BFI August [censored] Thread
 

Someone mentioned having a low-content thread (that's not to say that there isn't a lot of low content around already). If you have off-hand positions you just took on, or a random question that doesn't deserve its own thread, post it here.

I'll start things off by saying weeeeeeeeeeeeeeeeeeeeee.... I love volatility, makes my job fun.

Re: BFI August [censored] Thread
 

[x] prospecitve yield curve positions bitting you in the ass!!

[x] prospective credit spread widening bets paying hansomely

[x] gold bet going complete opposite direction than planned...end up paying Mr. Now $ in december.

[x] long vol UP UP UP [img]/images/graemlins/smile.gif[/img]

[x] GS CDS bet (equivalent to long spread...i.e bet cost of insurance would come down from rediculous high reached last week) very correct

[ ] made a ton of real money on my thoughts and bets

[x] learned more about what exactly i should be looking for during job search

[x] get WAY too many annoying recruiter calls for jobs i would [censored] all over and pay not to do

[x] girlfriend came BACK from europe (thought she'd love it so much and want to stay [img]/images/graemlins/wink.gif[/img])

[ ] thread delivers (so far)

Barron

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[ QUOTE ]
I love volatility, makes my job fun.


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I hear that! Right now the minis are down about 30 handles with over 400K volume and the opening bell hasn't even rung yet. Gonna be a wild one today!

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[ QUOTE ]
[ QUOTE ]
I love volatility, makes my job fun.


[/ QUOTE ]

I hear that! Right now the minis are down about 30 handles with over 400K volume and the opening bell hasn't even rung yet. Gonna be a wild one today!

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Already put out a report on who has the biggest exposures today. Eurodollar and Fed Funds are almost a bigger story than even the equities. Volume is going to be real sick today. It's one thing when cnocern is centered around hedge funds and the fed here in the US, but now it's centered around Europe and their central bank.

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[ QUOTE ]
[ QUOTE ]
I love volatility, makes my job fun.


[/ QUOTE ]

I hear that! Right now the minis are down about 30 handles with over 400K volume and the opening bell hasn't even rung yet. Gonna be a wild one today!

[/ QUOTE ]

Mr. B do you trade the Vix? The Vix itself is pretty crazy. It's up something like 16% today. Do you also think there should be a VIX-like product to trade for S&P Futures (rather than doing multiple trades to get the same effect?

Anyone else feel free to answer as well, I just knew he was a trader.

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[ QUOTE ]
Mr. B do you trade the Vix? The Vix itself is pretty crazy. It's up something like 16% today. Do you also think there should be a VIX-like product to trade for S&P Futures (rather than doing multiple trades to get the same effect?


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Actually I do trade VIX options. The volatility of volitility is more volatile than just about anything. Huge huge huge swings from day to day and even hour to hour. I don't really think another volatility contract is neccessary for S&P futures since SPX is for all intents and purposes the same thing. VIX is thinnish trade anyway (although picking up recently). I'm not sure there are enough volatility of volatility players out there. It can be a great overall hedge for an options portfolio.

Re: BFI August [censored] Thread
 

Date for Aug. 8th.

Volume Call Put Total
106,233 26,731 132,964
Open Interest
1,275,259 572,325 1,847,584

It's not too thin though.

Also, the volatility of the VIX is definitely awesome to trade. Is it one of your main products? Also, where do you trade from?

Sorry for asking so many questions, I'm in my first month in the risk dept. of the CME clearing house and there's sooo much stuff to learn and look at.

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[ QUOTE ]

Blind to Trend,
'Quant' Funds
Pay Heavy Price
Computer Models Failed
To See Risk Increasing;
Global Alpha Off 16%
By HENNY SENDER and KATE KELLY
August 9, 2007; Page C1

Computers don't always work.

That was the lesson so far this month for many so-called quant hedge funds, whose trading is dictated by complex computer programs.

The markets' volatility of the past few weeks has taken a toll on many widely known funds for sophisticated investors, notably a once-highflying hedge fund at Wall Street's Goldman Sachs Group Inc.

....

Quant funds -- "quant" stands for quantitative -- generally operate by building computer models of market behavior and then allowing the computer programs to dictate trading. A recurring characteristic of the recent trouble in financial markets is that many lenders, funds and brokerages were following statistical models that grossly underestimated how risky the market environment had become.

...

Renaissance Technologies Corp., the most successful quantitative-hedge-fund manager, is holding up despite the market's downturn. Renaissance's flagship Medallion hedge fund is up about 25% so far this year

[/ QUOTE ]

Clearly Jim Simons has a signed pact with the devil. I expect proof of this any time now.

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Yeah, that's pretty insane actually. I have no idea of what/where his positions have been (whether they're spread out at all or whether he focuses on one sector). EIther way that's pretty danm insane.

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Jesus christ I cant decide wherther to put more money into financials and construction companies or less. Pretty seriously thinking of going on margin and just putting it all on black (that this is the bottom and things are oversold.)

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Also, im the new portfolio manager for a Mcgill fund managed by undergrads. I need to open a new trading account cause the old one was horrible. If I use something like etrade does anyone know if I need some sort of special account because we are a non-profit org.?

Do non profit organisations pay capital gains taxes?

Re: BFI August [censored] Thread
 

Toll brothers, beazer, and the like have already bounced back up pretty hard this week. It could just be short covering though :x

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Jesus christ I cant decide wherther to put more money into financials and construction companies or less. Pretty seriously thinking of going on margin and just putting it all on black (that this is the bottom and things are oversold.)

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Same here. I've been buying a lot but I think I'm done. Unless I run hot haha.

A few months [or years from now], we will be bitching on why we didn't load up on banks and construction companies. If only I'm working at a firm right now where I'm investing with others' money. I would be going all out. If I fail, I'll go back to poker but man, if I hit ...

Re: BFI August [censored] Thread
 

[ QUOTE ]
Also, the volatility of the VIX is definitely awesome to trade. Is it one of your main products? Also, where do you trade from?


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So far I have only used the VIX options for hedging and speculation. I haven't traded it as main trading vehicle. But I am currently engaged in a massive research project which uses VIX options as a major part of the strategy. Not sure if it will work or not but I hope to finish the testing in a few weeks.

Re: BFI August [censored] Thread
 

Alright, so I'm weak on the MS paint skills...

http://www.krishanpoker.com/investinggraph.JPG

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that looks earily like a dsup graph, hmmm

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I'm in love with a Chinese stock, ADY. Built a 16% position in it. Sick fundamentals, cheap valuation, low volume and under followed. Oh, and tax-free status through 2010 courtesy of the great capitalist nation that is the PRC.

Please someone poke holes in the company to keep my optimism in check.

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I mentioned to my then-gf-now-wife about five years ago that it was a great time to buy Cisco as I didn't see how it could get beaten down any further. I didn't know then that she bought 1000 shares at around $10 that has tripled now. Smart girl. We'll be holding this for a very long time.

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the markets today are going to be interesting, i don't have anything invested at all so i can sit back and see.

gl to those with big bucks invested, hope you've got short positions.

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Libor and fed funds rates diverging :x

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I'm incompetent so this is seriously LC but it seems to me that there's some serious value in the market right now. Everybody is selling out of the big S&P 500 funds so all those stocks are diving when only a few of them really should be; all the non-financial solid income companies look like really good values to me, I'm going to try to pick a few and get my free cash into them.

(though, LOL I saw some finance guy on The Newshour the other day using GE as an example of a solid company that was falling irrationally and I was like WTF I don't know the details on GE but they are one of the largest credit/capital companies in the world, if you think GE is a manufacturing company you are living in 1950)

Re: BFI August [censored] Thread
 

meh, they are dropping but maybe for good reason. Consumer spending was weak for the past two months, and as barron explained in his mammoth ask barron thread, credit problems can affect all areas of the economy. Im not sure where I want to put my money, im already at 90% stock, but I might go into margin if I see some deals next week.

Re: BFI August [censored] Thread
 

Went short a bunch of homebuilders across the board beginning of the week, almost got stopped out of all of them courtesy of the mid-week rally but now that the market regained its senses and is starting to go back down I'm back in black, baby!

This could be just a pullback before we proceed to set new record highs but I can't for the life of me see that happening and wouldn't advise anyone I like personally to go long stocks right now.

Kirk

Re: BFI August [censored] Thread
 

[ QUOTE ]
Went short a bunch of homebuilders across the board beginning of the week, almost got stopped out of all of them courtesy of the mid-week rally but now that the market regained its senses and is starting to go back down I'm back in black, baby!

This could be just a pullback before we proceed to set new record highs but I can't for the life of me see that happening and wouldn't advise anyone I like personally to go long stocks right now.

Kirk

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I dont think its so clear right now where the market is going in the short-term. It really depends on how people react to more subprime bad news.

Re: BFI August [censored] Thread
 

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I dont think its so clear right now where the market is going in the short-term. It really depends on how people react to more subprime bad news.

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That's a given, however the fact that we're right off the all-time high combined with the fact that a lot of bad news are coming out and, like you hinted yourself, more bad news is probably on the way, makes it a lot more likely that we're going down rather than up, imo, therefore a bet on the downside has a higher likelyhood of being right. Also, all the prevalent negative sentiment should discourage retail investors from buying heavy into the stock market, so there goes support. This is all obviously speculation on my part based on simple common sense.

Kirk

Re: BFI August [censored] Thread
 

If I want to learn more about sectors such as financial and insurance companies [how they make moneys, the average margins, P/E], what books should I read?

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I think the reason a lot of the big names unrelated to the credit crunch are dropping is because hedgies are selling the big liquid names to raise money for redemptions.

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how do you guys deal with the variance of making and losing money?

right now i've got a sports betting system which i thought about for a while and then paid $2K for the season. They've been going 3 years and returning a decent %. Only after I bought then i looked into the figures and saw for the last 2.5 years they've returned about 7% (although if you used growth account in 3 years from £5K to £115K or so...not bad...last 2.5 years about £40K to £115K).

then ive got poker, which always used to give me $250/hr or so till ive hit a 60K hand breakeven spell. my worst ever.

then ive got financial spreadbetting which i havent started but am tempted

then a project im spending so many hours on recently but will probabably make at best $2k a month for a lot of work (something id get satisfaction from though if it comes off).

so all in all my day is spent on the project, thinking about spreadbetting, playing poker, and now on saturdays sports betting.

i can easily have a swing of a 2K in an hour at poker, im betting $1K per game on the sports (was going to do $8K per game but figured that would be too much), and then a lot of time spent on a project which won't make much.

im breakeven in the last 6 weeks. part of me thinks im mad for putting myself through all this thought and instead pack up and go on an incredible 6 week round the world holiday which would cost a huge amount. but part of me really would love to do it. but then i can do that when i retire at 35 with loads cash and a fit wife [img]/images/graemlins/smile.gif[/img]

Re: BFI August [censored] Thread
 

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I think the reason a lot of the big names unrelated to the credit crunch are dropping is because hedgies are selling the big liquid names to raise money for redemptions.

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Yeah, this is my feeling; the big consumer goods companies and such shouldn't really be hurt by tight credit too much, most of them have tons of cash on hand, they're just falling because the hedges and the panicked market timers are selling out of everything. Of course if there actually is a recession it's bad for any kind of optional/luxury companies, but companies that continue to do well in recessions like necessary staples would be my bets. I guess I'm gonna move some money next week.

Re: BFI August [censored] Thread
 

[ QUOTE ]
[ QUOTE ]
I think the reason a lot of the big names unrelated to the credit crunch are dropping is because hedgies are selling the big liquid names to raise money for redemptions.

[/ QUOTE ]

Yeah, this is my feeling; the big consumer goods companies and such shouldn't really be hurt by tight credit too much, most of them have tons of cash on hand, they're just falling because the hedges and the panicked market timers are selling out of everything. Of course if there actually is a recession it's bad for any kind of optional/luxury companies, but companies that continue to do well in recessions like necessary staples would be my bets. I guess I'm gonna move some money next week.

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Well, except that a lot of consumers buying those goods were doing so with home equity loans and stock market gains. They don't feel quite so flush right now and may turn off the money faucet.

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Someone posted a link to a website with allot of articles, I believe it was in response to something DcifrThs said anyone still got that link?

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Well, except that a lot of consumers buying those goods were doing so with home equity loans and stock market gains. They don't feel quite so flush right now and may turn off the money faucet.

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Yeah but that's just a general recession, right? Anyway, my other major idea was to put all my money in cash and wait for the foreclosures to really get underway, maybe about a year from now, and try to pick up a house dirt cheap.

Re: BFI August [censored] Thread
 

How is the headline that Goldman has to bail out yet another failing fund with 3B of its own cash good news?! Has everyone gone insane?
In other news I'm having a pretty good day with all of my shorts falling today... unfortunately since I have no plans of cashing out until the trend changes that doesn't really mean much.

Kirk

Re: BFI August [censored] Thread
 

This isn't considered bailing it out. And a lot of the capital isn't sepcifically Goldman's that they raised. This is a bunch of rich people (Goldman Sachs Co., some rich billionaire guy, and one other firm I think) buying into the fund because they think things are going to turn around.

It's not like Bear Stearns where its collateral was going to be seized and thus the parent comes in to save the day (well, absorb the loss anyway). This is being spun (that might be the wrong word) as people seeing the market as having overreacted and now are pouring money in to get in near the bottom.

Re: BFI August [censored] Thread
 

That makes sense... sort of. My only argument is, with more and more banks/homebuilders/mrtge brokers/hedge funds coming out of the I'm-in-really-deep-[censored] closet, how can anyone reasonable assume we're anywhere near the bottom?

Kirk

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[ QUOTE ]
That makes sense... sort of. My only argument is, with more and more banks/homebuilders/mrtge brokers/hedge funds coming out of the I'm-in-really-deep-[censored] closet, how can anyone reasonable assume we're anywhere near the bottom?

Kirk

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the bottom of the quant equity long/short "market" (GS NAEO/GEO, AQR, DE Shaw, etc all having similar positions and all taking hits as everyone reduces leverage and as multi-strat funds reduce their exposure to that strategy after others have gotten screwed) need not have anything to do with the bottom of the general market drawdown.

Re: BFI August [censored] Thread
 

can someone please recommend me a good bedtime reading book.

something finance based but not as in a learning book, more of an interesting read about the finance industry/particular person in the finance world.

many thanks.

ps i've read the first 100 pages on liar's poker on holiday once but wasnt my copy and had to give it back. thought that was okay.

Re: BFI August [censored] Thread
 

Any good recs for some construction companies? I'm looking to take some risk so small market value with lots of room room to go grow would be great.

Re: BFI August [censored] Thread
 

[ QUOTE ]
can someone please recommend me a good bedtime reading book.

something finance based but not as in a learning book, more of an interesting read about the finance industry/particular person in the finance world.

many thanks.

ps i've read the first 100 pages on liar's poker on holiday once but wasnt my copy and had to give it back. thought that was okay.

[/ QUOTE ]

Both "How I made 2M in the stock market" by Darvas and "Reminiscences of a Stock Operator" are really great books if you havne't read them already. They capture your interest and hold it and you can understand everything even if you're tired by day's end.

Kirk

Re: BFI August [censored] Thread
 

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[ QUOTE ]
can someone please recommend me a good bedtime reading book.

something finance based but not as in a learning book, more of an interesting read about the finance industry/particular person in the finance world.

many thanks.

ps i've read the first 100 pages on liar's poker on holiday once but wasnt my copy and had to give it back. thought that was okay.

[/ QUOTE ]

Both "How I made 2M in the stock market" by Darvas and "Reminiscences of a Stock Operator" are really great books if you havne't read them already. They capture your interest and hold it and you can understand everything even if you're tired by day's end.

Kirk

[/ QUOTE ]

"my life as a quant" by derman if you're at all mathy/nerdy