Wednesday, September 13, 2006


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 ? :)

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