Not much to say about this one (WSJ.com sub req'd), other than the fact that I have so much admiration for Citadel. Not because I like Ken Griffin, however. (I don't know the man, so I can't like him.) However, as an operation, the vulture tactics are beautiful. People always gripe about vultures, but they're part of the food chain too. If weaker players die off, someone has to pick up the pieces. In recent memory, that someone has been Citadel many times (think back to Amaranth). Its a lovely strategy, IMO. So I have the utmost respect for how Citadel operates their business goes about accomplishing their goals.
Tuesday, July 31, 2007
Thursday, July 26, 2007
Monetizing Domain Names Part III
Well, only 1 domain made it into the upcoming auction, and surprisingly that is the weakest name of the 2 strongest names I had. I guess it is because I actually had an appraisal performed on that name. Looks like I'll have to have an appraisal done on the others to help them sell. Such a bother. I'm not sure I want to do that, so right now I'll just wait. If I can make a decent return from the auction, then I'll put some of that money into domain name appraisals. We'll see how it goes.
Back in the Game
Apologies to all. I was away for this past weekend and didn't have time to post. I'll resolve that shortly with the latest update about my software company and the domain name sales status. Then I'll finish up the review of the BMW 750iL (IIRC) test drive that has been languishing and some other random bits.
Until next time...
Until next time...
Thursday, July 19, 2007
A Moment of Silence
If News Corp. succeeds in taking over Dow Jones, I'm canceling my subscription to WSJ.com immediately. I'll give Barron's a *bit* more time, but I imagine I'll probably cancel it as well. Guess I'll have to get ready to pay for access to ft.com and economist.com. Don't get me wrong; both are supremely good publications. However, I find the breadth and depth of the Wall Street Journal's coverage of all sorts of topics, 6 days per week, to be unsurpassed. Its not always the best, but it is always interesting, and it spans the entire range of my interests. I am constantly sharing WSJ.com articles with friends and family. Under Rupert Murderer, I doubt the content will be worth sharing with anyone anymore. So sad.
Wednesday, July 18, 2007
Diversification Part IV
Now I plan to talk about some of the new funds I am evaluating, and some of the moves I have made recently. Covered call writing will have to wait a bit longer.
I already mentioned that I sold 100 shares of SPXJX. Next up is a possible 25% cut of my position in the T. Rowe Price Emerging Markets Stock Fund (PRMSX). My rules (which admittedly need to be reviewed and possibly revised) call for selling 25% of my position with a 25% gain. I just increased that limit a bit since it was not taking into account the possible effects of short term capital gains taxes and trading costs. So for now, I'm staying put in PRMSX but if it keeps moving as it has, I'll end up selling 25% before the 1 year anniversary of its purchase.
However, further reflection would indicate that these selling rules should only apply to stocks and possibly ETFs. Mutual funds, on the other hand, are not designed to be traded as actively as stocks (and to a lesser degree, ETFs). With mutual funds, I think I should probably pare back my positions only as part of an overall portfolio re-balancing, otherwise I simply will not add to the existing positions. I'd love to hear the thoughts of others on this point.
At this point, I'll maintain my existing positions in PRMSX and SPXJX, and use the funds that I have available to take positions in FNMIX, RPIBX, and TREMX. Another monkey on my back is the fact that I still haven't identified the commodity investments that I want to add to my portfolio. Any and all suggestions are heartily welcome. I guess I'll have to do another post about the commodity positions in my portfolio, after I manage to actually take some.
Until next time...
I already mentioned that I sold 100 shares of SPXJX. Next up is a possible 25% cut of my position in the T. Rowe Price Emerging Markets Stock Fund (PRMSX). My rules (which admittedly need to be reviewed and possibly revised) call for selling 25% of my position with a 25% gain. I just increased that limit a bit since it was not taking into account the possible effects of short term capital gains taxes and trading costs. So for now, I'm staying put in PRMSX but if it keeps moving as it has, I'll end up selling 25% before the 1 year anniversary of its purchase.
However, further reflection would indicate that these selling rules should only apply to stocks and possibly ETFs. Mutual funds, on the other hand, are not designed to be traded as actively as stocks (and to a lesser degree, ETFs). With mutual funds, I think I should probably pare back my positions only as part of an overall portfolio re-balancing, otherwise I simply will not add to the existing positions. I'd love to hear the thoughts of others on this point.
At this point, I'll maintain my existing positions in PRMSX and SPXJX, and use the funds that I have available to take positions in FNMIX, RPIBX, and TREMX. Another monkey on my back is the fact that I still haven't identified the commodity investments that I want to add to my portfolio. Any and all suggestions are heartily welcome. I guess I'll have to do another post about the commodity positions in my portfolio, after I manage to actually take some.
Until next time...
Sunday, July 15, 2007
Monetizing Domain Names Part II
This has become an ongoing experiment of mine, and I'm taking it to the next level now. I'll get my alpha wherever I can, thank you!
As I've already detailed, I have been looking to sell 6 domain names that I have owned for about 10 years. After doing a fair amount of reading and generally sliding into the industry in the last 5 weeks, I had an epiphany yesterday. If the domains have 5 figures worth of value after this long, without having been developed, then how much more would they have if I were to turn those domains into active properties - real, live, web sites.
As luck would have it, I don't have to imagine for 2 of the domain names. These are 2 that my partners and I began developing back in the late 90s for a venture which fell apart due to inexperience and under-capitalization (mostly the former). While I kept one of the sites online for several years, it basically languished, still bringing in the occasional visitor (most recently in May 2005, according to my e-mail).
Now, what occurred to me is that, without any further effort, I may possibly get 6 figures for the best name at auction. However, with a small amount of effort, and Google AdSense, I might be able to increase the value of the property significantly. Maybe even to the point of making it viable on its own and not requiring a sale to monetize it. So that's the current direction of this experiment - turning the sites into cash flow generators using Google AdSense.
On a certain level, I feel bad for putting ads on the sites. I mean, I never wanted to do that, even ad advertising became an accepted monetization scheme. However, it sure beats trying to generate online retail or membership sales in terms of ease, speed, and growth. My AdSense account became live a few days ago, and although I have to hack some of the code to fit the text links in, I imagine I can actually start this experiment by the time the weekend rolls around.
The auction that these sites may possibly run in is scheduled for Saturday, 4 August. So let's see how much progress I can make before then. If things look promising (or even if they don't), I may withdraw them from the auction to spend more time developing the sites. We'll see. I do have high minimum bids set for the auction so I won't be mad if the domains manage to sell, but I don't want to limit the amount I can get for them if it is at all possible to enhance their values.
Wish me luck!
As I've already detailed, I have been looking to sell 6 domain names that I have owned for about 10 years. After doing a fair amount of reading and generally sliding into the industry in the last 5 weeks, I had an epiphany yesterday. If the domains have 5 figures worth of value after this long, without having been developed, then how much more would they have if I were to turn those domains into active properties - real, live, web sites.
As luck would have it, I don't have to imagine for 2 of the domain names. These are 2 that my partners and I began developing back in the late 90s for a venture which fell apart due to inexperience and under-capitalization (mostly the former). While I kept one of the sites online for several years, it basically languished, still bringing in the occasional visitor (most recently in May 2005, according to my e-mail).
Now, what occurred to me is that, without any further effort, I may possibly get 6 figures for the best name at auction. However, with a small amount of effort, and Google AdSense, I might be able to increase the value of the property significantly. Maybe even to the point of making it viable on its own and not requiring a sale to monetize it. So that's the current direction of this experiment - turning the sites into cash flow generators using Google AdSense.
On a certain level, I feel bad for putting ads on the sites. I mean, I never wanted to do that, even ad advertising became an accepted monetization scheme. However, it sure beats trying to generate online retail or membership sales in terms of ease, speed, and growth. My AdSense account became live a few days ago, and although I have to hack some of the code to fit the text links in, I imagine I can actually start this experiment by the time the weekend rolls around.
The auction that these sites may possibly run in is scheduled for Saturday, 4 August. So let's see how much progress I can make before then. If things look promising (or even if they don't), I may withdraw them from the auction to spend more time developing the sites. We'll see. I do have high minimum bids set for the auction so I won't be mad if the domains manage to sell, but I don't want to limit the amount I can get for them if it is at all possible to enhance their values.
Wish me luck!
Friday, July 13, 2007
Photographs as an asset class
Found this via FiNTAG. Thanks, as always.
There is a much larger story here, obviously, and that is the mad chase for investment returns in presumably non-correlated and less-discovered asset classes. That's all good and fine, as absurd as it all seems to me. Too much money chasing too few worthwhile investments.
Now, the thing that I wonder when I read this is why not just take this collection of photographs - clearly very valuable photographs - and securitize them based on the earnings from licensing? It could be exclusive licensing, or per-use, and could keep the spirit of the artist intact while at the same time benefiting the estates or other owners of the collection on an ongoing basis.
Just a thought.
There is a much larger story here, obviously, and that is the mad chase for investment returns in presumably non-correlated and less-discovered asset classes. That's all good and fine, as absurd as it all seems to me. Too much money chasing too few worthwhile investments.
Now, the thing that I wonder when I read this is why not just take this collection of photographs - clearly very valuable photographs - and securitize them based on the earnings from licensing? It could be exclusive licensing, or per-use, and could keep the spirit of the artist intact while at the same time benefiting the estates or other owners of the collection on an ongoing basis.
Just a thought.
Wednesday, July 11, 2007
Wednesday, July 04, 2007
Quick Thought about the Bear Stearns HF Implosion
I think I was reading Veryan's latest post about the Bear Stearns "hedge fund" blowup when it occurred to me that the problem became one of correlation. (I mean, the technical reasons a varied and all, and I'm no expert, but in the end it came down to correlation, as I see it.)
Lets say that both funds were long CDOs and possibly had synthetic exposure as well (wrote CDSes against the CDOs, etc.) and short the ABX indices, which is the description I've read. Now, both of these instruments are tied, fundamentally, to the mortgage market. Correct me if I'm mistaken, but the point of the hedge should be to offset the moves in the long position, with hopefully enough leverage applied to make a difference. You have to be careful with the leverage however, because too much in the wrong direction would offset the gains on the other side (which, again, mirrors the description I've heard of the Bear Stearns funds).
In the configuration described above, when these positions start heading south, there is no place to hide. Both of them are tied to mortgage instruments. Shouldn't the hedge have been in instruments with negative correlations to the CDOs and other instruments in the long portfolio? Even worse, the positions they needed to get out of the most quickly were the least liquid (which makes so little sense to me!).
Now, I would imagine someone is going to point out something I've missed. There's some assumption that I have overlooked that SHOULD have allowed this magic to work. However, the fact is that the magic DID NOT work.
So what we appear to have here, fundamentally, are two positions which are too positively correlated to be tied to each other. Had the hedge been in anything other than other mortgage related securities (Zimbabwean stocks?), then there might have been a chance. Too much positive correlation and too much leverage applied in the wrong place seems, to me, to have doomed these funds.
Now, what lesson can be learned from this? Diversification maybe? That seems like a big one. But even in such a concentrated portfolio, it would have made sense to have more diversification of credit securities. I could imagine less or no leverage on the long positions and mild leverage on the shorts, with the hedge being mildly levered purchases of mortgage CDSes. The fund weren't (aren't) short credit funds, right? So I can't imagine them positioning negatively in the credit markets, which is probably the best place to have been this year.
Oh well.
Lets say that both funds were long CDOs and possibly had synthetic exposure as well (wrote CDSes against the CDOs, etc.) and short the ABX indices, which is the description I've read. Now, both of these instruments are tied, fundamentally, to the mortgage market. Correct me if I'm mistaken, but the point of the hedge should be to offset the moves in the long position, with hopefully enough leverage applied to make a difference. You have to be careful with the leverage however, because too much in the wrong direction would offset the gains on the other side (which, again, mirrors the description I've heard of the Bear Stearns funds).
In the configuration described above, when these positions start heading south, there is no place to hide. Both of them are tied to mortgage instruments. Shouldn't the hedge have been in instruments with negative correlations to the CDOs and other instruments in the long portfolio? Even worse, the positions they needed to get out of the most quickly were the least liquid (which makes so little sense to me!).
Now, I would imagine someone is going to point out something I've missed. There's some assumption that I have overlooked that SHOULD have allowed this magic to work. However, the fact is that the magic DID NOT work.
So what we appear to have here, fundamentally, are two positions which are too positively correlated to be tied to each other. Had the hedge been in anything other than other mortgage related securities (Zimbabwean stocks?), then there might have been a chance. Too much positive correlation and too much leverage applied in the wrong place seems, to me, to have doomed these funds.
Now, what lesson can be learned from this? Diversification maybe? That seems like a big one. But even in such a concentrated portfolio, it would have made sense to have more diversification of credit securities. I could imagine less or no leverage on the long positions and mild leverage on the shorts, with the hedge being mildly levered purchases of mortgage CDSes. The fund weren't (aren't) short credit funds, right? So I can't imagine them positioning negatively in the credit markets, which is probably the best place to have been this year.
Oh well.
Personal Residential Skyscraper
I think "Wow!" pretty much encapsulates everything there is to say about this. No, wait, there is more...I want one!
Top 100 Early Stage VCs for 2006
I never would have imagined that 7 of the top 100 are right in my backyard, especially the #1 position holder (literally right up the street from my apartment by about 10 miles). Thanks to Paul Kedrosky for the original post.
Hedge Clipping
An article over at the New Yorker about the exploits of Harry Kat, with whom the All About Alpha readers are very familiar. Very interesting!
Tuesday, July 03, 2007
I Hate Comps!
I really, really hate comps as a valuation method for real estate. How friggin' stupid!
*sigh*
That is all.
*sigh*
That is all.
SPXJX Away!
Finally!
I jettisoned the first 100 shares of the SPARX Japan fund in the first major rebalancing action of my new portfolio. Right now, I'm planning to sit in cash while I work to identify some worthwhile commodity investments. While the gain isn't huge (only about $100 on the whole lot, even though I had a +1.95% increase today), I'm only looking at long term capital gains taxes on it ($15). Even better, I'm freeing up cash for another investment, creating "dry powder" as the saying goes.
More to come...
I jettisoned the first 100 shares of the SPARX Japan fund in the first major rebalancing action of my new portfolio. Right now, I'm planning to sit in cash while I work to identify some worthwhile commodity investments. While the gain isn't huge (only about $100 on the whole lot, even though I had a +1.95% increase today), I'm only looking at long term capital gains taxes on it ($15). Even better, I'm freeing up cash for another investment, creating "dry powder" as the saying goes.
More to come...
Sunday, July 01, 2007
Monetizing Domain Names
I wish I could report that my first month of monetizing my old domain names was wildly successful, but alas, I can't. It was not a failure however. The 6 domain names I own which I plan to sell generated $35 via domain parking. Nothing spectacular, but every dollar earned without going to my J.O.B. is fine by me. I'm now thinking about ways I can increase those earnings this month as I await the auction in which I hope to be able to sell some of the domains for a reasonable amount. We'll see what happens. One of the domains has already been appraised for over $14,000 and that's not even the best one! So I see no reason why I should not come out ahead here.
Until next time...
Until next time...
Subscribe to:
Posts (Atom)