Byron Wien’s ’5 Sure Things’

Tuesday, January 29th, 2008

Jan. 29, 2008 – This is irresistible. During periods where there seems to be such confusion in the market, we could certainly all use a dose of clarity. 

Byron Wien, Chief Global Strategist, Pequot Capital, and one of a few prolific market forecasters, shares his 5 ‘Sure Things’ for this turbulent market:

I’m getting older now, so I only invest in sure things. I don’t invest in things that only “might” work out. So let me give you five sure things.

• Gold is going to $1,000 an ounce probably this year. I forecast that it would go to $800 an ounce last year.
• Oil is going to probably $125 a barrel. I forecast that it would go to $80 last year. The dollar is going down for the reasons that I said because large holders of dollars are going to diversify into other assets and other currencies.
• Cotton is going to be the commodity of choice because the world’s standard of living is increasing and the places where it’s increasing fastest are warm and they don’t wear wool, they wear cotton. Cotton is something nobody wants to grow. They want to grow corn instead. So, while the demand for cotton is increasing, the acreage devoted to it is decreasing and that’s all you have to know.
• Finally, I think the Chinese are going to revalue the renminbi (yuan) even more than the seven percent that they did last year.
• As far as stocks are concerned, I think that my investment ideas follow some of my thesis. Our portfolio is very heavily overseas, but we’re in the agricultural area with Potash Corp (POT) and a lot of energy stocks.
• Large caps such as Schlumberger (SLB). Smaller caps such as National Oilwell Varco (NOV) and Ultra Petroleum (UPL). In technology, Qualcomm (QCOM). Finally, in adult education we think that a lot of people will be laid off and they’ll be trying to improve their skills so we would buy the Apollo Group (APOL).

Prior to his current position as Chief Investment Strategist at Pequot Capital, Byron Wien was Chief Global Strategist at Morgan Stanley.

Tags: Agriculture, Apollo Group, Byron Wien, Canadian Stocks, Chief Global Strategist, Chief Investment Strategist, Commodities, Commodity, COT, Currency, Dollar, Economy, Emerging Markets, energy, energy stocks, EUM, Gold, India, Investment, Investment Strategy, Investment Wisdom, Morgan Stanley, National Oilwell Varco, oil, Pequot Capital, Potash Corp, Qualcomm, Russia, Schlumberger, Thesis, Ultra Petroleum, US Stocks, usd, Value, Yuan
Posted in Commodities, ETFs, Gold, Oil and Gas | Comments Off

Short ETFs – Portfolio insurance

Tuesday, January 29th, 2008

Jan. 29, 2008 – Short and UltraShort Funds provide investors with highly liquid inverse exposure to the markets as represented by widely held benchmark indices.

Check out these charts for a couple of good examples. Most investors have difficulty grasping the idea of taking ’short’ positions or bets against the very markets that they are investing in. These new ’short’ ETFs do not require a great deal of sophistication or a margin account for the average investor to get some portfolio insurance.

iShares FTSE Xinhua 25 (FXI) vs. ProShares UltraShort FTSE Xinhua 25 (FXP)

iShares MSCI Emerging Markets (EEM) vs. ProShares Short MSCI Emerging Markets (EUM)

 ProShares Ultra Financials vs. Proshares UltraShort Financials (Dow Jones Financial Index(sm))

If you believe that there is more downside to come, then its still not too late to get some downside protection.

Don Coxe, in his recommendations from Basic Points, January 2008, warns:

The financial crisis is not centered in stock markets. Its primary locus is in financial derivatives, and in their impact on the stock prices of leading banks. Until the downward drift of bank stocks and the upward drift of derivative debt yields are reversed, the stock market will continue to slide. Keep overall equity exposure to minimums, and emphasize quality.

Tags: Bank stocks, Banks, Basic Points, Chart, Derivatives, Don Coxe, Emerging Market, Emerging Markets, ETF, EUM, Financials, FTSE, FXP, Investment, Investment Strategy, Markets, Proshares, SKF, Stock Markets, Technical Analysis, ultrashort, upw, uyg
Posted in Emerging Markets, ETFs, US Stocks | Comments Off

More volatility coming and more ETF options

Friday, January 25th, 2008

Jan. 25, 2008 – Watch out below. There is sure to be more volatility to the downside in the coming weeks, as the carry trade and proprietary traders continue to unwind profitable trades.

Finding themselves unable to collect on credit default swaps vis-a-vis AMBAC, MBIA, ACA, large institutions (banks) and hedge funds are finding themselves under pressure from a substantial cash call.

An example of this danger came to light when a little-known firm called ACA Financial Guaranty caused some of Wall Street’s biggest banks to write down billions of dollars in holdings, restating their value on corporate balance sheets. ACA revealed last month that it had promised to cover $60 billion worth of mortgage and corporate debt, but had enough cash to cover only a fraction of that. Merrill Lynch, Citigroup and financial institutions in Canada and France, which had all sold swaps to ACA, set aside billions in case the firm collapsed.

Most of the strength that the market is witnessing is due to short covering and this will manifest itself over and over during the next two to four weeks.

Institutions are still unwinding their profitable trades to raise cash. The market goes down. Then short covering occurs, and you get what appears to be a bounce or recovery in stock prices. The problem is that as long as the cash call remains larger than the outstanding short positions the market will continue to trend lower.

Don Coxe, in January’s Basic Points, puts it in these terms:

Sadly, the central bankers have been forced into injections of all-time record amounts of liquidity. Jim Cramer and some other prominent apologists for Wall Street glitterati screamed, “The Fed doesn’t get it,” and demanded bailouts for their buddies who faced demotion from Croesus status to morally cretinous status. The biggest benefi ciaries from these bailouts were not overstressed homeowners, but the biggest, baddest, borrowers who had made the biggest, baddest, bets through use of complex derivatives.

Despite strong openings today, both the Dow and TSX look unable to hang on to gains. You also have to look at trading volume for clues about the weakness of the recovery. Volumes are down 20% at the NYSE and 15% at NASDAQ.

Assuming you agree with the idea that there is more downside in the market, there are some relatively new and interesting ways that you can take positions on the short side to reduce downside that do not involve derivatives or short positions. In particular there are a new breed of ETFs that provide short exposure to various sectors and country bets. These are aptly referred to as ’short’ and ’double-short’ ETFs.

ProShares has created ETF’s that trade inversely with the markets. These allow investors and traders to hedge against market downturns or that want to bet against the market. These ETFs are very liquid and actively traded and are designed to go up when indexes go down. As a reminder, the SHORT funds use no leverage, but the UltraShort funds employ leverage. Here is partial list by Fund (Ticker):

• UltraShort QQQ (AMEX: QID)
• UltraShort Dow30 (AMEX: DXD)
• UltraShort S&P500 (AMEX: SDS)
• UltraShort MidCap400 (AMEX: MZZ)
• UltraShort SmallCap600 (AMEX: SDD)
• UltraShort Russell2000 (AMEX: TWM)
• UltraShort MSCI EAFE (AMEX: EFU)
• UltraShort FTSE/Xinhua China 25 (AMEX: FXP)… short selling FTSE Xinhua 25 index (FXI).
• UltraShort Basic Materials (AMEX: SMN)
• UltraShort Consumer Goods (AMEX: SZK)
• UltraShort Consumer Services (AMEX: SCC)
• UltraShort Financials (AMEX: SKF)
• UltraShort Health Care (AMEX: RXD)
• UltraShort Industrials (AMEX: SIJ)
• UltraShort Oil & Gas (AMEX: DUG)
• UltraShort Real Estate (AMEX: SRS)
• UltraShort Semiconductors (AMEX: SSG)
• UltraShort Technology (AMEX: REW)
• UltraShort Utilities (AMEX: SDP)
• Short MSCI Emerging Markets (AMEX:EUM)
• Short MSCI EAFE (AMEX: EFZ)
• Short QQQ (AMEX: PSQ)
• Short Dow30 (AMEX: DOG)
• Short S&P500 (AMEX: SH)
• Short MidCap400 (AMEX: MYY)
• Short SmallCap600 (AMEX: SBB)
• Short Russell2000 (AMEX: RWM)

On the TSX in Canada, Horizons BetaPro Funds have launched ‘double-short’ ETFs that trade inversely with the market (they also have corresponding ‘double-bull’ versions of these). Canadian investors and traders can use these to protect against downturns or simply bet against the market.

• Horizons BetaPro COMEX® Gold Bullion Bear Plus ETF (TSX: HBD)
• Horizons BetaPro S&P/TSX Global Mining® Bear Plus ETF (TSX: HMD)
• Horizons BetaPro DJ-AIGSM Agricultural Grains Bear Plus (TSX: ETF HAD)
• Horizons BetaPro S&P/TSX 60® Bear Plus ETF (TSX: HXD)
• Horizons BetaPro S&P/TSX Capped Financials® Bear Plus ETF (TSX: HFD)
• Horizons BetaPro S&P/TSX Capped Energy® Bear Plus ETF (TSX: HED)
• Horizons BetaPro S&P/TSX Global Gold® Bear Plus ETF (TSX: HGD)
• Horizons BetaPro NYMEX® Natural Gas Bear Plus ETF (TSX: HND)
• Horizons BetaPro NYMEX® Crude Oil Bear Plus ETF (TSX: HOD)
• Horizons BetaPro COMEX® Gold Bullion Bear Plus ETF (TSX: HBD)
• Horizons BetaPro S&P/TSX Global Mining® Bear Plus ETF (TSX: HMD)

Look at it this way; if you already have long positions that have appreciated, but you’ve got a longer term holding period in mind that is not determined by market conditions, this may a viable option to capture some of the potential downside.

Tags: Agricultural Grains, Amex, Apologists, Bailout, Banks, Basic Points, Bear Plus, Bear Plus ETF, Benefi, Biggest Banks, Bullion, Canadian Market, Carry Trade, China, Citigroup, Collapse, Corporate Balance Sheets, Corporate Debt, Credit, Credit Default Swap, Credit Default Swaps, Crude Oil, Crude Oil Bear Plus ETF, Derivatives, DOG, Dollar, Don Coxe, Dow 30, DUG, DXD, EFZ, Emerging Market, Emerging Markets, energy, ETF, EUM, Fed, Fed Doesn, Financial Guaranty, Financial Institutions In Canada, Financials, France, FTSE, FTSE Xinhua 25, FTSE/Xinhua China 25, FXP, Glitterati, Gold, Gold Bullion, Gold Bullion Bear Plus ETF, Grain, Hedge Fund, Hedge Funds, Horizons BetaPro, Horizons BetaPro Funds, Investment, Jim Cramer, liquidity, Markets, Mbia, Merrill Lynch, Mining, Miscellaneous, Mortgage, Msci Eafe, MYY, MZZ, Natural Gas, Natural Gas Bear Plus ETF, Nymex, oil, pence, Plus ETF, Profitable Trades, Proprietary Traders, Proshares, PSQ, QID, Rally, Real Estate, REW, risk, RWM, RXD, S&P/TSX 60, SBB, SCC, SDD, SDP, SDS, Short Covering, Short Dow30, Short MidCap400, Short MSCI Emerging Markets, Short QQQ, Short Russell2000, Short Selling, Short SmallCap600, SIJ, SKF, SMN, SRS, SSG, Stock Prices, Substantial Cash, SZK, Trading, Tsx, TSX 60, TWM, ultrashort, UltraShort Basic Materials, UltraShort Consumer Goods, UltraShort Consumer Services, UltraShort Dow30, UltraShort Financials, UltraShort Health Care, UltraShort Industrials, UltraShort MidCap400, UltraShort MSCI EAFE, UltraShort Oil & Gas, UltraShort QQQ, UltraShort Real Estate, UltraShort Russell2000, UltraShort Semiconductors, UltraShort SmallCap600, UltraShort Technology, UltraShort Utilities, Us Federal Reserve, usd, Value, Wall Street
Posted in Canadian Market, Commodities, Credit Markets, Emerging Markets, ETFs, Gold, Markets, Oil and Gas, Outlook, US Stocks | Comments Off

Recession and Bear Markets – Bespoke Reference

Friday, January 25th, 2008

Tags: Bear Market, Bear Markets, Blog, Chart, Economy, Investment, Investment Wisdom, Markets, Premium, Recession, S&P 500, United States, US Stocks
Posted in Markets, US Stocks | Comments Off

Breakingviews: Sovereign Wealth Funds Risk Index

Friday, January 25th, 2008

Jan. 25, 2008 – Today, we received this piece about Breakingviews.com’s new SWF Risk Index:

Breakingviews sovereign wealth fund risk index

By Una Galani AND Simon Nixon

To see the full index with detailed rankings, click on the link below

Sovereign Wealth Fund Index: Sovereign wealth funds were hardly talked about twelve months ago. Now they are one of the hottest topics in global financial markets. Over the last year, these state-owned entities have spent over $75bn snapping up stakes in some of the world’s biggest banks, taken big positions in stock exchanges on both sides of the Atlantic and even attempted a takeover of one of Britain’s leading supermarkets.

Such funds have existed for decades, but the shift in global economic power and the current weakness in western markets has given SWFs – forecast to grow assets fivefold to $13.4tr by 2017 – new influence and raised new fears about their motives. Critics such as President Sarkozy of France and some US politicians worry that SWFs tend to be secretive, target political as well as financial returns, and operate at the whim of governments not always sympathetic to western economic and political interests…

Tags: Banks, Biggest Banks, Brazil, Breakingviews, BRICs, China, Economic Power, Emerging Markets, France, Fund Index, Fund Risk, Galani, Global Financial Markets, Markets, Miscellaneous, Motives, Nixon, Political Interests, risk, Risk Index, Russia, Sarkozy, Stock Exchanges, Supermarkets, Swf, SWFs, Takeover, Target, Twelve Months, Western Markets, Whim
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More Carry-Trade commentary

Tuesday, January 22nd, 2008

Jan. 22, 2008 – Here are some more clippings about the ‘carry-trade’ at the heart of global market volatility:

Jan. 21 (Bloomberg) — The Australian and New Zealand dollars fell against the yen as concern over a slowing U.S. and global economy spurred a reduction in holdings of higher- yielding assets bought with funds from Japan.

The New Zealand currency traded near the lowest in almost two months versus the yen as a slump in Asian stocks deterred investors from so-called carry trades. Australia’s dollar also declined against the U.S. currency after a government report showed producer prices rose by less than economists estimated, prompting traders to pare bets the central bank will raise interest rates from an 11-year high next month.

Inserted from http://www.bloomberg.com/apps/news?pid=20601081&sid=ah9E711dlJh4&refer=australia

Australia’s 11-year high benchmark rate of 6.75 percent and New Zealand’s record 8.25 percent rate drew investors in the past as part of the carry trade strategy. Those rates compare to 0.5 percent in Japan. The risk in the carry trade is that swings in exchange rates erode profits from interest-rate differentials.

The carry trade strategy involves borrowing in countries where interest rates are low, and investing where returns are higher.

Commodities, which make up about 60 percent of Australian exports and 70 percent of New Zealand’s, tumbled since the beginning of last week. Falling global economic growth may reduce demand for commodities these countries export, such as metals.

Inserted from http://www.bloomberg.com/apps/news?pid=20601081&sid=a3dRGK0srjXo&refer=australia

Another nervous week as the ‘carry trade’ unwinds. Many equity indices and Yen crosses are poised at key support levels: ‘necklines’ of ‘head-and-shoulders’ patterns or the lower edge of the big trading band of the last year or so. Leading the pack South are GBP/JPY and Sweden’s OMX Index, closely followed by the Dow Jones Industrial Average and FTSE 100. These have already seen weekly closes below these key levels and should, one by one, topple all the other ones over too. An unseemly scramble is likely if not next week then in February; at-the-money implied volatility could soar.

Energy products and most metals eased, many thinking if not talking recession, and Baltic Dry and Capesize Freight Indices have halved since their peak at the end of last year. Even the more pessimistic are saying contraction will be shallow and short and that by Q3 2008 things will be mended and economic growth will pick up. We feel this is way too simplistic and that the unravelling of all the mess in the financial system will probably take the whole of this year (and then some more).

A ‘flight to quality’ has resulted in Treasury yields moving lower, US ones leading the way to multi-month lows with yield curve steepening seeing two-year TNotes at a mere 2.39% (lowest yield since September 2004). Credit spreads against junk bunds are at July’s record highs. The US dollar has been contained in relatively small ranges around last week’s levels although the Swiss franc did dip very briefly to a new record low (1.0838) as did the Czech koruna (17.318). Sterling has regained some of its composure, EUR/GBP down from a record £0.7614, and the Yen had the best all round performance, dipping to 105.92 to the greenback.

Stock indices are all lower, the New Zealand bourse for a staggering twelve consecutive days while Jakarta and Mumbai are down nearly 8% this week alone. US and European indices lost roughly 5%, many now lower than they were at any point in 2007.

Inserted from <http://www.fxstreet.com/technical/market-view/weekly-market-commentary/2008-01-21.html

The Japanese currency climbed against higher yielding currencies as investors looked for safe havens amid the turbulence in equity markets. The yen carry trade, where the low-yielding currency is sold to purchase riskier, high-yielding assets, proved a popular investment strategy in the first half of 2007 as stable equity market conditions ensured a healthy appetite for risk.

But the deepening financial market gloom since August has seen carry trades scaled back since the beginning of this year.

The real test of carry trade activity is the relationship between the yen and the New Zealand dollar. The yen fell 15 per cent against the Kiwi between January and August last year as the latter’s interest rate hit 8.25 per cent against Japan’s 0.5 per cent. But the Kiwi has since lost nearly all these gains, and was down 4 per cent this week to Y82.05 as the yen continued its rally.

Inserted from <http://www.ft.com/cms/s/0/0600819a-c634-11dc-8378-0000779fd2ac.html

Tags: Asia, Asian Stocks, Australia, Australia Australia, Australian Exports, bank, Benchmark Rate, Bloomberg, Carry Trade, Clippings, Commodities, Credit, Currency, Dollar, Dow 30, Dow Jones, Dow Jones Industrial, Dow Jones Industrial Average, Economists, Economy, Emerging Markets, energy, Energy Products, Euro, FT.com, FTSE, Ftse 100, Gbp, Gbp Jpy, Global Economic Growth, Global Economy, Government Report, Head And Shoulders, Interest Rate Differentials, interest rates, Investment, Investment Strategy, Jakarta, Japan, Market Volatility, Markets, Metals, Miscellaneous, Mumbai, New Zealand, New Zealand Currency, New Zealand Dollars, OMX, Other Ones, producer, Producer Prices, Rally, Recession, REW, risk, spreads, Sweden, Technical Analysis, Trade Strategy, Trading, United States, US Dollar, Yield Curve
Posted in Commodities, Credit Markets, Markets, US Stocks | Comments Off

Why the selloff in commodities and emerging markets?

Tuesday, January 22nd, 2008

Jan. 22, 2008 – Phew! Finally some sense prevailed at the Fed with an astonishing cut of 75 bps and 25 bps from Bank of Canada. What a turn of events. There hasn’t been a rate cut like this since the eighties.

Well, here we are in the midst of a global panic, and the media has been all over it, doing its best to carry the news of the panic. That’s why its really important to keep a clear head here, and cut through the clutter.

Emerging markets and commodities are still the strongest bets globally. Emerging markets have been operating from a higher quantum of growth roughly 2-3 times that of industrialized economies. In fact, emerging markets have been dealing with inflationary pressures. A recession in the west relieves some of that pressure, and that is good news. Fact is, the BRIC will still be in need of the raw materials, metals, oil and food, and that demand growth is expected to continue well into the next two decades. So why are they selling off?

The headlines say that demand from emerging markets for commodities will decline and that’s why they are getting hit hard. The real story is that they have been the best performing assets out there, and that is the easiest place to raise cash given the outstanding obligations of the credit market. Those responsible plain and simply need the cash, to refinance their obligations, and to shore up their balance sheets.

Who is doing all of the dumping of stocks? It is most certainly NOT you and me, or the average investor. We are just supposed to stand by and watch this happen.

Its a cabal of large institutional so-called ’smart money’, hedge funds, and currency traders that have driven this market to its present levels.

The credit market (subprime) meltdown, and the credit default swap meltdown, with the failures of MBIA, AMBAC, and ACA, that is following on its heels is the first part of this. The losses at the investment banks are precipitating the repatriation of capital in order to shore up balance sheets. The large proprietary traders are selling off their fundamentally strongest holdings with the biggest gains, in such things as commodities and emerging markets, to accomplish this. This amounts to a giant MARGIN CALL against these obligations. So, Canada and Emerging Markets are not selling off because there is something terribly wrong with them; it is because the biggest players need to get their hands on cash.

Cut through the clutter and you get to the unwinding of the carry trade. This most likely is the largest contributor to the ’round the world’ sell-off.

The slide of the dollar as a result of out-of-sync interest rate cuts, the late start in cutting rates by the Fed to get around the subprime and CDO meltdown, followed on by the ECB and BoJ’s reluctance to cut rates or print money is now leading to a wholesale unwinding of yen/dollar carry trade. And it is BIG. This, in our humble opinion, is the real source of indiscriminate selling of equities which explains why we have seen the kind of volatility we are seeing in the BRIC, emerging markets, and Australia and Canada.

Here’s what’s at the heart of it.

Yen hits 2-1/2-year high vs dollar as stocks slide

Tuesday January 22 2008

By Masayuki Kitano
TOKYO, Jan 22 (Reuters)
…The dollar hit a 2-1/2-year low of 105.61 yen on electronic trading platform EBS early on Tuesday, but later pared its losses and stood at 106.16 yen as of 0322 GMT…
The euro fell to a five-month low of 152.32 yen on EBS, while sterling fell as low as 204.87 yen the lowest since April 2006. They later rebounded off those lows.
“…It’s a combination of carry unwind and repatriation, as well as little or no chance of rate hikes being priced into the high-yielders,” says Gerrard Katz, head of North Asia FX trading at Standard Chartered.
“…Yen carry unwinding might, say, account for about 5 out of 10 of the entire move, with short-term speculators accounting for the other 5 or a bit more,” said a vice president for foreign exchange sales at a European bank…

Euro Falls to Five-Month Low Against Yen as World Stocks Plunge

From Bloomberg – Jan. 21 (Bloomberg)
“…What we are seeing now is investors pulling out of their profitable trades because of risk aversion,’’ said Bilal Hafeez, London-based global head of currency strategy at Deutsche Bank AG, the world’s biggest currency trader. “You see the euro coming off, a decline in emerging-market assets and a rally in the yen.

They are typical signs of carry trades being unwound…’’

“…Investors are likely to continue to liquidate their carry trades in coming weeks, said Neil Jones, head of European hedge fund sales at Mizuho Capital Markets in London. Jones predicts that a weekly close below 154 yen (vs. Euro) will “trigger a wave of sell signals’’ for the euro. He said the yen could rise to 100 per dollar by the end of March…”

To wit, in advance of the unwinding, you can bet that some of these ’sophisticated’ investors who borrowed in yen to invest in higher yielding opportunities elsewhere, covered their own backsides with short positions which they will undoubtedly cover once they are through unwinding their yen carry trade bets that are taking the market down. Hold on to your seats for now…and bet on a bounce at the other end.

This may prove to be the contrarian opportunity of the year to get some (more) exposure of those hard hit commodities and emerging markets. As per Dennis Gartman and Doug Kass, lets be careful out there.

Tags: Aca, Ambac, Asia, Australia, Balance Sheets, Bank Of Canada, Banks, Blog, Bloomberg, Bps, Brazil, BRIC, BRICs, Canadian Market, Carry Trade, Chart, China, Commodities, Credit, Credit Default Swap, Credit Market, Currency, Currency Traders, de-coupling, Dollar, Easiest Place, ECB, Eighties, Emerging Market, Emerging Markets, energy, Euro, Fed, Gartman, Global Panic, Hedge Fund, Hedge Funds, India, inflation, Inflationary Pressures, Investment, Investment Banks, Investment Strategy, Latin America, Markets, Mbia, Meltdown, Metals, oil, Rally, Recession, Repatriation, risk, Russia, Selloff, Smart Money, Trading, UK
Posted in Commodities, Credit Markets, Emerging Markets, Markets, Oil and Gas, US Stocks | Comments Off

Five Simple Steps to Becoming a Billionaire: The Greenspan Method

Sunday, January 20th, 2008

Five Simple Steps to Becoming a Billionaire: The Greenspan Method

Courtesy by Johnny Debacle, LongorShortCapital.com

This is very funny:

1. Become Fed Chairman
2. Lower interest rates until you create an asset bubble. Hold them low until stagflation is in the air and a real estate bubble is floating
3. Stop being Fed Chairman and release a book on how you didn’t do anything wrong and have no regrets. If possible, time it perfectly with the worst real estate market in generations
4. Join the hedge fund which has profited more in % and dollar terms than anyone else has from your mess (which you didn’t create)
5. Build a platinum statue of your muse, Ayn Rand, and sleep with it every night

It also helps if you are mostly unethical.

Tags: Ayn Rand, Billionaire, Debacle, Dollar, Dollar Terms, Fed, Five Simple Steps, Funny, Generations, Greenspan, Hedge Fund, humour, Information, interest rates, Miscellaneous, Muse, No Regrets, Platinum, Real Estate, Real Estate Bubble, Real Estate Market, Sleep, stagflation
Posted in Markets, Oil and Gas | Comments Off

Doug Kass’ 12 Sound Investment Principles

Sunday, January 20th, 2008

Jan. 20, 2008 – Doug Kass writes in RealMoney.com recent article for investors looking into the abyss, however, the advice is good anytime. 

1. Err on the side of conservatism.

2. Learn from the best, in classic investing books or through conversations with trustworthy individuals.

3. Avoid advice from those who lack flexibility and are dogmatic.

4. Be more concerned with return of capital than return on capital.

5. Trade/invest with below-average positions in order to take advantage of the market’s volatility and opportunity.

6. Take a base on balls, hit a single, but don’t go for the fences.

7. Buy straw hats in the winter (meaning, but out of favor items).

8. Buy only the best of breed in periods of economic/market uncertainty.

9. Always leg into a position.

10. Be patient.

11. Buy when your hands are shaking; sell when you become overconfident and complacent.

12. Always remember investing is about common sense.

Source:
12 Investment Principles for the Abyss
Doug Kass
RealMoney Silver, 1/17/2008 11:40 AM EST

Tags: Abyss, Base On Balls, Common Sense, Conservatism, Conversations, DOG, Doug Kass, Economic Market, Fences, Flexibility, Investing Books, Investment, Investment Strategy, Investment Wisdom, Market Uncertainty, Periods, Realmoney, Recent Article, Return Of Capital, Return On Capital, risk, Silver, Silver 1, Sound Investment Principles, Straw Hats, Volatility
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Watch out for “Black Swans”

Sunday, January 20th, 2008

Jan. 20, 2008 – Black Swan’ author Nassim Taleb warns traders to look out for the improbable:

Market meltdowns that scorch investors, 100-year floods that occur every 10 years and terrorist attacks such as 9/11. Nassim Taleb, an author, lecturer and big thinker, calls such unforeseen events “black swans,” borrowing from a tale about 17th Century European seafarers who landed on Australia and, much to their surprise, learned that not all swans were white.

Such shocks occur, Taleb says, because even experts fail to consider the likelihood of extreme scenarios. That’s why his theory, outlined in his book, “The Black Swan: The Impact of the Highly Improbable,” is so intriguing to Chicago’s trading community, which seeks to lessen risk by exchanging futures and options. His ideas have earned him cachet with investment bankers as well as rock ‘n’ rollers. (Copyright 2008 – Chicago Tribune)

Tags: Australia, author, Black Swan, Black Swans, Cachet, Chicago, Chicago Tribune, Euro, Floods, Futures And Options, Investment, Investment Bankers, Investment Strategy, Investment Wisdom, Lecturer, Likelihood, Miscellaneous, Nassim Taleb, Rollers, S Trading, Scenarios, Scorch, Seafarers, Shocks, Swans, Terrorist Attacks, Thinker, Trading, Unforeseen Events
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