June 18th 2009

There is a Chinese proverb that says "The palest ink is better than the best memory". It is for moments like this where I believe this blog will be extremely useful in the future. Right now I feel like Pearl in Andrew Lloyd Webber's musical Starlight express. The song "Make up my mind, make up my heart" is how I feel right now. I am convinced that Distressed is the place to be. But which investment is the right one? Finally I guess the decision will boil down to which fund provides the best accessibility to the managers and how easy will it be to get out of the investment if things take a turn for the worst. Even with that criterion there is no clear cut winner. There is always the option to get into more than one to hedge the bets. I can't help but notice that my philosophy and approach is effecting my personal life. Hedging things in my life, measuring the risk reward, wondering whether I should consider the overall volatility when making a decision or consider only the downside potential. Sometimes things are becoming so bad that I apply the same principles to make money in World of Warcraft. I am supposed to be using that to relax from work not be reminded of it. Switching off is extremely important for me. I hope I can continue to do that successfully.

I have been receiving so many distressed funds that it almost depresses me. Is the market in a worse situation than I think it is? Am I missing out on some information that others can see? Sometimes emotions and staunch belief's can cloud judgement. I hope I am not falling into that spiral. Does one choose an investment that is highly volatile, with an uncertain future but a potentially high exciting return and an even higher volatility or during these times it is better to play safe and go for something that is tried and tested but is liked to be very stable? I have just returned from a meeting where John Paulson presented his funds. I am looking forward to listening to him tomorrow too at a different seminar. One of Europe's biggest entrepreneurs. Very unassuming and if one had not seen his picture on the news or in the papers then you would not have been able to guess who he was. I don't know whether he is an investor or a potential investor but it only goes further to prove the strength of the Paulson funds.

June 15th 2009

Maybe my theory about the relationship between sports and financial markets is wrong. If this theory was true then the English markets should have opened higher when compared to the Australian and Indian markets considering that England beat the Indian team and Andy Murray won Queens. I probably am wrong about the degree of influence of sport on the financial markets. If I am wrong then I have no qualms about admitting it.

June 12th 2009

A pretty boring day at the markets. However once in a while boring is good for it helps us recognize excitement. A low volatility is bad for the market. Bring on the roller coasters. Money can be made when there is opportunity for arbitrage. And arbitrage is effective only when there are huge displacements.

June 11th 2009

1 hour and 11 minutes till the tube strike ends. Do I wait for the tube strike to end or start my journey now? My purpose and destination will not change. I probably will leave now. At the end of the day I doubt whether it will take me more than 2 hours if I leave now. 2 hours will be what my journey time will be if I include the waiting period. This brings up the interesting issue of market timing. Can one actually time the market? Is it possible to know when the markets will hit the acme and nadir of the cycle? I don't believe it is possible to call the markets. There is no use in wondering whether it will fall or rise. If you like an idea or investment then get into it now. If you are dealing with a bigger amount then invest a little on a weekly basis so that the cost averages out. Yes there is the possibility that a lower point may be reached but why should fear of a possible loss prevent you from taking action?

June 10th 2009

The tube strike is on. Waiting for transportation is crazy. I guess the strike is partially justified. Demanding that the employees that made mistakes be given their jobs back does not make sense. Asking for a rise in pay is acceptable. They are doing a much better job than the bankers. If they can get bonuses then why can't the tube employees? Besides in my opinion the tube workers provide a more essential service. I should make it clear that I support giving of bonuses to people who perform well in the financial sector. However I think it should be based on a risk reward basis. Possibly more related to the Sortino ratio than Sharpe. The sledging of the Ashes has gone political. Gordon Ramsay called a leading Australian TV presenter a lesbian and "pig woman". He also recommended that she use Simon Cowell's Botox doctor. The Australian PM said "I think I can describe his remarks as reflecting a new form of low life. Good on Tracy Grimshaw for coming out and giving him a left uppercut." Politicians should do what they do best. Let them continue making empty electoral promises and fleecing the tax payers money. I am not only referring to what has been happening in the UK. The rule in politics, finance and life in general is "Do what you want to as long as you don't get caught." If you do get caught then you have to be ready to face the repercussions. These don't only hurt the person who caused the mistake and cheated but also other people around. This should be a lesson that we have to learn from the financial crisis and the current political situation in the United Kingdom. I do not know whether the head of Gordon Brown will role. However I am sure that the public has lost faith in the political leaders.

-- Sent from my mobile device

June 9th 2009

There seems to be an overdose of cricket in my blogs but I cannot help that. All the strong favorites are no more bankable. Australia have crashed out. England lost a match to Netherlands who is "just" an associate member. Once Ireland beat Bangladesh who is a full member of the International Cricket Council. New Zealand barely escaped losing to Scotland. Currently Pakistan are fighting for their lives against the Dutch. My point over here is that the big bankable strategies may no longer hold good. There should be no room for fear. Just go on the field and believe in what you are doing. Further the developed markets or cash may no longer be the best bet. Investing in India rather than the US would have given you an additional 51%. The question is are you willing to take that risk. Sometimes you know something will not work but you can get too emotionally involved to let go. It is prudent to hedge your bets initially. Hopefully at least one of your investments will be a success and will make up for the losses of the other. Never ever hold on to something that you hope to do well in the future. You will be terribly disappointed. These times are interesting. Test the investments. Go with the one that you think will give you the best return. Is going with a steady past track record with an uncertain future better than going in with a start up investment that has the potential to produce the returns that you are looking for? I do not know right now but may find out sooner than what I expect. Everything can go wrong. There is the possibility of losing everything. Add that to the time you spent researching and doing the due diligence then your losses mount. However there is no return without risk and money cannot be made without having money in the first place.

June 8th 2009

England had a successful weekend of sports. However the markets fell and by a bigger margin that Australia. Does this mean my theory about the relationship between sport and the markets is wrong? I still stand by my theory. Twenty20 can go in any direction and it is hard to predict a result. It just does not make sense that Netherlands was able to beat England but England thrashed Pakistan who has the best T20 record. Now Test cricket is the real thing. People may think it is boring but you need a lot of talent to succeed in it. I do not know why people complain about cricket. A NFL game is made up of four quarters of 15 minutes. This one hour of actual play time takes about four hours to play. No wonder they have sexy cheerleaders. Now equate that to a test match and it will take about 20 days to finish one game.

June 6th 2009

I hate discussing finance over the weekend. However I am still reeling under the shock that Netherlands beat the English cricket team. The minnows have beaten one of the giants. West Indies are currently over powering Australia. If my theory about the relationship between sport and financial markets are true then the emerging markets should do better than the developed markets on Monday. The Euronext may do better than the FTSE. It will be a close call between the FTSE and the ASX. The advantage that the FTSE has is that it has the the England and Kazakhstan match to redeem itself,the F1 in Turkey and the England vs. Pakistan match tomorrow. If Williams, McLaren and Brawn do well tomorrow then the FTSE may redeem itself. If Renault, BMW or Ferrari does well then I would be reasonably confident that the Euronext would do well. Will my theory be proved right? I cannot wait to see.

Sent from my BlackBerry® wireless device

June 5th 2009

I am at the world polo event and was invited by one of the hedge funds that I know. Like others in the industry they were adversely affected.However this is not because they did a bad job. They were victims of their own success. They did exceptionally well. Their redemption terms were very good. Investors decided to pull out their money to compensate for the losses they suffered with their other investments. One of our relationship managers mentioned that she had heard that they may be in trouble. In hindsight I should have listened to her. I did my due dilligence and found nothing wrong. I did not account for investor sentiment though. I continue to believe in the potential of this asset management company. I have also started to value the opinion of that relationship manager more.
The weekend is here and as a policy I do not watch or read any news. It is something I have had to implement after my health got affected during the financial crisis. From mid September to mid December I used to sleep on average about 3 hours during weekdays and on the weekends about 15 hours. Have a nice weekend and now we will have to see if Gordon Brown continues to be the Prime Minister.

Sent from my BlackBerry® wireless device

June 4th 2009

The chances of the Australian cricket team doing well in the T20 have taken a big beating by the disciplinary actions enforced on Andrew Symonds because he had a bit too much to drink. It really does not matter that he was not included in the squad for the Ashes. Now Australia will be on the back foot. Maybe it is time to short the ASX and go long the FTSE. Going long the Sensex will not be a bad idea either. The election result in India has been a big boost for the country. The Indian government has been held to ransom by smaller regional parties for too long. 1991-1996 and 1999-2004 were strong periods of economic growth in India. The ruling party in both these elections had a strong majority in the parliament. The next five years should be extremely interesting.

June 3rd 2009.

Last evening to this morning has been busy with meetings. I have been in meetings, conferences and seminars before where it mostly was useless and a waste of time. To quote a song by Brad Paisley; it was "Like a long sermon on a pretty Sunday." Starting the day with Janwillem Acket the Chief Economist at Julius Baer was nice. He always has interesting and solid comments. Look Attending a meeting where Marc Rowan from Apollo Management was the main speaker was insightful. This was later followed by another event where James Caan of Dragons Den fame. Both of them were at opposite ends of a scale. Marc Rowan is someone who keeps away from the limelight,down to earth,approachable and warm. James Caan on the other hand is in the spot light, distant and slightly pompous. What he had to say about the markets made a lot of sense and his approach to investing is sound. You can read his interviews on the Bloomberg website. The most charismatic person I have heard speak was Colin Powell. He has a powerful aura about him. The most chilled person was Sir Richard Branson. He spoke via a teleconference from Necker island in the Carribean which is part of the Virgin Group. How cool is that? The most passionate person I have heard is Sir Bob Geldof. In the finance world in addition to Janwillem Acket; David Darst, John Paulson and Ken Griffin are absolutely brilliant. Warren Buffett is another person whose interview I love to watch. However unlike James Caan I cannot make a claim of sitting next to and having a chat with him. The thing that impressed me about them is their humility. Everyone knows how good they are. They know how good they are. However they do not parade themselves and blow their own trumpets.

June 2nd 2009

Emotions play an important role in the world of finance. Clinical data rose 7.1% because their flagship antidepressant will not reduce a person's sex drive. You know something is wrong with the markets when there is a drop in the sale of condoms but an increase in the consumption of chocolate. Investments are similar to relationships. You have those that want to make a quick buck. They are the "Wham Bam, thank you Ma'am" kind. You have those people who want to test and try the waters before making a commitment. You have the people that bereft of reason or logic bail out at the first sign of trouble. You have the people that are willing to be patient and wait. I believe that the last has the best long term return. However the risk is that you may end up waiting for too long and lose everything. At some point an assessment should be made whether a relationship or an investment is going in the direction you want it to grow. If it is not then it will be best to let go and take whatever losses/gains you have recieved. The ideal scenario though is to be patient, get into the right investment that not only provides short term dividend gains but also long term capital growth. This sadly is not as easy to achieve or find in investments or relationships.

June 1st 2009

A new month and the sun is shining brightly. The markets have been boosted by the news that the Chinese manufacturing markets have grown. However I am extremely skeptical when the markets increase or decrease on news of the mining, financial and Chinese sectors. This has also boosted the commodity prices which is of no surprise. Tomorrow will tell whether the news is actually positive or not. GM is to file for bankruptcy today and is expected to emerge from it in 60-90 days. Will it rise like the mythical Phoenix from the ashes? The countdown to the Ashes has begun. Historically the country that is expected to win the Ashes and wins the Ashes will increase. October 2008 is a good date to start as Australia played India in India and that was followed by England playing India in India. The FTSE futures are lagging the ASK by 1.73%. However the FTSE has increased at a faster rate than the ASX since England comprehentively beat West Indies in the Wisden Trophy. The performance of the two countries in the upcoming T20 cricket world cup will start to determine whether England or Australia will win the Ashes and consequently which market will do well. The person who will make a difference in the recovery of the UK market could be Andrew Flintoff. My eyes will be on Sophia Gardens in Cardiff on July the 8th where History will be made as it will become the 100th ground to host a test match since Cricket began.