論值角度分析認股證 – 7

個人參考數據

中國海外發展(688)的收市價：

2006-9-15            $5.81

2006-9-22           $6.22

2006-9-29           $6.01

 

3662 - 中海摩通六一零購(@EC) :

2006-9-22

收市價:  $0.78

引伸波幅(%):  36.19%

實際槓桿:  7.03x

對沖值:  88.14%

每日時間值損耗:  -0.31%

引伸波幅敏感度:  0.49%

 

2006-9-29

收市價：  $0.6

引伸波幅: 40.59%

實際槓桿:  8.09x

對沖值:  80.72% 

每日時間值損耗:  -0.62%

引伸波幅敏感度:  0.76% 

 

(本文作為記下個人投資的心路歷程及其分析理據，作為日後參考，更希望得到各前輩及朋友指點，分享心得，而並不是任何的投資建議或認股證推介。)

 

Ao xiang, there are many investors or bloggers who are not familiar with calculus but they know about simple mathethics. Hope you could elaborate on how to select stocks using simple but critical rule.

Reduce your speculative activities. Go through financial statement of the listed companies which you would like to be a shareholder. You have to read financial statement over the past three to five years.  As Warren Buffet always says, the rule number one is to avoid loss in the market and the rule number two is to remember the rule number one.

If you cannot understand what your investment manager or consultant advise, ask more. If they are reluctant to do that, they are simply hiding something that they do not want you to understand.

I am smarttrader.

I don't believe mystery in the universe of investment especially those investment managers who claim they have outperformed the market ONLY in terms of one year and three year. Too young to be arrogant. Ao Xiang , it's a good guy but sometimes be arrogant and feel proud of the sophiscated maths that he learnt.

Bloggers who would like to outperform should think outside of the box. Too many specialists using the same techniques to attempt to profit from the market. Yet,  I worked in a securities house for 3 years and 2 years in a fund manager. I am not addicted to this kind of analysis and the analysts reports from big brokerages, like Goldman Sachs, Morgan Stanley, Deutsche Bank or whatever you can say.

Having some knowledge in accounting is definitely helpful to make an informed decision.  Even the investment guru may do something wrong in investment, the most important is to be humble in the front of Mr. Market.

http://www.dowtheoryletters.com/  Richard Russell is one of the few great Dow theorists. He has started writing newsletter over 40 years, NOT 4 years!

http://www.investopedia.com/ is one of the best websites for learning financial terms and financial statements which bloggers and investors will find helpful.

http://village.albourne.com/ For bloggers and investors who are interested in understanding more about hedge funds, it's one of the best free website. Enjoy it!

http://webb-site.com/refer.htm for those investors who are not familiar with calculus, they can visit David Webb's great article. It provides insightful information how companies trick their public shareholders and some analysts on selected companies.

I successfully poached some of  clients. They included some from the most reputable ibank in the world and some analysts working in  ibank in the Germany. The reason is they get tired of their inhouse search materials. No insight at all. I have been student of Mr. Market and will always be.

In fact, that's why I question  your experience in this field based upon what you believe and what you feel and what you write. And from your wording, I gussed you've beem in this industry and frankly speaking, your opinion is evidently on the side of brokerage. Do not mix up your job with your investment. You need the sophiscated calculus  skills to perform in your job but it does not mean it is helpful and useful to investors or in investment. I hope you would not ban my id again.

4 experience in securities is green, less than one economic cycle. Do not be too ascertain what you have achieved in the past 4 years and what you believe. The past four year is a good time to any investors.  No hero and no arrogance  can survives in the universe of investment. Good luck!

To Smarttrader,

For my experience in investment, I have four years in equity fund management and one year in securities house as a management trainee. Based on my historical record, I have outperformed the market (one year and three years) since I have my own portfolio in 2003. So, I think I am one of practitioners in China and HK market.

In my work, I do need the Accounting Skills and Algebra (Calculus is developed from algebra and geometry) to prepare the financial statement analysis. Without financial statement analysis, I can't calculate the value of investment. Meanwhile, my classmate is a warrant trader who is busy in delta hedging and manages the Greek every trading day. Delta hedging and Greek is coming from Calculus. In addition, I saw the middle office used the VaR to manage the risk from trading desks when I was a management trainee in securities house. Again, VaR is coming from Calculus.

I can't say Calculus is necessary for all investors because I do believe different investors would have different investment skills, but Calculus is essential and useful skill in my working experience.

For the objective of my blog, I would like to keep track of life & work in joyful way. I don't have a mind to ask anyone to follow my investment or skills, just share my personal experience only.

Since I feel we can't have a good communication in my blog and this is not joyful for me in our discussion, this is regret that I am not going to have a further discussion with you. After the crazy workload, I would like to release and relax myself in writing my blog.  Smarttrader, thanks for your understanding and have a good day!

To Smarttrader,

For my experience in investment, I have four years in equity fund management and one year in security house as a management trainee. Based on my historical record, I have outperformed the market (one year and three years) since I have my own portfolio in 2003. So, I think I am one of practitioners in China and HK market.

In my work, I do need the Accounting Skills and Algebra (Calculus is developed from algebra and geometry) to prepare the financial statement analysis. Without financial statement analysis, I can't calculate the value of investment. Meanwhile, my classmate is a warrant trader who is busy in delta hedging and manages the Greek every trading day. Delta hedging and Greek is coming from Calculus. In addition, I saw the middle office used the VaR to manage the risk from trading desks when I was a management trainee in security house. Again, VaR is coming from Calculus.

I can't say Calculus is necessary for all investors because I do believe different investors would have different investment skills, but Calculus is essential and useful skill in my working experience.

For the objective of my blog, I would like to keep track of life & work in joyful way. I don't have a mind to ask anyone to follow my investment or skills, just share my personal experience only.

Since I feel we can't have a good communication in my blog and this is not joyful for me in our discussion, this is regret that I am not going to have a further discussion with you. After the crazy workload, I would like to release and relax myself in writing my blog.  Smarttrader, thanks for your understanding and have a good day!

To Smarttrader,

For my experience in investment, I have four years in equity fund management and one year in security house as a management trainee. Based on my historical record, I have outperformed the market (one year and three years) since I have my own portfolio in 2003. So, I think I am one of practitioners in China and HK market.

In my work, I do need the Accounting Skills and Algebra (Calculus is developed from algebra and geometry) to prepare the financial statement analysis. Without financial statement analysis, I can't calculate the value of investment. Meanwhile, my classmate is a warrant trader who is busy in delta hedging and manages the Greek every trading day. Delta hedging and Greek is coming from Calculus. In addition, I saw the middle office used the VaR to manage the risk from trading desks when I was a management trainee in security house. Again, VaR is coming from Calculus.

I can't say Calculus is necessary for all investors because I do believe different investors would have different investment skills, but Calculus is essential and useful skill in my working experience.

For the objective of my blog, I would like to keep track of life & work in joyful way. I don't have a mind to ask anyone to follow my investment or skills, just share my personal experience only.

Since I feel we can't have a good communication in my blog and this is not joyful for me in our discussion, I am not going to have a further discussion with you. After the crazy workload, I would like to release and relax myself in writing my blog.  Smarttrader, thanks for your understanding and have a good day!

To Smarttrader,

 

For my experience in investment, I have four years in equity fund management and one year in security house as a management trainee. Based on my historical record, I have outperformed the market (one year and three years) since I have my own portfolio in 2003. So, I think I am one of practitioners in China and HK market.

 

In my work, I do need the Accounting Skills and Algebra (Calculus is developed from algebra and geometry) to prepare the financial statement analysis. Without financial statement analysis, I can't calculate the value of investment. Meanwhile, my classmate is a warrant trader who is busy in delta hedging and manages the Greek every trading day. Delta hedging and Greek is coming from Calculus. In addition, I saw the middle office used the VaR to manage the risk from trading desks when I was a management trainee in security house. Again, VaR is coming from Calculus.

 

I can't say Calculus is necessary for all investors because I do believe different investors would have different investment skills, but Calculus is essential and useful skill in my working experience.

 

For the objective of my blog, I would like to keep track of life & work in joyful way. I don’t have a mind to ask anyone to follow my investment or skills, just share my personal experience only.

 

Since I feel we can't have a good communication in my blog and this is not joyful for me in our discussion, I am not going to have a further discussion with you. After the crazy workload, I would like to release and relax myself in writing my blog.  Smarttrader, thanks for your understanding and have a good day!

Which study and survey shows the knowledge of calculus could uplift and earn extra investment return than those people without applying calculus? Are you suggesting those investors without the help of calculus cannot find undervalued stocks?

Can a sophisticated  financial model correctly forecast the future? No one has the capability to make correct prediction about the future. Market is the reflection of human activity -including emotion, action and reaction. When only a few of hedge funds exit in the market, they have exceptional return. Yet, when tons of hedge funds exits in the market, their returns have significantly lower than before. It's simple! Return on Biggs's  hedge fund is disappointing and actually the fund is losing money.

Conventional wisdom is high risk with high return. In warrant speculation, 90% of the bets is HIGH RISK BUT NO RETURN.

 

In the universe of investment, the more theories you believe, the more loss you  suffer. I see many very rich and old gentlemen and ladies, espeically in private banking, who sticks to very simple but effective in investment.

I don't believe calculus could help discover valuation in stock investing.  In fact, stock investing is like art more than science. The knowledge of basic accounting is important to investment. Another critical is logical thinking and strong EQ.

And from your writing, you are not a practitioner. Your writing also raises my doubt about your experience in investment. No theory is good theory in the investment.  And you still mis-understand what I mean for average investors. I must stress investment is very important in anyone's life. And that's why they need to rely on theirselves to make decision rather than believing all their words.

You agree with my view by saying " I still believe "fire", "investment", "financial consultants", "equity fund" or "hedge fund" are not an evil for human if people could discriminate between good and bad."  But, how can discriminate between good and bad? That's the most important point! Can you tell people "HOW" ? Can you share your practical experience on "HOW"?

And I don't believe value investing in WARRANTS. Value investing is being abused. Mis-place bet on the wrong side makes speculators total loss and this is the loud and clear rule.  All speculators need is approximate correctness but not precise error!

How about the performance of Biggs after 2003? You must tell people how he lost money after 2003! And I don't think average investors know about calculus. It may help in your job BUT NOT IN INVESTMENT. I understand and know how to do with calculus very well BUT I NEVER PUT IT INTO INVESTMENT. It's simply waste of time

All I know is when the number of hedge funds are increasing and overcrowded, their respectable return are very likely to become history.  And in fact,  the falling rate of return over the past few years is an evidence. You may visit http://village.albourne.com/overview.html.

You mentioned several books for investors to read. It's good but I hope investors should not use rear mirror in investing.

For the question from smarttrader to evalute China Life, according to his recent comments, I think my view would not help him a lot. So, I am not going to evalute China Life in short period.

For any bloggers who are interesting in China Life,  I would like to list recent rating from different i-bank reports. Hope can help you.

Credit Suisse - underperform - 1H06 interim results: what goes up (2006-8-30)

Merrill Lynch - buy - Demystifying China Life’s 1H06
Result – Positive Surprise! (2006-8-30)

Deutsche Bank - sell - 1H06 result review: more than
in the price (2006-8-29)

CLSA - outperform - New business growth delivers (2006-8-28)

UBS - Neutral 2 - H106 preview & outlook (2006-8-28)

Goldman Sach - NR - Solid execution in a buoyant operating environment (2006-8-29)

For the question from smarttrader to evalute China Life, according to his recent comments, I think my view would not help him a lot. So, I am not trying to evalute China Life in short period.

For any bloggers who are interesting in China Life,  I would like to list recent rating from different i-bank reports. Hope can help you.

Credit Suisse - underperform - 1H06 interim results: what goes up (2006-8-30)

Merrill Lynch - buy - Demystifying China Life’s 1H06
Result – Positive Surprise! (2006-8-30)

Deutsche Bank - sell - 1H06 result review: more than
in the price (2006-8-29)

CLSA - outperform - New business growth delivers (2006-8-28)

UBS - Neutral 2 - H106 preview & outlook (2006-8-28)

Goldman Sach - NR - Solid execution in a buoyant operating environment (2006-8-29)

Smarttrader, 

 

I always have an old story coming up from my mind after reading your comments. Why we still use the fire even the fire has killed millions in history and now? No one can deny that the fire is dangerous, but the fire also helps our human to have a comfortable and modern life. Our electricity, hot meal, warm home in winter, traveling by car, train and plane etc. are all coming from the burning in killing temperature.

 

Beside one of case study of Amaranth's collapse, from the books "The Money Master' and "The New Money Master" written by John Train, there are still many successful cases in fund management industry.

 

In my view, I still believe "fire", "investment", "financial consultants", "equity fund" or "hedge fund" are not an evil for human if people could discriminate between good and bad.

 

So, I do suggest the investors should do the homework before starting own investment, buying any kind of funds, and visiting the consultants etc.

 

If bloggers like to know more about the hedge fund and its industry, I think they could read the book "Hedgehogging" written by Barton Biggs. Barton Biggs formed Morgan Stanley's research department and investment management division, and was ranked as the number one US investment strategist by the Institutional Investor magazine from 1996 to 2003. In 2003, he started his hedge fund – Traxis Partners.

 

If bloggers like to know more about the market risk form derivatives and hedge

fund, my article "不可輕視衍生產品的影響" might be a reference for them.

 

For calculus, I can't agree with your point because calculus is essential for my work. Before creating any big position after the sexy story, I would prepare a financial model to criticize it. Accounting skills and Algeba (Calculus is a central branch of mathematics, developed from algebra and geometry) are necessary for the preparation. In my experience, I need the calculus to find the value of investment.

 

From my studying experience (major in Quantitative Finance), almost all the basic of derivatives are coming from calculus. If investors would like to know the risk and return of derivatives, the knowledge of calculus or computing programme (to conclude the result of calculus) is needed.

 

Amaranth's collapse is also one of the case study for the conflict of interests and the due diligence claimed by those reputable institutional investors.  Hedge funds charge their customer 2% management fee and at least 20% of profit sharing.  In order to justify their ultra high fees, they have the incentives to bet clients money at a perilous risk.

Goldman Sachs, Credit Suisse, Man Investment, Morgan Stanley and Eutsche Bank all had stakes in the collapsed fund. Many financial advisers are recommending the use of fund of hedge funds to their clients, claiming the manger of fund-of-hedge fund woul do their own due diligence.

The loss of US$7 billion ,two-thirds of the fund size, is much larger than that of  LTCM's collapse in 1998.

If investors do not do their homework and believe their consultants whose positions basically have conflict of interests -to earn commissions as the major objective, then these stupid investors must do so at their peril.

Calculus do little help in investment. I believe the simpler the better on the basis of value!

You're still green, sometimes oversimplistic and over-complicated. Good theory but needs more practical experience.

Buying derivatives is like going into a casino. Speculators  need to know the entry point and the chance of making money on their bets.

How do you evaluate China Life?

Speculator say "Just tell me when to buy derivatives. no need to tell me how!"