Articles filed under 'Stocks'
China’s market is getting harder and harder to understand; if they are in a bubble and how long it will last, or if there will be a correction and when, is a major topic with the coming Olympics. So I thought I would move the topic to another area. While there have been huge amounts of FDI in Asian countries, especially China, most people have been overlooking Africa. Global FDI levels for 2006 put Africa at 2.7% with investments equaling $36 billion.
Africa is in its growing stage. Africa’s GDP is expected to grow by 6.2% in 2007 according to the IMF which means it would grow faster then the world economy. Ghana’s stock market was even the world’s third best performing market last year, and Egypt topped that list. Africa is so filled with investment opportunities with a growing infrastructure, many more businesses will be able to begin operating in Africa. This is without even mentioning the abundance of natural resources spread across Africa.
There are already some opportunities to invest in Africa right now through ETF’s such as EZA, and GAF. Both have been increasing over the past year. Do some research and this may seem like a good opportunity for you. This could be a good spot to hedge against the U.S. markets.
Thursday, Nov. 8, 2007
by Alex
This two-part series by Bryant Urstadt is some of the best investing writing I’ve ever read. Bryant gives a run down of exactly what-the-f happened this Summer 2007. After reading these two pieces, "it all makes sense, man".
Part 1: The Blow Up
Teaser:
On Wednesday, August 8, not long after the markets closed, 200 of the smartest people on Wall Street gathered in a conference room at Four World Financial Center, the 34-story headquarters of Merrill Lynch. August is usually a slow month, but the rows of chairs were full, and highly paid financial engineers were standing by the windows at the back, which looked out over black Town Cars below and the Hudson River beyond. They didn’t look like Masters of the Universe; they looked like members of a chess club. They were "quants," and they had a lot to talk about, for their work was at the heart of one of the most worrisome summer markets in decades.
Part 2: The Blow Up
If you’re prompted to subscribe, do it. It’s very quick, and I’ve gotten no spam from these guys.
(thanks, Ugly)
Monday, Nov. 5, 2007
by Jason
As we all saw on Wednesday, the Federal Reserve made equal 25 basis point cuts to the Federal Funds Rate and the Discount Rate. While we are happy that core inflation is not going to be a large problem with this rate cut, and that we are easing rates in a growing economy where we just saw the U.S. economy grow at an annualized growth rate of 3.9%, I believe that many other problems will arise.
While lowering rates will bring along a lower borrowing cost I do not think that our economy needs this. Doing this will only bring people to spend more money on things they do not need. As we saw already companies that sold necessities like The Procter & Gamble Company(NYSE:PG) and Johnson & Johnson(NYSE:JNJ) have both been doing well though the subprime market problems.
Lowering rates now will also…
With oil prices hitting $92 a barrel and could possibly go higher, corn and soy ethanol are sounding pretty cheap and are beginning to be a real alternative, not just something we talk about. E85 can even be found for under $2.00 a gallon in cities scattered across the United States, where gasoline sits almost a whole dollar higher.
Companies like Archer Daniels Midland Company (NYSE:ADM) and U.S. Global Investors Global RES (MUTF: PSPFX) are hitting highs on rising gasoline prices. While oil supplies are disappearing at a rapid pace, ethanol has finally become a cheap alternative to oil. Companies like Pacific Ethanol Inc. (NASDAQ:PEIX) and MGP Ingredients (NASDAQ:MGPI), which are trading at lows, could be staged for a comeback if oil prices continue to stay at highs.
It’s easy to forget about these renewable resources when oil comes back down, but remember renewable resources never go away. Prices can only get cheaper as interest grows and new technologies are invented to produce ethanol as well as other sources or energy cheaper.
Rising oil prices have also brought more attention to alternative energy such as solar power. Just recently HelioVolt raised $101 million for producing their flexible solar panels. SunPower Corp. (NASDAQ:SPWR) as well is making solar panels for homes and businesses that want to become more energy efficient. While in the past alternative energies have not been embraced, this could be the time to start noticing their benefits to society. Historically oil prices have increased during the winter seasons and that is what we are heading into.
Tuesday, Oct. 30, 2007
by Alex
Question: are we in a bull market or bear market? What if there was a third option? In Active Value Investing, Vitaliy Katsenelson makes a case that the current market is actual a "range-bound market" and then gives you the tools to take full advantage of the fact.
What is a Range Bound Market?
Range-bound markets are characterized by their roller-coaster-like volatility and the fact that despite this volatility, money invested in the beginning of the cycle will have close to 0% gains by the end of the cycle. In fact, range-bound markets are more common than bear markets. Katsenelson says:
"…if you look at the U.S. stock market during the entire twentieth century, most of the prolonged (greater than five years) markets were actually bull or range-bound markets. Prolonged bear (declining) markets happened in the past only when high market valuation was coupled with significant economic deterioration, similar to what was going on in Japan from the late 1980s through 2003 or so."
This chart from the book shows the past 107 years bull, bear, and range-bound markets as labeled by Kevin A. Turtle.
Lots of hub bub in the poker community about some apparent cheating that has been going on at AbsolutePoker.com. Bobby has a nice comic about the cheating at PlusEV.net, and probably the best place to get info and updates is Absolute Poker Cheats blog that was setup just for the occasion.
Traders will appreciate this chart showing how much of an outlier one suspected cheater is. That red dot in the upper right corner represents the win-rate of the suspected cheater. The trading analogy would be a trader who trades 90% of the stocks on the market and correctly predicts the stocks movement 90% of the time. With stats like these, you could make an insane amount of money. And that’s exactly what these guys have done, reportedly making hundreds of thousands of dollars in a short time.
from the Absolute Poker Cheats blog
For the poker illiterate, VPIP stands for “variably put money into pot”, which is a statistic that tracks what percentage of hands you play. Good players are in the 15-30% range. The cheaters are in the 70-90%.
BB/100 stands for “big blinds per 100 hands”, which measures how profitable you are. So if you were playing $100/$200 poker with a 1BB win-rate, you would win on average $200 every 100 hands. Winning players can make about 1-3BB/100 at the medium and high limits. In the short term (across a small number of hands), lucky players can make about 100BB/100 hands. The cheater graphed makes 500BB/100.
The graph is pretty damning, but probably most damning of all (at least to a poker player with a bit of knowledge) is to go over some of the actual hand histories that leaked for this player. You can read some play-by-play analysis with some guesses as to the cheaters thinking here or see a video replay of the hands here (requires a free registration). The short of it is that the villain is playing uncannily like he/she can see the other players cards.
Is there cheating like this going on in the stock market?
Obviously, Martha Stewart-style insider trading goes on, but what I’m thinking about here is the kinds of cheating available to unethical brokers. Unlike the online poker rooms, many of the big brokers have their own traders “playing” in the same market as their clients. This creates the same kind of conflicts-of-interest that the poker sites try to avoid.
While you wait for the rest of my Google analysis (it may be a while), you can read this article over at Forbes that closely matches my own thinking.
Google Still Cheap Atop Tech Heap by Georges Yared.
Peace out, Investor Geeks.
Tuesday, Oct. 2, 2007
by Jason
I shorted down a burning ring of fire
I went down down down
And the flames went higher
I’m in a funk. You ever get to that place where you want to reverse every one of your trade ideas? I’m there now.
I sell GRMN at $81 and it goes to $103. I buy BBBY for some reason at $36 and it goes low. Then I watch it bounce, set a stop loss that gets hit at $34.74, and watch it have a nice up day today. I sell EBAY in a whipsaw too, and now it’s jumping up like I thought it was going to two week ago.
I think the main mistake here is I’m being conservative, trying to avoid losses. GRMN looks like it’s dropping, sell… EBAY is dropping, sell. The other part of it is that I was nearly fully invested when the stocks started tumbling a couple weeks ago. So “reinforcing” my position was a trick out of my disposal. (That’s my own fault.) I aslo was pretty frustrated for getting in BBBY early and just wanted to get some distance from that trade.
So what do you guys do when you make big costly blunders like this?
So the other day, the big sell off started. And it’s arguable that it’s just beginning. Spurred on by Phil’s post, I considered selling out of everything.
It made sense: I thought everything was going down, so I should sell.
But it also didn’t make sense. One thing I’ve pointed out before is my struggles with trading/investing using so many different strategies. It’s easy to mix them up. That’s why when I make an entry, I need to know what my exit is… and stick to it.
The clearest no-no, which I avoided…
