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Ana Wang Investment Weblog

Archive for May 6th, 2008

Kaizen: in drips

Posted in PSYCHOLOGY of trading on 05/06/2008 10:48 pm by idkit

Ana has left a new comment on the post “Perspectives on Achieving Greatness as a Trader“:

Brett

I believe I can relate to point 4 you made about developing trading expertise.

The notion of Kaizen has been adopted by me unconsciously over the years on hindsight.

I have achieved much by doing little by little each period of my life. Most beneficial is for my brain not to atrophy and to keep my mind receptive to new learnings, which has culminated in my learning now how to trade online.

Following from this, I have embarked on a newsletter of my own called IDkit targeted at newbies.

Habits of learning will lead to endless creativity, I believe.

Posted by Ana to TraderFeed

Crude ’superspike’ to $200

Posted in Club Members Only on 05/06/2008 08:08 pm by idkit

I am long on Crude but to see it superspike to $200, I don’t know……….

Here is what Goldman guys are saying : Oil ‘Superspike’ Going To $200

The two things that have always been key circuit-breakers of high oil prices have been a) demand destruction – essentially, when pain at the pump forces consumers reduce their fuel consumption, cooling off prices – and b) a global increase in supply, driven by producers looking to exploit lofty prices that ease as they flood the market with more oil. Guess what? For the first time ever, neither seems to be happening. Which is exactly why oil popped above $120 a barrel yesterday, occasioning the resurfacing of the dire prognostications of one Mr. Arjun N. Murti. Here, his predictions for the turbulent months to come.

Morning Call: May 6

Crude oil prices may rise to between $150 and $200 a barrel within two years because of a lack of adequate supply growth, Goldman Sachs Group Inc. analysts led by Arjun N. Murti said in a report.

New York-based Murti first wrote of a “super spike” in oil prices in March 2005, when he said oil prices could range between $50 and $105 a barrel through 2009. The price of crude traded in New York averaged $56.71 in 2005, $66.23 in 2006 and $72.36 in 2007. Crude oil futures in New York rose to an intra- day record $120.54 a barrel today.

“The possibility of $150-$200 per barrel seems increasingly likely over the next six-24 months, though predicting the ultimate peak in oil prices as well as the remaining duration of the upcycle remains a major uncertainty,” the Goldman analysts wrote in the report dated May 5.

Soaring energy costs have so far failed to stem rising consumption in developing nations, with demand led by China, India and the Middle East. China, the world’s fastest growing major economy, has more than doubled oil use since New York crude oil dropped to this decade’s low of $16.70 a barrel on Nov. 19, 2001.

Price forecasts for spot U.S. benchmark West Texas Intermediate crude oil for 2008 to 2011 were revised higher by Goldman. The 2008 price estimate was raised to $108 a barrel from $96, the 2009 forecast to $110 from $105, and 2010 to 2011 estimates are projected at $120 from $110, the analysts said.

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Does low interest rates affect housing?

Posted in Market Commentary on 05/06/2008 02:12 pm by idkit

Those of us who invest in real estate in Singapore would like to know, and thanks to Nic who is familiar with such aspects in HK,  it is timely for us to consider whether:

Low interest rates not likely to help housing

Posted on May 6, 2008 by lushhomeonline

Income growth a better driver of housing price trends: Citi

LOW or negative real interest rates are often cited as one factor supporting housing prices. But Citi believes that in today’s market, negative real interest rates will at best be a ‘cushion’ in the near term.

In a report on the Singapore market, Citi analyst and vice-president (Asia Pacific Economics & Market Analysis) Kit Wei Zheng said: ‘Negative real interest rates, in and of themselves, are unlikely to be sufficient to drive housing prices, especially if income growth and sentiment are weak.’

In his analysis of property prices and real interest rates, Mr Kit noted that while a correlation was ‘maintained’ during the Asian financial crisis, this correlation broke down during the 2001 recession.

‘Between 2001 and mid-2004, property prices continued to fall even as real interest rates fell and eventually turned negative,’ he said. He also pointed out that between mid-2004 and 2007, property prices soared despite rising real interest rates.

‘Finally, property price inflation has moderated in the past two quarters, despite increasingly negative real interest rates,’ he added. Mr Kit believes income growth probably has a ’stronger explanatory power in explaining housing price trends’.

He noted that a strong labour market not only improves housing affordability but lifts rental demand from foreigners, thereby increasing rental yields and the attractiveness of residential property as an investment.

Citing the Monetary Authority of Singapore’s Macro-economic Review, he also noted that on average, the boost to asset prices from a one percentage point fall in foreign interest rates – which would affect domestic interest rates – is less than half of the income effect from a positive one per cent foreign demand shock.

The bad news, however, is that Mr Kit believes employment growth here may have peaked. ‘Total employment growth will likely fall short of the record 238,000 jobs created last year, more likely in the range of 120,000-150,000, with attendant slowdown in payroll growth,’ he said.

Nevertheless, Citi is ‘not inclined to be overly bearish and do not anticipate a collapse’ in the property market.

Negative or low interest rates may eventually prove ’supportive of housing demand’ if they coincide with a rebound in incomes and sentiment that many expect with the launch of the integrated resorts.

Mr Kit also believes that official figures for new housing supply could be over-estimated. He said that in the context of ‘heightened construction bottlenecks and spiralling material costs, actual supply in 2009 and 2010 will more likely be in the range of 18,000-19,000 units’, less than two-thirds of the 30,296 projected.

Also on the optimistic side, he said a recent MAS survey showing a fall of the value of mortgages in negative equity suggests that households ‘remain flush with cash’.

Affordability is also in check. For example, Mr Kit said the median price of a 110 sq m condo is about 23 times the average annual wage per person, which is still below the 25 times in 2000 and more than 33 times before the 1996 bust.

Source : Business Times – 6 May 2008

A hotshot forex guru & scammer!

Posted in Market Commentary on 05/06/2008 09:21 am by idkit

http://www.forexpeacearmy.com/forex-forum/forex-articles/2238-nine-year-sentence-forex-fraud-too-harsh-not-enough.html

We’d like to draw your attention to an article about a forex “guru”
who was recently given a 9 year prison sentence for forex fraud………..Received from Felix of Forex Bastards fame:

Question Nine Year Sentence for Forex Fraud. Too harsh or not enough? – Yesterday, 07:40 PM

Nine Year Sentence for Forex Fraud. Too harsh or not enough?

Joel Nathan Ward used to be a hotshot forex guru with millions of dollars of managed account money under his control. Now, he’s looking at 9 years of hard time in federal prison along with an order to repay $11 million to investors. Is he a sleazy scumbag who should be grateful for such a short sentence, or a good guy who is being denied a chance to make amends for one terrible mistake?

Before I get started, let me interject a personal story. I HATE scammers. The thought of some thief running off with another person’s money or possessions fills me with rage. This probably dates back to my house being robbed just before my 9th birthday. It was bad enough that they ransacked all of my parents’ stuff, but they dug through my closet and managed to find the box with my coin collection, tucked away in the same place as my Monopoly, Battleship, and chess sets. The thieves that robbed my house were pros and got away with their crimes. I decided it wouldn’t be so easy the next time. I guess that’s why I now have a safe that weighs over 900 pounds, a large dog, and an alarm system.

Normally, I would join the chorus calling for this guy to be hung from the battlements and left to rot, but then I dug a little deeper and the case became more interesting. I still think this guy was wrong, but think it’s worth exploring how and why he went from being a good buy to being a bad guy.

According to Joel, he learned to trade at a California school called Learn:Forex. He claims that his trading became consistently profitable, and he then opened the Joel Nathan Forex Fund. Not too long after, he purchased Learn:Forex. He was well respected in the world forex community and both write his own articles and he was frequently cited by others as a source of good information on forex trading.

According to Joel, the school was losing money when he bought it, and since he’d successfully “borrowed” money from his own fund before and managed to pay it back out of profits, it didn’t seem to be too big of a thing for him to “borrow” more to keep the school afloat while trying to make it more profitable. He supposedly was about to do an IPO on the school and launch a new, larger fund that would have let him easily repay the missing 10+ million dollars when the whole scheme fell apart. He claims all the money was lost and that he only lived in a modest home so hadn’t spent it on a lavish lifestyle. At one point, while overcome with guilt, he described himself as a “financial serial killer”, and expressed deep regrets that he’d become a scammer, but even now remains determined to find a way to repay the lost money.

The Federal prosecutors tell a different story. They say his fund was a Ponzi scheme. The prosecutors say that the missing millions went to pay for Joel’s salary, travel, extensive marketing, as well as other expenses. One of the prosecution’s expert witnesses was a finance professor employed by the CFTC. That witness audited the books and says that Joel was only using $2 million of the $15 million in his fund for trading, and that his trading profits from trading that $2 million came to $1000. (Personal note – Wow, and I though I had a bad time trading!). Joel’s response to this is to say that the professor lacked experience with forex to be able to interpret the account statements. I find this a little hard to believe – I’m not a professor of finance (I don’t even do a very good job balancing my checkbook), but when I first began demo trading forex, it was quite easy to see what my total profits and losses came to. I also had no trouble interpreting any of the Daily Confirmation Statements sent to me by my broker once I went live.

According to the prosecution, “As a trader, he was a failure. The only success Ward had was in convincing others that he was successful.” and “Joel Nathan Ward earned every minute of the nine-year sentence the court imposed.”

Joel did plead guilty to five counts of wire fraud, two counts of mail fraud and two counts of money laundering last year and asked the court to sentence him to house arrest so that he could keep trading to repay the money that his investors lost. The court instead imposed a 9 year stretch in Club Fed along with a requirement to repay $11 million stolen from investors. Joel went so far as to say “I will keep trading. The court can’t stop me from trading.” I’m not a legal expert, but I think it would be well within the power of a Federal judge to impose an injunction against Joel to keep him from trading even after he completes his time in the federal lockup. Prosecutors say that he is very unlikely to ever be able to pay off the debt, especially through trading.

This is where I am torn. Part of me says that he got off way too light and should be forced to sell his internal organs on eBay to help repay the money he stole. Another part of me wonders if he really did just make a terribly foolish mistake and should be allowed to trade (under strict supervision) so that his skills might be used to help recover the money that has been taken. Punishment is important, but should punishment be so harsh that it reduces the chances of repayment? Or, will he just find a way to go around any restrictions and scam again?

The prosecutors say his whole company was a scam from day 1. He says it only went wrong when he had to borrow money to keep his other company afloat? Assuming he was a legitimate trader at one time, should this be taken into account when considering a sentence? Does it really matter if he scammed from the beginning as opposed to making a mistake and falling off the straight and narrow?

If you want to read more about Joel and his problems, here are some good articles I found online:

http://www.sacramentotoday.com/news/…id=78&zoneid=1
Bloomberg.com: Law
Foreign-Exchange ‘Guru’ Gets Nine-Year Term – The Collar (usnews.com)
The Modesto Bee | A Q&A with Joel Nathan Ward
The Modesto Bee | Forex trader Ward traded only a fraction of $15M, prosecutors say
Foreign-Currency Trader Faces Criminal Charges for $7 Million Fraud

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Comments on :What now for the S&P – RayB

Posted in Market Commentary on 05/06/2008 07:49 am by idkit

  1. Mon 5 May 2008 – cross ref from www.tradingsuccess.com/blog/ -excerpts

    What Now for the S&P

    Posted by ray under Written Plan

  2. Baz

    When you factor in the fact that the audience or population for trading books is a small digit in percentage terms, the Snap-Can interpretation for Best-sellers for NOT is to me near enough.

    Non-fiction books can never be compared with novels which sell easily to a higher percentage of readers.

    As in trading, we need to compare apples with apples to reflect accurately on readership or sales of non-fiction category of books.

    Whether NOT is accepted as a Bestseller is not as important as whether readers or traders find it one of the best reads.

    From the feedbacks I get privately, NOT is one of the best trading books for traders.

    A priori, NOT is a ‘bestseller’ to these readers!

  3. Ana aka IDkit says:
    May 5th, 2008 at 11:33 pm RayWe begin the day with a modest gap down in the major indices.The weekend news flow was fairly quiet outside of Microsoft/Yahoo!,

    Since it looked like another slow day ahead, I hit the sack early ie before midnight singtime to get my beauty sleep!

    This morning, I woke up early and check my Market Delta on ES.

    Here is the breath I get from opening of pit session:

    In the first 45 mins : Hi 1416, Lo 1410

    After 90 mins, market spiked down to 1405 from 1411

    Thereafter, market was in a sideways mode, hovering 1409 to 1404.

    Market closed at 1408.75, down 6.5 on the day.

    So, going to bed early, I did not miss much action.