Friday, February 13, 2009
Risk Free - Equity Risk = Free Equity?
So now there's something less risky than risk-free!
Great news for those still using the Equity Risk Premium to justify high stock price valuations... pick your own risk-free rate!
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It's always mystified me that the ERP was seen as the return "required" above the risk free rate historically, and therefore a justification for current or future prices. Isn't it basically a circular argument? Or at best just a tool for relative value trades or reversion-to-mean type calls?
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Thursday, January 29, 2009
Dirt Bag on Wall Street - who knew?!
"Seriously, now, can we all just agree to put a stake once and for all in this Goldman Sachs reputation-thingy? I have repeatedly shaken my head in wonder over the years at Goldman Sachs' apparently preternatural ability to maintain an absolutely spotless public image while simultaneously soiling itself in full view of everyone in the most miserable and abject manner possible." [more]

Not much for me to add, but to point out that while the halo still shines somewhat brightly against its peers, (peer, I mean... and, to fill some chart space, Citi,) GS is still off some 60% from the start of 2007. Crappy performance, but much much better than Morgan Stanley (and the S&P500) off some 60% with Citi giving up 95% (okay, okay, 94%.)
(So when is it Joisey Governor Jon Corzine's turn? He was, at one point in time, the boss of Paulson, Rubin and Thain. And Jim Cramer. And possibly Erin Burnett...)
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Tuesday, January 13, 2009
0.96
I think they are referring to the length, not number of fingers, though knowing many London based traders myself, maybe...
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Happy New Year, by the way. (My short position in SAY really helped!)
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Monday, December 29, 2008
Year of the Ox, 2009... Is an Ox Year the same as a Bull Year??

The record for the Dow Industrials during the last century is not all that inspiring, with 5 winning years vs 4 losers, at an average gain for the year of a bit over 5%, but with a mile wide std dev of 21%, so expect something between -15% and +25%??! The next layer of astrology (elements) points to a slightly better outcome - the last Earth Ox (1949) saw a return of 12.8%. (Not statistically significant, methinks?!)
For the HSI, I only have 3 past Ox years to look at, for some reason... 1974: -64%, 1986: +21%, 1997(!): -17%
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Tuesday, October 14, 2008
"Brownie, you're doing a heck of a job"

"Brownie, you're doing a heck of a job"... from feather duster to rooster in one easy week...
And Nobel Laureate Krugman concurs...!
(UPDATE: Cassandra not quite so positive...)
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Friday, October 10, 2008
Friday, October 3, 2008
I'm so old that...
... I remember Barings and James Capel and WICO and BZW and Warburgs and Hoare Govett and Vickers da Costa
... I remember what people do when E F Hutton speaks, and who measures success one investor at a time
... I remember the sound of a stock chart being printed on a dot matrix printer
... I remember the IBM PC-XT (and its super fast 8088 processor) which we shared at work
... I remember searching for "sex" on Altavista
... I remember floppy disks (that really were floppy)
... I remember Bloomberg terminals with big ball keyboards (with Chiclet buttons)
... I once worked for Rowe and Pitman (or was it Rowak?)
... My first boss had been a partner at Phillips and Drew
... I remember Big Eight accounting houses
... I remember when Greed, for want of a better word, was good
... I used to think "who would read research from Goldman Sachs or Merrill Lynch in Asia?"
... I remember the first time Security Pacific started making Hoare Govett partners very very rich
... I remember that time when the KLSE traded more than the NYSE
... I remember Glass-Steagall
... I remember Pan-El
... I bought Aokam
... I broked to Scudder and Twentieth Century
... I remember horrible toilets on company visits in Shanghai... and holding on until back in your own hotel
... I remember small fish being dried in the sun along Boat Quay in Singapore
... I remember when every bank and broker had at least one junk available for booze cruises in Hong Kong
... I remember when Thailand was going to be the next Malaysia
... I remember Green Island Cement
... I remember ConsPlant
... I remember when Jardine Matheson had stock code 15
... I remember when First Pacific was definitely going to be the next hong
... I remember not being able to buy shares in Korea, Taiwan and India (and China) at all
... I remember Communist China
... I remember bloody coups and protests in Asia
... I remember watching the end of the Vietnam war on TV
... I remember asking somebody what "a hedge fund" was

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Friday, September 26, 2008
PalinDrone - on the Big Bank Bailout
“Not necessarily this, as it’s been proposed, has to pass or we’re gonna find ourselves in another Great Depression. But there has to be action taken, bipartisan effort — Congress not pointing fingers at this point at ... one another, but finding the solution to this, taking action and being serious about the reforms on Wall Street that are needed.”
So say we all.
Tuesday, September 23, 2008
Thursday, September 18, 2008
First: North Carolina, then: New York, then... THE WORLD!!!! (mwa-ha-ha-ha-haaa...)
Wednesday, September 17, 2008
Rewind to Sept 12th, 2007, Lehman Bros says: BUY AIG

"... believes the downturn in the U.S. housing market should not be material to its investment portfolio and overall financial position. Although 62% of the company’s $29 billion in subprime RMBS investments are from the 2006 and 2007 vintage years, we are comforted that roughly all is AAA or AA rated. As a result, a substantial cushion exists before AIG would incur losses. For example, AIG estimates 40%–60% default rates would need to occur before the AAA and AA tranches are affected."
Monday, September 15, 2008
BofA (Charlotte, NC) & Merrill Lynch (NY, NY)
Thursday, August 21, 2008
The Olympic MARKET Record! (So China will...)
Turns out that that little snippet of conventional wisdom (at least for the equity markets) maybe ain't quite so wise after all.
The record is actually, based on Jan to end June and July to end December performance, surprisingly even, over the past 8 Summer Olympiads (ex-Moscow) at three apiece between Going-from-Up-to-Up and Going-from-Up-to-Down.

So there! (Actual numbers visible if you click below, showing China traded A-shares as well as HK traded H-shares, plus the HSI for good measure. And just in case you're wondering, nobody gives a sh1t about B-shares anymore.)
But then again, none of the other home markets were down 48% in the first half year of their Summer Olympics, either, so perhaps China will try and manipulate the markets and "do an LA'84" which saw markets off 7% in the first half before closing out the year almost flat with a 9% Carl and Mary Lou inspired 2H burst.(Not that I'm implying that anybody in power in the US would ever look to manipulate the markets in the cradle of free market capitalism, no no no. No. No!)
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Stumble It!::
Tuesday, August 12, 2008
Dear investor...
Dear Investor,
This letter is to inform you that the wheels have come off of the proverbial wagon at ACME Systematic Leveraged Macro Momentum Fund LP, and that the same awesome thematic portfolio that made you feel (in the first half-year) as if you'd become very rich in comparison to those sucking wind on their leveraged MBS portfolios or Japanese Small-Cap Value Funds, has, quite literally, spontaneously combusted in our faces.
Our long-oil (PBR, SU, SWN), long coal (MEE, BTU), long fertilizer (POT, MOS), and long iron ore (CLF, RIO) positions have been crushed (no pun intended), and…
I especially like the reference to Taleb. Must all be somewhat close to the bone for some, to say the least.
(For more, check out the Hedge Fund Implode-o-meter.)
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Stumble It!::
Friday, August 8, 2008
Foreign Reserves - no correlation with land mass, amazingly enough!

So if the % of world reserves were proportional to land area...
- The US (0.6% of world reserves/ 6.5% by area) would be the size of Nigeria (0.87% of reserves.)
- Japan (13.9% reserves/ 0.25% area) would be larger than Russia (8.5% rsvs), say with an Indonesia (0.9% rsvs) or Libya (1.3% rsvs) stuck on the side.
- Both The Untied Kingdom, sans Empire, (0.7%/ 0.16%) and the ECB (0.7%/ 3.0%) would be about the size of Egypt (0.5%) or Mauritania (0.009%)
- China (25.9%!/ 6.4%) would a bit larger than Russia (8.5%), Canada (0.6%) and the US (0.6%) combined.
- Singapore (2.5%/ <0.01%) would be bigger than India (4.3%.)
- So would Brazil (2.6%/ 5.7%), for that matter...
- ... while India (4.3%/ 2.3% would be itself... PLUS Argentina (0.6%.)
And no, I really can't draw any investment conclusions from this "analysis"!!
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I won't do the exact same thing with populations (too obvious!) but I will say that China's current population is about that of the whole world in ~1850. India's lagging behind only slightly, matching the whole world maybe twenty years earlier? The USA, #3 in the headcount stakes, clocks in at about 1,000 AD (or CE) with #4 Indonesia only about 100 years earlier. Brazil at #5 is only 200 years into AD-space, while #6 Pakistan and #7 Bangladesh individually would be like the world about 200 years the other direction, ie ~200BC (or BCE.)
Err... Buy the BRICS? Yeah! Think about the compounding effect since 1850! Scratch that.
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Stumble It!::
Friday, August 1, 2008
2008 Beijing Olympic Manners
2) Shake hands for no more than 3 seconds (Team India, please cancel your flights)
3) No white socks with black shoes (the English squad should stay home, then)
4) Do not jump queue, spit, or remove shoes in public (don't get on the plane, Malaysians)
5) "Older women" must wear skirts that extend to 3cm below the knees (Philippine team... think again)
6) Men should avoid helping women carry their handbags (so long, Singaporeans - no golds for you...)
7) Avoid sticking your face too close to members of the opposite sex when talking in public (see ya in 2012, Koreans)
8) Do not visit your neighbours in your pyjamas & slippers (OK, this really IS Chinese)
(Actually just for Beijing citizens, apparently)
(AP)
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Stumble It!::
Market stability... and a measure of calm?

Low vol = low volatility or low volume?
(From The Daily Telegraph online - a few days ago.)
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Stumble It!::
Wednesday, June 25, 2008
------------------------- Disclaimer -------------------------
Good luck!
Hedge Thing







