There is a big difference between betting and investing. Investing in inverse ETF’s equates to betting. This article talks about the demise of XIV. People investing in products such as XIV should be given a lobotomy sponsored by the NHS. This is starting to bring back memories of 2008. The culprit was Hedge Funds then. Today it is ETF’s. That time one person I spoke to that worked for a bank that was heavily marketing Hedge Funds admitted that they did not read the fine print and did not know about gating. Another person told me that he was told hedge funds would never lose money. I wonder what that person’s view would be on ETF’s today. I am not a betting man but if I was then I would say that he would cease investing in ETF’s for the next one year. I would be telling him to keep his wallet out.
The active versus passive debate has been skinned so many times that there is nothing left to skin. The answer is that there is a place for both. However, in neither should there be a place for inverse ETF’s. There is nothing wrong with shorting stocks or ETF’s. You cannot crucify the undertaker for making money when people die. Investing in inverse ETF’s is like injecting yourself with a lethal substance hoping that you will make money off the insurance. The reality though is that action of your will probably leave your health beyond repair and cause heartbreak to the ones closest to you.
Except for two people; everyone else I know who passed through the gates of Credit Suisse has been glorified cold calling salespeople. Their structured products are so beautifully created that the client will not even realise that the only people making money are the banks themselves. Of those two people, one died and the other is a gem of a person who is thankfully working for another institution. I have told him that leaving Credit Suisse was the best thing that he did. It has been some time since I spoke to him. Maybe I should now.
Filed under Banking, Blog, Business, Compliance, ETF, Family Office, hedge funds, Indices, Investments, Market Outlook, Market Timing, Private Banking
Filed under Blog, Business, Compliance, ETF, Indices, Investments, Market Outlook, Market Timing, Private Banking, Regulations, Tax Avoidance, Vanguard
I came across this article. It proved to be an inspiration. When I look back at life I do wonder what would have happened if I had to get into humanities rather than finance. Writing is something that has always attracted me. I love the way that random words can be put together to create an immortal thing of beauty. Don’t get me wrong. I love finance. I love the way the markets dance like lovers under a starry sky. Sometimes they tread on each other’s toes and sometimes they seem to glide like shimmering silk. Getting into finance is like being bitten by a vampire. It changes your life forever. The thrill of seeing the decisions you make paying off. The disappointment of looking at lost opportunities. The new things you learn every day.
Writing is like watching life being born as soon as your fingers come off the keypad or the ink from your fountain pen starts to dry. The happiness I get from writing a story or a blog is completely different. You leave yourself exposed on a pedestal. You start to instantaneously wonder whether anyone cares about what you write because you have not got any views or likes.
I have always been a macro person. I do not want to concentrate only on one topic. I am a complex person with interests in diverse topics. Why should I shackle myself to just one topic? Yes, it is easier to get followers like that just as it is easier to get a job when you concentrate on one particular sector in the equity market. However, there is no fun in that. I want the world to read what I have to say about everything I want to write about. I want to do that without having to become a leader of a country who has a twiddly finger and a twitter account. I think I have just set myself a lofty ambition. Let me see where it gets me.
I love alternate indices. RAFI which can be invested through PowerShares is probably my favourite investable index. The other index I really like is the Christmas Price Index. I had written a post on the following topics
- Religion-based Indices
- Condoms and Chocolates
- Analysis Test Series England vs. South Africa
I am still in the process of tweaking my cricket index. The common assumption in all this is my strong belief that the methodology used to measure certain indices is not completely accurate and some like the ICC cricket ranking is completely wrong. One decision I really liked was a recommendation to buy the shares of Apple when the news that Steve Jobs had cancer broke out. Yes, I did feel sad that Steve Jobs had cancer but I absolutely was furious at the people who thought that Apple would collapse because Steve Jobs would no longer be involved and would die. Today I feel the same way about the negative ratings given by analysts about Apple. The good thing though is that the fall in the share price of Apple is a good opportunity to buy it. Apple is an innovative company and will continue to do so. Everyone initially predicted that the cost of the iPhone X would under perform the iPhone 8 and would eat into the profits of Apple. Analysts more often than not get their calls wrong. Does it really matter if a company distributes less dividend than analysts expected? The important thing is that Apple is a good company. I read an interesting astrological article on the numerology analysis of certain tech companies. I am not a great believer in astrology or horoscopes. I do consider that there is a certain amount of science in numbers. It does not matter whether it appears as numerology or the significance of numbers in various religious texts. This post on the thirteen tribes of Israel is extremely good. There is a logic in Shmita. Apple will always be an attractive company to buy into. Buying it when the share price is down is a bigger bonus.
Filed under Apple, Business, Christianity, Cricket, ETF, Healthcare, Indices, Investments, Islam, Leaders, Market Outlook, Market Timing, religion, Test matches
(Originally posted on 27th April 2010)
I wonder if it is a coincidence that I am writing another post related to religion. Any cataclysmic event will have an effect on a person’s psyche. On the surface, I do not think I have become more religious. However, there may have been a subconscious change.
My fascination with indices and especially those that have an alternate view should be apparent by now. So the launch of Europe’s first Christian Equity Index has caught my eye.
First, there must be a legitimate reason for launching an index. The reason for this is that there is an apparent demand by investors for so-called ethical stocks. First, the companies are drawn from the Stoxx Europe 600 Index. Second, they should derive their revenues from sources that are not against the values of Christianity as defined by a committee are only included.
Therein lies the first problem. The companies will be based on the interpretation of Christianity as set by people. Companies that have birth control are not included. This is an obvious reflection of the fact that members of the Vatican are present in the committee. Secondly, I refuse to believe that each and every company that will be listed there has not made any profit from non-Christian principled companies.
Thirdly is there a need for such an index? Shariah indices, for the most part, should act similar and contain the same underlying as a Christian index. Off the top of my head, I would say alcohol companies and the way interest is treated would differ.
I have stated earlier that the futures or stock market can reflect how well the country may perform in sports. Going by this philosophy then if this Christian index outperforms the European index and a shariah index then does that mean that Christian values are better than those of a secular world or Islam?
According to me, actions do not mean anything. What matters are your beliefs? In my mind, a Christian company is one that is led by people who have accepted Christ as their personal Saviour. If Christians are looking to invest in ethical companies then this should be the starting point. Everything else will flow.
(Originally posted on March 8th, 2010)
Durex in one of their studies just after the financial crisis reported that their sales had gone done and the average number of times people had sex reduced significantly. Around the same time, there was a report stating that the sales of chocolates had gone up. I told my friend then that a good sign that the world was in recession was when the sales of condoms decrease and that of chocolates go up. I view this as a sign of nervousness. The next step would be that the sales of condoms increases while the sale of chocolates begins to stabilise (rather than stagnate) This is a sign that the economy is improving. Then the final stage is when the sales of condoms increase at a significantly higher rate than that of chocolates. The sale of chocolates may actually decrease during this period. This I would equate with the economy being really good. People feel good about themselves. They feel happier. They go out more. Chocolate sales decrease because people no longer depend on it as a cure for depression. They avoid it so that they can get fit and look sexy again. I do not have any research yet to back my theory but I may be able to do it if I spend a few hours on Bloomberg.
If I can empirically prove my theory then I think this will be a better index than the Big Mac or iPhone because the number of people having sex and thereby using condoms is higher than people consuming either the Big Mac or the iPhone. The same with chocolates. The alternatives to both of these are limited. It is possible to make this index more accurate by calling it ” The Contraceptives and Confectionary Index (CONCON)” However that sounds too boring and not as exciting and naughty as “The Chocolate and Condom Index (CHOCO). Give me naughty and nice any day over formal and boring.
I have always been opposed to investing directly in Marks & Spencer. My view was simple. M&S sat in no man’s land. You had John Lewis that provided high-end goods. On the other end, there was Primark. If M&S made a few wrong calls on fashion then they would have a major slump. This did happen quite a few times. Yesterday’s news that M&S is to close down more stores came as no surprise. I strongly believe that M&S food is the ventilator that has kept the company alive. It will continue to do so. As always all you have to do is have a walk through the stores of M&S. In general, M&S Food will have the largest percentage of people. This trend will change unless M&S can appeal to the people who are inclined towards healthy but quick food but their older base that would like their traditional British meals. Will M&S be able to balance their traditional Cottage Pie with their Thai green curry? In light of Brexit, I hope they do as they are one of the iconic British brands. If one has to gain exposure to the UK today then possibly the best way to do it is through VGK. The Vanguard European Fund has about a 29% exposure to the UK. The exposure to the European markets would act as a hedge. I believe we are going through an extremely interesting time right now. I do not like making predictions but there will be a winner and a loser in the whole Brexit process. Either way, the financial markets will get affected. Overall the European markets will go up.
Disclaimer: I do not hold any shares of Marks & Spencer or VGK right now.
Filed under Brexit, England, Europe, Food, FTSE, Indices, Investments, Market Outlook, Market Timing, United Kingdom, Vanguard
It is with deep regret that I have decided to halt my progress in NaNoWriMo. Sadly reality is significantly stronger than fantasy. Life and death gets in the way. When my world and characters take over my mind and thoughts than the people who matter then there is a problem. I have enjoyed this process and NaNoWriMo gave me the impetus that I needed. One of my characters now has turned from a figment of my imagination to someone who breathes. Other characters came into his life who I never thought of. I have dealt with and killed a few demons that haunted me. I should admit that I found it satisfying although I wish that I made them suffer more before killing them. I have created a world.Religions and customs have started to form. I came across a quote which said that everyone has one good book in them but that’s where it should stay. I hope that I will have more than one book in me and the time will come when I can set it free. I like the process of writing and would love to be called an author. There is truth to writing even if it is fantasy. I would dare say that fantasy is more honest. Characters hate people. They love others. You will know if people like your book or hate it. Some of my favourite books are by Raymond Feist. One of the worst series and books is also by him. In the world of investments you never know who your friends are and who are your well wishers. You maintain relationships because you never know when you will need to wipe the dust off that business card to get some information that will make a big difference. You never know what people think of your ideas.
Ithaca by Constantine Cavafy is one of my favourite poems. I know my destination. NaNoWriMo was the wind that caused my ship to anchor off. I do not know how I will get there or when nor who I will meet on the way. I will finish my novel which has a working title of “The priests of Konkor.” At the risk of sounding too cliche; “Watch this space.”
I am looking forward to this test series. West Indies wants to rebrand themselves and be known as Windies now. That rebranding did not help them as Pakistan beat Windies convincingly in the West Indies. Except for the test that Windies won; the Pakistan bowlers decimated the Windies. However it is a different story in their tour matches. Their batsman have done extremely well against the English bowlers. The exception was against Kent.
England have gone in with a different team than the one that played against South Africa. Jennings and Dawson have been dropped. They have been directly replaced by Mark Stoneman and Mason Crane. Michael Woods is still injured and has been replaced by Chris Woakes. The team that I would have liked to see
1) Alastair Cook
2) Mark Stoneman
3) Joe Root
4) Dawid Malan
5) Ben Stokes
6) Jim Baristow
7) Moeen Ali
8) Toby Roland Jones
9) Chris Woakes
10) Stuart Broad
11) Jimmy Anderson
Seven players automatically get selected. So the question is the choice of Mark Stoneman, Dawid Malan, Tom Westley, Toby Roland-Jones,Chris Woakes and Mason Crane. The team chosen to play are
1) Alastair Cook
2) Mark Stoneman
3) Tom Westley
4) Joe Root
5) Dawid Malan
6) Ben Stokes
7) Jim Baristow
8) Moeen Ali
9) Toby Roland Jones
10) Stuart Broad
11) Jimmy Anderson
The team that they have chosen is a good game and cannot be faulted. They have not chosen Woakes because they want to make sure he his fit especially keeping Australia in mind where Chris Woakes may be needed. I have not followed Stoneman and this is the first time I have heard about him. However England need to find a stable opening partner. So far Alastair Cook has had 11 partners so far. An opening partner must be found by the time the Ashes come up. I don’t think that The Ashes is a place to test new players. You have had greats like like Don Bradman and Graham Gooch fail on debut even though they were playing in their home country. I hope Stoneman, Westley and Malan succeed. The top order needs to get sorted. Generally your best batsman should be at number three. Trevor Bayliss wants Joe Root to bat at three but Root feels comfortable batting at four. In the top order Cook and Root are the most important players. Cook opens the batting so it is only fair that Root bats in the slot where he feels most comfortable. It is better for Root to score more runs with either Cook, Stokes, Baristow or Moeen supporting him.
This will be England’s first Day and Night test match. The first in England and the 5th overall. This will also be the first match where the Dukes pink ball will be used. England is one of those few places in the world where Test cricket is still healthy. Having a day and night match will probably be better for the game.
Detailed Analysis to follow.
I have been working on my cricket index for sometime now. I have finally decided to use it to analyse test matches using it. There were four possible starting dates. The first is in January where we have the start of the winter season for India. The second would be in May which is the start of the English season. The third would be in November which would be the start of the start of the cricket season in the Southern Hemisphere . The fourth would be December 26th because I believe that the Boxing Day test match is iconic. I finally decided to start my year with the English season. All teams will be starting with zero points. The whole idea behind this is to treat the performance of the team as an investment portfolio. If a player is left out from a match then his points are replaced by the new player. If a player does not have any points then he starts on zero. The total worth of your portfolio is the value of the current holdings. Similarly the total score of a team is the value of each players points. The scoring system I have used is loosely based on a fantasy league system where points are given based on the performance of their batting, bowling and fielding.
Under my system for the first test match the performance of England was 32.2% better. England outperformed South Africa in every area of the game. That being said England were only marginally better than South Africa in their bowling. The points scored by Joe Root and Moeen Ali are quite close with Root just edging out Moeen. Joe Root has got all his points from only batting. Everyone else has got points from at least one another criteria. Moeen Ali scored points from batting, bowling and fielding. The numbers indicate that the first innings runs scored by Joe Root made the difference between England winning the match and getting a different result. However it is understandable that the Man of the Match went to Moeen Ali because of his all round contribution. Will this be a trend in the matches to come where matches are won by an all round performance than single contributions.
We know that Rabada will not be playing in the next test match. Francois du Plesis will be fit to lead the team. This means that South Africa will start significantly lower than what they ended the first test with. Going by history it is unlikely that England will change their team for the next test match irrespective of the condition of the pitch. Sri Lanka and Zimbabwe play one test on July 14th which is when the next test match between England and South Africa also starts. By the end of that those test matches we will have two more teams and by the end of the month India will also be in the points. On further consideration I have decided to include the test series between West Indies and Pakistan which was won by Pakistan.