quantoscope-blog

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Tips for Choosing a Broker - Zalan

1. Trade commissions

2. Trading tools

3. Other fees

4. Product range

5. Security

5. Market research

6. Minimum deposit

7. Customer service

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'When I was an investment manager during the dot-com era, new multi-billion dollar securities issues were scheduled to come to market in less than a day. A red herring would be emailed out about an hour before the close of the market. If you were lucky, there would be a conference call with management or a sell-side analyst just after the close. You then had to place your bid on the offering. “Act now, while supplies last!” These timing games mean that capital is allocated inefficiently and represent another visible hand in markets.

More Visible Hands

Regulations

Lobbying (in markets as well as in politics)

Anything meant to obscure the true nature of a transaction, including bribery, graft, nepotism, etc.

Monopoly, monopsony, and oligopoly

Explicit or implicit price fixing

Possible Remedies

Ask what information the counterparty may have in a prospective transaction that you don’t. Management may know the cost of its incentives programs relative to all other shareholders. Are you blindly voting the proxy not knowing this information? Management is counting on it.

Before transacting, are you sure you understand the value of a good or service to you? What information is out there to which you don’t have access? Are labor-intensive and low-margin businesses you invest in actually earning returns on capital?

What are the unspoken components - the elephants in the room - that overshadow or underlie a transaction?

Do you have enough time to render impartial, independent, and full judgment? If not, insist upon it, or else pass on the transaction.'

Awesome Wednesday afternoon article. - Zalan

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A post about this is coming soon. - Zalan

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Worth to read. - Zalan

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- Zalan

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'Although Bank of America would be consolidating its legal entities for the European Union in Dublin, London would remain the lender’s headquarters for Europe, the Middle East and Africa.' I think it would be okay to stop the Brexageddon propaganda. - Zalán

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No further comments needed. - Zalan

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This summary by UBS targets the less finance educated audience, so click, if you want to learn about blockchain, tech in finance, robots, trade wars and capital. - Zalan

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Your One-Minute Guide to Bitcoin - Marcell

This post will be a rapid summary to the cryptocurrency Bitcoin. It is intended for those who hear a lot about it, see opportunities to trade it, but have no actual grasp of what it is and how it works, and want to understand it.

Bitcoin is a currency, just like any other. The main difference between Bitcoin and other currencies is the way it gets released into the economy.  Currencies like the USD, GBP, and EUR enter the economy by a central bank which makes decisions about the money supply, meaning how much money should exist in the economy through various forms, such as buying or selling treasury bills or modifying the base rate. Bitcoin, on the other hand, gets released into the economy when someone solves a complex mathematical equation and is awarded Bitcoin for his efforts. This process is called Bitcoin Mining.

Wait, What?

Why would solving mathematical equations result in Bitcoin? What is the point? The point is that since there is no other way for Bitcoin to enter the economy, the amount of bitcoin in existence can't be modified arbitrarily, it can only increase if someone solves an equation, and as Bitcoin increases, the complexity of an equation gets progressively harder and harder. Solving these equations does not create any value for the world, it just serves as a tool to determine who is willing to invest capital and time into Bitcoin mining, so those get the Bitcoin who are willing to work for it. This process is still a bit silly, but at least it is not completely randomized.

Okay, but why on earth would someone pay for Bitcoin?

People use Bitcoin for various reasons. The most important of all is Privacy. Since it's P2P nature, Bitcoin cannot be traced back to its origin, so it serves as an excellent tool for avoiding taxes or buying illegal products online. Some people view Bitcoin as the future of currencies. What a time to be alive!

The other reason is pure speculation. Many people who invest in bitcoin, do it for the sole reason, that they believe, there will be someone in the future, who is willing to buy their Bitcoin at a higher price. Unlike other equities, there isn't even a theory about its fundamental value. Trading Bitcoin is closer to gambling.

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'According to information obtained by Handelsblatt, the bank wants to set up a “booking center” in Frankfurt, which will process and settle a large proportion of Deutsche’s European business with institutional and corporate customers.' As far as I understand Deutsche moves its Ops from London to Frankfurt. Unfortunately I can not open the whole article, but according to this, Frankfurt does not seem to replace the City. Bad (or costly) journalism. - Zalan

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‘Index funds are the sleep-easy investment. They’re highly regulated, cost very little to buy and own, and they give you massive diversification that’s easy to understand and control. They’re very liquid and require little emotional involvement. And just in case you still aren’t sure, remember they are recommended by the most trustworthy people in the industry.I believe almost all investors can get what they need from index funds. The ones I have recommended for more than 15 years all have respectable returns and are likely to continue doing so.‘ Interesting concept and mostly good arguments. My only shift is that what if only one stock in the index becomes toxic and investors are starting to sell like crazy? This scenario is definitely not representing the diversified, protecting property of index funds. - Zalan

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Summary 

• ‘Heightened equity volatility historically benefits gold and platinum, while equity drawdowns favor gold and silver. 

• Positive oil shocks tend to boost all precious metals while platinum has had the least sensitivity to extreme price drops. 

• Shifts in reserve currencies may drag on precious metals, but shocks from emerging market currencies may be limited.’

- Zalan

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This is probably the most amateur video ever appeared on Bloomberg. - Zalan

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'Overall, IBM has shown declining revenues over the last few years, which resulted in a stagnated share price. However, the company’s business is likely to return to growth as many initiatives like cloud and blockchain can become sound sources of revenue.

The comparative analysis shows the stock can be currently undervalued, as IBM’s forward P/E and P/S ratios are lower than those of the peers. The DCF model demonstrates the fair price range for the stock is $174-189.5, with a $166.2 target under the pessimistic scenario. The DDM model shows the fair price for the stock is $169.2. Therefore, IBM stock provides a sound margin of safety for investors who want a position in the stock.'

Disclosure: I am long IBM.

- Zalan

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'Shadow banking involves acquiring financial capital in an unregulated environment. This involves non-bank financial intermediaries providing firms loans, which is similar to traditional commercial banking but is actually outside the government's regulatory purview.'

Just like Fintechs such as Funding Circle, right? - Zalan

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'Investors who follow target forecasted returns exacerbate mispricing and pay the price in terms of lower returns. This also helps to explain the persistence of anomalies. Keep these findings in mind the next time you’re tempted to act on some analyst’s recommendation (and beware of that deadly condition known as confirmation bias).' - Zalan