http://finance.yahoo.com/q?s=caf
MORGAN STANLEY CHINA (CAF)
Prospectus:
http://www.morganstanleyindividual.com/Markets/IPOCenter/Prospectus/?DocID=p_CAFMS
This close-end fund allow you to invest in the China A share market. Unlike many other funds that invest in China, which most of them are buying H share (Chinese companies that are listed on Hong Kong Exchange). Currently, only Chinese citizens and qualified institutional investors are allowed in investing in China A share. Be extremely careful, that the Chinese stock market (A share in particular) is extremely over-valued by traditional metrics. The fund is also very thinly traded (avg vol: 400k). This makes CAF a extreme risky trading instrument IMHO.
I personally think FXI is a better way to invest in the Chinese market.
Prospectus for FXI: http://www.ishares.com/content/stream.jsp?url=/content/repository/material/prospectus/ftse_xinhua.pdf&mimeType=application/pdf
Here are the reasons why:
1. FXI is a index tracking ETF- low expense and not as thinly traded (avg vol: 6m)
2. The valuation is way more reasonable due to the fact the fund invest in ADRs/H share.
Monday, December 31, 2007
Wednesday, December 26, 2007
January Barometer
"Since 1950, there have been 20 down Januarys for the S&P 500, all of which preceded a new or extended bear market, or a flat market, except for one year, according to the Almanac. But in eight of those years, the broader market ended flat or with slight gains."
http://money.cnn.com/2005/01/26/markets/january/index.htm
http://www.google.com/search?hl=en&q=january+barometer&btnG=Search
The January Barometer is one of the more "reliable" indicator. Of course, there is no sure thing in the market (nothing has 100% guarantee). Your job as an investor/trader is to extract the most return for the risk taken. Risk is defined by the chance that sh*t can fall apart (unpredictable events ei: 9-11). No one can predict the future accurately, but you can always react to the driving forces of the market - greed and fear. Warren Buffett and other "investment gurus" are very good at "gaming" the market knowing the driving forces behind it.
"View Mr. Market as having a disorder and being in a manic depressive state and take advantage of this state of disorder." (See SEA's April 1998 newsletter for full quote.)
- Warren Buffett
Most of these gurus are can be label "contrarian" to a certain extend. It is by going against conventional wisdoms that these gurus were able to be successful in investing. Does that mean shorting everytime the market goes up and buying everytime the market comes down? No.
As to how to be a contrarian or add contrarian flavor in when building a style of investing/trading...that's for us to figure out.
http://money.cnn.com/2005/01/26/markets/january/index.htm
http://www.google.com/search?hl=en&q=january+barometer&btnG=Search
The January Barometer is one of the more "reliable" indicator. Of course, there is no sure thing in the market (nothing has 100% guarantee). Your job as an investor/trader is to extract the most return for the risk taken. Risk is defined by the chance that sh*t can fall apart (unpredictable events ei: 9-11). No one can predict the future accurately, but you can always react to the driving forces of the market - greed and fear. Warren Buffett and other "investment gurus" are very good at "gaming" the market knowing the driving forces behind it.
"View Mr. Market as having a disorder and being in a manic depressive state and take advantage of this state of disorder." (See SEA's April 1998 newsletter for full quote.)
- Warren Buffett
Most of these gurus are can be label "contrarian" to a certain extend. It is by going against conventional wisdoms that these gurus were able to be successful in investing. Does that mean shorting everytime the market goes up and buying everytime the market comes down? No.
As to how to be a contrarian or add contrarian flavor in when building a style of investing/trading...that's for us to figure out.
Monday, December 24, 2007
Randomness continues: Closing out 2007
Recently, I took a 24 hour road trip from FL all the way back in NY in a little Japanese coupe/hatchback - Toyota Celica. How on earth can this trip has anything possibly do with investing? Sit tight...
First, let me reflect on my friend's Toyota Celica. It was a used car with a good amount of mileage on it. I must say, the Celica isn't as roomy and practical as a Honda Accord, it doesn't accelerate as fast as a Ford Mustang, and it certainly can't handle corners as quickly as a BMW 3 series. But it doesn't matter. The car was very well-built. On the highway doing some-what-over-the-limit speed, the car was as steady and reliable...well as a Toyota should be. Everytime I open up the throttle, the little Japanese hatchback just bugging for more. No squeaks, no rattles. This little bugger can't outhandle a BMW, but when you grab on to its steering wheel it takes you right where you wanted. This car sure as hell isn't perfect, but for $7k, it is amazing value and after spending 1200 miles with it, I simply adore it.
This car, a 2000-2001 Toyota, also marked the end of an era. It was the last time where Toyota has built something that is cheap, fun and reliable. Toyota has since turned into a generic corporation with numbers/goals to reach every quarters to satisfy the on-going ambition of being the world's largest car maker. No longer does Toyota build "cars". They now build what I call "econbox" or Box with wheels. Every cars in the current Toyota line-up are as boring as your daytime television program. Not to mention Toyota also started cutting corners on the quality of the cars they build. I sat in the new Camry and I just wasn't impress by its interior. And I wasn't the only one. If you browse around for Camry reviews, there are a lot of complains about the new Camry interior fit and finish. And then there is the new Scion brand. Scion isn't about building quality and fun cars, its just another marketing scheme by Toyota. I can go on about how Toyota is no longer the humble Japanese car maker from the 80s that try to enter the U.S. market with quality built cars. But to tie to my point: I would not invest in Toyota at the moment. Sure, it has gained a sure foothold of the U.S. market since the 80s. Sure, it is stealing market shares from the Big 3(2.5). But Toyota is no longer a corporation with personality. No longer does this car maker need to make desirable cars because they already in-still its brands in the consumers' mind. No longer does it need to build a fun car- only need to market another generic car in a diff. brand. And don't even get me started with the Prius. Toyota was the underdog, the new kid on the block, now it's all grown. No longer does it need to be recognized, no longer does it need to be humble. Toyota has forgotten where it came from.
My investing/trading philosophy is very much the same as my philosophy on cars. I like to buy and trade what I understand, what I know. I like companies and cars that provide "value". I like underdogs that struggle to be recognized. And if I didn't make the point already: you are who you are. Your trading/investing style should reflect who you are. For example: I am impatient- hence, I don't look to hold a stock/position for more than a couple months. My style of trading doesn't fit anyone but me (or someone with similar personalities).
Note: In closing out 2007, unless there is some disaster waiting to happen next couple of days, I'm proud to announce that our return has trounced the S&P500. We have met our goal on beating the index with a good amount of cash waiting to be deploy. And we are fortunate to dodge the Credit crunch bullets. 2008, here we come...
Have a Happy Holiday/New Year.
First, let me reflect on my friend's Toyota Celica. It was a used car with a good amount of mileage on it. I must say, the Celica isn't as roomy and practical as a Honda Accord, it doesn't accelerate as fast as a Ford Mustang, and it certainly can't handle corners as quickly as a BMW 3 series. But it doesn't matter. The car was very well-built. On the highway doing some-what-over-the-limit speed, the car was as steady and reliable...well as a Toyota should be. Everytime I open up the throttle, the little Japanese hatchback just bugging for more. No squeaks, no rattles. This little bugger can't outhandle a BMW, but when you grab on to its steering wheel it takes you right where you wanted. This car sure as hell isn't perfect, but for $7k, it is amazing value and after spending 1200 miles with it, I simply adore it.
This car, a 2000-2001 Toyota, also marked the end of an era. It was the last time where Toyota has built something that is cheap, fun and reliable. Toyota has since turned into a generic corporation with numbers/goals to reach every quarters to satisfy the on-going ambition of being the world's largest car maker. No longer does Toyota build "cars". They now build what I call "econbox" or Box with wheels. Every cars in the current Toyota line-up are as boring as your daytime television program. Not to mention Toyota also started cutting corners on the quality of the cars they build. I sat in the new Camry and I just wasn't impress by its interior. And I wasn't the only one. If you browse around for Camry reviews, there are a lot of complains about the new Camry interior fit and finish. And then there is the new Scion brand. Scion isn't about building quality and fun cars, its just another marketing scheme by Toyota. I can go on about how Toyota is no longer the humble Japanese car maker from the 80s that try to enter the U.S. market with quality built cars. But to tie to my point: I would not invest in Toyota at the moment. Sure, it has gained a sure foothold of the U.S. market since the 80s. Sure, it is stealing market shares from the Big 3(2.5). But Toyota is no longer a corporation with personality. No longer does this car maker need to make desirable cars because they already in-still its brands in the consumers' mind. No longer does it need to build a fun car- only need to market another generic car in a diff. brand. And don't even get me started with the Prius. Toyota was the underdog, the new kid on the block, now it's all grown. No longer does it need to be recognized, no longer does it need to be humble. Toyota has forgotten where it came from.
My investing/trading philosophy is very much the same as my philosophy on cars. I like to buy and trade what I understand, what I know. I like companies and cars that provide "value". I like underdogs that struggle to be recognized. And if I didn't make the point already: you are who you are. Your trading/investing style should reflect who you are. For example: I am impatient- hence, I don't look to hold a stock/position for more than a couple months. My style of trading doesn't fit anyone but me (or someone with similar personalities).
Note: In closing out 2007, unless there is some disaster waiting to happen next couple of days, I'm proud to announce that our return has trounced the S&P500. We have met our goal on beating the index with a good amount of cash waiting to be deploy. And we are fortunate to dodge the Credit crunch bullets. 2008, here we come...
Have a Happy Holiday/New Year.
Friday, November 30, 2007
How to get RICH $$$
Notice how every "millionaire" books talk about what it takes to be rich? Persistent, hardworking, willing to take risk... these are your very typical characteristics of "millionaire-next-door".
I must, however, point to a very big flaw all these how-to-get-rich books and websites all shared. These websites and books only interviewed and researched the people who actually succeeded. And it makes sense because we want to know their "secrets". HOWEVER, for every millionaire next door, there is a failed entrepreneur (perhaps 7-8 failed entrepreneurs for every 1 millionaire).
I can bet that if you interview these failed entrepreneurs, you would find they hold the very same characteristics you see in the millionaire next door. That is, they are also hardworking, persistent and ambitious. Give it a second to think about it. Do you really think that people who start and own businesses (even tho it failed) are bunch of lazy bums that don't want their businesses to succeed? So what causes their failures? No one wants to know. I mean, would you like to purchase a book called "How to start a business and fail?" or maybe "Failure-next-door", or "Entrepreneurship was not for me"? The problem is, we don't want to hear about/acknowledge these failures. But they exist.
So what separate a millionaire next door from a failed hardworking ambitious entrepreneur?
Sometimes, I think it's just LUCK (timing, other variables that you are simply not in control of). Take this guy for example:
Stephan Paternot
http://www.smartmoney.com/mymoney/index.cfm?story=20010806&hpadref=1
He started the whole "social networking" concept. Where as myspace and facebook succeeded, he failed. Why? Because he came to the party to early. It was 1999. Noone was ready for Myspace type of thing. So it never took off. And look where these social networking websites are now. (Facebook was valued at $10bil by Microsoft).
And how about fiber optics? Verizon started to lay miles of fiber optic line recently and spent billions to get everyone hook up to the new and faster network. And everything seem to be successful as more customers were signing on their "Fios" service. However, back in 1990s, there were bunch of smaller companies went around and did the same thing as Verizon (laying miles of fiber optic lines)- all of them went bust.
So what's the problem with these failures?
"Ohh they were too early, they should've waited"
"Ohh, the time wasn't right"
"Ohh, noone was ready for it then"
"Ohh, they should've would've could've......."
Hindsight is always 20-20.
I'm not advocating that hardwork is useless, persistent is garbage and carrying ambitious is like carrying sack of bricks- but be ready to fail, the downside risk is there. We just don't want to see it.
I must, however, point to a very big flaw all these how-to-get-rich books and websites all shared. These websites and books only interviewed and researched the people who actually succeeded. And it makes sense because we want to know their "secrets". HOWEVER, for every millionaire next door, there is a failed entrepreneur (perhaps 7-8 failed entrepreneurs for every 1 millionaire).
I can bet that if you interview these failed entrepreneurs, you would find they hold the very same characteristics you see in the millionaire next door. That is, they are also hardworking, persistent and ambitious. Give it a second to think about it. Do you really think that people who start and own businesses (even tho it failed) are bunch of lazy bums that don't want their businesses to succeed? So what causes their failures? No one wants to know. I mean, would you like to purchase a book called "How to start a business and fail?" or maybe "Failure-next-door", or "Entrepreneurship was not for me"? The problem is, we don't want to hear about/acknowledge these failures. But they exist.
So what separate a millionaire next door from a failed hardworking ambitious entrepreneur?
Sometimes, I think it's just LUCK (timing, other variables that you are simply not in control of). Take this guy for example:
Stephan Paternot
http://www.smartmoney.com/mymoney/index.cfm?story=20010806&hpadref=1
He started the whole "social networking" concept. Where as myspace and facebook succeeded, he failed. Why? Because he came to the party to early. It was 1999. Noone was ready for Myspace type of thing. So it never took off. And look where these social networking websites are now. (Facebook was valued at $10bil by Microsoft).
And how about fiber optics? Verizon started to lay miles of fiber optic line recently and spent billions to get everyone hook up to the new and faster network. And everything seem to be successful as more customers were signing on their "Fios" service. However, back in 1990s, there were bunch of smaller companies went around and did the same thing as Verizon (laying miles of fiber optic lines)- all of them went bust.
So what's the problem with these failures?
"Ohh they were too early, they should've waited"
"Ohh, the time wasn't right"
"Ohh, noone was ready for it then"
"Ohh, they should've would've could've......."
Hindsight is always 20-20.
I'm not advocating that hardwork is useless, persistent is garbage and carrying ambitious is like carrying sack of bricks- but be ready to fail, the downside risk is there. We just don't want to see it.
Tuesday, November 27, 2007
Desparate for money, Citi goes Junk
Citi took out a loan that pays 11% coupons today. When an investment grade company has to take out a loan/capital infusion at junk rate, you know the credit market is in trouble. Especially when we are talking about a financial service company, which expertise is in managing interest spread and capital.
Sorry for all the Citi's shareholders and soon to be lay-off employees. I feel your pain.
However, the former CEO of Citi won't be feeling the pain with a severance package that is worth $40 mil. Good job, Chief Value Destroyer Chuck Prince.
Friday, November 16, 2007
Goldman the magnificent
Goldman Sachs is an unstoppable beast.
First, they're the #1 investment bank on Wall Street.
Then they navigate the subprime mess with speed and efficiency unheard of in the Street (although the practice of taking the opposite side of the trade .... on their clients, is heard of) and was the only bank with heavy subprime exposure to turn a profit.
Third, all of their alums are heavily court at by their competitors and are turning up in CEO suites everywhere on the Street including Rubin (Citi), Thain (Merrill), Duncan (NYSE), Lampert (next coming of Buffett?).
And this last event is what really pops out at me .... Goldman Sachs' partners helping to play a hand in grabbing back the best player in baseball, A-Rod, from the grasps of Scott Boras and into the hands of the Yankees again.
I think this past quarter has been a great one for GS. Stay tune as I would not be surpise if Goldman somehow rescues the Knicks from being the NBA's black sheep into a powerhouse again by buying out the team from under the Dolan's eyes (Cablevision is a public company and the BoD hates the Dolans), firing Isiah Thomas, jettisoning Marbury, and getting LeBron James in 2009.
New York New York is soon becoming Goldman, Goldman.
First, they're the #1 investment bank on Wall Street.
Then they navigate the subprime mess with speed and efficiency unheard of in the Street (although the practice of taking the opposite side of the trade .... on their clients, is heard of) and was the only bank with heavy subprime exposure to turn a profit.
Third, all of their alums are heavily court at by their competitors and are turning up in CEO suites everywhere on the Street including Rubin (Citi), Thain (Merrill), Duncan (NYSE), Lampert (next coming of Buffett?).
And this last event is what really pops out at me .... Goldman Sachs' partners helping to play a hand in grabbing back the best player in baseball, A-Rod, from the grasps of Scott Boras and into the hands of the Yankees again.
I think this past quarter has been a great one for GS. Stay tune as I would not be surpise if Goldman somehow rescues the Knicks from being the NBA's black sheep into a powerhouse again by buying out the team from under the Dolan's eyes (Cablevision is a public company and the BoD hates the Dolans), firing Isiah Thomas, jettisoning Marbury, and getting LeBron James in 2009.
New York New York is soon becoming Goldman, Goldman.
Thursday, November 15, 2007
Tuesday, November 13, 2007
Don't buy what Steve Schwarzman is selling
A picture (chart) is worth a thousand words.Am I joking? or Do I mean it literally?
Monday, November 12, 2007
Life takes Visa, but Mastercard is priceless.
So, Visa has finally filed for IPO.
http://biz.yahoo.com/rb/071109/visa_ipo.html?.v=1
Visa is own by a group of well-known banks. JPM and BAC together own 34.8% of Visa. Citigroup, Wells Fargo, US Bancorp and National City own another 24% of Visa.
Now, this chart is a very rough comp. b/w Mastercard and Visa. We know that Mastercard IPO was a success. Mastercard stock went up 5x since its IPO. The problem with this chart is that I'm not sure if Visa is selling out all of its shares to public, which they value at $10 bil. Or if it's selling ~40% stake (60% own by the rest of the banks). If Visa is selling 40% stake and valued the stake at $10 bil. , then it would fetch a $25 bil. market cap. That is in-line with Mastercard's current market cap.
Assuming that Visa fetch the same price/market cap as Mastercard, then its IPO is NOT worth buying into. Even though Visa has a bigger share of the market, it fails to bring its top-line to its bottom-line. The lower net income margin is causing Visa to earn about the same amount as Mastercard (not looking too deep into the quality of the earnings). Visa has also agreed to settle a lawsuit recently- which would cost Visa ~$2 billion dollars. On the surface, Visa looks attractive because of Mastercard's previous success. However, Mastercard's successful IPO launch was due to the fact that it was vastly underpriced. But that is not the case for Visa (unless $10 bil it plans to raise = 100% stake, which I highly doubt at the moment).
However much I love IPOs. Visa is a no-go for me.
http://biz.yahoo.com/rb/071109/visa_ipo.html?.v=1
Visa is own by a group of well-known banks. JPM and BAC together own 34.8% of Visa. Citigroup, Wells Fargo, US Bancorp and National City own another 24% of Visa.
Now, this chart is a very rough comp. b/w Mastercard and Visa. We know that Mastercard IPO was a success. Mastercard stock went up 5x since its IPO. The problem with this chart is that I'm not sure if Visa is selling out all of its shares to public, which they value at $10 bil. Or if it's selling ~40% stake (60% own by the rest of the banks). If Visa is selling 40% stake and valued the stake at $10 bil. , then it would fetch a $25 bil. market cap. That is in-line with Mastercard's current market cap.Assuming that Visa fetch the same price/market cap as Mastercard, then its IPO is NOT worth buying into. Even though Visa has a bigger share of the market, it fails to bring its top-line to its bottom-line. The lower net income margin is causing Visa to earn about the same amount as Mastercard (not looking too deep into the quality of the earnings). Visa has also agreed to settle a lawsuit recently- which would cost Visa ~$2 billion dollars. On the surface, Visa looks attractive because of Mastercard's previous success. However, Mastercard's successful IPO launch was due to the fact that it was vastly underpriced. But that is not the case for Visa (unless $10 bil it plans to raise = 100% stake, which I highly doubt at the moment).
However much I love IPOs. Visa is a no-go for me.
Thursday, November 8, 2007
Financials dogged the market AGAIN
Looks like many of my potential employers (financial firms)are in trouble. I must say my employment outlook does not look good at the moment. The financials once again take a hit today. As I posted over the weekend; uncertainty clouds over the financials. Morgan Stanley wrote down another couple bil. bucks. No biggie. It's only ~5-7% of MS market cap as Morgan already lost ~40% of its market cap YTD. MS is trading flat throughout the day. Up 0.49% as of now.
This is a good time to bring up the topic of Level 3 assets.
Basically, these are difficult to value assets. These are probably private investments in other private companies, investment in exotic investment vehicles, investment in illiquid instruments. ..etc. So the banks have to "guesstimate" the value of these assets. In today's environment, the value of these assets the banks have to come out with can be ugly. If I didn't sound bearish enough, I will say it again, I'm staying away from the financials.
End Of the Day Update:
A fresh round of buying emerged this afternoon. The XLF finished positive for the day. But I'm still not convinced that the financials are bargain at this level.
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