Explosion at nuclear plant in southern France

It was not immediately clear how serious the accident was or whether there were any victims. The Marcoule site is located in Langedoc Roussillon, in southern France, near the Mediterranean Sea

Paris: An explosion rocked the Marcoule nuclear plant in southern France today, reports PTI quoting the country's nuclear safety body and local authorities.

It was not immediately clear how serious the accident was or whether there were any victims. The Marcoule site is located in Langedoc Roussillon, in southern France, near the Mediterranean Sea.

Evangelia Petit of the Agency for Nuclear Safety said Monday an explosion had taken place but declined to provide any further details. Officials in the Gard region confirmed Monday's explosion but also would not elaborate.

The local Midi Libre newspaper, on its website, said an oven exploded at the plant, killing one person and seriously injuring another.

No radiation leak was reported, the report said, adding that no quarantine or evacuation orders were issued for neighbouring towns.

Three other people have been hospitalized with lighter injuries in the explosion, the paper said.

The accident occurred at 11:45am (0945 GMT, 5:45am EDT) in a plant that treats nuclear waste operated by a subsidiary of France's EDF electricity company, the report said.

In Vienna, an official at the IAEA, who asked for anonymity because he was not authorized to speak on record, said the agency was in contact with French authorities "trying to learn more on the nature of the explosion."


Asset allocation rules can turn out to be terribly misleading

Whether it’s equity versus debt, or debt and gold, perhaps even developed markets against emerging markets, the allocation formulas just don’t seem to be working as well as before. Models based on past data which are validated only against that past data, it seems, have limited validity

The concept of allocation is usually considered one of the main guiding principles for safe investing. The idea is that you are supposed to be diversified in various stocks or asset classes. This elementary risk management tool seems to be common sense. It is even reflected in the English expression "don't put all of your eggs in one basket". It is not only English. Almost the exact phase exists in French. The Chinese follow the example of an animal; the smart rabbit has three holes. There is no question that in life it is always a good idea to have alternatives. But for investors, especially recently, the practice may not always result in achieving its goal.

Money managers, financial analysts, and even courts are fond of asset allocation rules. One of the most common involves the allocation between stocks and bonds. The 'safe allocation' is supposed to be 60% of a portfolio in equity and 40% in bonds. So sacred is this allocation that it has a corollary based on age. At age 25 you are supposed to have 75% of your assets in stocks and 25% in bonds. By age 50 the portfolios should be balanced, because as you approach retirement you naturally want less risk. I recently saw a form from a US bank that went even further. It had about eight categories of risk tolerance each, with its own set of allocations from 'no risk' which would be 100% cash, to 'high risk' which would be 100% equities.
The problem with these rules is that they can be terribly misleading. For example, a solid portfolio is supposed to be made up of different stocks. The theory is that the movement of an individual stock is supposed to be based on an individual company's financial fundamentals. This concept is the basis of a vast industry of stock analysis and stock picking. Recently this has not been the case. Stocks have risen and fallen together without regard to their fundamentals. The correlation of the 250 biggest stocks in the US S&P stock index over the past month had been the highest since 1987 at 81%.

Other relationships have exhibited some novel patterns. In theory, owning government bonds and gold should be a good allocation because they tend to move in opposite directions. Gold is traditionally a hedge against inflation. When an economy is growing rapidly and inflation is rising, you should own gold. In contrast, inflation is the enemy of government bonds since their value is diminished and the returns may result in negative yields.

But recently, US treasuries and gold have risen together. The explanation is that they are both supposed to be "safe havens". Although I can't think of anything safe about buying either asset. Gold may be at the top of a bubble. Deflation may be more of a problem than inflation, while the value of dollar-denominated US treasuries continues to fall relative to other currencies.

Owning both emerging and developed markets is a recommended allocation. The idea is based on the theory that emerging markets have somehow 'decoupled' from developed markets. Emerging markets are supposedly growing rapidly regardless of recessions in developed markets. The reality is that they are closely correlated. A perfect match would yield a beta of 1. An ETF that tracks the MSCI Emerging Market Index has a beta of 1.14. Emerging markets track developed markets, but are more volatile. They outperform when the S&P is in a bull market and underperform during bear markets.

According to a recent theory, commodities like oil, metals, or agriculture are supposed to be negatively correlated with markets. Such a negative correlation should make them ideal for asset allocation as a good hedge. Sadly this is not the case. Over some periods they are negatively correlated, but over the past three years booming equity markets have also meant booming commodities prices.

Alternative investments like hedge funds and private equity are another asset class that are supposed to be a good place to put your eggs. This strategy gained popularity among pension funds due to the success in the 1980s of a manager of the endowment of Yale, a prestigious American university. What may have worked then, does not necessarily work now. As many as 89% of hedge funds are below their 2006-2007 highs. It is difficult to value private equity except for the listed funds. Some famous ones like 3i has fallen 30% and Blackstone has fallen 64% since it was listed in 2007.

Markets are dynamic systems. Creating models based on past data which are validated only against that past data have limited validity. In science we can create the theories with general applications because the rules are consistent and inviolable. Markets do not have this luxury as long as governments continue to introduce chaos into a system constantly changed by financial innovation.

(The writer is president of Emerging Market Strategies and can be contacted at [email protected]  or [email protected].)



Narendra Doshi

5 years ago

Very true William.
One must constantly review and learn to swim (make money)in the environment market puts you in. Pl learn to live in the present. Past is only a guide. Also, different people (even with the SAME ASSET ALLOCATION) may react differently. Have confidence in your rationale and keep continuously testing the same to have more wealth created, over time.

Telecom ministry approves NFAP-2011 for better spectrum management

Telecom operators and industry representatives had opposed the proposal that some spectrum in the frequency bands of 900, 1,400, 1,800 and 1,900 Mhz should be kept aside for companies to provide wireless services using technology and systems developed by indigenous players

New Delhi: Telecom minister Kapil Sibal has given in-principle approval to draft National Frequency Allocation Plan-2011 (NFAP), which would help in efficient spectrum management and higher mobile penetration in rural areas, reports PTI.

"Minister has given in-principle approval to new National Frequency Approval Plan-2011 (NFAP) draft that will surely help in better spectrum management and will also increase mobile penetration in rural areas," a source in the Department of Telecom (DoT) said.

The plan (NFAP 2011) aims to give a boost to domestic manufacturing of telecom equipment and efficient utilisation of spectrum.

The Wireless Planning Commission (WPC), the spectrum allocation wing of DoT, had issued the draft on NFAP in March.

"The draft will now go to a Group of Ministers (GoM) within a month and then it will be sent to the Cabinet for approval," the source added.

Various government departments, telecom operators and telecom industry bodies COAI and AUSPI had expressed disagreement to the DoT on the various clauses under the National Frequency Allocation Plan for 2011.

"The objections raised by organisations concerned have no technical and regulatory base," the NFAP document said.

Telecom operators and industry representatives like COAI and AUSPI had opposed the proposal that some spectrum in the frequency bands of 900, 1,400, 1,800 and 1,900 Mhz should be kept aside for companies to provide wireless services using technology and systems developed by indigenous players.

The information and broadcasting (I&B) ministry had also raised concerns over the proposal to allocate 700 MHz band for mobile and wireless broadband service.

The 700 MHz spectrum band was earlier predominantly marked for broadcasting services.

Representatives from the I&B ministry, in a NFAP meeting held in March, said the WPC needs to consider spectrum requirement of broadcasters, especially looking at Doordarshan's digitalisation plan, which is expected to be completed by 2017.

Industry players, on the other hand, were of the view that since 700 Mhz remains utilised by DD for a long-time and with no clear roadmap of the public broadcaster's expansion, the band should be allocated for mobile and BWA services.

The frequency band of 700 Mhz is in high demand by players in the broadcast and mobile industry.

Any service deployed in this frequency band will need less number of base stations (towers) in higher frequency band of 800, 900, 1800 and 2100 Mhz.

As per the latest Telecom Regulatory Authority of India (TRAI) data, the share of urban subscriber has marginally stood at 66.27% whereas share of rural subscribers stood at 33.73%.


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