Monthly Archives: October 2013

Insight from interviews

So I had a couple of interviews today with the investment division of a large financial services firm. The interviews could have gone better, but I was able to pick the brains of some very experienced investment management folk on their investment philosophies. In particular, I asked one of my interviewers what he thought of the markets, seeing as they are in a flipped relationship with economic activity. That is, weak jobs reports cause the market to rise, strong jobs reports cause the market to fall, for fear of the dreaded tapering.

His response was very interesting. He basically said that markets don’t matter, what you should focus your attention on is the business and how well its run. I can see where he is coming from. I may have been focusing too much on market movements when determining whether to invest or not, and which stock to choose.

So this is something to keep in mind for next time, although I still feel that market movements are important and should be factored into any investment analysis.

As Keynes said “The markets can stay irrational longer than you can stay solvent”.

Overall, it was an interesting day today and I learnt quite a bit from some very experienced investors.

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Good reads from around the Web

Economics

  • This is a break-down of some of the key stats from the recently released Global Wealth Report. It goes to highlight the staggering levels of wealth inequality in the US compared to the other top countries in the list, arranged by median wealth per-capita. In the US, the mean wealth is 6.7 times the media wealth whereas in Australia, this ratio is only 1.5. More juicy stats to be found at the source.
  • Business Insider does one of these posts every now and then. This one is very audaciously titled ‘The Most Important Charts In The World’ in all caps, so it demands at least a quick look-through. There are a few charts in there which I found insightful. One was the chart (charts #7,#15, #91) showing the effects of shale gas on US petroleum imports (here is an interesting article on it). Decreasing reliance on Middle-Eastern oil has very big geopolitical ramifications.  Other interesting charts were #41, #45, #54, #56, #60, #69, #74, #77, #82, #83, #87, #89, #101.
  • This article lists the flows out of money-market funds and a flight-of-safety into equities. A flight-of-safety into equities, you say? In this market? What has the world come to?
  • This is BIG news. A trade deal giving Canada preferential trade access to the EU, increasing bilateral trade by 20% to $35 Billion, add an estimated $12 Billion extra to the Canadian economy and create 80,000 jobs. Sounds so rosy. These two articles (CBC and Reuters) provide more details. Canada is now the only country with preferential trade access to both the US and the EU, a good position to be in.
  • Ahh Scott Sumner talking about NGDP targeting again. He makes some very good arguments, if you go through his previous posts, but he hasn’t manged to convince the right central-bankers and policy-makers yet.

Commodities

  • What has gold been up to these days? It’s been trading in the $1,300s for the last quarter, going up to low $1,400s for a bit in August and intermittently dropping down to the upper $1,200s. At the Commodities Week conference in London last week, head of  commodities research at Goldman labelled gold as a ‘slam-dunk sell’. This article provides some good background reading material and this one some good analysis on why gold has been going down.
  • Brent is up above $101, fueled by demand from China. This article provides some helpful stats.

Markets

  • GOOG just breached $1,000! My Applied Investments team have been at our 5% ceiling on Google so we have made a decent profit off it over the last few months. Where is GOOG headed now, after having hit the $1,000 mark?  I’m personally bullish on it over a 3-5 year horizon, but this article advises caution.
  • Over here is a decent summary of bull and bear cases for the equities market. Not a lot to read, so you can quickly glance over the points.

Miscellaneous

Other stuff

I still need to continue with my AUS story, post details on the few portfolios that I’ve created AND post the code for the ARMA-GARCH strategy. All three of these things coming up soon!

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