Monday, October 6 2008
By JF on Monday, October 6 2008, 00:25 - General
Very busy week end for me and I ended up reading only the Financial Times. Four articles were particularly noteworthy:
- The Bear: Merryn Somerset Webb thinks that the market are still overpricing. Doom and Gloom are on the menu
- The Bull: Fidelity's Anthony Bolton is putting his own money on the market. Good sign?
- Fat tails and counterparty risks: explanations on usually underestimated risks. A must read for ETF and structured products investors
- Mortgage Fraud: Some details on the last few years miraculous growth. Wall Street and the CIty are obviously responsible for the collapse but the previous unprecedented growth period (could also be qualified generalized insane period) was a courtesy of our respective government supervision.
Wednesday, October 1 2008
By JF on Wednesday, October 1 2008, 23:47 - General
... and Chuck Norris has not fixed the credit crisis yet
Anyway that is still funny
Tuesday, September 30 2008
By JF on Tuesday, September 30 2008, 23:51 - Investments
I opened a spread betting account tonight.
For those who don't know spread betting is a very popular way to trade in the UK. This popularity is explained by several reasons:
- It is tax free. You are actually not buying or selling financial instruments. You are just betting that their price is going to go up or down.
- It is highly levered. You can bet £10 for every £1 change on the price.
- You can lever the leverage Why not spread betting on the price of options?
I haven't funded yet. A few remarks though:
- Give me access to real time pricing
- I am very looking forward to receiving the training materials they provide you with. Two of the biggest providers here in the UK are providing their new customers with binders and special trading conditions for the first few weeks after subscribing.
- Their is a lot of warning and they are providing you with options to limit your losses but two clicks and it is actually done: you can have opened a positions. If you passed the company's credit check you don't even have to have the money on your account. One loss? I'll do better on the next one. It is really crazy and losing a lot may actually be stupidly easy.
- Even if the spreads are tight, lots of fees around. Leverage has a cost.
Will keep readers posted on the experimentation.
Tuesday, September 23 2008
By JF on Tuesday, September 23 2008, 07:23 - General
The SEC has just added GLG partners, a listed hedge fund manager, to the list of the securities that cannot be shorted ....
GLG lost its star manager at the beginning of the year and markets have been wondering since whether the hedge fund is going to suffer net outflows the manager set up his new competing fund.
That all. Will come back on this later but right now I am a bit short ... on time
Tuesday, September 9 2008
By JF on Tuesday, September 9 2008, 07:56 - Investments
Lyxor (Soc Gen) and db-x (Deutsche Bank) are distributing money market ETFs that can be used to invest in EUR, GBP and USD money markets.
This funds are replicating and compounding everyday the performance of overnight cash investments, namely:
- EONIA (Euro OverNight Index Average) for the Lyxor ETF EURO CASH (CSH.P). EONIA represents the weighted average all the unsecured overnight € denominated borrowings
- SONIA (Sterling OverNight Index Average) for the db-x-tracker GB £ MONEY MARKET ETF (XGBP.L). SONIA represents the weighted average all the unsecured overnight £ denominated borrowings
- FED FUNDS EFFECTIVE RATE TOTAL RETURN INDEX for the db-x-tracker US $ MONEY MARKET ETF (XUSD.L). It will stick to the performance of the FOMC stated retaes.
The good
- Very tight bid-ask spreads and relatively low management costs
- Access to the money market.
- Even though these rates are for unsecured borrowing, Lyxor and DB seems to be holding collateral and entering into swaps to replicate these indexes, providing you with a slightly more secured products and enabling them to replicate more closely the performance of the indexes.
The bad
- Beware of the cost. Even though the bid-ask spreads are very tight you still have to pay your brokers.
Sunday, September 7 2008
By JF on Sunday, September 7 2008, 21:33 - General
- Saving from the ground up: The Sunday Times finance makeover column is giving some advise to a couple in their late twenties that does not have any saving. A good example if you don't know where to start.
- Use momentum to cross choppy waters: David Stevenson, the Financial Times' adventurous investor, investigates some of the no-hassle investment vehicle if you want to try momentum investing, an investment strategy that buy the stars (the stocks whose price is rising most) and sells the dogs (the stocks whose price is falling most) and rebalancing regularly). I personally share David's view that an ETF replicating the returns of SocGen's index would definitely a potential buy for me.
Good readings
