Archive for the ‘Investing’ Category

Are you Ready for the Financial Crisis?

January 17th, 2016

A wise man once wrote:

Markets top slowly and bottom quickly.

When I read this and anlyzed some of the major market tops over the last 100 years, I was surprised by the accuracy of this statement. (One major exception was the 2000 Tech Bubble, which was quite different from other market dynamics.)

S&P 500 Jan 2011 - 2016

S&P 500 Jan 2011 – 2016

The theory behind this is that the “smart money” figures out that a market is topping long before the average Joe. I’m not sure if I agree with the theory, but it does seem to me that the “stupid money” gets out way too late, after the market has dropped significantly.

Read more…


Investing, Money, Success, US Economy , , , , , , , ,

Chaikin Analytics Review and Free Trial

July 8th, 2014

One of the biggest hurdles that the individual investor faces in trying to create a nimble, smart portfolio is the competition.

Investment bankers, quants, mutual fund companies, and big Wall Street firms are employing Ph.D. researchers with degrees in everything from finance to physics to create model portfolios. They use the latest and most powerful technology to guide their buys and sells.

The little guy doesn’t have a chance.

That’s what I thought, until last week. George and I had a chance to see a demonstration of Chaikin Analytics, probably one of the most complete set of investment tools and stock market model-building technology that’s available for the money. Or at least I’ve ever seen.

The Chaikin Analytics Dashboard

The Chaikin Analytics Dashboard

How does Chaikin level the playing field?

Read more…


Business Strategy, Internet, Investing, Money, US Economy , , , , , , , , , , , ,

The End of Everything and the Beginning of Nothing

April 26th, 2014

Zero Marginal Cost SocietyThe predominant economic systems are capitalism and communism. Both have their problems, which seems to explain the existence of mishy-mashy socialism in most countries.

Most futurists debate which economic system will dominate the next century. That’s a mistake, according to some experts, like Jeremy Rifkin. Rifkin recently wrote The Zero Marginal Cost Society that looks at how technology and ideas, like the Collaborative Commons, will re-shape the financial status quo.

Adding sensors to just about everything will move the power of info-centric businesses — think energy and utility companies — back into the hands of individuals. If a person had smart enough algorithms, for example, they could purchase energy much more efficiently, use it efficiently, and save it efficiently. In a very real sense, an individual could run their own utility company.

But, that’s just the beginning. Let’s try to connect all the zero-marginal cost technologies. 3-D Printing has already received lots of hype, but buried deep within this technology are several — forget disruptive — transformative technologies. What if you could 3-D print your own efficient solar cells? What if you could 3-D print your own efficient battery? Let’s go crazy here. What if you could 3-D print a fusion reactor for your home.

So, now you’re going to not only be a smart consumer — a prosumer in Rifkin’s lingo — to a smart producer — or a producer… wait, that doesn’t work. Anyway, what happens when you produce something for almost free and use it so efficiently that you avoid costs. Well, everything becomes nothing. In other words supply increases to near infinity and costs fall correspondingly to near nothing.

Read more…


Accelerating Technology, Business Strategy, Investing, Money , , , ,

Did Kickstarter donors just get ripped off for billions?

April 5th, 2014

By now, we have all read about the Facebook acquisition of Oculus, the virtual reality company, for $2 billion. That’s billion — with a “b.”


The debate can go on about whether this is a sell-out to Facebook and their slick and sometimes creepy marketing machine, or the next stage in a revolution of virtual reality. Or, both, for that matter. What a lot of people are wondering — especially those who donated money to Oculus through Kickstarter — is whether they got ripped off.

Kickstarter, a crowdsourced donation site, helped Oculus raise $2.4 million for its Rift product back in 2012. In exchange, backers received t-shirts, posters, and prototypes, depending on their level of gift.

So, legally, the answer is “no.” Nobody got ripped off. These people donated, they didn’t actually invest in the virtual reality company, nor were they promised any sort of any financial remuneration from Oculus for their donation, if they were able to sell the company.

Read more…


Accelerating Technology, Business Strategy, Investing, Money , , ,

Stocks And Retirement | Should I Keep Holding On To These Stocks?

March 31st, 2014

All retirees end up asking themselves if they should cash in their chips and make a smooth, profitable exit from the stocks game. Having nurtured their portfolios through the years, they sometimes feel uneasy about selling their stock assets. After all, a lot of time has gone by, watching them, believing in them, having them generating income, even if poor at times. Many retirees know that they could generate some extra cushion by unloading their stocks, but they just can’t seem to fathom the act.

Image courtesy

Image courtesy Andreas Poike

It’s important to remember why you started accumulating stocks in the first place. In most cases, it was simply a matter of developing a tangible financial portfolio; something that you created to make life better for the future of you and your loved ones. Well, have your stocks done that? Maybe you took a heavy hit back in 2008. Maybe you’re just recovering – and stock markets are doing just about as good as you could hope for right now. Maybe it is time time to cash them in. You can try the superannuation calculator over at Suncorp, if you need a hand figuring out how much you need to retire.

Should you sell your stocks now that you’re a retiree? Read more…


Investing, Money , , , , , , ,

Buying a Franchise Business

March 13th, 2014

What exactly is a franchise business?
There may be some slight variations from one situation to another but on the whole, this involves buying what is effectively a license from someone to open up your own business operating under their corporate umbrella and brand. It is a very familiar business model and offers the advantage of you being able to join a winning brand rather than needing to come up with your own business idea and develop it accordingly.

Image courtesy Ed Hart

Image courtesy Ed Hart

What are the main advantages of a franchise?
As touched on above, you are theoretically jumping onto the bandwagon of an existing successful company and that may be worth a lot to you.
Other things that might come as part of the package, though not always so do check, might be: Read more…


Business Strategy, Investing, Money, Success , , ,

How Can You Avoid the Next MtGox Bitcoin Meltdown?

March 1st, 2014


Bitcoin was supposed to be a safe haven — away from the greedy hands of corporations and bankers and far from the idiotic brains of mindless speculators. It was a popular people’s currency.

The evaporation of Bitcoins in MtGox has caused every fan of the crypto-currency to re-think this. And it’s making them ask: How can we avoid putting our Bitcoins in the next MtGox?

Short answer: you can’t. What seemed to be lost in the idealism of Bitcoin — that it’s some weapons that would only be wielded by the good against those who are evil — was the critical idea that Bitcoin, and every other crypto-currency for that matter, is that it’s only a tool. And tools can be misused and crafted into weapons very easily. It all depends on the hands that are using it.

Whether MtGox debacle was one of greed, or one of incompetence, remains to be seen. But just because MtGox went down due to either fraud-or-fuck-up dynamic does not mean it won’t happen again.

While there’s no way you can completely avoid the mess, you can consider some risk-assessment strategies to pull the needle back to your side.

Insist on Transparency
Bitcoin is supposed to be about transparency; its exchanges should be equally transparent. If you believe that the exchange you’re using isn’t completely open, find another.

Remain Cautious
Continually monitor the Bitcoin situation. There were rumors that MtGox was sketchy. Only the smart ones got out in time.

Panic, then Assess
People tell you not to panic. But if you sense that your exchange is faltering, get your Bitcoins out immediately and redistribute them elsewhere. If it is just a drill, you can move them back.

Read more…


Business Strategy, Internet, Investing, Money ,

Crowdsourcing The Personal Hedge Fund

February 2nd, 2014


Many people have problems with hedge funds and big investment conglomerates. They rake in billions of dollars and live like rock stars.

People hate them so much they protest constantly, occupying this and occupying that.

But, I don’t have a problem with them. In fact, the chants of sympathy for the poor and working class and hand-wringing over income inequality are typically a cover for the protesters who are simply jealous of the big financiers. Had they stumbled onto these opportunities, they would be in the same penthouse, driving the same Porsche.

Read more…


Accelerating Technology, Automated Trading, Investing, Online Investing AI , , , , , , ,

From Main Street to Mainstream: Will More Businesses Accept Bitcoins?

January 18th, 2014
From Main Street to Mainstream

From Main Street to Mainstream

If Bitcoin becomes mainstream, it won’t do so because of the bankers, hedge funders, and other Wall Street types. Those folks are happy to trade whatever type of currency comes their way. If tomorrow, the world switched to beaver pelts, you can bet that someone would create a beaver pelt ETF, or build a hedge fund that is invested heavily in beaver pelt-for-dollars trading.

But, for Bitcoin to become more accepted as a mainstream currency, users will need to pave a path to Main Street. That hasn’t been the case, so far. But there are signs that this is changing. In fact, two trends — gift cards and third-party Bitcoin facilitators — can make the alt-coin more user-friendly.

Main Street Vs. Wall Street

Main Street is more cautious and fearful than their “No Fear” counterparts on Wall Street. Bitcoin has terms that they’re not familiar with — algorithmic mining, blockchains, wallets, etc. It can be scary for someone from a non-tech background to embrace this alt-currency. Much easier for them to reach into their own physical wallet and produce a dollar bill or a credit card, right?

Then, there are governments who are taking shots at Bitcoin. They are not accepting it — and some are even banning it. This makes total sense. Bitcoin is a threat to their monopolies on currency, one of the key ways they hold power.

So, Bitcoin does have some hurdles.

However, there are signs that the ice of fear is starting to be chipped away. Trends are starting to develop that can build a bridge from alt-coin users to Main Street.

Read more…


Investing, Money, US Economy , , ,

Is Investing Really a Zero-Sum Game?

January 6th, 2014
Zero-Sum Game ContraryBrin

Zero-Sum Game ContraryBrin

Investing — in anything stocks, bitcoins, goat futures, whatever — is a zero-sum game, according to most critics and proponents of investing.

Someone buys, someone sells. Someone wins, someone loses.

In a very broad sense, this is true, but if we look a little more closely we can see that the zero-sum game does not exactly fit investing because of the timescale involved. In fact, investing is rarely a zero-sum game.

We like our models. No, not super models. Humans use models to improve the efficiency of thinking. Guesswork, it turns out, is what being intelligent is all about. That’s why when we one of our investments sours, we immediately equate that to a game, like baseball or football. We struck out. We lost.  But baseball and football — or whatever game you’re into — have finite time limits: innings, quarters, periods, etc. But many investments do not.

Take a stock trade. You may buy stock in a company and the price begins to go down. You sell your stock and someone buys it. According to the zero-sum model, you lost: you bought high and sold low. And the other guy bought it lower, so he won.

However, you have yet to hit the ninth inning. What if you take that investment and buy another stock and it soars? What if the winner in this trade — the investor who bought your stock — finds that the company continues to underperform and its value continues to crater?  These trades — that seemed to be a winner-loser type of thing — can be seen as only one play in a much longer, much more complex game that we call the “market.” The buying and selling of an investment are usually seen as “the game.” As we can see in the above scenario, they are not. They are just plays within the game.

Only finite limits define a zero-sum game and, as long as people are in the market and companies are being created and sustained — then, the zero-sum game heuristic does not fit. In fact, it can be debilitating. People who fail at certain investment strategies immediately exit the game.

In other words, investing isn’t so much a zero-sum game as investors are zero-sum thinkers.

Obviously, there are much better examples of the zero-sum model in investing. Off the top of my head, I see that options — which can expire at a certain time and be essentially valueless — is a type of zero-sum game. If you don’t exit in time, or the underlying security doesn’t perform to your expectation, then your investment goes to zero. You lose. (However, I would point out that option trading has become a thing-in-itself and not what the strategy is most ideally intended — as a hedge to non-zero-sum game trading. You should use options to guard against risk on your main options.)

There are probably other types of investing that are better understood in the zero-sum model.

The point I would like to pass on is to be careful of our models. They become self-fulfilling prophecies — and not just for us. They can spread and infect other people’s thinking. They can lead to the most horrible type of model-making called “policy changes.” A policy change is when a government entity decided to make bad heuristics into the law of the land and there is only one true law in this case — the law of unintended consequences.

What do you think? Do you think zero-sum investing is still a good model? Do you know of other investment models, or perspectives, that have similar faults?



Dreams Come True, Investing, Money , , ,