Friday, July 28, 2006

Alpha Guy Resurrection

Jason has done a wonderful job with this blog and as the previous post indicates, he has stopped to pursue other interests. Rather than letting the blog languish, he agreed to sell it so that someone else can continue where he has decided to leave off.

While obviously the writing will change to some degree with someone else writing, the themes will stay basically the same. The main focus will be investing with a bit of personal finance and other ramblings thrown in from time to time.

I'd like to thank Jason for doing a wonderful job and wish him the best in his other side projects. I hope to continue writing to his level and expand it into something he'd be proud to read. I look forward to meeting all the people who frequent the posts here and look forward to continuing this project.

Monday, July 17, 2006

The end of the Alpha Guy

After 227 posts this post, #228, will be my final post. I haven't been posting as much as I originally wanted to due to a lack of time and being busy with other side projects. I think if I try to keep writing, the lack of posts will continue.

I figured if I'm going to end this blog, it might as well be during a time I hit another goal. This week I passed by the $50,000 mark and it feels pretty good.

I just wanted to say thanks for reading this little blog of mine, thanks for those who emailed me and posted comments, and the other personal finance blogs out there.

I will continue checking the Alpha Guy email from time to time.

I wish everyone the best of luck with their personal finances, but also to remember that we only live once and we can't take the money with us. Spend time with friends, family, and have some fun.

If all goes well you will hear from me on a bigger scale (whether you will realize it or not) because my goals are big and I'm ready to accomplish them...

-Jason the "Alpha Guy"

Tuesday, July 11, 2006

Rebalancing and Program Trading

This post has to do with rebalancing a portfolio and program trading (for big portfolios). Some investment firms have multiple portfolios/funds that are set up for certain goals. For instance, one fund might be a regular long/short fund where it takes long positions as well as short positions. Another fund might be levered, so it will basically have the same positions as the long/short fund but in greater percentages (through borrowing). If the long/short fund has a 1% position in Microsoft (MSFT), the levered portfolio might have a 2% position in MSFT- so it's a 2x fund. This ration can be any number, I'm just using 2 for simplicity.

But sometimes things get out of whack because of a variety of reasons. Let's say the stock doesn't trade that much so the 2x fund is unable to get enough shares, or more shares are sold out of the 1x fund. If money leaves the 1x fund, stocks will need to be sold and this will throw off the 2x fund as well. This is where rebalancing and program trading come into play. Ideally rebalancing might happen once per quarter, but it can happen more frequently. Rebalancing basically means how it is read- rebalance the portfolio. Using software you can figure out which stocks are out of line and you might need to bring these positions up or down (you can also do this on Excel, it just takes a little longer).

Once this is figured out, most trading software platforms can automatically generate the trades and then you just need to send them to a program for trading. We use program trading because generally when you rebalance a portfolio it's a small amount of shares (percentage wise), but possibly hundreds of trades. With program trading we basically send all the orders to a program and it gets all the trades done. We just have to sit back and wait....I wish! We have to monitor the positions and trades to make sure things go smoothly, but using programs definitely saves some time.

Thursday, July 06, 2006

It's been awhile

I haven't been on my laptop for awhile, that's my reason for my lack of posts.
I calculated my June end of month net worth and I was pretty disappointed. I thought this was going to be the month to pass the $50,000 mark but I had way too many expenses and I ended the month at $49,150. I fell way short of my monthly goal, but I think I'll be on track for this month. I also have a few more things to sell on eBay and I think this could bring in another $100.

In a few months I'll be able to invest in a 401(k), so I will post more about this once I get more information. The max I can do is $15,000 per year and I think I might be able to pull this off if I use some of my bonus money. Although my company doesn't match, I do get the benefit of reducing my taxable income. Actually this combined with my IRA, my taxable income might be really low (hey! another refund!).

I started trading a few weeks ago at work and it's going very well. I don't think about how much money I'm spending, I just concentrate on completing the trades. I still triple-check my trade order before I push any buttons though! I'll probably write a more detailed post about this later as well.

Also, I casually mentioned that my friends and I are starting a website. Well that's growing into two related websites and nothing is complete yet so I won't go into details. I think they will be fun sites and our goal is to generate enough ad revenue to cover apartment rent. It's going to take awhile because the site will mainly be for the San Francisco Bay Area, but we're going to give it a shot.
I wish I had more web/programming skills because I think it's easier to at least start new ventures. Right now I have ideas and I have to run it by some friends to see if it's do-able.