Tag Archives: Trading

The Investing Edge: The Win / Pay Odds Gap

Investing is too often looked at using a handful of academic models. Successful investing involves thinking about the investment process in as many different ways as possible. This article takes a look at investing using alternative views. From Betting to Investing Many of the ideas used by the investment community are adopted from the horse…

Your stop loss orders aren’t guaranteed to protect you

Speaking of trading, I want to talk about certain trading misconceptions. I recently talked about the liquidity trap that some investors were getting themselves into when investing in illiquid stocks. The issue is not an investment issue but a trading issue that can greatly affect the overall IRR. In discussions about this trading trap some…

Buying bitcoins is going long bitcoin deflation

Buying bitcoins as an investment means going long bitcoin deflation. That’s it. Let me explain. Bitcoin is a cryptocurrency, a digital currency made hard to forge using cryptography, and also a payment platform such as those used by Visa, ATMs and if you’ve done wire transfers, the Swift system. The bitcoin technology platform is not…

Dubai Financial Markets Investor Structure Improving

My foray into DFM’s historical data unearthed some interesting nuggets, both of which I consider positive. For the first half of this year, Arab investors, including from the GCC, withdrew a total of AED 1.6 billion from the market while UAE citizens invested a total of AED 421 million. Here is the first interesting bit, the total…

Investors are falling into a liquidity trap in the GCC

I am increasingly hearing of people investing into positions in the markets because they think that the price of a share is cheap due to a decline in the price. The price is not cheap, it is low for a reason. Worse, when these investors enter the market and buy the shares they think they…

Dana Gas seems confused about sukuk pricing

Dana Gas’s CEO thinks his sukuk coupons are above market even though the sukuk price is below market. This is inconsistent. I am not discussing any Sharia law issues here, just the simple dynamics of the bond (including sukuk) market. This opinion is based on an article in The National. According to Dana Gas’s CEO the…

The Ministry of Silly Walks to battle Trump, the TRA and the UAE banks and free zones.

The election of Donald Trump as the next president of the US has caused a ripple or two in world political and economic markets. As I discussed about Brexit, such knee-jerk responses create opportunities. For example, Mr Trump’s promise to ban all Muslims from America would, one might think, cause stock prices in the travel…

Investing in, not Trading, the Price Cycle: an Overlay Strategy

Here’s the reason market timers lose money: They are traders instead of investors, and as discussed in a previous article traders are time sensitive as their main dependence is on price movement. Therefore they need to invest as close to the upturn in price as possible and they need to hold on and exit only…

Who Wins, the Trader or the Investor?

The perennially favourite discussion topic is trading versus investing. What’s the difference? Is it short time horizon versus long time horizon? Is it growth versus value? Is it Soros versus Buffet? This post is a continuation of my 2007 article in The National. Reading the previous article is not necessary to benefit from this post,…

Moral Arbitrage and the Inheritance Play

The thing about the rational investor hypothesis is that it assumes that investors wish to maximise a financial risk/reward function. They don’t. Investors have a utility function that includes economic considerations, but also includes many other goals important to the investor. Some investors may refuse to invest in defense companies, especially those that produce offensive…