Topic: The RAWK Investment/Trading Thread

[El Campeador]

I think at the minute that some of the major banks are currently undervalued by the market and that they should be a decent medium/long term investment.

I humbly disagree; I wouldn't touch them with a stolen pole long term. I would trade them for short periods, but the fact is that noone knows which of them are going to get nationalized, which of them are going to be allowed to go under, and which would survive in their current state.

Those that do survive cannot be expected to get back to their previous valuations because many were making profits while being incredibly overleveraged. A traditional bank might be able to make a 1% profit by loaning out to debtors some of the money of their depositors, but the days of making 10% by borrowing shedloads of money in the overnight markets, selling that to some unsuspecting mortgage punter, and then collateralizing and selling off the risk (while booking profits that would never materialize) is over.

Does the traditional, over-regulated bank have a rosy future in terms of growing valuations? I don't think so. We need safer banks, with more stringent lending guidelines, which means my money goes into energy, technology and healthcare stocks that probably have much more upside.

[Dread Breath]

You should be safe enough on RAWK mate

I'm not referring to any legal ramifications any posters might have in giving advice - from my perspective it just isn't fair to ask for advice on specific stocks for a lot of reasons. General market direction sure - maybe specific commodities, indexes or broad categories of stocks, but nothing else.

BTW agree with El Campeador's opinion on banking stocks - a large market section that is OK to give advice about if you ask me.

[JP-65]

EL C & DB

Absolutely, even good advice, without knowing time horizon, timing of entry, appetite for/capability to handle risk, can turn out to be bad advice.

My view on sectors right now, is pretty simple.....if I was going to look for one "sure" thing, it would have to be oils, because not much new is being found, and demand will come back.  Now how you go about it is the big question......crude, integrated's, drillers, equipment suppliers etc, provides a broad array of options.

[Dread Breath]

Thought this was interesting:

Gold

By Colin Twiggs
March 17, 2009 2:30 a.m. ET (5:30 p.m. AET)

Spot gold is headed for another test of the band of support between $890 and $900. Failure of support would break the rising trendline and warn of a down-swing to test $700. Breakout above $950 would indicate another test of $1000.

Gold has behaved out of character over the past few months, diverging from its usual relationships. Performance against the dollar is normally inverted: when the dollar strengthens, gold falls — and vice versa. Gold made a typical response from 2006 to mid-2008: making a strong bull trend when the dollar weakened. In late 2008, however, the dollar reversed and started to strengthen. Gold initially weakened, as expected, but then rallied, testing its previous highs — even while the dollar continued to rise.

When it comes to precious metals, silver and platinum normally follow gold closely. But now the two have diverged from gold, with both in a strong down-trend.

After finding support at $9 silver rallied to $15, but is likely to re-test support before there is any suggestion of a trend change.

More susceptible to the economic cycle, because of stronger industrial demand, platinum underwent a dramatic fall in 2008. The primary trend is definitely at odds with gold.

What All This Means

Gold is rising despite a strong dollar because the investing public are looking for safety — buying both the dollar and gold in their need for security. Crude oil, silver and platinum, however, warn us that something may be amiss. With the collapse of the global debt bubble, we face an extended period of deflation. And while gold is a great inflation hedge, it is a pretty lousy investment during a deflation.

There is an alternative scenario, however, which is driving the current divergence. If the (US) federal government pulls the inflation lever, gold prices will soar. Inflation is a tempting solution, especially with massive federal debt, enormous contingent liabilities, collapsing housing prices, and a banking sector on life support. The easy way out may be hard to resist. With liabilities denominated in your own currency, it is a simple matter to give your creditors a "haircut". Double the money supply and your debts are halved in real terms, house prices miraculously recover and bank collateral will rise from the dead. There is just one catch, however. Hyper-inflation. And inevitable collapse of the already-creaking fiat monetary system.

But that would not be bad news for everyone. If the Fed added a few zeros to their dollar bills, gold bugs would be cheering from the sidelines.

In short, gold is likely to decline as long as we experience deflation, but would quickly reverse in the event that the US starts to "print" money (ie. monetize its debt). That would most likely be flagged by a falling dollar.

link

[mickdelick]

Is it worth buying shares in Barclays... Now they are around 52p?

Bought at 52... Sold today at 94

[Dread Breath]

Bought at 52... Sold today at 94

Nice work.

[mickdelick]

Nice work.

Sold £2500 at 94 then the other £2500 today at £1.13

[CB]

If you are looking for an investment opportunity to back then lithium must be high up there. Much of the developments in electric power (quick recharge batteries, electric vehicles, etc) are going to use lithium in a big way. Bolivia is going to be one of the big sources and many of the big miners are currently courting investors for major projects there (when the government gives approval). I also know that high net-worth private investors are looking to invest directly in lithium mining in Argentina, Bolivia, Canada, Chile and Venezuela. Unfortunately lithium is (unfortunately) not traded like other commodities so you can only really invest in equities. Look at Sociedad Quimica y Minera SA (SQM) and Nordic Mining ASA in mining and FMC Corp and Rockwood Holdings Inc in processing. Also Sumitimo Corp and Mitsubishi Corp are going to lead the funding of a lot of the South American mines.

[BazC]

How's trading been for you guys these days? Just read through this thread and it seems to have died down last few months!

I'm at home now and have been thinking about starting trading- but don't know where to start.

Would appreciate it if someone can point me in the right direction- to the sites they use for trading and daily information, as well as learning about the game as it were (especially some of the analysis techniques). Also, good charting software that I could use. Finally, I don't know what to focus on- there's just so much out there- equities, FX, commodities and their options...

Google is a great tool but sometimes it has a tendency to swamp you with so much information, that the non-expert doesn't know how to sift through the tat to get to the gold.

[El Campeador]

Mixed results really - I try to avoid the summer months myself because the volume is anemic, and tends to amplify false signals.

I did buy oil around Christmas, and let it go just last week, anticipating a pullback - trade of the year so far for me at around 90% return. I'm bearish on banks and financials short term, carving out a position in FAZ.

On most everything else, I don't know where the next 10% move is going to come from - up or down - so I'm waiting it out.

[Daniel Cabbaggio]

not having a dig or anything but in light of M jacksons death, would his record labels shares (if they are a PLC) be expected to have a jump in anticaption of increased ablum sales, media exposure etc?

would be interesting to know what the response of the markets is, in relation to Big news headlines such as this one
Almost like the dialouge in the movie Wall Street (reguarding gordy Geeko), when they stated he was selling Nasa shares 10 seconds after the Challenger exploded

[BazC]

not having a dig or anything but in light of M jacksons death, would his record labels shares (if they are a PLC) be expected to have a jump in anticaption of increased ablum sales, media exposure etc?

would be interesting to know what the response of the markets is, in relation to Big news headlines such as this one
Almost like the dialouge in the movie Wall Street (reguarding gordy Geeko), when they stated he was selling Nasa shares 10 seconds after the Challenger exploded

Already checked it out- not to trade but just to see what would happen to the price (I've been looking at trading all day so it was something I thought of almost straight away after the news broke  ) but it looks like he had his own label and it was privately owned.

[Sinos]

Already checked it out- not to trade but just to see what would happen to the price (I've been looking at trading all day so it was something I thought of almost straight away after the news broke  ) but it looks like he had his own label and it was privately owned.

He was signed to Sony/ATV but his death ain't gonna have significant enough impact on Sony's price.

[Daniel Cabbaggio]

He was signed to Sony/ATV but his death ain't gonna have significant enough impact on Sony's price.

what about apple/itunes, just noticed "Thriller" is top of the album charts instanly

[BazC]

He was signed to Sony/ATV but his death ain't gonna have significant enough impact on Sony's price.

Thought it was Epic Records- well that's what I found anyway... not much research mind, just a quick google, saw he had his own label, got onto their site, saw he was signed to them... couple hours later checked it again to see if there was more official news on the website regarding his death (when I first went on it there was nothing) and they just had a picture of him and nothing else.

[BazC]

Mixed results really - I try to avoid the summer months myself because the volume is anemic, and tends to amplify false signals.

I did buy oil around Christmas, and let it go just last week, anticipating a pullback - trade of the year so far for me at around 90% return. I'm bearish on banks and financials short term, carving out a position in FAZ.

On most everything else, I don't know where the next 10% move is going to come from - up or down - so I'm waiting it out.

I got hold of some books the other day- a few Elder ones to give me an introduction to trading and some technical analysis ones as well as a few strategy ones. Hoping to get through a couple and then to put together a portfolio...

Anyway, I think you recommended an Elder book to me once - I found a PM from yourself listing a few books- (trading for a Living was one) so thought I'd say thanks, and at the same time bump this thread 

[TOGH]

Has anyone got any advice as to the type of questions I could be asked in an interview with a large trading firm that seems to specialise on options?

[TheWalrus]

Planning to file my tax return this week for the last three years (I hate doing them hence the lateness) and it occurred to me that during one of those years I made a £10k trading loss when CART went bust. Is there any way I can claim any tax relief on the loss? I know I'd have to pay cgt on profits, does it work the other way?

[smorgasbords]

Has anyone got any advice as to the type of questions I could be asked in an interview with a large trading firm that seems to specialise on options?

Not an expert, but I'd expect there to be questions on the Greeks (the mathematical derivatives), and questions to just test your general way of thinking, e.g. "how many petrol stations are there in Britain".

[BazC]

Not an expert, but I'd expect there to be questions on the Greeks (the mathematical derivatives), and questions to just test your general way of thinking, e.g. "how many petrol stations are there in Britain".

Hahaha! I got that exact question once. Uncanny.

[smorgasbords]

Hahaha! I got that exact question once. Uncanny.

I think the investment banks have a fairly generic set. "How many tennis balls in a jumbo jet", and "how many aeroplanes are in the air at any one time" are a couple of others.

[BazC]

I think the investment banks have a fairly generic set. "How many tennis balls in a jumbo jet", and "how many aeroplanes are in the air at any one time" are a couple of others.

Yeah I've heard of many 'versions' of the estimation questions- how many street lamps in London, how many orange juices drank in USA every day, how tall is that building out the window in terms of £1 coins... etc. They're quite hard to prepare for I think- you either get lucky with your train of thought on how to work them out or unlucky if you go down a back alley...

Anyway, bit off topic 

[Gus 1855]

Been an interesting six months in the wine investment world. Plenty of people making a killing on the first growths from Bordeaux 2008. Literally a 100% increase for many in the space of a few days with Lafite and Latour 2008. Lesser gains on other estates who released early.

2005s having shown signs of recovery earlier in the year have levelled out again with the advent of 2008. 1982s gone pear-shaped and DRC dive-bombed, otherwise a better than expected year.

Anyone buy wine for investment?

[TOGH]

Yeah I've heard of many 'versions' of the estimation questions- how many street lamps in London, how many orange juices drank in USA every day, how tall is that building out the window in terms of £1 coins... etc. They're quite hard to prepare for I think- you either get lucky with your train of thought on how to work them out or unlucky if you go down a back alley...

Anyway, bit off topic 

Do they give you any approximations such as the population of the area etc?

Tried the petrol station one and got 14,000, according to wiki there was 9,271 in 2007

[BazC]

Do they give you any approximations such as the population of the area etc?

Tried the petrol station one and got 14,000, according to wiki there was 9,271 in 2007

They gave me no approximations- just asked me the question. But you shouldn't need to really approximate radical facts but general ones that you know- I worked it out by population- 60m in the UK. Then, approximated number of cars- reasoned that there'd be slightly less than half due to many people not having cars, but then quite a few people having multiple cars, haulage etc. Said 25m cars in that case. Then said that I thought that there'd be a couple of thousand vehicles to a petrol station on average, so got to 12500.

Interviewer told me that that was the right answer- but when I checked after I got the number you did - around 90000. Doesn't matter what answer you actually get though, as it's all about how you do the reasoning and calculation in your head and how fast you can get the answer I guess. Of course, if you get the right answer (or they think you did!) then it can't be a bad thing!

[El Campeador]

Sometimes, you just gotta look at a trade, and think - man that was good. This was probably my best single trade ever. Obviously, building a portfolio over the long term is made up of many trades, but sometimes, getting one right in a big way can be very satisfying.

I broke my elbow Christmas Eve, and I had surgery Boxing Day. On the evening of the 24th, broken, twisted on painkillers, I did something I never do - traded after hours and under the influence. I couldn't believe that the DXO (double long crude oil) had dropped to 1.77. It was an afterhours drop like I'd never seen, and I was convinced it was some sort of a pricing anomaly. I had entered and exited once already, so I was keeping an eye on it, and felt that crude, while certainly overpriced at $147, was hideously underpriced at the time around $35. Worst case scenario, I thought, it stays at $35 for a while, but longterm - the dollar's under pressure, which will support crude, and while demand was down, it wasn't down as much as the crude crash would suggest. Inventories were relatively tight compared to years past, and long term, it's an irreplaceable resource. Getting in at a multiyear low to a leveraged forward ETF didn't seem like that bad an idea. The hillbilly heroin the doctor had shot me up with made me pull the trigger, I swear I'd have never done it had I not missed an entire trading day 

When it sprang back, I sold two fifths of my position to bank some profit, and lessen the risk of going long.

In June, I decided crude had had enough. Technicals were alarming, and any nominal increase (or overall decrease) in demand did not justify a 100% runup. Demand hadn't doubled after all, and the outlook was bleak. The summer driving season hadn't taken its usual whack at crude inventories. More alarmingly, refinery utilization in the States, which traditionally runs above 90% (even 95%) in the summer months around the 4th of July, has been sitting at the bottom of the 80% range.

So I sold.

12/24/2008          Bought 5000 DXO @ 1.77                     -8,940.99    
01/07/2009           Sold 2000 DXO @ 3.0301                     5,960.02    
06/15/2009           Sold 3000 DXO @ 4.4901                    13,370.00    

Outlay - $8,941
Return - $19,330
Profit - $10,389

 

[CB]

Has anyone got any advice as to the type of questions I could be asked in an interview with a large trading firm that seems to specialise on options?

I work for an investment banking firm and sometimes get involved in interviewing candidates. Two questions I often ask are straight forward ones, namely what is the FTSE-100 at today and what are the headlines in today's Financial Times. It still amazes me how many people can't answer these questions.

[CB]

Just wondering if anyone else has a liking for investments in minerals and natural resources. I bought 2,000 shares in Vedanta Resources plc back in April at £7.43. They are now trading at £17.49 and I am wondering whether I should stay for the ride or cash in. Any thoughts? Also bought 12,000 shares in Indus Gas plc for 149.50p at the same time and they have hit £3 but I think this one has got more legs in it.

I also have holdings in Gasol plc and Hallin Marine Subsea International plc but they have been somewhat erratic. Stupidly I missed an opportunity to get out of Gasol when they reached £4.90.

[PaulF]

They gave me no approximations- just asked me the question. But you shouldn't need to really approximate radical facts but general ones that you know- I worked it out by population- 60m in the UK. Then, approximated number of cars- reasoned that there'd be slightly less than half due to many people not having cars, but then quite a few people having multiple cars, haulage etc. Said 25m cars in that case. Then said that I thought that there'd be a couple of thousand vehicles to a petrol station on average, so got to 12500.

Interviewer told me that that was the right answer- but when I checked after I got the number you did - around 90000. Doesn't matter what answer you actually get though, as it's all about how you do the reasoning and calculation in your head and how fast you can get the answer I guess. Of course, if you get the right answer (or they think you did!) then it can't be a bad thing!

That's really spooky, just walking to the car this morning, and for some unknown reason  I was thinking about questions that 'tested' people's powers of logical thought and ability to filter out relevant information when looking for an answer, rather than ability to recall an answer.  I didn't come up with any specific questions, but they are exactly the kind of thing I had in mind.  Are there any HR depts in investment banks hiring at the moment.....

[PaulF]

Been an interesting six months in the wine investment world. Plenty of people making a killing on the first growths from Bordeaux 2008. Literally a 100% increase for many in the space of a few days with Lafite and Latour 2008. Lesser gains on other estates who released early.

2005s having shown signs of recovery earlier in the year have levelled out again with the advent of 2008. 1982s gone pear-shaped and DRC dive-bombed, otherwise a better than expected year.

Anyone buy wine for investment?

No, but if you are thinking of starting a fund or business I can invest my SIPP in, then maybe we're talking

SIPP , sip pun not intended.

[CB]

Are there any HR depts in investment banks hiring at the moment.....

I work for an investment banking firm and we are currently recruiting at junior levels. The reason being that we can see a need for more people in 12-18 months time and we need them bedded in well before then. Although it has to be said that mine is a mid-market firm and not bulge bracket. Maybe the bigger players will hold off on the recruitment for now as recruits will of course flock to them when they re-open the doors.

[PaulF]

I work for an investment banking firm and we are currently recruiting at junior levels. The reason being that we can see a need for more people in 12-18 months time and we need them bedded in well before then. Although it has to be said that mine is a mid-market firm and not bulge bracket. Maybe the bigger players will hold off on the recruitment for now as recruits will of course flock to them when they re-open the doors.

Fab. They'll still need people in HR to sort the wheat from the chaff!

(ps are you recruiting HR people at junior levels, or staff in general?)

[scatman]

bad news for chelsea building society, 41m fraud!

[CB]

Fab. They'll still need people in HR to sort the wheat from the chaff!

(ps are you recruiting HR people at junior levels, or staff in general?)

Not HR staff. We don't have those.

[ttnbd]

bad news for chelsea building society, 41m fraud!

you should have seen one of the questions and answers they put up for these results.  One was "Who is to blame for these bad lending decisions?" to which they originally put a reply of "No-one is to blame" which they later changed to "no one individual".

There will be more of the fraud to come out for all banks/building societies that have buy-to-let mortgages on their books, especially if they've bought those loans from other firms.

[BazC]

Was thinking of this thread the other day as I've been reading a lot around the investment/trading field lately. Part way through a technical analysis book, but I don't find it intellectually appealing basing trading decisions solely on historic price/volume data, although I appreciate the psychology involved and the effect this has in the market amongst investors. Started looking at learning more about fundamentals- accounting statements (which I know a bit about from previous studies), ratios and economic factors (industry profile, competition, barriers to entry, etc).

Also been interested in valuation and pricing. Followed a course on options pricing and also got hold of a valuation book- quite hardcore on the theory but it's interesting if only practical for use in professional situations.

That's really spooky, just walking to the car this morning, and for some unknown reason  I was thinking about questions that 'tested' people's powers of logical thought and ability to filter out relevant information when looking for an answer, rather than ability to recall an answer.  I didn't come up with any specific questions, but they are exactly the kind of thing I had in mind.  Are there any HR depts in investment banks hiring at the moment.....

Questions like that and brainteasers are something I enjoy trying to work out when I come across them.  There're approximation ones, but then also the ones requiring you to think outside the box and be a bit innovative with use of maths and stats.

I heard of a consultancy one as well- I think one from McKinsey & Co analyst interviews asks you how you'd have the whole of the UK revert from driving on the left to driving on the right hand side of the roads. The catch being the switch needs to take place at the same time across the whole country and overnight, but you can have as long as you like to prepare for it.

I work for an investment banking firm and we are currently recruiting at junior levels. The reason being that we can see a need for more people in 12-18 months time and we need them bedded in well before then. Although it has to be said that mine is a mid-market firm and not bulge bracket. Maybe the bigger players will hold off on the recruitment for now as recruits will of course flock to them when they re-open the doors.

Recruiting in M&A? What sectors does your firm cover?

I've heard of a few of the big banks picking up their hiring- BarCap, MS and ML might be looking at massive hiring in certain areas.

you should have seen one of the questions and answers they put up for these results.  One was "Who is to blame for these bad lending decisions?" to which they originally put a reply of "No-one is to blame" which they later changed to "no one individual".

There will be more of the fraud to come out for all banks/building societies that have buy-to-let mortgages on their books, especially if they've bought those loans from other firms.

Read a couple of interesting articles regarding Spanish banks and US prime mortgage foreclosures/serious delinquencies increases on FT Alphaville yesterday. The Spanish situation especially sounds like it could be in a bad way with bad loans being hidden away off balance sheet or not being valued properly (adjusted to market).

[ttnbd]

Read a couple of interesting articles regarding Spanish banks and US prime mortgage foreclosures/serious delinquencies increases on FT Alphaville yesterday. The Spanish situation especially sounds like it could be in a bad way with bad loans being hidden away off balance sheet or not being valued properly (adjusted to market).

The spanish economy is a basket case, ever increasing unemployment with ever decreasing house prices while the strengthened euro is unlikely a great help to them.  While the ex-pats over there will be suffering as their £ income is worth less in €'s.

Saw something briefly on bloomberg the other day (thursday I think) where a guest they had was mentioning something that Gietner said about the economy.  He said something about the US only just starting to see the prime delinquences hit the books now and that's, obviously, a much much bigger issue and that the government shouldn't say there's a recovery just yet.  We'll likely have the same thing over here but a big chunk of it is unlikely to occur until base rate starts increasing again.

It's going to be a long bumpy road and I'd say we are deffo heading for another dip if, by some miracle, the GDP shows growth in Q3.

[BazC]

The spanish economy is a basket case, ever increasing unemployment with ever decreasing house prices while the strengthened euro is unlikely a great help to them.  While the ex-pats over there will be suffering as their £ income is worth less in €'s.

Saw something briefly on bloomberg the other day (thursday I think) where a guest they had was mentioning something that Gietner said about the economy.  He said something about the US only just starting to see the prime delinquences hit the books now and that's, obviously, a much much bigger issue and that the government shouldn't say there's a recovery just yet.  We'll likely have the same thing over here but a big chunk of it is unlikely to occur until base rate starts increasing again.

It's going to be a long bumpy road and I'd say we are deffo heading for another dip if, by some miracle, the GDP shows growth in Q3.

Yeah the US prime mortgage situation is a bit precarious still.  The view with US housing market and mortgage stability was that it'd only come when house prices started rising, let alone stabilising... which makes sense as there must be shiteloads of people around with mortgages worth a lot more than the value of their house who are on the brink- I wonder how much it would effect the economy though- simply because they're of lower risk of default so there wouldn't be many defaulting. I guess the credit markets are still fragile though so even such a wave could be very serious? Sub prime mortgage defaults may have started slowing but it looks like the effect they've had on the economy's dragging down even those in the prime tranches.

On the economy- you'd rely on the US spending it's way out of recession, but now that households are deleveraging, it's going to need another hotbed of materialism in the world to help kickstart things. With China and India around, maybe it could happen quickly. Not holding my breath too much though.

[BazC]

One for Gus:

Wine doing fine

[mulfella]

Can anybody recommend a company / site to open a small trading account with?