Comments on: Algorithms vs retail investors http://blogs.reuters.com/felix-salmon/2011/01/10/algorithms-vs-retail-investors/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: ARJTurgot2 http://blogs.reuters.com/felix-salmon/2011/01/10/algorithms-vs-retail-investors/comment-page-1/#comment-23098 Thu, 13 Jan 2011 03:24:49 +0000 http://blogs.reuters.com/felix-salmon/?p=6890#comment-23098 China already there:
http://pipelineandgasjournal.com/petrobr as-china-sign-10-billion-deal

Politics… it’s been fascinating watching the politics on this, and they may be opaque, but they are hugely covered. These is one of those cases where China is buying the assets of a continent. I did a foot-loose-retiree trip south in late ’09. In Buenos Aires you probably can’t go anywhere in the city and not see some form of PetroBras sign at least every 5 minutes; Soccer teams, bus stops, empanada stands, t-shirts on kids. And that’s in Argentina. In Brazil, it’s total.

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By: kosmik http://blogs.reuters.com/felix-salmon/2011/01/10/algorithms-vs-retail-investors/comment-page-1/#comment-23075 Wed, 12 Jan 2011 21:12:38 +0000 http://blogs.reuters.com/felix-salmon/?p=6890#comment-23075 http://fragmentation.fidessa.com/wp-cont ent/uploads/High-Frequency-Trading-Optiv er-Position-Paper.pdf

This one correctly illustrates typical strategies employed by so-called high-frequency traders.

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By: TFF http://blogs.reuters.com/felix-salmon/2011/01/10/algorithms-vs-retail-investors/comment-page-1/#comment-23068 Wed, 12 Jan 2011 19:25:24 +0000 http://blogs.reuters.com/felix-salmon/?p=6890#comment-23068 PEG is hardly a definitive measure, especially if relying on past history rather than future expectations. Sometimes it makes sense to evaluate a slow-growth company on its profitability and free cash flow.

If I recall correctly, they’ve been a bit capital-constrained. Partnerships with China would help that.

But I avoid because they are politically opaque.

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By: ARJTurgot2 http://blogs.reuters.com/felix-salmon/2011/01/10/algorithms-vs-retail-investors/comment-page-1/#comment-23065 Wed, 12 Jan 2011 19:05:19 +0000 http://blogs.reuters.com/felix-salmon/?p=6890#comment-23065 My most immediate problem is PetroBras. Today the PEG on it was north of 4. I bought it during the end-of-the-world sale at well less than a PEG of 1, have made buckets, so, time to boogy. BUT, PetroBras is already the Latin American Exxon, pays a dividend, will be a major partner with China, owns the South Atlantic, and can even get along with Chavez. Plus, if you think about commodities as holdings, oil would seem to be on the list. But, dayyam, 4? You could at least eat Tasty-creme donuts. And it is just one of my picks like that. Existential dilemma time.

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By: TFF http://blogs.reuters.com/felix-salmon/2011/01/10/algorithms-vs-retail-investors/comment-page-1/#comment-23061 Wed, 12 Jan 2011 18:30:21 +0000 http://blogs.reuters.com/felix-salmon/?p=6890#comment-23061 Very funny, Danny. :)

I actually was trading through some of the banks (BAC, WFC, WB) at various points during the slide. I’m potentially prone to “value trap” just like any other value investor, and I didn’t immediately recognize how serious the problems were.

Happily bailed on WB as soon as it became apparent that the CEO was lying through his teeth about the financial health. Got burned a bit on the shady BAC/Merrill deal, but profited nicely on WFC. Overall a wash — but could easily have been much worse.

Am sticking to more transparent businesses for now, thankyouverymuch!!!

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By: Danny_Black http://blogs.reuters.com/felix-salmon/2011/01/10/algorithms-vs-retail-investors/comment-page-1/#comment-23059 Wed, 12 Jan 2011 17:15:11 +0000 http://blogs.reuters.com/felix-salmon/?p=6890#comment-23059 TFF, so you were a buyer of BSC and LEH during 2008?

(Tongue firmly in cheek…)

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By: TFF http://blogs.reuters.com/felix-salmon/2011/01/10/algorithms-vs-retail-investors/comment-page-1/#comment-23057 Wed, 12 Jan 2011 16:31:21 +0000 http://blogs.reuters.com/felix-salmon/?p=6890#comment-23057 Felix fears volatility:
http://blogs.reuters.com/felix-salmon/20 10/05/10/why-volatility-means-you-should -sell-stocks/

Since May 10, the S&P500 is up 15.7%. It did fall first — so Felix did okay as long as he jumped back in before mid-September. Still not sure it makes sense to try timing the market like that.

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By: TFF http://blogs.reuters.com/felix-salmon/2011/01/10/algorithms-vs-retail-investors/comment-page-1/#comment-23053 Wed, 12 Jan 2011 15:57:45 +0000 http://blogs.reuters.com/felix-salmon/?p=6890#comment-23053 One more observation? Taking on risk is most profitable in the midst of a panic. Everybody knows which stocks are likely to suffer most in a downturn, and they get dumped first (and hardest).

Consider a “counter-cyclic” philosophy? When the market projections are rosy, be content with high-dividend slow-growth stocks. Eventually the market will turn, and those will hold up better than their riskier peers. Then you are perfectly positioned to pick up some bargains.

Volatility is a long-term investor’s best friend.

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By: TFF http://blogs.reuters.com/felix-salmon/2011/01/10/algorithms-vs-retail-investors/comment-page-1/#comment-23050 Wed, 12 Jan 2011 15:13:14 +0000 http://blogs.reuters.com/felix-salmon/?p=6890#comment-23050 ARJTurgot, it sounds like our situations are not too different (though you are likely 20 years older). As you say, you can never abandon equities in a world where inflation remains such a risk. My hope is to construct a retirement portfolio that provides for my income needs through dividends, keeping a modest allocation in cash and perhaps bonds for liquidity. Not terribly different from my present strategy.

Our top four holdings right now (in order from least risky to greatest return) are PG, JNJ, ABT, and IBM. Pharma is facing a tough decade, however the wiser companies are using the present cash flow to invest in other businesses. I expect they will maintain their strong dividends while achieving slow growth. IBM is one of several very similar “mature tech” companies, providing essential services on a scale that smaller businesses can’t touch. Their growth prospects are likely limited at this point, but their margins and cash flow are strong.

Dividends, stable earnings, and P/E below 15 limit the downside risk in an economic downturn. All stand to benefit from global growth. I hesitate to place big bets on any single issue, but have a dozen holdings of this nature that form the core of my portfolio.

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By: ARJTurgot2 http://blogs.reuters.com/felix-salmon/2011/01/10/algorithms-vs-retail-investors/comment-page-1/#comment-23046 Wed, 12 Jan 2011 13:14:26 +0000 http://blogs.reuters.com/felix-salmon/?p=6890#comment-23046 @TFF

Greed never rests. I’m evidently older, my urchins are through grad school, we held on to the mortgage docs for historical purposes, and the annuity is somewhat inflation adjusted. I owe on a library fine, but on consumer debt we’re part of the vile class exploiting the poor; forget miles, my credit cards pay me money.

But, my lessons in life lead me to the conclusion that there is a dearth of competence in many of our leaders and leading institutions. Sadly, my time in government exposed me to some of our state and national leaders. Not encouraging. In those circumstances I think you have to stay in growth mode. The urgency drops, and you can be selective, but you have to stay in the game.

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