Terms Portfolio A collection of investments are all owned by the same individual or organization. These investments often include stocks, which are investments in individual businesses; bonds, which are investments in debt that are designed to earn interest; and mutual funds, which are essentially pools of money from many investors that are invested by professionals or according to indices. Sharpe Ratio A risk-adjusted measure developed by William F. Sharpe, calculated using standard deviation and excess return to determine reward per unit of risk. The higher the Sharpe ratio, the better the funds historical risk-adjusted performance. Mutual Fund (Unit Trust) A form of collective investment constituted under a trust deed or a pooled investment plan where the capital contributions of investors are combined into a legally formed trust fund. Equity fund Equity fund or stock fund is a fund that invests in Equities more commonly known as stocks. Such funds are typically held either in stock or cash, as opposed to bonds, notes or other securities. Return Based on Investopedia definition, return can be defined as the gain or lossof an investment over a specified period, expressed asa percentage increase over the initial investment cost. Gains on investments are considered to beany income received from the security, plus realized capital gains. Risk The quantifiable likelihood of loss or less-than-expected returns Risk-adjusted return A measure of how much an investment returned in relation to the amount of risk it took on. Often used to compare a high-risk, potentially high-return investment with a low-risk, lower-return investment. Benchmark A standard, used for comparison. For example, the Nasdaq may be used as a benchmark against which the performance of a technology stock is compared. Regression Analysis A statistical technique used to find relationships between variables for the purpose of predicting future values. Coefficient of Determination A measure of the correlation between the dependent and independent variables in a regression analysis. R-squared A measurement of how closely a portfolios performance correlates with the performance of a benchmark index, such as the SP 500, and thus a measurement of what portion of its performance can be explained by the performance of the overall market or index. Values for r-squared range from 0 to 1, where 0 indicates no correlation and 1 indicates perfect correlation. Kuala Lumpur Composite Index (KLCI) The Kuala Lumpur Composite Index (KLCI) is a stock market index generally accepted as the local stock market barometer. KLCI was introduced in 1986 to public the need for a stock market index which would serve as an accurate performance indicator of the Malaysian stock market as well as the economy. It is used to be the main index, and is now one of the three primary indices for the Malaysian stock market which the other two are FMB30 and FMBEMAS, Bursa Malaysia. It contains 100 companies from the Main Board with approximately 500 to 650 listed companies in the Main Board which comprise of multi-sectors companies across the year 2000 to 2006 and is a capitalization-weighted index. 2.0 Literature Review 2.1 Chapter Description Literature review is the documentation of a comprehensive review of the published and unpublished work from the secondary sources of data in the areas of specific interest to the researcher. The reason of the literature review is to ensure that no important variable that has in the past been founded repeatedly to have an impact on the problem is ignored. (Uma Sekaran, 2005 page 63). 2.2 Literature Review of Evaluated Portfolio Performance Craig W. French (2003) discussed on what is involved in evaluating portfolio performance, including the need to adjust for differential risk and differential time periods, the need for a benchmark, and constraints on portfolio managers. It also considered the difference between the portfolios performance and the managers performance. For measurement this paper used well-known risk-adjusted (composite) measures of Sharpe portfolio performance. Investors who had all (or substantially all) of their assets in a portfolio of securities should rely more on the Sharpe measure because total risk is important. Joel Owen and Ramon Rabinovitch (1998), for the last four decades, numerous authors have been suggesting methods to evaluate portfolio performance. Sharpe (1966) proposed performance measures which had produced a score for every portfolio being evaluated. These scores were used to compare the performance of any two portfolios or rank the performance of all portfolios in a given set. The earlier works by Sharpe (1966), Treynor (1965) and Jensen (1968) represented significant contributions to the evaluation of portfolio performance. 2.3 Literature Review of Sharpe Ratio Francisco Peà ±aranda (2007) in her paper commented on developments beyond mean-variance preferences to some alternatives to the Sharpe ratio. The main goal of those measures was to give a similar ranking to Sharpe ratios when returns were symmetrically distributed and showed a preference for skewness when they were not. Moreover, performance measures could be used to guide asset allocation since they can be used as the criterion to maximize with portfolio. Raphie Hayat (2006), the attractiveness of the Sharpe Ratio came from its intuitiveness and simplicity. The Sharpe Ratio are simple because it could rank funds on the base of a single and intuitive since it only rewarded funds with a higher ratio if their returns were higher with the same level of risk or if the risk was lowered while keeping the same level of return. Zhidong Bai, Keyan Wang, and Wing-Keung Wong (2006) stated that the asset performance evaluation was one of the most important areas in investment analysis. In order to compare the performance among assets, several statistics had been developed and among them, the Sharpe-ratio statistic was the most prevalent. However, the major limitation of the Sharpe-ratio statistic was that its distribution is only valid asymptotically, but not valid for small samples. Nevertheless, it was important in finance to test the performance among assets for small samples. Tzu-Wei Kuo and Cesario Mateus (2006), the Sharpe ratio was well known risk-adjusted performance measures and easily understood by an individual investor. Thus, investors could evaluate the exchange-traded funds (ETFs) performance, based on the Sharpe ratio. However, the Sharpe ratio relied on the assumption that returns were normally distributed having these measures difficulty in evaluating the performance with skewed return distributions. Martin Eling and Frank Schuhmacher said that the classic Sharpe ratio was adequate in evaluating investment funds when the returns of those funds were normally distributed and the investor intended to place all his risky assets into just one investment fund. Because hedge fund returns differed significantly from a normal distribution, other performance measures had been proposed and encouraged in both academic and practice-oriented literature. The Sharpe ratio measured the performance of an investment fund by considering the relationship between the risk premium and the standard deviation of the returns generated by a fund. The Sharpe ratio were an adequate performance measure if the returns of the investment funds were normally distributed and the investor wished to place all his risky assets in just one investment fund. Andreas G Merikas, Anna A Merikas and Ioannis Sorros (2005) examined the exact relationship between the Sharpe ratio and the information ratio. Sharpe in 1994 asserted that the information ratio was a generalized Sharpe ratio. Sharpe ratios had been estimated for each fund in each category, and an average ratio for each category. The Sharpe ratio would generally be positive since excess returns of funds over the risk free rate would be positive, unlike excess returns of funds over the market, which could be negative, as the return of the risk free bond was smaller but at the same time less volatile than the return of the market. Cheryl J. Frohlich, Anita Pennathur and Oliver Schnusenberg in their research, Sharpe reward-to-variability ratio was used if total variability was thought to be the appropriate measure of risk, a stocks (portfolios) risk-adjusted returns could be computed using the Sharpe Index. The Sharpe and Treynor Index eliminated the problem of only considering return as a measure of performance. However, neither ratio was independent of the time period over which it is measured. This means that the ratio can change from one period to another with different results. Moreover, both ratios also ignored the correlation of a fund with other assets, liabilities, or previous realizations of its own return. Mario Onorato (2004), the Sharpe Ratio of any investment was defined as its excess return, it is return in excess of a benchmark return divided by the standard deviation of excess return. The benchmark represents a risk free investment alternative. Moreover, although the Sharpe ratio has become part of the modern financial analysis, its applications typically did not account for the fact that it was an estimated quantity, subject to estimation errors that would be substantial in some cases. The statistical properties of Sharpe ratios depended intimately on the statistical properties of the return series on which they are based. This suggests that a more sophisticated approach to interpreting Sharpe ratios is called for, one that incorporates information about the investment style that generates the returns and the market environment in which those returns are generated. Wei Zhen (2004), in his paper said that the Sharpe (1966) and Treynor (1965) performance measures were widely accepted in both academia and industry to assess the Risk-adjusted value of a particular portfolio. It could be shown, after some mathematical treatment, that the Sharpe performance measure was useful when the portfolio of interest represented all of the investors investment, while Treynors measure was preferred when the portfolio under discussion was only a portion of the whole investment package. Robert McCauley and Guorong Jiang (2004), through the Sharpe ratio it compared the returns of portfolios in relation to their risk by dividing their returns in excess of the riskless rate of return by the volatility of their returns. A portfolio with a higher Sharpe ratio was preferred in that it offered a higher return per unit of risk, as measured by return volatility. William Goetzmann, Jonathan Ingersoll, Matthew Spiegel and Ivo Welch (2002), the Sharpe ratio is one of the most common measures of portfolio performance. It was used as a tool for evaluating and predicting the performance of mutual fund managers. Since then the Sharpe ratio, and its close analogues the Information ratio, the squared Sharpe ratio and M-squared, have become widely used in practice to rank investment managers and to evaluate the attractiveness of investment strategies in general. The appeal of the Sharpe measure was clear. It was an affine transformation of a simple t-test for equality in means of two variables, the first variable being the managers time series of returns and the second being a benchmark. The Sharpe ratio was also ubiquitous in academic research as a metric for bounding asset prices. Andrew Worthington and Helen Higgs (2002), the Sharpe ratio (also known as the reward-to-volatility ratio) indicated the excess return per unit of risk and was calculated by dividing the return in excess of the risk-free rate by the standard deviation of returns. In the current context, the Sharpe ratio was the most appropriate performance measure for an investor whose portfolio was composed wholly of a given artists work. Verena Kugi (1999), the Sharpe ratio measured the change in the portfolios return with respect to a one unit change in the portfolios risk. The higher this Reward-to-Variability-Ratio the more attractive was the evaluated portfolio because the investor received more compensation for the same increase in risk. Graphically, the Sharpe ratio was equal to the slope of a straight line connecting the position of the evaluated portfolio, for example a fund, with the risk-free rate. To determine the quality of performance, the Sharpe index of the evaluated portfolio was compared to the Sharpe index of the market or benchmark portfolio. The portfolios Sharpe index being higher than the markets Sharpe index indicated that the portfolio manager had outperformed the market. Respectively, a lower Sharpe ratio was a sign of underperformance. Any portfolio that was positioned on the capital market line had a Sharpe ratio equal to that of the market and was therefore characterized by neutral perform ance. Youguo Liang and Willard McIntosh (1998), the Sharpes alpha captured the excess return of Malaysian Conventional and Islamic Equity Mutual Fund Malaysian Conventional and Islamic Equity Mutual Fund An Analysis Of Companies Portfolio Performance Using Sharpe Ratio: A Study On The Differences Of Performance Between Malaysian Conventional And Islamic Equity Mutual Fund In 2007 1.0 Introduction 1.0.1 Chapter Description In this chapter, explaining the background of the study, problem statement, objectives of the study, hypotheses, significance of this study, as well as the scope and limitations during the process of completing this study. 1.0.2 Background of the Study Portfolio evaluation is on the time before 1960. Investors evaluated portfolio performance almost entirely on the basis of the rate of return. They were aware of the concept of risk but did not know how to quantify or measure it, so they could consider it explicitly. Developments in portfolio theory in the early 1960s showed investors on how to quantify and measure risk in terms of the variability of returns. Still, because no single measure combined both return and risk, the two factors had to be considered separately as researchers such as Friend, Blume, and Crockett (1970). Specifically, the investigators grouped portfolios into similar risk classes based on a measure of risk (such as the variance of return) and compared the rates of return for alternative portfolios directly within these risk classes. Before 1960, investors evaluated portfolio performance almost entirely on the rate of return, although they knew that risk was a very important variable in determining investment success. The reason for omitting risk was the lack of knowledge on how to measure and quantify it. After the development of portfolio theory in early 60s, and CAPM in subsequent years, risk, measured as either by standard deviation or beta, was included in evaluation process. However, since there was not a single measure combining return and risk, two factors were to be considered separately that were researchers grouped portfolios into similar risk classes and compared rates of return of portfolios in the same risk class. There are many kinds of measurement such as Jensen, Treynor and also Sharpe to evaluate the companys portfolio performance. Jensens alpha has been a popular performance measure because it is a return concept. Related to Dr. William F. Sharpes contribution to style analysis of investment performance, the Sharpes alpha is related to the Jensens alpha in the sense that both measures excess returns. They differ, however, in the selection and construction of benchmarks. Sharpe (1966) developed a composite index which was very similar to the Treynor measure, the only difference was that it was being used as standard deviation, instead of beta. To measure the portfolio risk, the researcher needs the average rate of return for Portfolio during a specified time period, the average rate of return on risk-free rate during the same period, Sharpe performance index and the standard deviation of the rate of return for Portfolio during the time period. Sharpe preferred to compare portfolios to the capital market line (CML) rather than the security market line (SML). Sharpe index, therefore, evaluated funds performance based on both rate of return and diversification (Sharpe 1967). For a completely diversified portfolio Treynor and Sharpe indices would give identical rankings. Although the mutual fund industry in Malaysia started as far back as 1959 with the establishment of the Malayan Unit Trust Ltd, the development of the industry did not take-off until the 1980s with the launching of the Amanah Saham Nasional (ASN). In 2004, the Commission approved 17 new Syariah-based unit trust funds, bringing the total number of such funds to 71 or 24.4% of the total 291 approved funds in the industry as at the end of 2004 (2003: 55 funds or 24.3% of the total industry). Of the 71 Syariah-based unit trust funds, 14 were balanced funds, 14 were bond funds, 39 were equity funds, 2 two were fixed income funds and two were money market funds. The number of units in circulation for Syariah-based unit trust funds also increased from 8.59 billion units as at the end of 2003 to 13.16 billion units in 2004. The number of accounts registered an increase of 23.4% or 80,848 accounts, with a total of 427,000 accounts in 2004. One conventional fund made changes to its investment objectives and operations which enabled it to comply with the requirements of Syariah-based unit trust funds. In terms of value, the NAV of Syariah-based unit trust funds grew to RM6.76 billion representing 7.7% of the industry, an increase of 0.9% from the previous year. Over a 10-year period (1995-2004), the NAV of Syariah-based unit trust funds grew at a compounded annual growth rate (CAGR) of 26.18% while the overall industry CAGR was 7.89%. The recognition of the increasing dominance and importance of unit trusts as an investment instrument has spurred researchers to devise appropriate techniques to assess portfolio performance. The earlier works by Sharpe (1966), Treynor (1965) and Jensen (1968) represented significant contributions to the evaluation of portfolio performance. Therefore, the primary aim of this paper is to present new evidences for the analysis of companies portfolio performance using Sharpe ratio by studying the differences the performance between Malaysian conventional and Islamic Equity Mutual Fund in 2007. 1.0.3 Overview of Conventional and Islamic Mutual Fund Mutual fund or better known as unit trust in Malaysia is an investment vehicle created by asset management companies specializing in pooling savings from both retail and institutional investors. Individual investors seeking liquidity, portfolio diversification and investment expertise are increasingly choosing unit trust funds as their investment vehicle. However, these investors do differ in their preferences based on their risk threshold, liquidity needs and their needs to comply with religious requirement. In the Malaysian context, the performance of mutual funds or more popularly known as unit trust funds as reported by Shamsher and Annuar (1995), Tan (1995), Leong and Aw (1997), Annuar et al,. (1997) and Low and Noor A. Ghazali (2005) concluded that on average, funds were unable to beat the market. The number of unit trust has grown dramatically in recent years. Unit trusts are now the preferred way for individual investors and many institutions to participate in the capital markets, and their popularity has increased demand for evaluations of fund performance. Muslims are not allowed to invest in standard mutual funds since their religion prohibits them from investing in certain equities, like those of banks or companies that deal in pork, alcohol, pornography and certain entertainment related products. An Islamic mutual fund is similar to a â€Å"conventional† mutual fund in many ways; however, unlike its â€Å"conventional† counterpart, an Islamic mutual fund must conform to the Sharia (Islamic Law) investment precepts. The Sharia encourages the use of profit sharing and partnership schemes, and forbids riba (interest), maysir (gambling and pure games of chance), and gharar (selling something that is not owned or that cannot be described in accurate detail; i.e., in terms of type, size and amount) (El-Gamal 2000). The Sharia guidelines and principles govern several aspects of an Islamic mutual fund, including its asset allocation (portfolio screening), investment and trading practices, and income distribution (purification). When selecting investments for their portfolio (asset allocation), conventional mutual funds can freely choose between debt-bearing investments and profit-bearing investment, and invest across the spectrum of all available industries. An Islamic mutual fund, however, must set up screens in order to select those companies that meet its qualitative and quantitative criteria set by Sharia guidelines. 1.1 Problem Statement At some levels, people are always interested in evaluating the performance of their investments. Having to spend the time and incurred the expense to design an asset allocation strategy and select the specific set of securities to form their portfolios, investors whether they are individuals, corporations, or financial institutions. It must be periodically determined whether this effort is worthwhile. Investors in managing their own portfolios should evaluate their performance, as should those who pay one or several professional money managers to make these decisions for them. It is imperative to determine the realized investment performance which justifies the additional costs of engaging professional management. Comparing a portfolios historical returns to those produced by other managers or indexes can be instructive; such comparisons do not produce a complete picture of the portfolios performance. Indeed, the central tenet of the modern approach to performance measurement is that it is impossible to make a thorough evaluation of an investment without explicitly control the risk of the portfolio. Given the complexity and importance of the issues involved, it is not a surprise to learn that there is not a single universally accepted procedure for risk-adjusting portfolio returns. Nevertheless, there are several techniques that are commonly employed. Some previous studies found results that are inconsistent with Chuas findings. These studies include Ewe (1994), Shamsher and Annuar (1995), and Tan (1995). Shamsher and Annuar (1995), focused their study on the performance of 54 unit trusts covering the period of late 80s to early 90s. They found out that the returns on investment in unit trust were well below the risk free and market returns. Furthermore, the results indicated that not only the degree of portfolios diversification was below expectation but the actual returns and risk characteristics of funds were also inconsistent with their stated objectives. Tan (1995) analyzed performance of 12 unit trusts over a 10-year period, 1984-1993. He concluded that unit trusts in general perform worse than the market portfolio. Consistent with Chuas findings, Tan also concluded that government sponsored funds performed better than private funds. As we can see, there are three portfolio performance evaluation techniques that comprise the basic ‘toolkit for measuring risk-adjusted performance. Although some redundancy exists among these measures, each of them provides unique perspectives, so that best viewed as complementary measures. In particular, examining the controversy surrounding the selection of the proper benchmark to use in the risk-adjustment process and discussing why these benchmark problems become larger when beginning to invest globally. From here, how to evaluate the performance of the investments in order to reduce the risk taken? What measurement can contribute to evaluating a good investment? Therefore, it is interesting to analyze the companies portfolio performance by studying on the differences in the performance between conventional and Islamic equity mutual fund in Malaysia by using Sharpe ratio. 1.2 Objectives of Research The general purpose of this study is to analyze the companies portfolio performance using Sharpe ratio by studying on the differences in the performance between conventional and Islamic equity mutual fund in Malaysia. A careful review on those questions has led to the development of the following specific research objectives which are: i. To measure and rank both relative quantitative performances of mutual fund (conventional/Islamic) on the basis of their return, total risk, coefficient of variation and Sharpe ratio. The term performance contains both the return and the risk undertaken by these mutual funds. ii. To investigate whether both mutual funds (conventional/Islamic) are earning higher returns than the benchmark returns (or market Portfolio/Index returns) in terms of risk. iii. To determine the relationship between dependent variable and independent variable. 1.3 Scope of Study The study is on the analysis of the companies portfolio performance in determining the measure of average daily return, total risk (standard deviation), coefficient of variation and Sharpe ratio. Moreover, to observe the differences in terms of performance between conventional and Islamic mutual fund in the context of Malaysian capital market by comparing them to the stock market index or Kuala Lumpur Composite Index (KLCI) benchmark. The scopes of the study are stated as follow:  § The relationship between two variables: the return on equity mutual fund as the dependent variable whereas the return on stock market index (KLCI) as the independent variable for conventional and Islamic fund.  § The period of study will cover one (1) year starting from January 2007 to December 2007 using the daily basis collected from The Star and New Straits Times newspapers and also from the internet.  § This research will also focus on the conventional and Islamic Equity Mutual Fund companies available in Malaysia. 1.4 Theoretical Framework The theoretical framework shows the relationship between the independent variables and dependent variable. The independent variable is the return on KLCI while the dependent variable is the return of Equity Mutual fund companies in Malaysia. Schematic diagram for the theoretical framework in this study is as follows: Market Index Equity Fund Market Index Islamic Equity Fund Independent Variable Dependent Variable 1.5 Hypotheses According to Uma Sekaran (2003), a hypothesis can be defined as a logically conjectured relationship between two or more variables expressed in the form of testable statement. Hypothesis can be divided into two categories which are Ho which is a Null Hypothesis and Ha which is an Alternate Hypothesis. The term â€Å"null† can be thought of as meaning â€Å"no change† or â€Å"no difference†. The second hypothesis is called alternative hypothesis. It is summary of the case if the null hypothesis is not true. It is stated that Ha, the alternative hypothesis is a statement of a view that has been prepared to be accepted if Ho is rejected. The hypotheses of this study are: Hypothesis 1: Ho: There is no relationship between the return on KLCI and the return on Conventional equity mutual fund. Ha: There is a relationship between the return on KLCI and the return on Conventional equity mutual fund. Hypothesis 2: Ho: There is no relationship between the return on KLCI and the return on Islamic equity mutual fund. Ha: There is a relationship between the return on KLCI and the return on Islamic equity mutual fund. 1.6 Limitations of the Study Data Collection and Cost Limitation The major source of data gained is from the secondary sources. The data is only available at certain places and it requires cost to obtain the data. Besides, it also requires costs in the process of printing, photocopying, data services and transportations to obtain the information. The information about the topic studied is also difficult to search in the library because of the limited information. As a result, it causes problems to the researcher to gather and collect the information. The information and data related to the study is rather difficult to obtain. Thus, the accuracy of the study depends on the accuracy of the data available and may not perfectly precise. In addition, data is also limited since it relies on the secondary sources alone. Lack of Experience and Expertise Since this research is the first research experience for the researcher, undoubtedly there are still lots of things to improve. The lacks of experience especially in data collection and time management have been the limitations to the researcher. Moreover, the researcher has limited knowledge on the topic and needs more understanding on the topic studied. Time Constraint Time is very limited for the researcher to complete the research. The researcher has to be very smart in scheduling the time to make sure the research is completed in time. Thus, time constraint has been identified as one of the limitations for the researcher. 1.7 Significance of the Study This research analyzes on the companies portfolio performance using Sharpe ratio by studying on the differences in the performance between conventional and Islamic Equity Mutual Fund in Malaysia. Therefore this study will provide some information that can be useful because the data and findings from this research will help other researchers to produce better result in their research. This research is also significant to: To Researcher As a finance student, issues in measuring portfolio performance are so much important and crucial. By studying about measurement of portfolio performance in depth, a better understanding and knowledge is gained. This research has given the researcher the opportunity to get the experience in practice as well as in theories. To other researcher This study also can be a useful reference to other researchers who are keen to carry on the study regarding the performance of mutual fund in Malaysia. There are several fruitful areas in this study that can be further examined by other researchers. Further study will give an opportunity to other researchers to expand their view and knowledge. To do so, they need to refer to numerous literatures and hopefully, this research can come in handy for them. To Finance Students This research will be very useful for finance students in having more knowledge about the companys portfolio performance and the differences in the performance between conventional and Islamic Equity Mutual fund in Malaysia. They can use this research as a guide and as references in their studies in portfolio management and mutual fund in Malaysia. To Businesses This research is very important to businesses in realizing the effects of portfolio management on their performance. This is important so that they will have clear direction in deciding their investment. To Investors This study plays an important role in decision making since it gives the investors a prior knowledge of which Equity Mutual Fund companies is the best to invest and whether those companies provide high returns on investment. Moreover, revealing the specific volatility patterns in returns might also benefit investors in risk management and portfolio optimization. This research is also important to investors so that they can have a clearer picture of their investment choices. For investors the study can help them to know the risk and return of their investment transaction. 1.8 Definition of Terms Portfolio A collection of investments are all owned by the same individual or organization. These investments often include stocks, which are investments in individual businesses; bonds, which are investments in debt that are designed to earn interest; and mutual funds, which are essentially pools of money from many investors that are invested by professionals or according to indices. Sharpe Ratio A risk-adjusted measure developed by William F. Sharpe, calculated using standard deviation and excess return to determine reward per unit of risk. The higher the Sharpe ratio, the better the funds historical risk-adjusted performance. Mutual Fund (Unit Trust) A form of collective investment constituted under a trust deed or a pooled investment plan where the capital contributions of investors are combined into a legally formed trust fund. Equity fund Equity fund or stock fund is a fund that invests in Equities more commonly known as stocks. Such funds are typically held either in stock or cash, as opposed to bonds, notes or other securities. Return Based on Investopedia definition, return can be defined as the gain or lossof an investment over a specified period, expressed asa percentage increase over the initial investment cost. Gains on investments are considered to beany income received from the security, plus realized capital gains. Risk The quantifiable likelihood of loss or less-than-expected returns Risk-adjusted return A measure of how much an investment returned in relation to the amount of risk it took on. Often used to compare a high-risk, potentially high-return investment with a low-risk, lower-return investment. Benchmark A standard, used for comparison. For example, the Nasdaq may be used as a benchmark against which the performance of a technology stock is compared. Regression Analysis A statistical technique used to find relationships between variables for the purpose of predicting future values. Coefficient of Determination A measure of the correlation between the dependent and independent variables in a regression analysis. R-squared A measurement of how closely a portfolios performance correlates with the performance of a benchmark index, such as the SP 500, and thus a measurement of what portion of its performance can be explained by the performance of the overall market or index. Values for r-squared range from 0 to 1, where 0 indicates no correlation and 1 indicates perfect correlation. Kuala Lumpur Composite Index (KLCI) The Kuala Lumpur Composite Index (KLCI) is a stock market index generally accepted as the local stock market barometer. KLCI was introduced in 1986 to public the need for a stock market index which would serve as an accurate performance indicator of the Malaysian stock market as well as the economy. It is used to be the main index, and is now one of the three primary indices for the Malaysian stock market which the other two are FMB30 and FMBEMAS, Bursa Malaysia. It contains 100 companies from the Main Board with approximately 500 to 650 listed companies in the Main Board which comprise of multi-sectors companies across the year 2000 to 2006 and is a capitalization-weighted index. 2.0 Literature Review 2.1 Chapter Description Literature review is the documentation of a comprehensive review of the published and unpublished work from the secondary sources of data in the areas of specific interest to the researcher. The reason of the literature review is to ensure that no important variable that has in the past been founded repeatedly to have an impact on the problem is ignored. (Uma Sekaran, 2005 page 63). 2.2 Literature Review of Evaluated Portfolio Performance Craig W. French (2003) discussed on what is involved in evaluating portfolio performance, including the need to adjust for differential risk and differential time periods, the need for a benchmark, and constraints on portfolio managers. It also considered the difference between the portfolios performance and the managers performance. For measurement this paper used well-known risk-adjusted (composite) measures of Sharpe portfolio performance. Investors who had all (or substantially all) of their assets in a portfolio of securities should rely more on the Sharpe measure because total risk is important. Joel Owen and Ramon Rabinovitch (1998), for the last four decades, numerous authors have been suggesting methods to evaluate portfolio performance. Sharpe (1966) proposed performance measures which had produced a score for every portfolio being evaluated. These scores were used to compare the performance of any two portfolios or rank the performance of all portfolios in a given set. The earlier works by Sharpe (1966), Treynor (1965) and Jensen (1968) represented significant contributions to the evaluation of portfolio performance. 2.3 Literature Review of Sharpe Ratio Francisco Peà ±aranda (2007) in her paper commented on developments beyond mean-variance preferences to some alternatives to the Sharpe ratio. The main goal of those measures was to give a similar ranking to Sharpe ratios when returns were symmetrically distributed and showed a preference for skewness when they were not. Moreover, performance measures could be used to guide asset allocation since they can be used as the criterion to maximize with portfolio. Raphie Hayat (2006), the attractiveness of the Sharpe Ratio came from its intuitiveness and simplicity. The Sharpe Ratio are simple because it could rank funds on the base of a single and intuitive since it only rewarded funds with a higher ratio if their returns were higher with the same level of risk or if the risk was lowered while keeping the same level of return. Zhidong Bai, Keyan Wang, and Wing-Keung Wong (2006) stated that the asset performance evaluation was one of the most important areas in investment analysis. In order to compare the performance among assets, several statistics had been developed and among them, the Sharpe-ratio statistic was the most prevalent. However, the major limitation of the Sharpe-ratio statistic was that its distribution is only valid asymptotically, but not valid for small samples. Nevertheless, it was important in finance to test the performance among assets for small samples. Tzu-Wei Kuo and Cesario Mateus (2006), the Sharpe ratio was well known risk-adjusted performance measures and easily understood by an individual investor. Thus, investors could evaluate the exchange-traded funds (ETFs) performance, based on the Sharpe ratio. However, the Sharpe ratio relied on the assumption that returns were normally distributed having these measures difficulty in evaluating the performance with skewed return distributions. Martin Eling and Frank Schuhmacher said that the classic Sharpe ratio was adequate in evaluating investment funds when the returns of those funds were normally distributed and the investor intended to place all his risky assets into just one investment fund. Because hedge fund returns differed significantly from a normal distribution, other performance measures had been proposed and encouraged in both academic and practice-oriented literature. The Sharpe ratio measured the performance of an investment fund by considering the relationship between the risk premium and the standard deviation of the returns generated by a fund. The Sharpe ratio were an adequate performance measure if the returns of the investment funds were normally distributed and the investor wished to place all his risky assets in just one investment fund. Andreas G Merikas, Anna A Merikas and Ioannis Sorros (2005) examined the exact relationship between the Sharpe ratio and the information ratio. Sharpe in 1994 asserted that the information ratio was a generalized Sharpe ratio. Sharpe ratios had been estimated for each fund in each category, and an average ratio for each category. The Sharpe ratio would generally be positive since excess returns of funds over the risk free rate would be positive, unlike excess returns of funds over the market, which could be negative, as the return of the risk free bond was smaller but at the same time less volatile than the return of the market. Cheryl J. Frohlich, Anita Pennathur and Oliver Schnusenberg in their research, Sharpe reward-to-variability ratio was used if total variability was thought to be the appropriate measure of risk, a stocks (portfolios) risk-adjusted returns could be computed using the Sharpe Index. The Sharpe and Treynor Index eliminated the problem of only considering return as a measure of performance. However, neither ratio was independent of the time period over which it is measured. This means that the ratio can change from one period to another with different results. Moreover, both ratios also ignored the correlation of a fund with other assets, liabilities, or previous realizations of its own return. Mario Onorato (2004), the Sharpe Ratio of any investment was defined as its excess return, it is return in excess of a benchmark return divided by the standard deviation of excess return. The benchmark represents a risk free investment alternative. Moreover, although the Sharpe ratio has become part of the modern financial analysis, its applications typically did not account for the fact that it was an estimated quantity, subject to estimation errors that would be substantial in some cases. The statistical properties of Sharpe ratios depended intimately on the statistical properties of the return series on which they are based. This suggests that a more sophisticated approach to interpreting Sharpe ratios is called for, one that incorporates information about the investment style that generates the returns and the market environment in which those returns are generated. Wei Zhen (2004), in his paper said that the Sharpe (1966) and Treynor (1965) performance measures were widely accepted in both academia and industry to assess the Risk-adjusted value of a particular portfolio. It could be shown, after some mathematical treatment, that the Sharpe performance measure was useful when the portfolio of interest represented all of the investors investment, while Treynors measure was preferred when the portfolio under discussion was only a portion of the whole investment package. Robert McCauley and Guorong Jiang (2004), through the Sharpe ratio it compared the returns of portfolios in relation to their risk by dividing their returns in excess of the riskless rate of return by the volatility of their returns. A portfolio with a higher Sharpe ratio was preferred in that it offered a higher return per unit of risk, as measured by return volatility. William Goetzmann, Jonathan Ingersoll, Matthew Spiegel and Ivo Welch (2002), the Sharpe ratio is one of the most common measures of portfolio performance. It was used as a tool for evaluating and predicting the performance of mutual fund managers. Since then the Sharpe ratio, and its close analogues the Information ratio, the squared Sharpe ratio and M-squared, have become widely used in practice to rank investment managers and to evaluate the attractiveness of investment strategies in general. The appeal of the Sharpe measure was clear. It was an affine transformation of a simple t-test for equality in means of two variables, the first variable being the managers time series of returns and the second being a benchmark. The Sharpe ratio was also ubiquitous in academic research as a metric for bounding asset prices. Andrew Worthington and Helen Higgs (2002), the Sharpe ratio (also known as the reward-to-volatility ratio) indicated the excess return per unit of risk and was calculated by dividing the return in excess of the risk-free rate by the standard deviation of returns. In the current context, the Sharpe ratio was the most appropriate performance measure for an investor whose portfolio was composed wholly of a given artists work. Verena Kugi (1999), the Sharpe ratio measured the change in the portfolios return with respect to a one unit change in the portfolios risk. The higher this Reward-to-Variability-Ratio the more attractive was the evaluated portfolio because the investor received more compensation for the same increase in risk. Graphically, the Sharpe ratio was equal to the slope of a straight line connecting the position of the evaluated portfolio, for example a fund, with the risk-free rate. To determine the quality of performance, the Sharpe index of the evaluated portfolio was compared to the Sharpe index of the market or benchmark portfolio. The portfolios Sharpe index being higher than the markets Sharpe index indicated that the portfolio manager had outperformed the market. Respectively, a lower Sharpe ratio was a sign of underperformance. Any portfolio that was positioned on the capital market line had a Sharpe ratio equal to that of the market and was therefore characterized by neutral perform ance. Youguo Liang and Willard McIntosh (1998), the Sharpes alpha captured the excess return of

News Media, Money and Infotainment Essay -- Television Media TV Essays

News Media, Money and Infotainment In the past few years the media has grown into more than just the facts. The goal of the media is not just to inform us but to entertain. This new media style is known as "Infotainment". The media's goals are ratings based. They use shows like Jerry Springer, Entertainment Tonight, and Hard Copy to bring in these ratings. The media of today has grown into a profit-based industry that tries to entertain us with the news and with tabloid television shows. In the late 1980s and early 1990s the three big television stations, of ABC, CBS, and NBC, changed to provide more infotainment. Networks lost ratings to the heavy competition of cable and home video. The diminishing audience caused the big three to just break even or make a tiny profit. This led to the news having topics such as issues in the entertainment world and art related stories produce a rating increase. The industry was no longer news based. Their goal over those few years had changed from reporting the news into shows that report what bring in a profit. What brought in the biggest audience was what was shown on the networks. When the rating for these shows were being taken there was an increase in the reporting of sex and violence to increase the viewers. This in tern increased the ratings (Cook 4-5). The new form of news was shaped based on how to bring in the biggest audience and make the most money whatever the cost. This new form of infotainment led to the development of Tabloid television shows. These shows, also known as "Trash TV", have more entertainment than news. Thought there is a difference between good and bad trash. With shows like Sally Jesse Raphael, Geraldo Rivera, and Jerry Springer that in many cases exploi... ...ed media world is set up to be infotaining. These shows attracting viewers with tabloid shows and putting more entertaining information in the news. The networks are trying to make the biggest profit possible and with shows that exploit people they seem to be doing it. It doesn't mater who it hurts or what the consequences are. It's no longer just reporting the news, but reporting what will bring in the biggest profit. WORKS CITED Cook, Philip S., Douglass Gomery, and Lawrence W. Lichty, ed. The Future of News. Washington: The Woodrow Wilson Center Press, 1992. Olster, Marjorie. "Raunchy radio host Stern to get late-night TV show." Infobeat. Online. Electronic Text Center. Internet. 31 Mar. 1998. Available http://www.infobeat.com/stories/cgi/story.cgi?id=2553562895-d94 Talked To Death. Videocassette. Home Box Office. Parco Productions, Inc., 1996. VHS. 60min

Effects of Industrialization in 1700 - 1850 Essay -- American European

Effects of Industrialization in 1700 - 1850 Industrialization occurred in many countries, each taking a different approach to the implementation of new machinery and technology. The most notable for leading the way in industrialization is Britain. Industrialization not only made dramatic changes in the economic structure of countries but also in the social and political areas of countries. Industrialization led to much upheaval, especially socially since the whole way of life was changing. The emergence of the working class and the growing divide between classes also meant that a new political and economic structure was developed: capitalism. Industrialization began in Britain since there was a large supply of coal and steel and it was seen as one of the greatest colonial powers, thus allowing it to gain the capital and market needed to industrialize. Since Britain led the way for industrialization, it could be seen to epitomise the effects that it had on countries. One of the social effects that industrialization had was that the ‘rhythm of life changed’ . Pre-industrialization, people were based mainly in rural areas. However, when the enclosure of land became popular in the 1760’s, farmers who were tenants began to be pushed of the land. This along with the establishment of new urban towns and cities meant that people started to move away resulting in ‘English peasant villages being destroyed’ . Land enclosure was only one reason why people moved to the new urban areas. The other was the fact that new machinery was making families handicrafts of little commercial value, meaning that they were not able to survive on the money they made. This meant that the promise of a rise in wages appealed to a great many people in the rural areas, resulting in yet more change for the population With industrialization came a new family structure, the nuclear family. This was in complete contrast to the previous way people interacted with each other, but fitted perfectly into the nameless society, which had developed. The pre-industrial villages were very close knit since most of the textile and agricultural industry revolved around the home, with everyone participating in some way to the production of consumer goods. The nuclear family was very unlike this... ...freedom from agriculture, meaning that more people could undertake ‘professional’ jobs such as doctors and lawyers. This was unlike that of the time pre-industrial, because then the basis of society was the worker and owner, now society had the employer, the employee, and the professional. Industrialization also changed the world economic system because places like China and India who, previous to industrialization, had been one of the main manufactures for the world were now being left behind since they could not produce goods as cheaply as industrialized countries. Bibliography J.M. Roberts, The Pelican History Of The World, Pelican, 1986 T.S. Ashton, The Industrial Revolution 1760-1830, Oxford University Press, 1970 P. Gregg, A Social and Economic History of Britain, Harrap, 1971 G. Rude, Revolutionary Europe 1783-1815, Fontana/Collins, 1980 P. Mathias, The First Industrial Nation, Methuen&Co Ltd, 1972 M.J. Daunton, Progress and Poverty, Oxford University Press, 1995 P. Lane, Documents on British Economic and Social History 1750-1870, 1972 G. Warner, Marten and Muir, The New Groundwork of British History, Balckie&son, 1968

Social Justice is NOT Achieved by Income Redistribution Essay -- Globa

The term â€Å"social justice† has existed since the 1840s and has continued to transform over the years. â€Å"Global justice† is simply another in a long line of interchangeable prefixes such as â€Å"national justice†, â€Å"economic justice† etc that precede the word justice. A plethora of policies are advocated under the name of â€Å"global justice†. This paper will consider the more popular proposal of income redistribution and consider its intellectual foundation and how it relates to justice, as well as its real world implications. The most apparent and theoretically, the most easily overcome obstacle inherent in this idea is the very definition of the term â€Å"social justice†. As the years go by the term grows to encompass an ever increasing number of issues. It can mean anything from income redistribution to AIDS prevention. For some contemporary examples, the student activist group Global Justice1 has no definition of the term it so prominently uses as its name yet states that its purpose deals with â€Å"AIDS, trade and child survival†. Nowhere does the organization attempt to explain why their particular stand on those particular issues has anything to do with â€Å"global justice†. USC professor Robin D.G. Kelley is the executive editor of the â€Å"Social Justice Wiki†2. The stated objective of the online encyclopedia is to document various activist groups and movements3. Any attempt to discern any further insight of the term 'social justice' from the very encyclopedia dedi cated to its name will result in failure as there is no indication as to why those specific groups fall under the banner of social justice and other groups do not, except for purely subjective and arbitrary guidelines4. The pervasiveness and the emptiness of the term speak volumes ab... ...e on â€Å"society†, but rather we have a clear case of who is being unjust to whom. The incredible irony of this situation would be that this legitimate and justifiable form of 'global justice' (in which case the guilty parties were unjust in their individual conduct and are clearly identified) would usually be invoked in order to counter policies enacted precisely under the justification of â€Å"social justice†. Perhaps â€Å"social justice† activists can redeem themselves of this past error, but only if they begin advocating against the injustice of trade barriers and immigration restrictions; for that is the only valid application of â€Å"justice on a global scale†. Any other justification for income redistribution leads to innocent individuals who justly acquired their material wealth, unjustly forced to pay compensation for the suffering of others they had no part in promoting.

Executive Summary of Starbucks

SUMMARY OF â€Å"Howard Schultz : Building Starbucks Community† This text speaks about Howard Schultz and how he built a Starbucks Community. * Early Years This man was the oldest of three children in a modest family of Brooklyn. Indeed, his father combined 3 different jobs to support his family. His mother was a homemaker who transmits her values to her children. She was a strong-willed person who wants a good future for her children with the respect of these values. Her dearest wish was that all go to college. Howard, who believes in the American dream, felt that he had to plan his own future because he didn’t want to stay in Brooklyn.Indeed, he met many different people who came from different backgrounds. He said that â€Å"Diversity isn’t something I had to learn. I lived it†. It’s a point which influenced his future behavior. During his teenage, Howard and his father clashed often. He will realize later that sometimes you learn lessons, but yo u don’t realize them in the moment. But at the time he thought that his father could have accomplished so much more if only he had tried. This natural leadership ability stood out in the schoolyard. The Sport’s domain was the example.Indeed, it allows him to have a scholarship until University in Northern Michigan. After graduating, Schultz made a sales trainee in New-York in Xerox. Despite a good income, he didn’t like this job for several reasons: This Company was too bureaucratic, strict and rigid and he didn’t have a voice. Finally, he didn’t find a link between this company and his values. * Creating Starbucks Howard had already works in the field of coffee. So one day, he was encountered Starbucks Coffee and was very sensitive to the product and the business.He said that he felt he had discovered a whole new continent. After that, he joined Starbucks as a director of operations and marketing. He saw the enormous growth potential of this Compa ny especially in the gourmet and food markets. He realized that during a trip to Italy. Indeed, he noticed the unique community experience that Milanese espresso bars played in their customers’ daily lives. He will be based on this model to launch his own business: Il Giornale. This business was a chain of espresso cafes from Starbucks in downtown Seattle. It had three locations but had not yet turned a profit.So for answer to this problem, Schultz planned to consolidate the new company with the name of Starbucks Corporation. Indeed, this name was so known by customers. But the development of this business wasn’t so simple. The first in which Schultz has faced was the following: One of these original investors proposed to purchase Starbucks instead, on terms that would have dramatically diluted his stake and that of his other investors. Furthermore, investors put pressure on Schultz’s head. They said â€Å"If you don’t take this deal, you’ll never work in this town again. You’ll never raise another dollar.You’ll be dog meat†. As a leader, Howard Schultz didn’t renounced. He prepared an alternative plan cancelled the dilution and he managed. * Growing Starbucks The father’s death of Howard Schultz has completely changed his state of mind. He realized that his father’s life wasn’t the same as hers. In those days there was no health insurance and no workmen’s compensation. So, he decided to make Starbucks the first American company to provide access to health coverage for qualified employees. Indeed, this event is directly linked to the culture and the values of Starbucks.He wanted to build the king of company that his father never had a chance to work for, where you would be valued and respected no matter where you came from, the color of your skin, or your lever of education. He wanted to build a company that linked shareholder value to the cultural values that he created with the other employees of the company. The original business plan of Starbucks provided 125 new stores in five year. In the first year, the company had already open 15 stores in Northwest cities with a strong coffee culture. The growth was running.And for continue at this pace, Schultz recruited Howard Behar, an executive 10 years his senior who had 25 years of retail experience. His assignment was to innovate in response to customer requests and develop the customer experience. In an other hand, Starbucks focused its attention into values and culture of the stores, reasoning that satisfied and happy baristas made for satisfied customers. For continuing in this way, Schultz was aware that growth is intoxicating and seductive but also that it covers up a tremendous amount of mistakes.To solve this problem, he shared power with others. Indeed, Schultz & Behar wanted to stay in the way of their values so they decided to codify the values in the company mission and values statement. It’s important for the two leaders to sharing the culture of the company in each Starbucks stores. This is what distinguishes this company from others and allows it to continuing growth. For reach this goal, there were two key: The first was to hire people with like-minded values and the second was to reinforce the values and culture of the company.The expansion of Starbucks making this own language into a common usage (like â€Å"latte†, â€Å"half-caf†Ã¢â‚¬ ¦). Schultz was also proud of making difficult choices to pass up certain growth opportunities and to stay focused. The new way adopted by Starbucks was to explore marketing carefully selected. For example, they were experimenting to combined music and coffee stores and other entertainment ventures. It was a success. * Staying Grounded As an entrepreneur, Schultz should be irreproachable. For being that, he should learn several things like to manage vulnerability and doubt.But for understand him; there were n’t a lot of people. So he decided to talk with Warren Bennis, a widely respected leadership and with a rabbi, during a trip in Israel, where he had learned about the power of humility. These lessons helped Howard to understand that success is best when it’s shared and be better in his business. * Whither Starbucks†¦ and Schultz? The hope of Howard Schultz is that Starbucks can be a model for building a company the right way. Especially he wants that the size of the company can’t erase the integrity.It’s an illustration of the state of mind of Schultz. He took advantage of every opportunity for delivering his message like in leadership conferences for his store managers in which he focus on people and the human connection, not on numbers. He also focused on the consumer especially on customer experience. The brand wants to have a big place in customer’s life because it pretends that it wants to be the â€Å"third place in customers’ li ves between the home and the office. For that, Starbuck offers a global range from coffee to CD’s with the music that you can find in Starbucks stores.To combine these two ambitions, Starbucks responds to customer demand which is: Hungry for humanity and authenticity. * The Schultz E-mail After the big success of Starbucks, Howard Schultz was worried about one important thing for him: With the growth, Starbucks could lose the personal feeling of the neighborhood coffeehouse which Howard Schultz wanted to create. Indeed, at his arrival, his goal was to develop Starbucks as a model company including financial performance and mainly the respect of the human relationship. But this ambition wasn’t simple to apply in the reality.Indeed, Starbucks had become the fastest growing chain in the history of retailing: The brand began with three stores in Seattle for reach, twenty years ago, 40,000 outlets worldwide. This phenomenal expansion allows Starbucks to engage in competitio n with the big company like McDonalds and Dunkin Donuts. Despite this success in financially field, a question for Schultz was essential: Had Starbucks lost its soul in the process of becoming a global brand? For having an answer, Schultz decided to send an E-mail to Jim Donald, Starbucks new CEO, with copies to members of the executive team.In his mail, Schultz explained his point of view about the situation of Starbucks at this moment. He said that the growth had not a good effect in the customer experience. He described Starbucks with the sterility and the uniformity of store decor. The turnover is the first priority than the small coffee heritage of the brand and compromised the â€Å"passion for coffee†. He send this mail and waited the response of the senior team. Schultz ’memo was published on â€Å"Starbucks Gossip†, a web site about Starbucks, the experiences and opinions of the customers and employees. So, we could find some rumors in this about the co mpany.But when the memo was public, the corporate communication had tried to manage the crisis and the solution was to post a confirmation that the memo was authentic. For keeping a good image, Starbucks decided to position this memo as a new way of the company. Indeed, it explained that Starbucks â€Å"reinventing itself, saying it reflected the company’s philosophy that ongoing success was not automatically a given†. It created a buzz on Internet and in Press. The Wall Street Journal dedicated an article about Schultz’s memo with 1,500 words and some blogs like â€Å"BusinessWeek. om†, â€Å"Bloomberg. com†Ã¢â‚¬ ¦ * Joe Nocera’s Challenge The buzz continued two weeks later when the business journalist for New York Times, Joe Nocera, wrote an article about Howard Schultz in his column â€Å"Talking Business†. He focused his attention on the two personalities of Schultz. So the name of article was â€Å"Two Howard Schultz†. Fir st, he described Schultz as a sensitive man who is attached on human’s values in his company with health assurance for employees, and coffee experience for customers. The article speaks about the huge social responsibility program established by Schultz.But in a second time, he described a face completely different of Howard Schultz. For him, Schultz was a businessman who thinks about profit, benefit and growth so an aggressive competitor. For Nocera, Schultz’s aim was to grow as soon as possible by making the best financial result. For illustrating this, he collected some testimonials of Schultz’s colleagues who said: â€Å"Mr. Schultz is an enormously competitive businessman† for example. An other colleague told an anecdote: â€Å"Howard said that they would never serve food. He thought it would dilute the experience. †¦) For Starbucks, there was always going to be a limit to how much coffee it could sell in any one location, so to goose same-stor e sales, it began selling food†. All these testimonies supported the thesis that Howard Schultz was a man who wanted a quickly growth with a big profit. His first face was just a disguise to hide his true nature as Nocera. After having made an opposition between the two faced of Schultz, the journalist concluded that there was in reality only one Howard Schultz and the two things he wanted were â€Å"incompatible†.Finally, after this event, Schultz analyzed the situation and some questions arrived: Was it possible to have it both ways, or were growth and authenticity incompatible? Starbucks pursue such aggressive global growth and remain the unique local coffeehouse that attracted customers in the first place? We can see that these issues were in link with the first ambition of Howard Schultz†¦ So we can ask us if this ambition was really feasible or if Schultz has failed to achieve his goal. One thing was certain: The issue wasn’t going to go away

You Suck: A Love Story Chapter 21~22

Chapter Twenty-one Ladies and Gentlemen, Presenting the Disappointments He was the best one-handed free-throw shooter in the Bay Area, and that Christmas night he had sunk sixty-four in a row in his driveway hoop, shooting the new leather Spauldingball his dad had left under the tree for him. Sixty-seven in a row, without ever setting down or spilling his beer. His record was seventy-two, and he would have broken it, had he not been dragged off into the bushes to be slaughtered. Jeff Murray was not the smartest of the Animals, nor the most well-born, but when it came to squandering potential, he was the hands-down winner. Jeff had been a star power forward through his sophomore, junior, and senior years in high school, and he had been offered a full-boat ride to Cal, Berkeley – there had even been talk of his going pro after a couple of years in college, but Jeff had decided to impress his prom date by showing her he had enough vertical leap to clear a moving car. It was a minor misjudgment, and he would have cleared the car had he not drunk most of a case of beer before the attempt, and had the car's height not been eight inches enhanced by the light bar on the roof. The light bar just caught Jeff's left sneaker, and somersaulted him four times in the air before he landed upright in a James Brown split on the tarmac. He was pretty sure that his knee wasn't supposed to bend that way, and a team of doctors would later agree. He'd wear a brace forever and he'd never play competitive basketball again. Although he was a smokin' one-handed H.O.R.S.E. player, and he might have even been a champion if it weren't for that slaughtered-in-the-bushes thing. He liked the new leather ball, and he knew he shouldn't be using it on the asphalt, and especially this late at night, when the sound of his dribbling might disturb his neighbors. He lived in a garage apartment in Cow Hollow, and the fog was blowing in damp streams up his street, making the basketball sound lonely and ominous, so no one complained. It was Christmas – if all some poor bastard had was some hoops, then you'd have to be a special kind of heartless to call the cops on him. A car turned at the end of the street; blue halogens swept through the fog like sabers, then went out. Jeff squinted into the fog, but couldn't make out what kind of car it was, only that it had stopped a couple of doors down and it was a dark color. He turned to take his record-breaking shot, but distracted, he put a little too much backspin on the ball and it jumped out of the hoop. He ran it down at the junipers by the garage, but was only able to tip it, so that it went into the bushes. He set his beer down on the driveway and went in after it, and – well, you know†¦ Francis Evelyn Stroud answered the phone on the second ring, as she always did, as it was proper to do. â€Å"Hello.† â€Å"Hi, Mom, It's Jody. Merry Christmas.† â€Å"And to you, darling. You're calling rather late.† â€Å"I know, Mom. I was going to call earlier, but had a thing.† I was a thing, Jody thought. â€Å"A thing? Of course. Did you get the package I sent?† It would be expensive and completely inappropriate, a cashmere business suit, or something in a houndstooth or a herringbone, something worn only by matronly academics or matronly spies with stout poison-dart shoes. And Mother Stroud would have sent it to the old address. â€Å"Yes, I got it. It's lovely. I can't wait to wear it.† â€Å"I sent a leather-bound set of the complete works of Wallace Stegner,† Mother Stroud said. Fuck! Jody kicked at Tommy for making her call. He skipped out of range, waving a scolding finger at her. Of course. Stegner, the Stanford paragon. Mother was one of the first coeds to graduate from Stanford and she never missed an opportunity to point out that Jody hadn't gone there. Jody's father had also gone to Stanford. She was born to Stanford, and yet she had disgraced them by going to San Francisco State, and not finishing. â€Å"Yeah, those will be great, too. I guess they just haven't caught up with me yet.† â€Å"You've moved again?† Mrs. Stroud had lived in the same house in Carmel for thirty years. Carpet and draperies never survived more than two years, but she'd been in the same house. â€Å"Yeah, we needed a little more space. Tommy's working at home now.† â€Å"We? Then you're still with that writer boy?† Mom said ;writer; like it was a fungus. Jody scribbled on a Post-it at the counter: Note: Break Tommy's arms off. Beat him with them. â€Å"Yes. I'm still with Tommy. He's been nominated for a Fulbright. So, did you have a nice Christmas?† â€Å"It was fine. Your sister brought that man.† â€Å"Her husband, Bob, you mean?† Mother Stroud did not care for men since Jody's father had left her for a younger woman. â€Å"Well, whatever his name is.† â€Å"It's Bob, Mom. He went to school with us. You've known him since he was nine.† â€Å"Well, I had a smoked turkey delivered, and a lovely foie-gras-and-wild-mushroom appetizer.† â€Å"You had Christmas catered?† â€Å"Of course.† â€Å"Of course.† Of course. Of course. It would never occur to her that by having Christmas dinner catered, she was making other people work on Christmas. â€Å"Well, I put my present in the mail, Mom. I'd better go. Tommy's being honored at a dinner tonight because of his massive intellect.† â€Å"On Christmas?† Oh, what the fuck. â€Å"He's Jewish.† She could hear the intake of breath on the other end of the phone. This is the light version, Mom, imagine how scandalized you be if I told you he was dead and that I killed him. â€Å"You didn't tell me that.† â€Å"Sure I did. You must be losing details. Gotta go, Mom. I gotta help Tommy get his penis piercing in before the dinner. Bye.† She hung up. Tommy had been dancing naked in front of her for most of the phone call. When she hung up he stopped. â€Å"Did I mention that I worry about your ethical equilibrium?† â€Å"Said the guy who was just playing buff the scrotum with my red scarf while I was making the merry Christmas call to my mother?† â€Å"Admit it. You're a little turned on.† Dr. Drew – Drew McComber, the Ohm-budsman, the resident pharmacist and medical adviser to the Animals, was afraid of the dark. The fear had crept up on him, like a hash brownie, and coldcocked him with an inescapable paranoia after four years on the night crew at the Marina Safeway. Thing was, he awoke in the evening, to the pervasive grow lights in his garage apartment in the Marina, then drove four blocks under the streetlights to the brightly lit Safeway, then got off work in the morning when the sun was well off the horizon, to return to his grow-lit apartment, to sleep with a satin mask in place. He encountered darkness so infrequently that it seemed like a menacing stranger when he did. On Christmas night, round midnight, Drew sat among a jungle of five-foot-tall pot plants in his living room, wearing sunglasses and watching a movie on cable about the special relationship between the lady of an English manor and her chimney sweep. (Because of his work schedule, and the constant demand to stay wasted, Drew found it difficult to keep a girlfriend. Until the Animals found Blue, his sex life had been a largely solitary affair, and (sigh) apparently had become so once again.) Each time the chimney sweep's sooty hand smacked the powdered bottom of the lady of the manor, Drew grieved a little – that dusky handprint on alabaster flank falling like a shadow on his erotic soul. There was arousal, but no joy. Sad and lonely wood did tent his hemp-fiber cargo pants. Then, as if scripted by Erecto, the Generously Endowed Pizza Delivery God of Improbable Trysts, there was a knock at Drew's door. Rather than answer the door directly, Drew adjusted himself and ambled through the ganja forest to a small video screen in his kitchenette – a video peephole. He'd installed it in the days before his doctor had given him the prescription that made him a quasilegal medical marijuana grower (patient complains that reality harshes his mellow – prescribe 2 grams cannabis every three hours by inhalation, ingestion, or suppository). Sure enough, as if he had called in an order, the video screen revealed a pale but pretty blonde standing on his doorstep in a conservative blue cocktail dress and heels. She might have just come from a party or a dinner out – her hair was pinned up with tiny blue bows. She might have shown up to audition for the role of the lady of the manor. Drew keyed the intercom. â€Å"Hi. Are you sure you have the right house?† â€Å"I think so,† said the girl. â€Å"I'm looking for Drew.† She smiled into the camera. Perfect teeth. â€Å"Jeez,† Drew said, then realizing that he had said it allowed, he cleared his throat and said, â€Å"I'll be right there.† He smoothed his erection down, pushed his hair behind his ears, and in five long strides he was through the forest and at the front door. At the last second he remembered the sunglasses, pushed them up on his head, smiled broadly, and threw open the door, releasing a wide beam of ultraviolet light into the night fog. The pretty blonde dropped her smile, then screamed as she burst into flames and leapt out of the light. Drew ran out into the dark to save her. Chapter Twenty-two Being the Chronicles of Abby Normal: Pathetic Nosferatu Noobsicle Well, except for the murder, Christmas was like a slow drag over broken glass – I now truly know the ennui of passing eternity in total boredom – eating and hurling to-furky all day, stuck with Ronnie and Mom until like six, when Jared came over. His father has a fresh family with little crumb-snatcher stepsisters, so they like forget about him as soon as the squealing and presents start in the morning. He spent the whole day rewatching The Nightmare Before Christmas disc in his room and smoking cloves. His room is totally sacrosanct since he told his ‘rents that he couldn't guarantee that he wouldn't be masturbating to gay porn if anyone came in. (He's so lucky sometimes – I could stand on my head and flick the bean right there at the dinner table and my mom would be all, â€Å"Honey, Christmas is family time, we should be together† and make me finish in front of everyone.) So, we like watched The Nightmare Before Christmas disc with Mom and Ronnie until they fell asleep on the couch – then Jared and I drew some really cool tribal tattoos on Ronnie's shaved head with Magic Marker, but only like in red and black, so they look real. Then he was all, â€Å"We should go get some coffee – my aunt gave me a hundred-dollar Starbucks gift card for Christmas.† And I hate it when people brag about their Christmas presents, because it's completely shallow and materialistic. So, I was all, â€Å"Yeah, well, I'd love to, but I am now one of the chosen, so I have duties.† And he was all, â€Å"No way, you're Jewish?† And I was all, â€Å"No, I am nosferatu.† And he was all, â€Å"You are not.† And I was all, â€Å"Remember that sexylicious guy from Walgreens. It was him. Well, actually it's the Countess who brought me into the sacred circle of sanguinity.† And he was all, â€Å"You didn't even call me?† â€Å"I'm sorry, Jared, but you are of an inferior species now.† So he goes, â€Å"I know, I totally suck.† And I know he's going to go all tragico-emo on me. So I say, â€Å"Buy me a Mochaccino and I'll reveal to you our dark ways and stuff.† We leave a note saying that Jared has impregnated me and we're running off together to join a satanic cult, so my mother won't panic when she wakes up, because she's totalitarian about leaving notes. Then we head to the SOMA. But apparently, the entire fucking country shuts down on Christmas, slammed under the oppressive iron fist of the baby Jesus, so out of nine Starbucks we try, all are closed. And Jared is all, â€Å"Take me to meet them. I want to be in the dark fold, too.† And I was all, â€Å"No way, loser, your hair is totally flat.† Which it was. He only had the one spike in front, and his sculpting gel had like failed hours ago, so in his PVC raincoat, he kinda looked like a black lacquer coatrack like you see in Chinatown, but that wasn't why I couldn't take him to see the Countess and my Dark Lord. I just couldn't. I knew the Countess would freak out if she saw I was exploiting her exquisite gift to show off for a friend, so I was all, â€Å"It's very secret.† But Jared started to pout and brood at the same time, which he can totally pull off because he practices, so I started to feel like a malodorous soupà §on of mashed assholes, as Lautramont so aptly put it. (Shut up, Lily says it sounds more romantic in French.) So I let him come, but I told him he had to say outside across the street. But when we came around the corner of the Dark Lord's block, there was a guy in a yellow tracksuit standing in the middle of the street. Just standing there, with his hood up and his head down, looking like he was going to stand there forever. And he turned really slow in our direction. Jared was all, â€Å"Wanksta rappa,† in my ear, and he giggled that high-pitched little-girl giggle he does sometimes that's like violence catnip to other guys. (Which is why Jared has to carry a foot-long double-edged dagger in his boot, which he calls his Wolf-fang. Fortunately it doesn't give him any false confidence and he is still a total puss, but he likes the attention he gets when doormen take it away from him at clubs.) Anyway, I think my vampyre senses were, like, on edge, because I could just tell that this wasn't your normal hip-hop guy standing in the middle of a deserted street in a three-hundred-dollar tracksuit at midnight on Christmas night, so I grabbed Jared's arm and pulled him back around the corner. And I'm all, â€Å"Dude. Shields up. Creep. Stealth. Lowest profile.† So we peek around the corner, totally cloaked this time, and the tracksuit guy is like over by the door of the loft, and someone is coming out. It's the crusty old drunk guy with the huge shaved cat, and he has his unit out, like he's going to take a leak, which I could have gone another sixteen years without seeing. And Tracksuit grabs him like he's a rag doll and pulls his head back by the hair, and bites him on the neck. And when he does, I can see that it's not a hip-hop guy at all, but some crusty white vampyre, his fangs were like visible from space. So the huge cat guy is thrashing and screaming and spraying whiz all over the place and I can hear the huge cat hissing behind the door, and Jared grabs me by my messenger bag and starts pulling me away, down the street. So that's all I saw. And Jared was all, â€Å"Whoa.† And I was all, â€Å"Yeah.† And as soon as we got a few blocks away, I pulled out my cell and called the Countess's cell, but it went right to voice mail. So now we're at a special midnight showing of The Nightmare Before Christmas at the Metreon, drinking a huge Diet Coke to calm our nerves while we wait for a return call from my vampyre coven. (Jared forgot his inhaler and has been gasping since we saw the attack. It's so embarrassing. People are like looking, and I've moved a couple of seats over so they won't think I'm giving him a hand job or something.) I am totally overcome with dread and foreboding, and the time passes like a seeping infection on a bad eyebrow piercing. So we wait. I wish we had some pot. More later. Oh yeah, and Mom got me a green Care Bear for Christmas! I totally love it. â€Å"You're sure this is where you left it?† Jody was looking up and down the Embarcadero. There were no people out on the street – the performers and hustlers were long gone. She could hear the Bay Bridge humming in the distance, a foghorn started to low over in Alameda. A BART train burped out of a tunnel onto the street a block away, headed toward the ballpark, empty. A police cruiser turning out of Market Street strafed them with its headlights before heading past the Ferry Building toward Fisherman's Wharf. Tommy waved to the cops. â€Å"Yeah. I was right here and my watch went off. He weighed a ton. It would have taken a bunch of guys to move him.† Jody saw something shining on the bricks near her feet and crouched down to touch the source. Metal filings of some sort. She licked her finger and came up with a coating of yellowish metallic particles on her fingertip. â€Å"Unless someone cut it up.† â€Å"Who would do that? Who would cut a statue up and steal the pieces?† â€Å"Doesn't matter. Maybe thieves, maybe city workers. If someone cut that bronze shell, one of two things happened. If it was daytime, Elijah fried out here in the sun. If it was dark, he's free.† â€Å"It wasn't light, was it?† Jody shook her head. â€Å"I'm guessing no.† She saw a light pattern among the bricks a few steps away and crouched down again. There was a fine, grayish powder between the bricks. She pinched some between her fingers and shook her head. â€Å"For sure no.† â€Å"What? What is that?† She brushed her finger off on her jeans and dug into her jacket pocket. â€Å"Tommy, remember I told you that you didn't drink the whore dry because she wouldn't have been there if you had?† â€Å"Yeah.† â€Å"Well, that's because when a vampire drains someone – when we drain someone, they turn to a fine gray powder. I can't explain why, but it looks like that. Feels like that.† She pointed to the mortar lines between the bricks. Tommy knelt down and touched the powder, looked up. â€Å"How do you know that?† â€Å"You know how I know that?† â€Å"You've killed people.† She shrugged. â€Å"Just a couple. And they were sick. Terminal. They were asking for it, sort of.† â€Å"So that's why you weren't upset about the hooker?† She pulled her cell phone out of her jacket pocket, then held it behind her back and twisted back and forth looking at her feet, like a little girl being interrogated about how Mommy's lamp got broken. â€Å"Are you mad?† â€Å"I'm a little disappointed.† â€Å"Really? I'm really sorry. You would have done the same thing if you'd been there.† â€Å"I'm just disappointed that you didn't feel that you could trust me.† â€Å"You were having a hard time with your change. I didn't want to bother you.† â€Å"But it wasn't sexual or anything, right?† â€Å"Absolutely not. Purely nutritional.† She didn't think it necessary to tell him about kissing the old man. It would just confuse things. â€Å"Well, I guess it's okay, then. I guess if you had to.† He stood and she ran to him and kissed him. â€Å"I can't tell you how glad I am to have that off my chest.† â€Å"Yeah, well†¦Ã¢â‚¬  â€Å"Hang on.† She held up a finger and hit the power button on her phone. â€Å"Calling your mom to tell her she was right about your being a tramp?† â€Å"I'm calling the kid.† â€Å"Abby?† â€Å"Yeah. I need to tell her to stay away from our place. Elijah is going to start messing with us like before.† Jody watched as the little icons on her phone showed that it was searching for a signal. â€Å"But she said she wasn't coming by tonight. It's Christmas.† â€Å"I know she said that, but I think she may come by anyway.† â€Å"Why?† â€Å"Well, she has a thing for me, I think. I bit her last night.† â€Å"You bit Abby?† â€Å"Yeah. I told you, I was hurt. I needed – â€Å" â€Å"God, you're such a blood slut.† â€Å"I knew you'd be mad.† â€Å"Well, it's Abby, for fuck's sake. I'm her dark lord.† â€Å"Look, a voice mail.† Elijah Ben Sapir cast the twitching, pee-spraying alcoholic across the street, where he bounced off the metal garage door of the foundry and back out to the curb, where his head knocked the side mirror off an illegally parked Mazda. Then the vampire walked with exaggerated steps, his arms held out from his sides like a bad stage monster to try to keep the urine-sotted velour fabric of his tracksuit from contacting his skin. Although he had experienced all manner of filth and gore in his eight hundred years, and had, in fact, spent whole days hiding naked under loamy soil to escape the sun, he didn't remember being quite so put off as he was at being pissed on by his lunch. Perhaps it was that he only had one set of clothes now, and there was no luxurious yacht with a full wardrobe to retire to, or perhaps it was that he had spent the day between two urine-stained mattresses under an unconscious junkie while police searched the hotel around him. He'd just hit his limit, that's all. He'd known the desk clerk would give him up to the police, so as soon as he had gone to his room, the vampire had hidden his tracksuit in the corner of the closet, gone to mist, then slipped under the door into the next room and in between the mattress and box springs of a semiconscious junkie. He'd gone back to solid just as sunrise put him out for the day. At sundown, he was surprised at how elated he was to find the tracksuit still in the closet, after he fed off the junkie (just a sip) and snapped his neck. (Leaving more or less a greeting card to the homicide inspectors who had attacked him with the others at the yacht club.) Now his precious tracksuit was all covered in whiz and he was furious. He stalked over to where he'd thrown the bum and snatched him up by the ankle. Elijah was not tall by modern standards, but he found that if he held the bum's ankle high above his head, he could shake him sufficiently to get the job done. â€Å"You're not even her minion, are you?† Elijah banged the bum's head against the sidewalk to punctuate his question. â€Å"Please,† said the bum. â€Å"My huge cat – â€Å" Thud, thud, thud on the sidewalk. A little shake. Change, a few bills, a lighter, and a bottle of Johnny Walker rained out of the bum's pockets. â€Å"You're just her little moo cow, aren't you? I tasted her on you.† â€Å"There's a kid,† said the moo cow. â€Å"A spooky little girl. She takes care of them.† â€Å"Them?† Elijah flung the bum against the garage and proceeded to pick up the change and the bills on the sidewalk. The steel door next to the garage door opened and a burly bald man in overalls stepped out on the sidewalk, smacking a lead-tipped tire thumper on his palm. â€Å"You motherfuckers making enough noise out here?† Elijah bared his fangs and hissed at the biker, then leapt to the wall over the garage door and clung there, facedown, above the biker's head. The biker looked up at the vampire, down at the prostrate bum, then at the damaged Mazda. â€Å"Well, okay then,† he said. â€Å"I can see you fellas still have some shit to work out.† He slipped back into the foundry and slammed the door. Elijah dropped to his feet and headed up the street, not even bothering to stop to snap the moo cow's neck. How could he have been so stupid? He wasn't going to terrorize her by killing a food source. He needed to threaten her minion, just as he had with the boy. How could he have known that she'd actually betray him and choose the boy? Turn the boy? It wouldn't happen again. Amid all the anger, the hunger, and the excitement at having a purpose, Elijah Ben Sapir felt a twinge of heartache. He had begun this adventure thinking himself the puppet master; now he was all entangled in the strings. Making mistakes. No worry. He cocked his head and focused. Past the rasping breath of the moo cow, the buildings settling, the Bay Bridge humming, and a thousand hearts beating in the lofts around him, he could hear the retreating steps of the little girl and her friend.