I have been hearing a lot of sound bites from business media about "Fundamental Analysis" and "Technical Analysis".Its intriguing to discern it in laymans term for me so help me remember in future i write this blog and all those fellow amateurs this one
Fundamental Analysis
When a trader or a Broker takes a investing decision based on the company financials balance sheet etc and overall climate of socio economic conditions in surrounding area it is called a fundamental trade. For example a political coup in Pakistan or nationalization rumors in Venezuela or say bad profit for the quarter or say political stability in China or change in govt in India etc results in the trader to infer value of a company.
However these days these fundamentals are proving to be costlier to be relied on as the market is really volatile and any speculations could be potentially hitting a nail on your foot.
Technical Analysis
When trader or a broker takes the investing decision based on daily volume , and relies on mathematical analysis using regression techniques or predictive modelling, reversion of mean or technicals like standard deviation,variance, etc Charts which are available on finance.yahoo.com is called as trade on technical analysis.
God knows how the markets are relying these days but for technical trading these days is automatic and computational financial engineering is used as long as the models work so is good once they stop it comes back to sentimental or emotional trading.
check out google: Quant funds to find out different type of mutual funds or hedge funds trading using quantitative analysis...
Thursday, April 30, 2009
what is Fundamental anlaysis and Technical Analysis
How to sell a Tennis racket 101
Really !!! world's No. 3 Novak Djokovic selling a racket. Mind boggling ad funny at times boring sometime but overall very very intriguing and it got my attention so kudos to the marketing team.... and kuods to Djokovic to agreeing on doing it.
Sunday, April 26, 2009
Bank Stress Test Conditions......
Un-employment rate - (2010) 10.3 % 2009current 8.9
House Value decline (2010) 30% current 2009 20%
Page 6 of the doc is where the meat is
Stress Test Assumptions
Saturday, April 25, 2009
Elliot wave theory on Bombay Stock Exchange
Yes, like everyone else i am also bitten by the elliotwave theory bug... so i decided to put it to test. Since many bloggers / columnist commentators have sucked curiosity juice from dow jones's comparison to elliotwave i am going to compare it to international stock exchange my pic India's Bombay Stock Exchange's Sensitive Index (SENSEX).
Elliot wave theory works on basis of fibonacci number sequence. where wave 1,3,5 are upward going waves while 2 and 4 are correctional waves. This theory was put in practice by Proff Prechter who was a Trading Analyst who set a 440% return record on options account in 1989 trading match .... ok enough of his background, although this is mathematically related theory pertaining to fibonacci sequence and its golden ratio of 1.6343 Precther and co. beleives that this number occurs in non-randomly fashion in today's stock market. Well tough to beleive that..... but if you implement a mass socio-economic tag or mass psychology tag then suddenly the theory becomes a hot property.
The theory is taught in many financial institutions as non-technical mass psychology theory so that traders can keep them selves ahead of the market....
lets put this theory to test I have taken a 5 year period of BSE : sensex and compared it witht he elliotwave thoery, okay to be precise i am comparing a "cycle"
WIKIPEDIA REFERENCE
The classification of a wave at any particular degree can vary, though practitioners generally agree on the standard order of degrees (approximate durations given):
* Grand supercycle: multi-century
* Supercycle: multi-decade (about 40-70 years)
* Cycle: one year to several years (or even several decades under an Elliott Extension)
* Primary: a few months to a couple of years
* Intermediate: weeks to months
* Minor: weeks
* Minute: days
* Minuette: hours
* Subminuette: minutes
ELLIOT WAVE
BOMBAY STOCK EXCHANGE APR 04-APR09
Halleluajh !!! wooow this thinge fits like a glove !!!!! in the five year spread... this means that we are giong to see one more drop Or below is the end of wave... although i must admit that i have chosen random interval of the uptick and down tick wave .... its like i am biasing the data to fit the model .... but over all first impression not bad... but i wont stop the autopsy .... too vage
Thursday, April 23, 2009
Koreans making move on downturn
First time I came to know about rapid development of South Korean ambition to become a Financial hub, supply chain hub, manufacturing hub, and information technology hub was in a class i took with my proff from industrial engineering. That was the first time I looked at the Korea rather Korean economy for the first time and read about the leaps and bounds taking place in the country.
Recently was again reminded of the gallops taken by the nation when i was reading news about how a KIA plant in Georgia state,US starting this december is been looked upon like an godly saviour. TO me its purely amazing how much the Korean technology economy has become reliable and mutated that they can afford to put up plants in USA to manufacture cars giving honda's and Toyota's a tough time ( Hyundai was voted as best car and they made sure they advertised it :D ) .People in the town call the kia factory as "god sent gift" which will employ thousands and would boost neighbouring economy.The koreans are shrewd businessmen like the Chinese who are harnessing the downturn the Koreans too are lapping up huge ammount of commercial rental property at dirt cheap prices. Of course like many others i too presume that the crisis is not going to last throughout life considering this the investment is bound to give an awesome fruit in near future. However one thing concerns me is the reduction in the manufacturing sector where thousands jobs lost this recession has really brought it to its knees this was also indicated by the reduction in import of spot cargoes containing natural gas by the Korean's. Overall i feel that Koreans and then Chinese and then Indian in same priority order should be bet on ..........
But the bases are set here today's KOSPI from www.Bloomberg.com
Tuesday, April 21, 2009
Reserve Bank of India reduces its intrest rates
Indian Reserve Bank of India cut its lending rate by 25 basis points i.e. 0.25%
repo rate has been cut to 4.75 per cent from the existing 5 per
cent while the reverse repo has been cut to 3.25 per cent from the existing 3.5 per cent.RBI cuts interest rates by 25 bps LINK
Other headlines
RBI on a shopping spree for oil bonds
RBI to upgrade regulations to deal with menace of tax havens
A recent study indicates people from Indian Subcontinent have stashed more than 150billion $ in overseas places like, lichenstein, Mauritius, Switzerland etc .... U.S has started a crack down lets c what Indian regulators do about it
Convolution of information
'Worst is over; India to be on recovery path in 2-3 quarters'
"Dubai's Ruler Says the Worst Is Over"
but down in the third para he says "stimulus packages had helped the economy "shift . . . from the crisis mode to the solution"
Dubai has seen its property market collapse and other main parts of the services-led economy slow down.Spiralling debt and a lack of short-term funding forced the government to take out a $10bn (£6.8bn) loan from the central bank in February to prevent default and help pay government invoices.
"
arrrrrgh too confusing sir......
"US hopes the worst is over"
The thrid para says ...............
"We are in a period of extreme uncertainty but to be optimistic I would say that at least there are some indicators which are not as bad as they were in the past,” Pier Carlo Padoan, the OECD vice director, said in Berlin on Saturday. "
Cnbc thinks susan boyle can save economy
whossssssssh what has world come to
A discussion on elliot wave theory
I heard this on thedisciplinedinvestor.com intresting elliot wave theory is back in fashion...i should admit i have no clue whats logic in elliot wave being applied to a stock market but authors here try to explain it.
ref: thedisciplinedinvestor.com
afraidtotrade.com
TDI Podcast 103: Elliott Wave Theory in Action
Posted using ShareThis
Monday, April 20, 2009
Improved Magic words of the Nassim "Black Swan" Taleb..
Nassim Taleb has come up with improved 10 point scenario to make world black swan free.... nearly impossible task but worth a braincell exercise
Ten principles for a Black Swan-proofworld By Nassim Nicholas Taleb
How to have negative Federal rates 101
Interest rates have always been a motivator to circulate money in the market, with fed rates bottoming out i always wonder would there be a chance of fed going negative percentage. What i mean is say fed loans you 1000 bucks and your return 970 a return that is negative 3%. Why would anyone is such a sane mind would do that? any kindergartner would answer as ..no!!.. instead people would hoard it !!!..however this would not solve the problem we got in the first place by lending money to unqualified borrowers who foreclosed resulting in a spanner thrown in credit circulation.
I was reading a article in new york times by author Proff Gregory Mankiw one of his student suggested the following LINK
Unless, that is, we figure out a way to make holding money less attractive.
At one of my recent Harvard seminars, a graduate student proposed a clever scheme to do exactly that. (I will let the student remain anonymous. In case he ever wants to pursue a career as a central banker, having his name associated with this idea probably won’t help.)
Imagine that the Fed were to announce that, a year from today, it would pick a digit from zero to 9 out of a hat. All currency with a serial number ending in that digit would no longer be legal tender. Suddenly, the expected return to holding currency would become negative 10 percent.
That move would free the Fed to cut interest rates below zero. People would be delighted to lend money at negative 3 percent, since losing 3 percent is better than losing 10.
Of course, some people might decide that at those rates, they would rather spend the money — for example, by buying a new car. But because expanding aggregate demand is precisely the goal of the interest rate cut, such an incentive isn’t a flaw — it’s a benefit
Although this is a very clever scenario has never been happened before and chances are almost what Taleb would call as Black swan that it might happen :D. A seemingly Ridiculous thought which might make lending more money than hoarding feasible, hands down to the thinker.Interestingly China recently published that it has about 1.29tr $ hard cash will be driven to insanity if such a event occurs and might lend US back in negative interest terms , who knows actually this has tickle my brains to build castles in air. I don't know what other tricks the proff Mankiw's students have in their hat .... like currency expiration date, private circulation of money (deteroit dollar).In these days of electronic exchange of currency how do i know that currency given to me as salary has the number selected by fed to abolish...less than 5% of currency is circulated or stored in physical form.
There is continuing article in economist on this LINK on how to scare the hell out of china...
Rationally thinking china is doing a great national service for survival of United States, by buying and fed treasury bill, supplying high quality goods at reasonable price, and thus allowing the sinking dollar to cling straw. Scaring china out of 10% of its foreign exchange holding would be the day US would be out of existence.
Saturday, April 18, 2009
DATA download links
1. Historical FX Rates: http://oanda.com/convert/fxhistory
2. Historical Stock Prices: YHOO: Historical Prices for YAHOO INC - Yahoo! Finance
3. Recent LIBOR rates: BBA - British Bankers' Association - BBA LIBOR
4. Some Implied Volatilities: http://www.ivolatility.com
5. Delayed Commodities: http://www.liffe-commodities.com/
6. US Fundamentals: http://www.sec.gov
Economic data
UK: http://www.statistics.gov.uk
US: http://www.census.gov ,
http://www.bls.gov ,
http://www.federalreserve.gov ,
http://www.ssa.gov ,
http://www.treasury.gov
(i) For S&P 500 hist. DB:
Historical Stock Data
(ii) For Euronext's stock markets (5y database):
302 Found
(iii) others (very interesting if you have the ticker):
Yahoo! - 404 Not Found
http://bigcharts.marketwatch.com/historical/
Downloader
Historical stock quotes download Metastock
Extensive Data Series
http://www.economagic.com/
Links
http://cpcug.org:80/user/invest/datahist.html
The Financial Data Finder
Currency Data
http://www.oanda.com/convert/fxhistory
Options Data
Stock Options Analysis and Trading Tools on I Volatility.com
Untitled Document
http://www.maoxian.com/memoranda/putcall.html
Free Nightly Intraday Futures Data
http://www.simiansavants.com/cmedata.shtml
Free Data
http://www.traders2traders.com/linkindex/default.asp
Wednesday, April 15, 2009
compress function in SAS
this will make easier to sort bunch of ip address given in log files...
libname ashu "D:\saslibraries";
data ashu.dest(drop = name);
set ashu .source;
name = compress(cip,'.'); * might need to change the ip c-ip to cip while importing file to SAS
cip1 = put(name,12.);
run;
proc sort data = ashu.dest out = dest;
by cip1;
run;
Tuesday, April 7, 2009
Japanese Hedge funds shunning trading models
when half of the global trade is done on trading models Japanese hedge funds are keeping away from the trading models and are more focussed on the internal research, and ofcourse performing well LINK
April 7 (Bloomberg) -- Hideki Wakabayashi sat through 500 meetings with company executives before settling on the stocks that produced a 13 percent advance last year for the long-short equity hedge fund he runs at Tokyo-based Finnowave Investments.
Toru Hashizume matched Wakabayashi’s performance with a 13 percent return for his Ginga Service Sector Fund by following a similar path. He said he sifted through 800 stocks before betting on about 70.
The Japanese hedge fund managers plan to beat benchmarks again in 2009 by shunning computer-driven trading in favor of company research. Their gains contrast with the average 19 percent drop of global hedge funds, according to data compiled by Chicago-based Hedge Fund Research Inc., and the 42 percent slump in the Nikkei 225 Stock Average during 2008, the index’s worst annual performance.
Sunday, April 5, 2009
Friday, April 3, 2009
Moody's , S&P downgraded
The news of Moodys and Standard and Poor being not the sole authorities in deciding credit rating was taken by Insurance companies today according to the article in Bloomberg, this will force insurance companies to develop a new way or to enlarge internal credit risk department. Thus increasing their headache of measuring the risk instead of outsourcing, but reducing the discrepency, thus putting dice,of stability in deciding future risks assesment, rolling. LINK
April 3 (Bloomberg) -- U.S. state insurance regulators may reduce their dependence on firms including Standard & Poor’s and Moody’s Investors Service, saying they are looking into ratings “shortcomings.”
The National Association of Insurance Commissioners has assigned a group to explore “the reasons for recent rating shortcomings” and “the problems inherent in reliance on ratings,” the group said in a statement on its Web site.
The watchdogs are conducting their review after insurers’ portfolios were buffeted by downgrades to commercial mortgage- backed securities held to help back policies. Regulators currently rely on ratings assigned by S&P, Moody’s and other firms when calculating the amount of capital insurance companies must hold to protect against losses on CMBS and other so-called
Thursday, April 2, 2009
Swiss Bank's New Clientele
In interview published in bloomberg.com Banque Cantonale de Geneve's chief says that amidst the loss they took on Bernie Madoff and abandonment of secrecy laws in N.America they find one regional-sector growing, Asia and the Middle East. He further comments “An entrepreneur living in India with Harvard degree" is an ideal candidate for his bank’s prospective growth. This clearly implies that there is huge money flowing in and out of India and will possibly rise in future. This may be very good news not only to Swiss banks but overall also to the regions where it’s targeting because it clearly implies the growth and development is actually happening in the region.
However if you look at it socially to me it is very controversial approach and might lead to disaster for the bank customers because if sooner or later under more international pressure (IMF, World Bank, UN) if they give up their current " secrecy " laws and expose ...poor people living in the subcontinent to the stashed cash of the rich, they would invite huge backlash from a common man.
However, if you look at it positively you'll be forced to conclude that Indians/Middle east have lot of money these days to be put in world market, economic stimulus per se. Cash flow, credit flow is the reason the whole cycle of global economy is stuck,.. what’s wrong if the "Mumbai Money" or " Middle East money" or "Asian money " fuels its growth, since existence of big institutions have ceased to exists in one country the globe should unite to solve this crisis.
Not only Swiss banks should target "India, Asia, Middleast" entrepreneur clientele they should also foment growth in these same markets by encouraging Venture capitalism and other forms of Angel investing and bring back the clean money back to the economy... this cycle of investment, sounds to me like a wonderful plan for growth if only Swiss bank read my blog
As I write this first Swiss Bank casualty is reported by bloomberg
Wednesday, April 1, 2009
This happens when a programmer / MBA works as a Quant
I have always held a point of view, that giving quant job in hands of programers, MBA's would be like inviting hell. They donot realize the perturbations and their outcomes when it comes to stochastic math. A recent article in Nymag.com gives a confessions of a programer who wrote a mortgage software which was later used in this sub prime crisis leading to "modern depression" yes the way he describes in the article it is very clear he was a part of it. Also in this article he describes how traders who get$2million in bonuses behaved like overgrown kindergartners , imagination sends chills down my spine about their largese .These days no one wants to be a quant, but infact banks and financial institutions need quant little reliable one who considers in to account the uncertainity of predictions and minimizes them to be in a safe zone a real mathematician who can help ,for further read i recommend reading this article
