First off, I'm one of the ones not drinking the Warren Buffett koolaid. I don't really think he's betting on Goldman or the economy per se. Here is a great post that describes the math of what's really happening, and don't forget to read the comments section, also filled with some very good information and views.
http://bigpicture.typepad.com/comments/2008/09/i-got-75b-but-i.html
And given the fact that Buffett has written some US$40billion worth of S&P puts, it helps him to seem like he's confident about the economy.
As for this "bailout", it's really quite awful. The market's been overleveraged for some time now and there has not been real deleveraging except for Lehman's implosion. A bank selling leveraged bets/assets to another bank does not take it out of the system, it merely moves it around. So what happened? Basically we started with X amount of money, and in a few years, we borrowed and leveraged it so that on paper, we all had Y>>X amount of money. Those who were smart enough to take it off the table, they can retire now. Those pension funds or big mutual funds that don't just get in and out of the market, they watched Y turn back down towards X. But Y didn't really exist in the first place. This bailout sounds like it's basically going to hold onto Y until a time when it might actually become Y. A real RTC would be much more useful. Force these banks to sell off the assets, liquidate when necessary, and kill a couple banks in the process. This may be more likely to cause the implosion we need to get back away from this non-existant Y amount of money. Instead, we're going to pay Y to all these financial institutions, and Bush/Paulsson have used this "we must act now" bullshit to scare Congress into this. Not only that, but this is an election year, and for some reason "recession" sounds like death to too many people. The economy is cyclic. We need recessions. Let's just get ours over with.
Thursday, September 25, 2008
Saturday, September 20, 2008
NFL picks
After going 2 for 3 in both the first two weeks of the season, I have 4 picks for this week. I like Atlanta -6 (the line was -5.5 for most of the week), Buffalo -9.5, New Orleans-Denver over 51, and Cleveland-Baltimore under 38.
Atlanta has already shown that it can win at home, and the Chiefs have allowed big games by the opponents' rushing game so far this season (McFadden last week, New England running backs averaged 5+ yards per carry) which should play right into the Falcons' hands. Buffalo has been a very solid team so far this season, having been able to beat their opponents on all three sides of the ball (offense, defense, special teams). More importantly, they can stop the run, which is the only thing Oakland has going for them. Everybody expects a shootout in Denver this week, and I don't see how these teams will disappoint. Both have big play receivers, slow secondary, and cannon-arm quarterbacks. Lastly, I just don't see how Cleveland will score against this rested and rejuvenated Ravens defense, while looking back at Baltimore's week 1 game, their two scores basically came when they broke two big run plays. Cleveland has actually handled that pretty well, keeping opponents from breaking the big play on the ground.
Although I like these picks as is, I understand that any of these picks would work well in a teaser, so have fun with that.
Atlanta has already shown that it can win at home, and the Chiefs have allowed big games by the opponents' rushing game so far this season (McFadden last week, New England running backs averaged 5+ yards per carry) which should play right into the Falcons' hands. Buffalo has been a very solid team so far this season, having been able to beat their opponents on all three sides of the ball (offense, defense, special teams). More importantly, they can stop the run, which is the only thing Oakland has going for them. Everybody expects a shootout in Denver this week, and I don't see how these teams will disappoint. Both have big play receivers, slow secondary, and cannon-arm quarterbacks. Lastly, I just don't see how Cleveland will score against this rested and rejuvenated Ravens defense, while looking back at Baltimore's week 1 game, their two scores basically came when they broke two big run plays. Cleveland has actually handled that pretty well, keeping opponents from breaking the big play on the ground.
Although I like these picks as is, I understand that any of these picks would work well in a teaser, so have fun with that.
Friday, September 19, 2008
No shorting
Today's market just felt completely artificial. Citigroup opening at $22? So basically people could gap the stocks to ridiculous prices and force the shorts to cover into them so they can get out. What a joke. I strongly disagree with this move and think they're just trying to place the blame without actually dealing with the situation, like that pension fund moron that went on CNBC and blamed the shorts. This is America after all, where parents ban a kid from playing little league because he's too good.
These artificially high prices don't mean anything. It doesn't "instill confidence" back into the markets. Who's going to suddenly want Citigroup at 22 thinking it's going to 40 because of this? All this will do is hinder the flow of trading. They might as well have just closed the markets for 2 weeks if the move is to serve as a "timeout" so the markets can take a breather and whatever plans have been initiated so far can get rolling. At least that way I can take a vacation.
Now, I believe in the ability to short whatever and whenever you want as long as you follow protocol and locate and borrow the stock. But I propose a middle ground that might be better than this no shorting at all thing. How about the "upday rule"? Instead of only being able to short on an uptick (like the old "uptick rule"), you can only short if the stock is up on the day from the previous close. That way, when a financial stock gets beaten down, you can't pile on. Sure there might be short sellers trying to prevent bounces, but you won't have short sellers driving a stock to 0 (this is what they claim is going on after all). And there's no real way of manipulation like there is with the uptick rule. Comments anyone?
These artificially high prices don't mean anything. It doesn't "instill confidence" back into the markets. Who's going to suddenly want Citigroup at 22 thinking it's going to 40 because of this? All this will do is hinder the flow of trading. They might as well have just closed the markets for 2 weeks if the move is to serve as a "timeout" so the markets can take a breather and whatever plans have been initiated so far can get rolling. At least that way I can take a vacation.
Now, I believe in the ability to short whatever and whenever you want as long as you follow protocol and locate and borrow the stock. But I propose a middle ground that might be better than this no shorting at all thing. How about the "upday rule"? Instead of only being able to short on an uptick (like the old "uptick rule"), you can only short if the stock is up on the day from the previous close. That way, when a financial stock gets beaten down, you can't pile on. Sure there might be short sellers trying to prevent bounces, but you won't have short sellers driving a stock to 0 (this is what they claim is going on after all). And there's no real way of manipulation like there is with the uptick rule. Comments anyone?
Thursday, September 18, 2008
Blue Hill
Being one of the few people who dropped a bunch of money on a day where many current and former coworkers made ridiculous sums, I needed a good meal to ease the pain. Being in the area, I stopped by Blue Hill, the critically acclaimed restaurant that is number 1 on the New York Observer's list of top 10 greenmarket restaurants. The meal was fantastic but since I didn't feel like sitting down for a long tasting menu, I'm just going to write a few things about the experience.
1. Solo diners get the full range of amuse and prestarters that would normally accompany the tasting menu or farm feast menu. They were simple and probably even better than the rest of the meal. I wish more places would treat solo diners so well.
2. For a guy who is pretty much a carnivore, I have to tell you, I enjoyed every bit of vegetable and fruit on offer. Everything had that ridiculously fresh crispness or softness to it. Among the amuse selections were just simple raw fresh vegetables and they were so, so good. I can only describe the nuttiness of the tomato flavor with the word gorgeous.
3. I walked in at 630pm and was easily seated with no reservation. There is also full menu dining in the bar area. The dining room has a really nice feel to it.
1. Solo diners get the full range of amuse and prestarters that would normally accompany the tasting menu or farm feast menu. They were simple and probably even better than the rest of the meal. I wish more places would treat solo diners so well.
2. For a guy who is pretty much a carnivore, I have to tell you, I enjoyed every bit of vegetable and fruit on offer. Everything had that ridiculously fresh crispness or softness to it. Among the amuse selections were just simple raw fresh vegetables and they were so, so good. I can only describe the nuttiness of the tomato flavor with the word gorgeous.
3. I walked in at 630pm and was easily seated with no reservation. There is also full menu dining in the bar area. The dining room has a really nice feel to it.
Thursday, September 11, 2008
NFL picks
I stopped with the MLB picks because there were just not enough favorable lines this year. At least I stopped with a positive record and balance. To make up for it and to give me a reason to write more posts since I've kinda neglected the blog, I'll start posting some NFL picks.
Last week for myself, I chose Detroit -3, NYJets -3, and Pittsburgh -6.5. That resulted in 2 out of 3 wins. This week, my three choices are Tennesee ML or whatever you can get, Arizona -6.5, and Seattle-SF Under 38.
It's unclear as it is whether Kerry Collins is that much of a downgrade from Vince Young, so why is a team that beat a strong Jaguars team an underdog against a Cincinatti team that couldn't beat a Joe Flacco-led Ravens squad? As for Mia@Arz, I believe that weak teams play significantly better at home, so I expect a better performance from Arizona and a worse performance from Miami compared to week 1. As for the last pick, I have no idea where any offense is coming from in that game. Good luck to all!
Last week for myself, I chose Detroit -3, NYJets -3, and Pittsburgh -6.5. That resulted in 2 out of 3 wins. This week, my three choices are Tennesee ML or whatever you can get, Arizona -6.5, and Seattle-SF Under 38.
It's unclear as it is whether Kerry Collins is that much of a downgrade from Vince Young, so why is a team that beat a strong Jaguars team an underdog against a Cincinatti team that couldn't beat a Joe Flacco-led Ravens squad? As for Mia@Arz, I believe that weak teams play significantly better at home, so I expect a better performance from Arizona and a worse performance from Miami compared to week 1. As for the last pick, I have no idea where any offense is coming from in that game. Good luck to all!
Thursday, September 4, 2008
US Open (EDITED)
Flipping channels right now between Ed Hochuli showing off his guns in the Giants game and Djokovic dominating Roddick at the US Open. After watching Mardy Fish come out strong against Nadal yesterday, I realized that to beat Nadal, a player would have to have a powerful serve with a kick and the ability to come into the net. I don't think Federer's serve is what it used to be as he doesn't have many 15+ace matches nowadays and while Roddick's serve is powerful, it's flatter. I think Sampras back in his prime would be able to consistently beat Nadal. Watching Djokovic right now though, he does have the serve that could give Nadal trouble. He doesn't come into the net much, but his ground strokes are very solid for sure. As much as everyone is looking foward to another Nadal-Federer rematch and the fight for the true number 1 ranking, I could easily see Djokovic beating Nadal. After all, this is Nadal's first US Open Semi as it is.
EDITED:
Right after I wrote and posted the above, Roddick has just come back to win the 3rd set, and I also realized that since Nadal is the 1 seed, Djokovic would have to beat Federer first to get to Nadal, and I'm not sure that's going to happen.
EDITED:
Right after I wrote and posted the above, Roddick has just come back to win the 3rd set, and I also realized that since Nadal is the 1 seed, Djokovic would have to beat Federer first to get to Nadal, and I'm not sure that's going to happen.
A quick point on the upcoming election
First off I'm going to remind everyone that I don't vote. As someone who works in finance, I obviously agree to some extent with general Republican policies. But the over-conservative and overly religion-based politicos of the recent regime have been driving me nuts.
So I buy a little of what both sides are selling. But I do have a preference if I were to vote this year. First, let me pose a question. Does anyone really think either of these two candidates will end up doing a horrendous job in office? I actually think either one would end up doing a very good job, though each with their own methods. So for me, it's a matter of long-term utility. If Obama loses, he's not going to pull a Gore. He seems like a guy who really believes in change, believes he'll be the person to bring that change, and just seems like a life-long politician. McCain, on the other hand, is old. It's doubtful he will run again if he loses this year. As I don't see anybody really stepping up in the near future, my feelings are quite simple: I'd rather see 4-8 years of McCain followed by 8 years of Obama than 8 years of Obama followed by I don't know who. And for those who are thinking 8 years of Obama followed by 8 years of Hillary, dream on.
So I buy a little of what both sides are selling. But I do have a preference if I were to vote this year. First, let me pose a question. Does anyone really think either of these two candidates will end up doing a horrendous job in office? I actually think either one would end up doing a very good job, though each with their own methods. So for me, it's a matter of long-term utility. If Obama loses, he's not going to pull a Gore. He seems like a guy who really believes in change, believes he'll be the person to bring that change, and just seems like a life-long politician. McCain, on the other hand, is old. It's doubtful he will run again if he loses this year. As I don't see anybody really stepping up in the near future, my feelings are quite simple: I'd rather see 4-8 years of McCain followed by 8 years of Obama than 8 years of Obama followed by I don't know who. And for those who are thinking 8 years of Obama followed by 8 years of Hillary, dream on.
Friday, August 22, 2008
Quick catching up
As usual, just as things start going well again at work, I find a way to blow up. However, I still think I can recover nicely and this week will be crucial in deciding whether I can take a trip to Hong Kong in September. So everyone wish me luck in trading this week, especially those who want to see me in Hong Kong!
Among other things, a huge market has opened up downstairs right in the building. It's called Food Cellar & Co. and essentially is as big as a Whole Foods type place and has the sushi and hot foods sections as well. The best part is that they have an oven specifically for made-to-order pizzas and they're actually pretty good. This is a really good development since I was starting to get bored with the food options around here.
Among other things, a huge market has opened up downstairs right in the building. It's called Food Cellar & Co. and essentially is as big as a Whole Foods type place and has the sushi and hot foods sections as well. The best part is that they have an oven specifically for made-to-order pizzas and they're actually pretty good. This is a really good development since I was starting to get bored with the food options around here.
Quick trip to Boston
Was up in Boston last week for 4 days to attend a wedding. Congrats to Hao Yuen and Munyi!! During my time up there, I stayed for two nights at the Liberty hotel, which used to be a jail and is right next to Mass General Hospital. It's pretty classy, and houses one of the hottest bar/lounges in the city. I was very pleased with my stay.
Much of the trip was also spent eating, with way too much artery-clogging goodness. Wednesday started off with dinner at Hamersley's Bistro, with the always delicious roast chicken entree (practically the only time I order chicken at a restaurant) and a deliciously fatty calf's brain appetizer. Thursday lunch was spent at one of my favorite and very underappreciated sushi places in Boston, Sakurabana in the financial district. To the surprise of me and my friend, they had kobe beef sushi and tataki along with our usual preferred choices of bonito, suzuki, and hamachi belly.
Thursday dinner deserves a paragraph all by itself, as I spent over 3 and a half hours with my friend at Clio for the 14 course tasting menu which became 15 when we augmented an A5 kobe beef dish. It was a tasty and whimsical meal, with several fun courses and the iron chef experience with liquid nitrogen being used to create a sorbet tableside. My favorite highlights included:
A tomato water martini with basil oil, caper berry, and tomato popsicle.
Geoduck sashimi and BBQ, which was the first time I've had BBQed geoduck and that was nice.
A two hour slow-poached egg, which was special because when I asked whether it was sous-vide, they said it wasn't because it wasn't in a vaccuum bag but poached in the shell.
Two beautiful seared diver scallops with textures of tomato, rhubarb, and szechuan pepper.
Friday was mixed food-wise, as I had two lunches with the two Boston offices where I worked. After two slices of pizza I joined a whole bunch of guys for a disappointing (but not unexpectedly so) restaurant week lunch at the steakhouse named the Oak Room. Reminds me of the restaurant week disaster at Smith and Wollensky's from a while back. I'm not big on restaurant week to begin with but above all else I strongly strongly suggest not choosing a steakhouse to sample. Friday dinner was much nicer although it was basically a cow overdose. Bone marrow and oxtail for appetizer, a 30 oz bone-in rib eye for entree, and a shortrib mac n' cheese for a side which doubled as my dessert since it took me forever to finish it.
Much of the trip was also spent eating, with way too much artery-clogging goodness. Wednesday started off with dinner at Hamersley's Bistro, with the always delicious roast chicken entree (practically the only time I order chicken at a restaurant) and a deliciously fatty calf's brain appetizer. Thursday lunch was spent at one of my favorite and very underappreciated sushi places in Boston, Sakurabana in the financial district. To the surprise of me and my friend, they had kobe beef sushi and tataki along with our usual preferred choices of bonito, suzuki, and hamachi belly.
Thursday dinner deserves a paragraph all by itself, as I spent over 3 and a half hours with my friend at Clio for the 14 course tasting menu which became 15 when we augmented an A5 kobe beef dish. It was a tasty and whimsical meal, with several fun courses and the iron chef experience with liquid nitrogen being used to create a sorbet tableside. My favorite highlights included:
A tomato water martini with basil oil, caper berry, and tomato popsicle.
Geoduck sashimi and BBQ, which was the first time I've had BBQed geoduck and that was nice.
A two hour slow-poached egg, which was special because when I asked whether it was sous-vide, they said it wasn't because it wasn't in a vaccuum bag but poached in the shell.
Two beautiful seared diver scallops with textures of tomato, rhubarb, and szechuan pepper.
Friday was mixed food-wise, as I had two lunches with the two Boston offices where I worked. After two slices of pizza I joined a whole bunch of guys for a disappointing (but not unexpectedly so) restaurant week lunch at the steakhouse named the Oak Room. Reminds me of the restaurant week disaster at Smith and Wollensky's from a while back. I'm not big on restaurant week to begin with but above all else I strongly strongly suggest not choosing a steakhouse to sample. Friday dinner was much nicer although it was basically a cow overdose. Bone marrow and oxtail for appetizer, a 30 oz bone-in rib eye for entree, and a shortrib mac n' cheese for a side which doubled as my dessert since it took me forever to finish it.
Friday, August 1, 2008
Cognitive dissonance in trading
Just as I was on a little winning streak trading, I ended up doing something really stupid today. However, I did notice that this stupid trade that I made today is very similar to other stupid trades that I've made before and might be rooted in something psychologically ingrained in all of us.
Basically, the stupid trade looks like this. I have a premise/trade idea that is a combination of a short/medium term catalyst. After entering into the trade, I exit the trade for whatever reason (profit-taking, short term catalyst gone, time spent in trade, etc.). As the stock continues to move in the direction I had predicted, I now don't look for reasons to get back into the trade in that direction, but rather start to look for a fade move against it. This usually leads to much much pain.
An example: Let's say I buy a stock at $10. As it gets to $10.25, I notice there is a seller that keeps holding it down. Not only selling at $10.25, but coming low to $10.20, and seeming to return even after that one order is done. Seeing this new seller, I decide to exit the position, thinking supply/demand is saturated here. After a bit of time passes, either the market or just the stock proceeds to continue the move with speed and force. Before I can decide to join in again, the stock is at $10.50 and beyond. Now, however, I often find myself rationalizing a viewpoint to fade the move. Thoughts like "the stock has just made a 5% move" or "I think that's the seller coming back in" tend to just lead to a lot of pain as I keep getting squeezed through $11 and so on.
Now, obviously I traded like a moron. But I'm beginning to wonder whether part of what's behind the thought process comes from cognitive dissonance. I did a quick example of cognitive dissonance in this random daily thought from over a year ago: RDT Post
In short, cognitive dissonance refers to the mind's need for our thoughts and actions to be consistent (ie. not contradictory).
I don't recall the exact study, but I remember my professor describing a study about cognitive dissonance: Subjects were asked to do a task on a computer. The task was extremely boring and repetitive. After the completion of the task, subjects were paid either $1 or $20 for their participation. After receiving the payment, subjects were asked how much they enjoyed the task. According to the results, the subjects who received $1 on average responded to having enjoyed the task more than subjects who received $20. The authors' conclusions were that their minds experienced dissonance from performing such a boring task for only $1 that they resolved the contradiction by believing the task to be more enjoyable.
With regards to the trade, I'm wondering whether I start to think about reasons why the stock would come back instead of keep on going because it's consistent with me having exited my position earlier. Now, if cognitive dissonance was really such a factor, noone would sell their positions because it's contradictory to them buying it in the first place. However, in this case I had two contradicting beliefs already (the buy and the sell) and it seems that the most recent one had more sway over my thought process.
Oh well, whatever, maybe I'm just a moron who can't trade and am just whining. Have a good weekend everyone.
Basically, the stupid trade looks like this. I have a premise/trade idea that is a combination of a short/medium term catalyst. After entering into the trade, I exit the trade for whatever reason (profit-taking, short term catalyst gone, time spent in trade, etc.). As the stock continues to move in the direction I had predicted, I now don't look for reasons to get back into the trade in that direction, but rather start to look for a fade move against it. This usually leads to much much pain.
An example: Let's say I buy a stock at $10. As it gets to $10.25, I notice there is a seller that keeps holding it down. Not only selling at $10.25, but coming low to $10.20, and seeming to return even after that one order is done. Seeing this new seller, I decide to exit the position, thinking supply/demand is saturated here. After a bit of time passes, either the market or just the stock proceeds to continue the move with speed and force. Before I can decide to join in again, the stock is at $10.50 and beyond. Now, however, I often find myself rationalizing a viewpoint to fade the move. Thoughts like "the stock has just made a 5% move" or "I think that's the seller coming back in" tend to just lead to a lot of pain as I keep getting squeezed through $11 and so on.
Now, obviously I traded like a moron. But I'm beginning to wonder whether part of what's behind the thought process comes from cognitive dissonance. I did a quick example of cognitive dissonance in this random daily thought from over a year ago: RDT Post
In short, cognitive dissonance refers to the mind's need for our thoughts and actions to be consistent (ie. not contradictory).
I don't recall the exact study, but I remember my professor describing a study about cognitive dissonance: Subjects were asked to do a task on a computer. The task was extremely boring and repetitive. After the completion of the task, subjects were paid either $1 or $20 for their participation. After receiving the payment, subjects were asked how much they enjoyed the task. According to the results, the subjects who received $1 on average responded to having enjoyed the task more than subjects who received $20. The authors' conclusions were that their minds experienced dissonance from performing such a boring task for only $1 that they resolved the contradiction by believing the task to be more enjoyable.
With regards to the trade, I'm wondering whether I start to think about reasons why the stock would come back instead of keep on going because it's consistent with me having exited my position earlier. Now, if cognitive dissonance was really such a factor, noone would sell their positions because it's contradictory to them buying it in the first place. However, in this case I had two contradicting beliefs already (the buy and the sell) and it seems that the most recent one had more sway over my thought process.
Oh well, whatever, maybe I'm just a moron who can't trade and am just whining. Have a good weekend everyone.
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