EUCOM Economic Analysis - Part I

[Surferbeetle]

@Fuchs

One doesn't have to cheat in order to win.

There is gobs of public info out there and it is my sense that not all of that info gets to the market instantaneously nor efficiently (flying in the face of some of the tenants of the efficient market hypothesis ).

Firn has rightly recommended Benjamin Graham's book the Intelligent Investor as worth a read. I second his recommendation...Mr. Market sometimes drops by with some craaazzzyyy pricing on stocks...enough value that one can later sell those same stocks and cover one's beer and pretzels expenses for the year.

[Fuchs]

Surferbeetle, the people who buy or sell shares (and stuff) define the market price, not the ones who hold it.
The people who buy or sell can also be expected to have recently paid attention to news more than the holders.

I understand others people who read financial news or listen to them on TV believe they have info, but this info is basically already priced in. Whatever unsystematic distortion happens between info and conclusion tends to affect both you and all the others (buyers, sellers) on average. The market price is already aggregated including the info you get from reading or watching public info.
To believe that you get an advantage from such sources is about the same as to believe that you can process the info better than the one you're trading with. There's little reason to believe this to be systematically true.

Professionals who spend 60 hrs/week with consuming, discussing and digesting publicly and non-publicly available information on a narrow segment of the market get rich if they're correct more than 51% of the time. It's in my opinion delusional to believe you can beat your trading partner this way.

Or in another way: It's like believing that you can make profit in the betting market for sports because you are watching sports matches.



Focus on avoiding systemic risks and on keeping fees small instead and enjoy life by not looking at your shares' development or useless financial "news" more than monthly or quarterly.
A more thorough analysis makes only sense if you've got enough capital to diversify AND justify the expenses of a thorough analysis of a specific company, preferably a Ltd.

[Surferbeetle]

Fuchs,

Appreciate the concern and words of wisdom.

Savings/investing work is limited to low cost index funds only, and I am more on the cash side of late due to my concerns with our geopolitical situation. For fun, relaxation, and intellectual exercise I have about ten stocks which I follow and trade in from time to time. My limit is 'beer & pretzels' money only... if it all goes bad I can walk away without a glance back at what I placed on the table. E.ON is not one of these stocks since I have little or no knowledge regarding Euro utilities.

Agree with you regarding the value of much of what passes for for 'news'.

Regarding the efficient market hypothesis, what you state tracks with what I was taught in school and what I read in many of my various text & reference books. I am a bit of a heretic on this topic however as theory does not always appear to track with what I experience in the field. Let's just say that asymmetry exists....

[Fuchs]

Asymmetry or not; the problem is you have no systemic reason why you should find yourself on the good end of asymmetry, rather than on the bad end.

[Surferbeetle]

The world is a very big place, and we don't necessarily understand what we think we know. Along those lines:

What's the better way to invest—little by little, or all at once?, October 09, 2012, Vanguard, https://personal.vanguard.com/us/ins...eraging-102012

A Vanguard research paper issued in July 2012 found that the lump-sum approach has historically outperformed the dollar-cost method in the United States, United Kingdom, and Australia. But a close look at the study's underlying assumptions reinforces the idea that there are compelling arguments for both investing methods.

[Firn]

It is always nice to see some contra given. Anyway I will post the latest three trades, at least the price for which I got hopefully more value. Note that this concerns the small part of the portfolio wich is directly invested in equities. The far bigger equity part is in index funds, mostly of the (physical) ETF type.

E.ON: ~15
HP: ~10
Xerox: ~5

Buying fees are roughly 0.5%, portfolio fees 0.1%. Prices in €. Trades happened in the last two weeks. Obviously the sample is (too) small but it will be easier to manage.


We will see how things go in a couple of years. Hopefully we will not have forgotten this thread, but maybe this might be a good thing as good news doesn't create as many posts.

P.S: I just noted the almost perfect price scale of 5-10-15. Funny.

[Surferbeetle]

LNG Transport Ship Ob River (Dynagas LTD - Greece)



Gas tanker Ob River attempts first winter Arctic crossing, By Matt McGrath, 25 November 2012 Last updated at 19:35 ET, BBC News, http://www.bbc.co.uk/news/science-environment-20454757

A large tanker carrying liquified natural gas (LNG) is set to become the first ship of its type to sail across the Arctic.

Built in 2007 with a strengthened hull, the Ob River can carry up to 150,000 cubic metres of gas. The tanker was loaded with LNG at Hammerfest in the north of Norway on 7 November and set sail across the Barents Sea. It has been accompanied by a Russian nuclear-powered icebreaker for much of its voyage.

"Nineteen thousand ships went through the Suez canal last year; around 40 went through the northern sea route. There's a huge difference."

[Firn]

Yesterday evening I took a closer look at some financial statements, with some interesting results. ENEL for example did indeed trade a some point in recent times under the cash per share.

Mostly I looked at the results of stocks I own. Overall it was quite nice, but as written before such bull runs are always a bit two-edged if you have a hard time to find other good investements outside of stocks...

It is always nice to see some contra given. Anyway I will post the latest three trades, at least the price for which I got hopefully more value. Note that this concerns the small part of the portfolio wich is directly invested in equities. The far bigger equity part is in index funds, mostly of the (physical) ETF type.

E.ON: ~15
HP: ~10
Xerox: ~5

Buying fees are roughly 0.5%, portfolio fees 0.1%. Prices in €. Trades happened in the last two weeks. Obviously the sample is (too) small but it will be easier to manage.


We will see how things go in a couple of years. Hopefully we will not have forgotten this thread, but maybe this might be a good thing as good news doesn't create as many posts.

P.S: I just noted the almost perfect price scale of 5-10-15. Funny.

E.ON went down from ~15 to ~13€, a brilliant investment in a strong market
H.P did not too badly from ~ 10 to 12,8€ not too shabby.
Xerox gain some from 5 to 6€

So if one invested 30 € in each stock one has now (with fees but without dividends) roughly 100€ compared to 90€ you had a quarter ago. Not too bad especially if we consider that the € roughly gained 10% on the $. An U.S American could have got a nice return with those three combined.