Comments on: Contrarian Investing http://www.nikhilpahwa.com/2005/12/20/contrarian-investing/ In the realm of ideas, everything depends on enthusiasm; in the real world, all rests on perseverance Thu, 09 Feb 2012 00:51:26 +0000 http://wordpress.org/?v=2.5 By: Sfx http://www.nikhilpahwa.com/2005/12/20/contrarian-investing/#comment-177 Sfx Thu, 22 Dec 2005 05:42:00 +0000 http://www.mixedbag.in/2005/contrarian-investing/#comment-177 Good luck with trying to find out about the Sage - you'll find most of it in the accounts and just for his curency bets, they're worth a look-see. As of the end of last year , he had a US $ 21.4 bln bet AGAINST the US Dollar - basically on concerns about the economy etc. Most of them being the USD agst the Euro, Yen , Sterling , Swiss, Canadian and the Aussie. A total of 12 currencies tho. Booked a profit of USD 1.63 bln on them as of last year but has spent the three quarters so far this year getting hammered with losses ranging from USD 300 to 700 mio each quarter. The year end bit shud see more losses just given the way the currencies have behaved over the last quarter or so - however, the goss is that he's trimmed down his bets to a large extent. Good luck with trying to find out about the Sage - you’ll find most of it in the accounts and just for his curency bets, they’re worth a look-see.
As of the end of last year , he had a US $ 21.4 bln bet AGAINST the US Dollar - basically on concerns about the economy etc. Most of them being the USD agst the Euro, Yen , Sterling , Swiss, Canadian and the Aussie. A total of 12 currencies tho.
Booked a profit of USD 1.63 bln on them as of last year but has spent the three quarters so far this year getting hammered with losses ranging from USD 300 to 700 mio each quarter. The year end bit shud see more losses just given the way the currencies have behaved over the last quarter or so - however, the goss is that he’s trimmed down his bets to a large extent.

]]> By: The Unrest Cure http://www.nikhilpahwa.com/2005/12/20/contrarian-investing/#comment-176 The Unrest Cure Wed, 21 Dec 2005 09:19:00 +0000 http://www.mixedbag.in/2005/contrarian-investing/#comment-176 Well, the Indian equity market is an unpredictable beast. I wanted some info on steel co's today, with a three year period in mind, and my broker couldn't advise. It's trading at a surprisingly low PE of 3 to 5, but that is on last years earnings. So obviously, something has hit steel hard this year. My broker, though, said "I can only advise you on trading, not investing." The equity markets here move largely on news and rumours, though only in the short term. Day traders, in particular, take great risks blindly. One analyst voices a viewpoint on TV, and the stock starts moving. A majority of the mutual funds look to create and ride waves, and movements are based on how foreign markets are doing and news, while retail investors are usually left scratching their heads. Both the cases that I have mentioned, particularly that of Reliance, are news based. Even in case of Ranbaxy, Deutsche Bank has downgraded it and lowered PE forecasts, but have stated that they would rerate if Ranbaxy's wins any patent battles. I'm taking a risk, knowing that if Ranbaxy wins even one case, it'll result in a revaluation of the stock. I've no clue about currency markets, or even derivatives. Didn't know that Warren Buffett was playing the currency game. Should be interesting - will look it up. Well, the Indian equity market is an unpredictable beast. I wanted some info on steel co’s today, with a three year period in mind, and my broker couldn’t advise. It’s trading at a surprisingly low PE of 3 to 5, but that is on last years earnings. So obviously, something has hit steel hard this year. My broker, though, said “I can only advise you on trading, not investing.”

The equity markets here move largely on news and rumours, though only in the short term. Day traders, in particular, take great risks blindly. One analyst voices a viewpoint on TV, and the stock starts moving. A majority of the mutual funds look to create and ride waves, and movements are based on how foreign markets are doing and news, while retail investors are usually left scratching their heads.

Both the cases that I have mentioned, particularly that of Reliance, are news based. Even in case of Ranbaxy, Deutsche Bank has downgraded it and lowered PE forecasts, but have stated that they would rerate if Ranbaxy’s wins any patent battles. I’m taking a risk, knowing that if Ranbaxy wins even one case, it’ll result in a revaluation of the stock.

I’ve no clue about currency markets, or even derivatives. Didn’t know that Warren Buffett was playing the currency game. Should be interesting - will look it up.

]]> By: Sfx http://www.nikhilpahwa.com/2005/12/20/contrarian-investing/#comment-175 Sfx Wed, 21 Dec 2005 08:16:00 +0000 http://www.mixedbag.in/2005/contrarian-investing/#comment-175 I'm in the business of trading - but currency and not equities .. and altho admittedly they are somewhat different in their character - am strongly of the view, that the only news that affects prices (from the point of view of investors and not traders) is genuine , hardcore and nitty gritty fundamentals of the company and not the weekly / quarterly news releases, gossip, etc... Its something that no one probably understands better than Warren Buffet. That said, he's an equity guru and these past couple of years has tried his hand at currency markets with a view on the US economy - with very little luck and decently significant losses... Its alarmed the trading community a little but its too early to judge - because nobody knows his time frame.... Cheers I’m in the business of trading - but currency and not equities .. and altho admittedly they are somewhat different in their character - am strongly of the view, that the only news that affects prices (from the point of view of investors and not traders) is genuine , hardcore and nitty gritty fundamentals of the company and not the weekly / quarterly news releases, gossip, etc… Its something that no one probably understands better than Warren Buffet. That said, he’s an equity guru and these past couple of years has tried his hand at currency markets with a view on the US economy - with very little luck and decently significant losses… Its alarmed the trading community a little but its too early to judge - because nobody knows his time frame….

Cheers

]]> By: The Unrest Cure http://www.nikhilpahwa.com/2005/12/20/contrarian-investing/#comment-174 The Unrest Cure Wed, 21 Dec 2005 08:06:00 +0000 http://www.mixedbag.in/2005/contrarian-investing/#comment-174 Thanks for the Jack Schwagger reference - will look that up. As bad news (in the Reliance case - not related to the operations of the company) beats the share price down, without really affecting the performance of the company, it uncovers value. As such, it isn't anchored on previous prices, rather - on projected earnings and the value resulting out of an attractive price. News has a shorter lifespan than value. :-) Thanks for the Jack Schwagger reference - will look that up.

As bad news (in the Reliance case - not related to the operations of the company) beats the share price down, without really affecting the performance of the company, it uncovers value. As such, it isn’t anchored on previous prices, rather - on projected earnings and the value resulting out of an attractive price.

News has a shorter lifespan than value. :-)

]]> By: Sfx http://www.nikhilpahwa.com/2005/12/20/contrarian-investing/#comment-173 Sfx Wed, 21 Dec 2005 07:43:00 +0000 http://www.mixedbag.in/2005/contrarian-investing/#comment-173 Interesting qns first up in that post ...there's this terrific series of books on trading in markets by Jack Schwagger ... "The call of the countertrend" There's a constellation of cognitive and emotional factors that make people automatically countertrend in their approach. People want to buy cheap and sell dear; this by itself makes them countertrend. But the notion of cheapness and dearness must be anchored to something. People tend to view the prices they're used to as normal and prices removed from these levels as aberrant. This perspective leads people to trade counter to an emerging trend on the assumption that prices will eventually return to "normal". Therein lies the path to disaster. - From the William Eckhardt interview in the New Market Wizards Interesting qns first up in that post …there’s this terrific series of books on trading in markets by Jack Schwagger …

“The call of the countertrend”

There’s a constellation of cognitive and emotional factors that make people automatically countertrend in their approach. People want to buy cheap and sell dear; this by itself makes them countertrend. But the notion of cheapness and dearness must be anchored to something. People tend to view the prices they’re used to as normal and prices removed from these levels as aberrant. This perspective leads people to trade counter to an emerging trend on the assumption that prices will eventually return to “normal”. Therein lies the path to disaster.
- From the William Eckhardt interview in the New Market Wizards

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