AAR & TOL 02 (Nov 08 - Jul 09)

[LenaHuat]

[millionairemind]

I am long stocks, short index and doing nothing most of the time

WL, you run your money like a truly hedged fund

Either way you make money

Thank goodness the period of inactivity coincided with the June school holidays.

I am just doing nothing ALL of the time

[OE2008]

I am long stocks, short index and doing nothing most of the time

WL, you run your money like a truly hedged fund

Either way you make money

Thank goodness the period of inactivity coincided with the June school holidays.

I am just doing nothing ALL of the time

BC's approach is not as simple as it looks. When to build up long positions and when to hedge with shorts on index are important. I suspect right timing is crucial. Not to forget, he writes options on indices too. Obviously he has quite a war chest to write such options. When to do it is again crucial.

How BC? Can tell us more?

[b0rderc0llie]

millionairemind, you must be having lots of fun with your son during this school holiday period

some hedge funds are long something and short something, earning the spread, and are supposed to make money whether market goes up or down.

OE2008, for me, I am not after the spread. I long something or short something based on an overall plan. My investment philosphy is similar to musicwhiz. We look for good companies to buy and hold, and our fortunes are linked to how well those companies do in the future. I recognize that there are many investment/trading philosophies, just like there are many different styles of kungfu, and I respect all of them. Also, even though I practice the same style of kungfu as musicwhiz, I notice that we might use it differently. One evident example is our selection of companies we would like to hold. My main 3 companies are SPH, SGX and OCBC. I am also looking to buy into other monopolistic companies (eg. SMRT, Singtel) at a low price which I would like to buy. Once I have bought into those companies, I will grow or sink with them.

My approach is actually very simple. The main part of my overall plan is to buy and hold these companies for the long term. Their prices will fluctuate, but what is most important to me is that their business will grow. Market moves up and down, and it is very boring to simply buy and hold, so I speculate on the indices. Going short on the indices serves a dual purpose; it allows me to speculate on the market, and it also forms a hedge to my long stock positions.

As for when to build up long positions, when I find a price which I would like to acquire the stocks of the companies I like, I would buy. As for when to short the indices, when I feel that the market is too high, I will short.

Another idea in my overall plan is to rebalance my portfolio under different circumstances. It is under a thread called "Asset Allocation".

[OE2008]

b0rderc0llie,

Ic, thank you.

Your style is simple enough. Not without risks though. The truth is that all plans come with risks. Value-based stocks, even those with solid track record can derail. No lack of examples in the current environment. Good luck and wish you haut big.

I read, Uncle Oei HL wrote naked call options of 30-year US Treasury bonds, among other things/holdings. Let's see if more details of what contributed to his massive losses are revealed in the on-going Court case. Pure directional and ultra big bets??

[b0rderc0llie]

Most of the call options I wrote are covered calls options, in which I own the underlying assets. There is no risk involved in writing a covered call. The risk is in holding the underlying assets, which may, in the worst case, go to 0.

I've written naked call options before too. In the worst case, it has the same risk profile as shorting the underlying. The risks can be managed by not betting so big. In Uncle Oei's case, he lost $1b. If things were to turn out differently, he might had made $1b. So, just limit our exposure to what we can afford to lose.

[OE2008]

TOL,

This week is crucial for the bulls. Also there is the auctions of US$104b Treasury bonds. One theory is the equity markets across the board will be sold down to frighten the shit out of institutions and sovereign investors and drive them to seek safety in US Treasuries Once the auctions are done, there could be some recovery?

Elliott wavers see higher probability of the end of the Mar-June bear market. Next target is lower than the Mar 09 low

[winston]

One theory is the equity markets across the board will be sold down to frighten the shit out of institutions and sovereign investors and drive them to seek safety in US Treasuries Once the auctions are done, there could be some recovery?

Would need a lot of fire-power to do that...

[winston]

Reminder:-

Need to constantly remind myself to be patient. Do not short the market just during 2H Window Dressing. I can always short the indices after next Thursday. Very difficult to be patient especially when you see the market spiking upwards. 4 more days to go.

Very difficult to do nothing....

[Aspellian]

I am also reminding myself to wait till after window dressing. also when market gives the clear signal on when to short. must not do a shot-gun. been shot too many times. Mr Market is our good friend. Also telling myself - BE PATIENT.