Archive for category Investing
Dealers Digest Central Bank Views And Buy Bonds
Posted by Tetyana Matychak in Investing on September 1st, 2010
Friday’s initial response to the words from Ben Bernanke is being reversed on Monday. Bond yields jumped sharply as the Fed Chairman said that the FOMC stood ready to perform whatever action necessary to safeguard the economy from failing. Investors immediately looked beyond the action of further quantitative easing and took this as a sign that ultimate economic recovery would be bearish for bonds.
Eurodollar futures – Short-end Eurodollar futures are making gains again on Monday with the rise in deferred maturities almost at a double-digit pace. September treasury note futures have climbed by a half-point this morning to stand at 125-23 to yield 2.59%. The initial response to the speech at Jackson Hole in Wyoming was a fear that meaningful measures to support the U.S. economy would revive growth sufficiently so as to put the era of extremely low interest rates at risk. But as dealers ponder further this morning the renewed buying suggests that they recognize that although the Fed is prepared to act, it can’t go the distance without a confluence of other resources pulling in the same direction at once.
European bond markets – September bunds have recovered from Friday’s slump to 133.25 as weaker longs were knocked out of the market. The contract has climbed once again on Monday to 134.19 where the yield of 2.13 stands seven basis points below that at Friday’s close and compares to last Monday’s record low of 2.09%. The demand for German bunds remained firm despite the headwind of relatively bullish economic data. A European Commission report showed a rise to a two-year peak in confidence in the economic outlook. An unsourced report running in today’s Financial Times says that the ECB will extend its emergency aid to the region’s banking system through 2011. Euribor futures made minor gains on the story. Read the rest of this entry »
Investing In South Korea: Why This Emerging Market Is A Perfect Contrarian Opportunity
Posted by Tetyana Matychak in Investing on August 27th, 2010
The mere mention of this country’s name can cause the “Risk-o-Meter” to nudge higher. But it’s got nothing to do with the nation’s own economy or growth prospects.
Rather, the problem resides to its immediate north in the shape of the contentious Kim Jong-Il and the saber-rattling North Koreans. Their South Korean neighbors live with the constant threat of violence erupting at any moment – especially after North Korea allegedly torpedoed one of South Korea’s warships in March.
But the likelihood of a full-blown war is slim. Why? Because the United States still has some 28,500 troops in South Korea. And thanks to the long-standing U.S.-South Korea alliance, any North Korean attack would effectively be an attack upon the United States, too.
Even Kim Jong-Il knows that’s a bad idea and would end disastrously for his rogue nation.
And for investors, the overblown geopolitical climate is just one reason why I’m convinced that now is the perfect time to buy into this contrarian situation. But there are more… Read the rest of this entry »
Housing’s a wreck. Builders rally. Huh?
Posted by Tetyana Matychak in Investing on August 25th, 2010
Existing home sales plummeted in July. New home sales sunk as well, hitting a record low. And even though luxury homebuilder Toll Brothers reported a surprise quarterly profit Wednesday, that was largely due to a tax break. Sales were down slightly from a year ago and orders dropped 16%.
Despite this, some investors appear willing to once again bet that the housing market has hit bottom. Shares of Toll Brothers (TOL) were up more than 2% in early afternoon trading.
The S&P SPDR Homebuilders (XHB) exchange traded fund, which holds other builders such as KB Home (KBH) and Pulte (PHM), as well as building materials makers and home improvement retailers, rose 1.5%.
It’s a strange reaction to say the least. The broad market is down because of more gloomy housing data. But the companies that are most directly tied to the health of the housing market are up?
It doesn’t make a heck of a lot of sense. It may be a case of traders betting for the umpteenth time that this is finally a bottom for housing.
That’s a mistake. Now that the tax credit for homebuyers has expired, it’s difficult to imagine what can juice the real estate market again in the near-term. Read the rest of this entry »
Could Your Offshore Jurisdiction Go Bankrupt? Part I
Posted by Tetyana Matychak in Investing on July 20th, 2010
Offshore centers now face a perfect financial storm. In more prosperous times, revenues from the offshore sector, along with tourism, helped fuel these countries’ economies. Their governments emulated more developed nations by borrowing heavily to build up their infrastructure. They also bought votes with social programs and bloated government payrolls.
When the global economy tanked, tourist revenues fell, along with revenues from their offshore sectors. But the social programs and bloated payrolls remained.
Blame Offshore Tax Havens! (Again)
The economic crisis also led to worldwide drop in tax revenues, with the biggest losers big industrialized countries like the United States. Politicians in these countries found a convenient scapegoat to blame for falling tax revenues: dozens of mostly tiny offshore centers.
Using the economic crisis, the world’s richest and most powerful governments had the perfect opportunity to achieve a long-term goal: forcing offshore jurisdictions to enforce their tax laws. They acted through non-governmental organizations they control, such as the Organization for Economic Cooperation and Development (OECD). The OECD has the authority to issue supposedly non-binding “best practices” guidelines. And, the OECD now decrees that “best practices” meant becoming tax collectors on behalf of these rich and powerful governments. Read the rest of this entry »
Raising Money During The Summer Slowdown
Posted by Tetyana Matychak in Investing on July 6th, 2010
The streets are empty in NYC this July 4th weekend and it seems like everyone is at the beach. The Gotham Gal and I are getting ready to head to Italy for a week on Sunday night. Summer is here and I can feel the pace of work life and city life slow down.
Many of our companies experience a slow third quarter because people aren’t working at quite the same pace in July and August and it is hard to get it all back in September. And many entrepreneurs and investors I work with assume for the same reasons that the summer months are a bad time to be raising money.
I don’t think the summer months are a bad time to be raising money. It’s a different time to be sure, but not necessarily worse. We see a lot less incoming activity in the summer months so it may be the best time to get a VC’s attention. If everyone else thinks it is a bad time, then the contrarian in me says it is a good time.
I just did a quick query on our portfolio and we made our first investments in eight of our twenty-seven active portfolio companies during the third quarter. Three of our investments were closed in July. Three of our investments were closed in August. And two of our investments were closed in the first couple weeks of September.
Eight out of twenty-seven is thirty percent of our portfolio, and that is north of the twenty-five percent of the year that the summer represents. So our firm has been more active on new investments during the summer than we are on average. Read the rest of this entry »
4 Investment Ideas That Provide Income
Posted by Tetyana Matychak in Investing on July 1st, 2010
As of this moment, the S&P/TSX Composite index is down 384.58 point or -3.27% year to date. The S&P 500 is down 67.32 or -6.04% year to date. That is your market update. When the global economic outlook appears uncertain and on the brink of another recession, equity markets reflect this reality in terms of greater than normal volatility. In markets like these, what we should be looking for are non-correlated assets and managers that have demonstrated the expertise to preserve capital during uncertain times like today.
In addition, one should also be focusing their efforts on receiving some form of income while the economic climate sorts itself. The following 4 ideas should hopefully accomplish both those goals. While we cant speak to the best/worst time to buy/sell particular securities, as that depends on one’s personal circumstances, the approach we usually take, especially with closed end funds, is to purchase them when they are trading at the steeper than normal discount to their Net Asset Value (NAV). The only other thing we would like to add is that you should do you own due diligence.
Trident Performance Corp.
This closed end fund is managed by CI Investments. Its investment objective is to provide tax-efficient risk-adjusted long term rates of return by obtaining exposure to a Global Macroeconomic Portfolio, advised by Trident Investment Management. Co-Founded in 1998, by Nandu Narayanan, Trident Investment Management seeks to exploit macroeconomic trends to generate attractive risk-adjusted rates of return with low or negative correlation to traditional ‘long’ investments. This is exactly what Mr. Narayanan did during the financial crisis, when the CI Global Opportunities Fund recorded positive performance of 109% in 2007 and 42.6% in 2008. Since inception in March 1995, the fund has averaged 19.69% as of the end of May 31, 2010. Read the rest of this entry »
Hedge Funds May 2010
Posted by Tetyana Matychak in Investing on June 30th, 2010
The latest hedge fund performance and investor allocation data for May 2010 show that last month indeed was a tough one for hedge funds. The Hedge Fund Aggregate Index was down but did not fall as hard as the S&P 500. Total hedge fund assets fell almost 3% in May.
The HFN Hedge Fund Aggregate Index was -2.86% in May 2010 and +0.89% year-to-date (YTD). The S&P 500 Total Return Index (S&P) was -7.99% in May and -1.51% YTD.
Total industry assets fell an estimated -2.82% to $2.234 trillion in May. Despite performance based asset reductions, net investor flows were positive for the fifth month in a row.
Performance accounted for $66.87 billion of the decrease and investor allocations accounted for a net inflow of $2.13 billion. Net inflows were the lowest since January and the second month in a row of slower rates of increase.
The core rate of growth (% asset change due to investor allocations/redemptions) was an increase of 0.09%, the second slowest rate of increase since HFN began tracking asset flow data in Q4 2003. Read the rest of this entry »
How To Rob An Individual Investor
Posted by Tetyana Matychak in Investing on June 29th, 2010
THE RICH HAVE BEEN DOING IT TO THE POOR SINCE THE BEGINNING OF TIME.
Fortunately for us, it’s a heck of a lot more blatant (and therefore easier to spot) on Wall Street than it is in many places.
Some call it a “hustle”. Others call it a “con job”. Whatever your pet name for it is, one thing is certain: if you don’t see it coming, you’ll likely wind up much poorer as a result and very, very sorry you ever ran into it.
On Wall Street, as opposed to Main Street, the con takes a couple of different shapes. One is the famous and well discussed “bucket-shop hustle”.
Now, many people automatically think of small, dingy firms – akin to a boiler room – when they hear the name “bucket-shop”. But those firms are responsible for a small fraction of the damage done to individual investors. To this very day, the most harmful “bucket-shop” practices are engaged in by many of the largest brokerage firms in the world.
It goes a little something like this: you get a call from a well-intentioned broker who has the “deal of a lifetime” for you. After getting you all worked up into a lather, you’re convinced that it’s something you should purchase. What you don’t know is that the broker who just convinced you to buy shares of XYZ was secretly selling them for one of the firm’s largest customers. Before you know it, you’re left holding shares of a stock or bond that have decreased in value by as much as 90%. Read the rest of this entry »
The Fallible Mr. Buffett
Posted by Tetyana Matychak in Investing on June 10th, 2010
For years, we’ve become accustomed to hearing how no one could have seen the unfolding subprime crisis… not even, according to Warren Buffett, the credit rating agencies.
The very companies that paid millions to do efficient research could not foresee a problem of this magnitude?
What is Buffett thinking?
This is the guy that once stood up for the little guy, defending him from corporate madness.
And now he’s defending credit rating agencies — some of the very companies that took us to the edge of financial ruin, all while holding stock?
Why is he now catering to the corporate elitists that helped foster the subprime meltdown?
Why is he defending Goldman Sachs and its CEO Lloyd Blankfein — accused on fraud charges from the SEC and undergoing an alleged Justice Department investigation of criminal wrongdoing surrounding the structuring of ridiculous derivative contracts? Read the rest of this entry »
Mutual Funds: 10 questions to test your IQ
Posted by Tetyana Matychak in Favourites, Fund Markets, Investing on May 14th, 2010
Mutual funds are a cornerstone of retirement planning. Yet they’re widely misunderstood and investing ignorance can really cost you. Do you know the difference between an expense ratio and a turnover ratio? What about an open-end fund versus a closed-end? Try this quiz, and check out the answers at bottom:
1. What percentage of households own mutual funds?
(a) 10 percent; (b) 27 percent; (c) 43 percent
2. When was the key law governing mutual fund operations adopted?
(a) 1929; (b) 1933; (c) 1934; (d) 1940
3. How many mutual funds are there in the U.S.?
(a) Nearly 1,000; (b) Nearly 4,000; (c) Nearly 8,000 Read the rest of this entry »
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Consumer Spending in U.S. Rises More Than Forecast
30 August 2010
Monetary Policy Gets No Respect
19 July 2010
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5 July 2010
Is A Global Reserve Currency A Necessity?
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