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Showing posts from November, 2012

Lessons from Hedge Fund Market Wizards: Ray Dalio

In our second installment of "Lessons from Hedge Fund Market Wizards", we'll offer up some trading and macroeconomic insights pulled from Jack Schwager's interview with Ray Dalio of Bridgewater Associates. 

You've probably heard of Ray Dalio if you have even a cursory knowledge of the hedge fund industry (or the Forbes billionaires list), so let's get right to it. These notes will fill in the rest of the story. 

1). Dalio is the founder and former CEO (now "mentor") of Bridgewater Associates, a fund that has returned more money ($50 billion) for investors than any hedge fund in history.  

2). Bridgewater still manages to achieve excellent returns on a huge base of capital and has done so over a long period of time. It is among the few hedge funds with a 20-year track record. 

3). Dalio believes that mistakes are a good thing, as they provide an opportunity for learning. If he could figure out what he (or someone else) was doing wrong, he could use that …

Lessons from Hedge Fund Market Wizards: Colm O'Shea

In our first installment of "Lessons from Hedge Fund Market Wizards", we examine the lessons offered in Jack Schwager's interview with noted global macro trader and hedge fund manager, Colm O'Shea of COMAC Capital. 

Last week we brought you a brief overview of Hedge FundMarket Wizards, including several interviews with author Jack Schwager sharing trading insights found within this new Market Wizards volume. 

We'll expand on those ideas throughout this series by zeroing in on our favorite interviews and highlighting some key lessons and quotes. Of course, our notes are just a sample of what readers will find in these interview chapters - we don't want to give away the store!  

Today, we'll look closely at some key insights offered in the book's opening chapter. Here are our notes on Schwager's interview with Colm O'Shea

1). Colm O'Shea began his career as a young economic forecaster. He was kept behind closed doors by his firm, who did not …

Jack Schwager on Hedge Fund Market Wizards

Update: Find the latest "Lessons from Hedge Fund Market Wizards" posts here.  

If you're a fan of the Market Wizards books by Jack Schwager, then you've probably read (or are looking forward to reading) the latest in the series, Hedge Fund Market Wizards.


We'll be taking an in-depth look at this book and the insights of the "Hedge Fund Wizards" in an upcoming series of posts, but for now I'd like to share some key interviews and webinars with author Jack Schwager. 

These videos will give you a great inside look at Schwager's writing process, as well as offering some key lessons found in this new collection of interviews with leading traders and hedge fund managers. 

First, an Opelesque interview with Schwager in Manhattan: "15 Hedge Fund Market Wizard trading secrets and insights".



This discussion opens by noting that while markets have changed since the first Wizards books were published, the main principles behind the various traders…

Dell: a '90s market leader digests its prior gains

Happened to glance at the daily chart of DELL today. 

While I wouldn't be surprised if the stock caught a bit of a bounce into 2013 (once year-end tax loss selling is exhausted), I'm not exactly bullish on the longer-term picture for DELL. 

Here's why, from a purely technical (price) view. Backing up to the weekly chart, we see DELL approaching its early 2009 lows near the $7.85 - $9 levels. If it can hold above those lows and rebound higher after a dismal 2012, that would provide a cyclical respite from what has been an overall bearish trend since early 2000.  However, even a months-long rebound and a 50%-60% rise wouldn't negate the longer-term bearish trend. 




Zooming out to the monthly chart, we see the secular bullish trend that took DELL from an adjusted price of $0.09 in 1990 to a high of over $50 (a 600-fold increase) by the bull market peak of early 2000. 


During this nearly-unprecedented boom, DELL was a market leader among US stocks. The company reached a peak ma…

Sayonara Panasonic, hello Samsung and Apple?

Taking a look at the charts of Panasonic and Sony today, in light of Panasonic's $9.6 billion loss for the year ($25 billion in losses over five years) and the steadily eroding Japanese consumer electronics business.  



While Panasonic, Sony, and Sharp have been getting killed in the TV and electronics marketplace (and in the share market) over the past few years, others have prospered. 

Apple, which is increasingly seen as more of a design-focused electronics maker, as opposed to a computer company, has seen its stock price quadruple in price over the last five years. 



The US design-meets-Chinese manufacturing combo has helped Apple out-innovate its competitors and undercut their cost structure. A strong yen has also hindered exports of Japanese electronics. 

Samsung has been rising to the top and is now dominating the smartphone market along with Apple. In fact, the two now account for 106 percent of handset profits. That's right, the total is greater than 100% when offsetting lo…