Trade ideas...lets see what we can come up with

[Mr. Now]

Barron,

How about a small wager of exactly 100USD between us, in which you bet against the price of the GLD ETF as of yesterday (Friday close) being higher 6 calendar months hence?

I take the other side of the even money wager-- betting on a higher GLD price 6 months from the Friday close-- even though you are cocksure that gold prices are definitely heading lower, and you are (in theory) therefore supposed to lay me very favorable odds.

For the record, I am not a formally trained economist [img]/images/graemlins/wink.gif[/img]

This is a friendly wager, (even money), and a spectator sport, designed to entertain and perhaps even educate some of the readers of this forum.

I realize my English may not be perfect. What say you?

[bills217]

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How about a small wager of exactly 10000USD

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HU INVESTING CHALLENGE FOR PORTFOLIOS PLZ

[DesertCat]

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For long-term value investors, do you take into account this type of information?

I assume not or else my road just got a little longer.

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this thread is specifically aimed at active managers (alpha), not long term passive allocations (beta)

Barron

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Value investors are the epitomy of alpha generators, i.e. Buffett has generated as much or more alpha as anyone in the world.

For the most part, if you are a value investor, this kind of information can usually be ignored. Typically you are looking for the best risk/reward ratios among investments in your circle of competence, and ignore the macro-economic picture. Buffett has said this many times, and most of his investments are like that. There are exceptions, such as his recent currency bet, but that's more a factor of the extreme size of his portfolio, and his limited opportunities in large cap stocks.

Another counter example could be if you are buying a company whose profitability is linked to low interest rates, you've got to make a reasonable assumption about the future of interest rates. But usually you are just trying to find good businesses at very low prices, with a margin of error so great that it doesn't matter what the economy is doing.

[DcifrThs]

[ QUOTE ]
Barron,

How about a small wager of exactly 100USD between us, in which you bet against the price of the GLD ETF as of yesterday (Friday close) being higher 6 calendar months hence?

I take the other side of the even money wager-- betting on a higher GLD price 6 months from the Friday close-- even though you are cocksure that gold prices are definitely heading lower, and you are (in theory) therefore supposed to lay me very favorable odds.

For the record, I am not a formally trained economist [img]/images/graemlins/wink.gif[/img]

This is a friendly wager, (even money), and a spectator sport, designed to entertain and perhaps even educate some of the readers of this forum.

I realize my English may not be perfect. What say you?

[/ QUOTE ]

sure, 100USD 6mo from friday's close (December 8th 2007)

the reason you can't give odds in these scenarios is because a lot can happen in 6 months. downside inflation pressure could delay the bundesbank & BOE, & BOJ from raising rates thus prolonging the liquidity boom while growth could surprise down slightly pushing demand for risky assets up.

further, i could be right and gold falls but then lets say i'd want to cover the short, i couldn't. i'm locked in for 6 months.

but i'll agree to the friendly wager of $100 in hard US currency payable via some poker site or whatever.

GL (and get the gold etf close as of friday and post it here)

EDIT: gold for august delivery closed at 653.1. the ETF you linked had it closed at 64.22. which would you like to use (i.e. on december 7th, since the 8th is a saturday, we can either use gold's close for february delivery, or the ETF you linked).

thanks,
Barron

[DcifrThs]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
For long-term value investors, do you take into account this type of information?

I assume not or else my road just got a little longer.

[/ QUOTE ]

this thread is specifically aimed at active managers (alpha), not long term passive allocations (beta)

Barron

[/ QUOTE ]

Value investors are the epitomy of alpha generators, i.e. Buffett has generated as much or more alpha as anyone in the world.

For the most part, if you are a value investor, this kind of information can usually be ignored. Typically you are looking for the best risk/reward ratios among investments in your circle of competence, and ignore the macro-economic picture. Buffett has said this many times, and most of his investments are like that. There are exceptions, such as his recent currency bet, but that's more a factor of the extreme size of his portfolio, and his limited opportunities in large cap stocks.

Another counter example could be if you are buying a company whose profitability is linked to low interest rates, you've got to make a reasonable assumption about the future of interest rates. But usually you are just trying to find good businesses at very low prices, with a margin of error so great that it doesn't matter what the economy is doing.

[/ QUOTE ]

i think you know what i meant. it is aimed at macro type bets. i thought he meant "long term passive portfolio" and i corrected that.

value-investing, isn't the industry i'll be going into, nor is it as practiced as it should be. despite buffet "telling 'em time and again."

equities aren't my passion and there are so many things going on in the world i wanted to make a non-equity alpha generation thread.

so pick away!
Barron

[Mr. Now]

Barron,

OK.

Wager size:
$100

Instrument:
GLD (ETF)

Base price as of start date-- Friday June 8 close:
64.22

What we are betting on:
The closing price of GLD on Friday December 7 (8th is a Saturday)
If GLD closes lower than 64.22 on this date, Barron wins, otherwise Mr. Now wins.

Terms:
Payoff to winner from loser not later than December 14 2007; payment method by mutual agreement at that time (poker site, PayPal etc)

I really like my chances here. Let's talk on December 7th.

[DcifrThs]

WSJ article on bond yield movements:

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Investors reacted to the interest-rate move by pouring $3.5 billion into money-market funds this past week. While these short-term funds won't get a rate boost from higher long-term rates, investors won't lose money if bond and stock prices keep falling.


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step 1 [img]/images/graemlins/smile.gif[/img]

Barron

[DcifrThs]

YAY [img]/images/graemlins/smile.gif[/img]

[ QUOTE ]
Gold, Silver Fall as Higher Interest Rates May Pare Demand

By Choy Leng Yeong

June 12 (Bloomberg) -- Gold fell, resuming a decline that sent prices last week to their lowest level since March, on concern that higher global interest rates may cut demand for the metal as an alternative investment. Silver also dropped.

Gold fell 3.9 percent last week, the biggest drop in three months, after the European Central Bank and the Reserve Bank of New Zealand raised rates. Holding gold becomes less attractive when rates rise because the metal has no fixed returns. U.S. Treasury yields rose today after China and Japan showed consumer and producer prices rising, renewing speculation that faster global inflation may prompt central banks to raise rates.

``The climbing Treasury yields could keep gold prices a little lower,'' said Michael K. Smith, president of T&K Futures and Options Inc. in Port St. Lucie, Florida. ``Higher rates might bolster the dollar and keep inflation away. No inflation is bad for gold.''

Gold futures for August delivery fell $5.90, or 0.9 percent, to $653.10 an ounce on the Comex division of the New York Mercantile Exchange, after dropping as low as $649.50. The price on June 8 touched $647.80, the lowest since March 16.

Silver for July delivery fell 18.5 cents, or 1.4 percent, to $13.09 an ounce. The metal plunged 3.3 percent on June 8, the biggest decline for a most-active contract since March 2. It fell 5.1 percent last week.

The yield on the 10-year bond rose 6 basis points to 5.22 percent at 1:29 p.m. in New York, according to bond broker Cantor Fitzgerald LP.

Dollar Rising

The dollar rose to near a two-month high against the euro today and has climbed for a fifth day, the longest winning run since October, as speculation increased that the Federal Reserve will hold interest rates steady this year.

``You're going to make more money in agriculture than in gold,'' Jim Rogers, chairman of Beeland Interests Inc., said yesterday in an interview. ``I would worry about gold.''

Traders assigned a 44 percent chance that the Fed will raise rates 25 basis points by December as of yesterday, compared with no chance a month ago, according to options on Fed funds futures.

``If the interest rates get high enough, people would just go for the guaranteed rate of return versus the speculative one, gold,'' Smith said. ``Until the market absorbs all the negative information, I won't start recommending silver and gold again. Grain is where the action is for me.''

A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.

To contact the reporter on this story: Choy Leng Yeong in Seattle at clyeong@bloomberg.net .

Last Updated: June 12, 2007 14:15 EDT

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Barron

EDIT: i think it would only be gentlemanly of me to offer you a buy out of $75 this early on. global rates are sooo unlikely to fall in the next 6 months (while chinese & other emerging mkt inflation will only push rates higher) that i should offer you the buy out option. lemme knwo Mr. Now [img]/images/graemlins/smile.gif[/img]

[scott1]

Quoted from your gold falling article -
``You're going to make more money in agriculture than in gold,'' Jim Rogers, chairman of Beeland Interests Inc., said yesterday in an interview. ``I would worry about gold.''

Iowa farmland is the clear play here.

[DcifrThs]

[ QUOTE ]
Quoted from your gold falling article -
``You're going to make more money in agriculture than in gold,'' Jim Rogers, chairman of Beeland Interests Inc., said yesterday in an interview. ``I would worry about gold.''

Iowa farmland is the clear play here.

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LDO.

but i didn't make a prop bet on farmland.

Barron