Can't believe I haven't wrote anything for 3 years and came back to write something.... "Everyone should know how to invest" is still my belief though.
Ever heard of a logic game about "pirates distribute gem"? Five pirates would like to find a way to distribute 100 gems among them. Each pirate raises an idea about how to distribute in a randomly determined order. After one pirate raised his idea, the five of them can vote for or against the idea. This idea will only be accepted if the idea receives more vote for than against. If the idea is being rejected the pirate who suggests will be dumped to the sea for the sharks. The next pirate will suggests and they will go through the voting again, until a suggestion is accepted. Now, as the first pirate who is going to suggests, how would you suggest?
If you want to try to solve this yourself then sit back and enjoy the thinking before you read on. I'll try to go through the answer very quickly here. But my blog here is not about the answer, I will get to the point why I raise this topic later. Anyone who thinks they know the answer already can skip the answer part and read on.
Answer:
Think backward. Let's name the 5 pirates as A, B, C, D and E, with A as the first pirate to suggest, and E the last one in that alphabetical order. If you are D, you know regardless of how you suggest, you sure will get nothing because even a tie you lose, as E can always vote against you so you can never win. So if you are C, you know as long as you give D something he will vote for your suggestion. So C would suggest (99,1,0), or if D is scared E will vote against him and dump him into the sea, C can even suggest (100,0,0) and D will still vote for C's plan.
Let's assume the worst case for C so C will suggest (99,1,0). Now if you are B and you know if you got dumped into the sea, that will be what C is going to suggest, so E basically will get nothing and D at most will get 1. So if you are B you can simply suggest (97,0,2,1). So E will get 1, and D gets 1 more to 2, you should then have 3 votes to 1 and your plan will be accepted.
Finally if you are A, and you know if you got dumped into the sea, that will be what B is going to suggest. Now you know C will get nothing and as A you need only 3 votes. So A can suggest the following: (97,0,1,0,2)
so you can keep 97 gems. Not sure if this answer is very surprising to you.
Now you wonder why I tell this logic game in here, shouldn't this blog about investment?
Of course this is related to investment. Remember the financial tsunami? Financial institutions invested in too much highly-leveraged investment vehicles and when these vehicles defaulted, they got burned and the de-leveraging process brought the whole world's financial systems down with it. The US government, printed a lot of money by putting up tons of Treasury bonds as collateral with the Federal Reserve, tried to save the economy as many banks were simply insolvent.
What happened next was we saw many big investment banks (that still survived after the tsunami) paid historical high bonus to their employees as these banks made a lot of money by using the printed money from the government. These banks simply used the money the government printed to make those money. Can we say these people saved the financial system by using the government's money? Can we say these people made money by solving a problem that they created?
This made me thought of the logic game. These investment banks was the first pirate. They have the full control on how to distribute the gems, and they surely know very well how they should distribute. Since the government needed to inject the liquidity through these banks, these banks have the full control on how to distribute the money. And here you go, by going through similar logic, these banks for sure got the biggest chunk of the money and the people who could not have a say about how to distribute the money simply got almost nothing.
As you see, investment is not an easy game to play. As if you don't have a say about how to distribute the wealth, it's very difficult to play the game and earn a fortune.
Saturday, May 14, 2011
Sunday, April 27, 2008
the columnist who shorted BIDU again
Remember there is a columnist in a chinese newspaper in Toronto who (paper trade) and shorted Baidu at $180, held and saw BIDU hit $429, then only to cover the short at around $330? This same guy shorted BIDU again in his newspaper paper trading account at around $300 about 2 weeks ago, and now he covered at $360. He said there was an email kicked his ass by saying that he pretends he is a professional, but no real knowledge on investing/trading. He didn't post the whole email there, but he posted 2 other emails that paid high respect to his analysis.
I don't know how many emails this guy received, and it doesn't matter that the comments are good or bad. But it's funny that I found being a columnist is actually very easy. One of the email he posted said his analysis is good and meaningful, and losing money can happen to anyone anytime, so losing money is not an issue, who can say this columnist cannot make back all the money he lost in the future?
I assume this email is real, but sounds like it's somebody who take "money" as evil or garbage, so, it doesn't matter if we lose them. Yes, who cannot say he cannot make it back, but as well, who can guarantee he can definitely make it back??
He covered his position at $360, a loss of 20% in about 2 weeks. If you went back to the column when he said he will short BIDU at around $300, you'll see he didn't really give much strong reason or analysis to back his decision. He just said BIDU went up fiercely in 2 weeks from about $200 to $300, the sharp increase in a short time period can also serve as a reason to drop sharply very quickly. Well, what a reason. I totally don't know this can be consider as an "analysis".
This columnist from time to time will tell people that he already knew subprime could create a very big problem, however, didn't really see him do anything to take advantage of it. No wonder he can only write column in a newspaper but not a fund manager. This guy also will tease himself in the column, of course he is not really teasing himself, he just wants to separate himself from the general public to show that he is different than other people. This guy is too funny, not much more reliable than Jim Cramer.
I made mistake too. In the meantime I consider I didn't sell the SDD as a mistake. I should have sold it when it first rebounded or at least second rebound to $80. Now i'm sitting at about 13% loss, really need to think about what to do.
DGP as well, I should have sold like I talked about SDD above, then I should have limited my loss below 10%. Oil was going up so much so fast but gold was not moving and I should know that gold is relatively weak now.
So many bad news about oil, but I still think oil cannot just keep going up, it has to take a rest, and i think $120 is a good chance that it will retreat before it can go up further. But given my entry point of HOD.TO was not very good, probably I won't make much money on it.
Finally got some LOR, but since the market is still weak (stocks go up because bad news is not as bad as they originally thought, but not much good news), i better take a deeper look before i want to commit more money to ETFs like that.
I don't know how many emails this guy received, and it doesn't matter that the comments are good or bad. But it's funny that I found being a columnist is actually very easy. One of the email he posted said his analysis is good and meaningful, and losing money can happen to anyone anytime, so losing money is not an issue, who can say this columnist cannot make back all the money he lost in the future?
I assume this email is real, but sounds like it's somebody who take "money" as evil or garbage, so, it doesn't matter if we lose them. Yes, who cannot say he cannot make it back, but as well, who can guarantee he can definitely make it back??
He covered his position at $360, a loss of 20% in about 2 weeks. If you went back to the column when he said he will short BIDU at around $300, you'll see he didn't really give much strong reason or analysis to back his decision. He just said BIDU went up fiercely in 2 weeks from about $200 to $300, the sharp increase in a short time period can also serve as a reason to drop sharply very quickly. Well, what a reason. I totally don't know this can be consider as an "analysis".
This columnist from time to time will tell people that he already knew subprime could create a very big problem, however, didn't really see him do anything to take advantage of it. No wonder he can only write column in a newspaper but not a fund manager. This guy also will tease himself in the column, of course he is not really teasing himself, he just wants to separate himself from the general public to show that he is different than other people. This guy is too funny, not much more reliable than Jim Cramer.
I made mistake too. In the meantime I consider I didn't sell the SDD as a mistake. I should have sold it when it first rebounded or at least second rebound to $80. Now i'm sitting at about 13% loss, really need to think about what to do.
DGP as well, I should have sold like I talked about SDD above, then I should have limited my loss below 10%. Oil was going up so much so fast but gold was not moving and I should know that gold is relatively weak now.
So many bad news about oil, but I still think oil cannot just keep going up, it has to take a rest, and i think $120 is a good chance that it will retreat before it can go up further. But given my entry point of HOD.TO was not very good, probably I won't make much money on it.
Finally got some LOR, but since the market is still weak (stocks go up because bad news is not as bad as they originally thought, but not much good news), i better take a deeper look before i want to commit more money to ETFs like that.
Thursday, April 24, 2008
Sold Nintendo and SKF, bought ultra short oil
finally sold my NTDOY.PK at $70.95, i'm not sure i ever received any dividend, or will be receiving, at least i sold at a price that is closed to breakeven.
At the same time I sold SKF at $109.08, not the best price but very good still, as I made a 6% since I bought last Friday, can't complain.
On the other hand I think the oil went up too fast, I am expecting a short term pull back to close to $100 before it can go up again. But I think i didn't get into it at a good price at $10.99, now it's at $10.77 so i'm down by 2% in the blink of my eye..... I bought in at before 10:30am, somehow I think i should not buy from there. If i at least wait until 11am i definitely should get a better price.
earnings report period cannot serve as the main gauge of the direction of market because there could be too much noise. as i always say i want to see the follow through trend and volume, which should only happen after the earnings season. If there are no news and people still keep buying and price at least does not drop, there could be something. In the meantime let's watch and learn.
At the same time I sold SKF at $109.08, not the best price but very good still, as I made a 6% since I bought last Friday, can't complain.
On the other hand I think the oil went up too fast, I am expecting a short term pull back to close to $100 before it can go up again. But I think i didn't get into it at a good price at $10.99, now it's at $10.77 so i'm down by 2% in the blink of my eye..... I bought in at before 10:30am, somehow I think i should not buy from there. If i at least wait until 11am i definitely should get a better price.
earnings report period cannot serve as the main gauge of the direction of market because there could be too much noise. as i always say i want to see the follow through trend and volume, which should only happen after the earnings season. If there are no news and people still keep buying and price at least does not drop, there could be something. In the meantime let's watch and learn.
Friday, April 18, 2008
why did market go up?
i forgot to say i bought HFU.TO at $13.75 on Tuesday, probably i was too busy on other stuffs and too tired.....
on the other hand i sold HFU.TO at $15.04 and URE at $36.37 today. i missed the best chance to sell URE in the morning (because i was in stupid and boring meeting in office), then i was a bit hesitate in the afternoon while URE was still trading around $37.50. i should have known that after a very bullish week we should trim back position on such a Friday. Well you know more every time you make a decision, right or wrong. At least i'm glad that i still made money on it, though both positions were a bit shy of 10% (in less than a week).
I was quite disappointed about SDD and DGP though. I should have sold SDD earlier when it went back to a bit below $80. I should sold it like I sold SRS and SKF to cut my loss. You wonder how did i come up with the decision to cut those ultra short position? that's because i saw the 20-day EMA of these ETFs (or on the other hand the 20-day EMA of the ultra long ETFs) made a lower high (a higher low). As well, the 20-day EMA has been diverged from the 200-day EMA by quite a lot. As i said, even if things will go down in a longer term, nothing will just go down in a straight line, specially a ETF, not individual stock.
DGP is another disappointment due to 2 problems. The first one, oil is making new high but gold is not moving. Sooner or later after I trim this position i will go for oil for US dollar-play instead of gold. i will still go for gold by a bit but won't be large position. The second problem, I don't see if this ETF is paying me interest/dividends, i wonder if this is priced in the ETF price or what. anyway, can't figure that out.
people are wondering how come market is going up with such big write-offs from financials? i don't think i have a very clear reason, I just tried to react to what I saw, and so far other than UYG I handled that pretty okay. Sometimes you need to get what market gives you before you ask too many questions, otherwise you will miss the chance.
Now that by end of the day I got back into SKF at $102.64, a small position. After a very good week of rally I guess the market needs to relax a bit. Anyway I still have my UYG so I'm actually hedged at this point, but UYG is an ultra long that I can always hold longer if you believe market eventually will go back up.
on the other hand i sold HFU.TO at $15.04 and URE at $36.37 today. i missed the best chance to sell URE in the morning (because i was in stupid and boring meeting in office), then i was a bit hesitate in the afternoon while URE was still trading around $37.50. i should have known that after a very bullish week we should trim back position on such a Friday. Well you know more every time you make a decision, right or wrong. At least i'm glad that i still made money on it, though both positions were a bit shy of 10% (in less than a week).
I was quite disappointed about SDD and DGP though. I should have sold SDD earlier when it went back to a bit below $80. I should sold it like I sold SRS and SKF to cut my loss. You wonder how did i come up with the decision to cut those ultra short position? that's because i saw the 20-day EMA of these ETFs (or on the other hand the 20-day EMA of the ultra long ETFs) made a lower high (a higher low). As well, the 20-day EMA has been diverged from the 200-day EMA by quite a lot. As i said, even if things will go down in a longer term, nothing will just go down in a straight line, specially a ETF, not individual stock.
DGP is another disappointment due to 2 problems. The first one, oil is making new high but gold is not moving. Sooner or later after I trim this position i will go for oil for US dollar-play instead of gold. i will still go for gold by a bit but won't be large position. The second problem, I don't see if this ETF is paying me interest/dividends, i wonder if this is priced in the ETF price or what. anyway, can't figure that out.
people are wondering how come market is going up with such big write-offs from financials? i don't think i have a very clear reason, I just tried to react to what I saw, and so far other than UYG I handled that pretty okay. Sometimes you need to get what market gives you before you ask too many questions, otherwise you will miss the chance.
Now that by end of the day I got back into SKF at $102.64, a small position. After a very good week of rally I guess the market needs to relax a bit. Anyway I still have my UYG so I'm actually hedged at this point, but UYG is an ultra long that I can always hold longer if you believe market eventually will go back up.
Tuesday, April 15, 2008
URE
so busy at work that don't even have time to write anything, but gotta update the status.
I sold my SKF at $117.06, loss on commission after 3 weeks. as you see sometimes even if you are right in the direction but got in at the wrong time, you will see your profit sinks.
On the other hand I just buy into URE this afternoon at $32.89, and again thinking about increasing a bit position in UYG and maybe some other dividend paying ETFs. In the past I had LOR, which is a dividend paying ETFs, mainly high dividend paying firm and currencies. It is managed by Lazard in US, and so far I didn't see they cut their dividends, so my thought is maybe they can get through this bear market with limited chance of cutting their dividends at all. In the meantime they are paying 8.4% as dividend (that breaks into capital gains, interest and dividends), given that boarder stock markets may stabilize at the last lowest range 8.4% is a pretty good bet. I'll think about it.
Nintendo drops again, 4.6%, there is not much news i can find. This is the bad things about individual stocks. Sometimes you just cannot get enough news to do any meaningful analysis. I'm still looking for a close to break even price to cut this pos.
I sold my SKF at $117.06, loss on commission after 3 weeks. as you see sometimes even if you are right in the direction but got in at the wrong time, you will see your profit sinks.
On the other hand I just buy into URE this afternoon at $32.89, and again thinking about increasing a bit position in UYG and maybe some other dividend paying ETFs. In the past I had LOR, which is a dividend paying ETFs, mainly high dividend paying firm and currencies. It is managed by Lazard in US, and so far I didn't see they cut their dividends, so my thought is maybe they can get through this bear market with limited chance of cutting their dividends at all. In the meantime they are paying 8.4% as dividend (that breaks into capital gains, interest and dividends), given that boarder stock markets may stabilize at the last lowest range 8.4% is a pretty good bet. I'll think about it.
Nintendo drops again, 4.6%, there is not much news i can find. This is the bad things about individual stocks. Sometimes you just cannot get enough news to do any meaningful analysis. I'm still looking for a close to break even price to cut this pos.
Thursday, April 3, 2008
SRS
I was very tired and sleepy over these few days so I haven't updated in here that I sold my SRS on Monday at $99.24 already. It's a loss of about 6%. I did try to quickly revise to buy URE at $33.50, however I cancelled my order later on Monday, and now you know it's $37.39....., how unlucky.
While on today I initiated a small position on UYG at $34. And yes, I'm still keeping my SKF. That means I ultra long financials and at the same time ultra short financials.
I initiate ultra long position in financials (and almost in real estate) because I think in the short term, they are going up. I know in a longer run it may not be the case but I saw their 20-day EMA made a higher low recently. Even better for URE its 20-day EMA crossed over the 50-day EMA from below.
They were still all below their 200-day EMA. I don't believe the stocks can just blast through all moving averages and it's a bull market again. But I'm not surprised in the short term it's a little bull market.
I may try to find chance to sell my SKF first, but I still want to keep my SDD.
My Nintendo is coming back, so for now I'll keep it for a while as I expect it will see $70 or above in this quarter.
Finally DGP, gold and other commodities are facing pressure in the short term, but I still want to keep DGP for now, but not thinking to add to the position until I see a clear trend.
While on today I initiated a small position on UYG at $34. And yes, I'm still keeping my SKF. That means I ultra long financials and at the same time ultra short financials.
I initiate ultra long position in financials (and almost in real estate) because I think in the short term, they are going up. I know in a longer run it may not be the case but I saw their 20-day EMA made a higher low recently. Even better for URE its 20-day EMA crossed over the 50-day EMA from below.
They were still all below their 200-day EMA. I don't believe the stocks can just blast through all moving averages and it's a bull market again. But I'm not surprised in the short term it's a little bull market.
I may try to find chance to sell my SKF first, but I still want to keep my SDD.
My Nintendo is coming back, so for now I'll keep it for a while as I expect it will see $70 or above in this quarter.
Finally DGP, gold and other commodities are facing pressure in the short term, but I still want to keep DGP for now, but not thinking to add to the position until I see a clear trend.
Friday, March 28, 2008
Sold my HFU.TO at $14.39
I guess I was pretty lucky. I don't want to be a Jim Cramer type of stupid head, so I'll not just attribute all the gains to my skill. I couldn't believe I could get out at the daily high of HFU.TO. Anyway it's a gain of about 16% over 10 days, I'm pretty satisfied.
Also glad that my SKF is now at the money, just a bit disappointed that my SDD is still under the water. SRS I kind of know it's getting weak, guess I'll try to sell it next week in case market rallies back up.
Citigroup upgraded LEH, well I can't say they are wrong, but just that these days who will believe these analysts. Be careful because LEH and MER continued yesterday's downward move, specially MER had an accelerating volume with the downward price movement. I guess it's still too early to say US financials are bottomed.
Also glad that my SKF is now at the money, just a bit disappointed that my SDD is still under the water. SRS I kind of know it's getting weak, guess I'll try to sell it next week in case market rallies back up.
Citigroup upgraded LEH, well I can't say they are wrong, but just that these days who will believe these analysts. Be careful because LEH and MER continued yesterday's downward move, specially MER had an accelerating volume with the downward price movement. I guess it's still too early to say US financials are bottomed.
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