Wednesday, September 13, 2006

Money from equities

who makes money from equities and why is so much money chasing this field:

1) American domestic consumption fuelled by the housing boom ( now going into a bust). The boom was primarily due ot very veyr low interest rates which meant that you could buy houses. You sell those houses at a profit and consume the money.

2) who was providing the money for this.. the world is willing to, becuase they need a stable place to invest. which means that the us has a very high capital account deficit. ( their trade balance aint doin too good either coz of the higher oil bill)

3) so no one produces anything in america and the bank says so mcuh so that all debt values are known. so the money geos ot markets where there are lot of variables like in asia

4) hedge funds want alpha returns and this is available only in volatility :)


companies-> pvt placement

there are a lot of other channels for money to flow in and out.

will keep writing in

kite runner

the book by khalid hosseini is one of hte good books i have read recently. thought are acutlaly drawn into the setting, you imagine hte scenario's as its unfolding, feeling good bad, torn and look for redemption in the end. teh characterization of people leaves no doubt to how the world would be when seen if the talibanesque style were to succeed. but as the cab driver says, you have seen only one afghanistan. our world views is also determined by what we have seen, not as much by what the reality is. When the two intersect we are left numb by the acts of violence. When you meet people like assef and their world interwines in yours, thats when true violence stares in your face. And what about redemption, Amir found it, but many people would never probably find it in their lives. They would just be thinking about hte time s they could say... for you, a thousand times over.


Equities as an asset class are wierd at worst and extraordinary simple at best. Company makes money and its stock should be a value of that and the future cash flows possible right ? But it doesnt work that way-the movement of the stock is purely determined the kind of press the industry generates in the short run, and by the number of hedge funds that are present in the market the short run ( 6 months) can give the weak a heart attack. Add to this the day trading speculators and you have a good cuisine to ruin your blood pressure. But the long run price very much factor of the additional money a company is able ot add to its shareholders. As buffet says Options and futures might just be speculative investments, as I am getting involved inthe market, i understand they are an important aspect of price discovery. The amount of risk that options enable you to diversify ( or speculate) or put your money in equities means that they would always exemplify the overall equity risk. will write more on this. Schumi retires, fed ex moves on, sachs is the largest hedge fund, man are we moving or what ? :)

Sunday, September 10, 2006


House of flying daggers:
Dunno what exactly the movie was trying ot represent. Shot in amazingly beautiful locales for an extremely pathetic or no story line at all, it shall remain one of the movies that i would want to forget.

Plot: The house of flying daggers is a cult who is against the govt. Torn in this struggle is a young woman who is captivated by the man who she is supposed to kill Pathetic dubbing later we realize she is dead and the seasons are changing.

Munnabhai: Feel good over and above all and likeable.