you’ll be alright…
SO what did you decide? are you picking stocks or making sector calls or going long stocks/short sectors…or passive indexing?
Passive indexing and trading FX for now… but he wants me to look at macro level investing also… heres a direct quote from our email " For a while I’d wanted to build a good portfolio of macro investment. If we could research economic trends with strong fundamentals I’d love that" thats why i’ve been looking at cloud computing and other possible areas… I dont have enough experience to pick stocks or make sector calls just yet…!
So what are some macro ideas/themes/concepts that you find interesting? I’m definitely up for reading some.
One idea is, with deleveraging, we can expect declines in US consumption, so a contracting trade deficit, which would mean either declining imports or increasing exports, balanced by increasing imports in China, which starts to reduce its trade surplus - perhaps through appreciation of the yuan.
To clarify, think balance of payments, where reduction in current account is balanced by increases in capital account etc, and trade deficit is part of current account. So a rise in current account in US…is balanced by decline in capital account. Any opinion on implications on trade?
Pardon me if I am not being clear. Do you think this is realistic? If so, any investment ideas?
I’m thinking this will help US manufacturing.
us manufacturing will increase due to wage inflaton in china and higher quality in the US…
you gotta keep it simple…
Deleveraging is definetly interesting… but one thing i would find interesting is how foriegn investments in the US would benefit from a deleveraging… maybe some investment ideas there? I have a bit of a worry with the current economic outlook… now that i started trading FX and watching economic indicators, some warning signs are coming up that China is dangeriouslly slowing down… this may dampen recovery or growth in the US and Europein the future… Also look at the imbalance in markets Aren’t commodities currently at their lowest in terms of prices (excluding gold) while tech companies are at their highest? … im guessing that it should indicate that something is wrong… I cant say much about the US, but what about Russia, the middle east, Asia? I think too many investors are scared to step outside their bounderies… Im currently visiting the Middle east and heard a really interesting observation from a local Jordanian taxi driver about the impact of the war in Syria… he said that Syria had many consumer and rish tourist from oil rich countries coming to purchase items and spend money from oil rich countries… but with the current problems, the attraction is over and many of them are going to Jordan… How do you see investing in areas such as those? outside Europe and US? I feel there is much much more opportunities coming up in there areas compared to the US and Europe…
Lemme know what you think!
But Why is that wage inflation going to happen? I say it is going to be rising yuan.
I think the underlying mechanics must be understood before we can get insight into end results like wage inflation etc.
either way, if you look at chinese wage data, its clearly gone up even in Yuan terms…this comes down to the fact the nation as a whole is improving so people’s standards rise (ppl demand more and more is normal evoluation)…from a supply and demand perspective, a stagnant supply of labour coupled with higher domestic demand pressures will also lift wages…
there are a host of other factors, but a nation on the rise will not see on the whole wages fall…
Sounds like a well thought out macro strategy there…
You can’t go wrong with Facebook.
Cloud computing is not my macro strategy! I still need to do research and those were just some ideas of interest
stop being so harsh on the guy…let him make his trades…it is what it is…
BTW, Antticfa, my sarcasm was not directed at you, but your boss…
There are a lot of haters on this forum, generally jealous or just big internet personalities.
I would first be concerned with your friends ability to take risk and his liquidity needs. I don’t know how much forex trading you can do with that amount of money without using a lot of leverage. (I know nothing about it). If its just his play money, I don’t see why you can’t build an equity portfolio with maybe 10-15 positions based on some top down analysis. As far as equity portfolios go, you can get fairly diversified with 10 different stocks. As far as gaining experience, building your own well-researched portfolio based on your own ideas is going to do you more favors than investing completely passively.
If its actually important money, but equity exposure is allowable, just throw it all into a few ETFs.
Cloud storage is one reason why I’m holding hard drive stocks right now. STX and WD have done fairly well, but if they take a beating maybe take a look. I think those companies had taken a beating due to slow computer sales and a lack of pricing power, but there’s been a lot of consolidation and the 2-3 major suppliers have to get paid enough to stay in business. Cloud storage is mostly going to be old fashioned disk drives from what I understand, and solid state is becomming much more accessable for the individual consumer… but they still have a shorter lifespan.
Good luck.
Just reading this thread for the first time…pretty funny stuff. First off, OP, good for you. Every person here would love to have someone hand them some play money to pretend to be a PM. The experience will benefit you in one way or another.
Now that said, you’re not acting as a PM. You’re acting as a macro analyst for a quant fund. Nothing wrong with that, but it’s a far cry from being a PM.
If your buddy is truly okay with you managing the money, turn off the algos and build a portfolio from the ground up. Buying ETFs and index funds is acting more as an advisor (unless you go the portable alpha approach, but you don’t have enough money to do that). If currencies are your thing have at it. With $20k I’d probably buy my two favorite stocks and call it a day. “Best Idea” strategies are all the rage these days. You’ll have your own (extremely) concentrated portfolio.
Drilling down to cloud computing - The problem you’re going to run into is the companies that are best positioned to profit from cloud computing (mentioned above) are already too big. Google and Amazon could knock it out of the park, but it won’t signficantly improve their bottom lines (i.e. you nail your thesis but the stocks don’t go anywhere). If you can find a small cap that has some good cloud computing IP that would be the way to go.
I disagree with everything said here especially the last piece about if goog or amzn being too big and it won’t matter to the bottom line…complete rubbish.
We should have a separate thread on cloud computing. I like the technology and personally use it, but I think it has a long way to go before it’ll materially impact the mega-caps. You should throw Apple, MSFT and IBM in there too. Realistically though, what percentage of bottom line could be derived from cloud computing? Particularly Apple and Google. Probably a good 3-5 years off before it matters I’d guess.
It reminds me - to a much lesser extent - of people trying to grab onto the nano-tech players in the early 2000’s (which still hasn’t panned out). Everyone way buying anything that had to do with nanotech thinking someone would get it right. Turns out GE was/is the leader in nanotech, but they’re so big the success they had didn’t matter in the grand scheme. Cloud computing is a much safer bet, but I see similarities.
STL’s advice isn’t necessarily bad, but I think that it does make sense to get used to constructing a portfolio and rebalancing it, then slowly adding stock picks to it to try to improve returns over a simple asset allocation. Something like a core-satellite structure. I’m not sure if 20K is really enough to implement that, but with ETFs around it may be more feasible than it used to be.
Indeed. This is an unfortunately large part of being a PM. But with $20k I’d keep the turnover as low as possible.