Tuesday, December 31, 2013

How To Behave Like a Badass Sales Trader/Dealer/Broker

Year end review ... reposting one of the favourites.

Getting into a dealing room is difficult in the first place. After the initiation period, you will have to behave accordingly in order to be a "stockbroker". Most of the behavioural traits will be inculcated via osmosis, but you can always learn some handy tricks.


Yell Occasionally - Its no point being a soft spoken, polite person, in a dealing room. You will be accorded no respect. You have to yell occasionally to voice urgency. Easy targets will be when speaking on the phone to back room or settlements - use phrases like "the deal is done, don't bother me again"; "don't bother me again, just cross it it"; etc... The other easy targets are your execution dealers, some choice phrases include: "just hit the bloody thing to the stupid buyers"; "what do you mean we are still above the average buying price, ..C'MON"; etc...


Foul Language - This is a given, its the vibe, its a must. If you are not using occasional foul language, your bosses and colleagues will think you never do deals big enough or have clients that are big swinging dicks (or dickheads in most cases). No need to do it over the phone as you try not to swear to your clients. Just pick up any research report and exclaim, "these fucking analysts know dick shit", you get the drift ... a good trick is to put the phone down and then yell "Fucker" or "Useless fucker", hey, you might not even be on the line with anyone, but your colleagues and bosses will think you are doing "good work". "Good work" meaning "taking shit from clients".

Slam the phone - You are not a good broker if you have never broken a phone before. Sometimes the PABX system board may be very expensive, in that case, take the receiver and just whack on the table a few times till it can be heard across the room. Nobody will mess with you cause you will be perceived as a badass broker-dealer-trader. Works every time.

Use Useless Abbreviations & Insiders' Lingo - Sprinkle it in your conversation especially among friends not from the industry. Examples: dog with fleas, dead cat bounce, GN4, PN17, ostrich, pig, sheep, DK, Bollinger, arb, bp, CAC40, CFD, DAX30, front loading, front running, alpha, gamma, beta, GTC, RRR, warehousing, Sharpe ratio, theta, XD ...etc..


Badass behaviour in the dealing room is accepted because you are all fighting for the same clients. Some orders you got is some orders the competition did not get. To maintain good service, acute attention must be given to order instructions and execution precision - hence if you have to ensure the down line gets the message, you will yell and shout and curse, as its your head thats on the chopping block, not theirs. 
Getting yelled at by clients are normal, and as the punching bag, you will have to take those punches. Once the phone is down, that accumulated stress has to go somewhere or you will get an early ulcer or some cancerous growth.

Drink like a Fish - Badasses drink almost every other day. Either you have a really bad day in the office - so, need a drink. Or you had a really good day - so, have to drink to celebrate. If you are not a constant drinker when you are a trader/dealer/broker, you'd probably never amount to much. But basically you have to drink like a fish to numb your soul for being around so much money thats not yours, so many assholes, so much false pretences and bad behaviour,and so many devious sycophants. 


If you have read The Prince by Niccolo Machiavelli, you will know that a badass broker/dealer/trade is a true  Machiavellian. A person  who "views and manipulates others" for "personal gain, often against the other's self-interest". By reputation, stockbrokers have manipulative personalities. So do people who sell cars or houses. Its really hard to differentiate between the three.


How To Comfort Yourself - When your clients lose money, its a terrible thing and you will feel bad (for a little while). This always helped me when I was one, you will snap out of it when you repeat the mantra "Well, it could have been worse, it could have been my money, or it could have been me". Always work wonders.


How To Comfort Clients - When clients faced losses, they need to be handled. Tell them, you also suffered losses in your personal account on the same stock. Tell them another fund/client had even bigger losses than them. 

At the end of the day, a badass broker/dealer/trader is a person with high EQ (when necessary) and thinks that there is a vast gap between truth and untruths. Do you lie ??? ..., well, we don't call it lies when we are withholding some facts, ...we don't call it lying when we over exaggerate the attractiveness of a stock, ... we don't call it lying when we underplay the risk, ... we don't call it lying when we shove a placement down a client's throat because we just have to get the thing off our books.
--------------------------------------------

Question:
What does a hedge fund manager with no fund to manage say?
Answer:
Would you like fries with that sir?


A stockbroker is someone who invests your money till it's all gone!

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How to know you are not cut out to be badass:
- when you avoid calls from certain clients, if you can't face the music, you don't have the balls for the industry
- when you can't sleep well most nights worrying about positions
- when you look at yourself in the mirror coming home from work and you hate yourself
- when you feel like Spiderman in a bull market but feel like an idiot during a bear market (market cycles should have little effect on you emotionally, just the place you spend your holidays .. Mauritius or Redang)
- when you have no life apart from the markets

In the end, the financial markets, if you work in them, are just places where you help in the movement of funds from one to another. You live by the flickering lights on the screen. You stare at 4 screens the whole day and go home to stare at another screen, and if you are constantly on FB and Whatsapp, make that 6 screens - that is if you do not go to watch a movie, which would be 7 screens, what a life, screens the whole fucking day. In the end, you take your cut (or commission) with the movement of funds. You hope to value add in your service to clients via "good analysis" or "good execution" or "good information flow" ... mainly its all bull shit, and you know it too, and guess what, the client knows it too.

Monday, December 23, 2013

Thursday, December 19, 2013

Guns N' Roses ... and ... Bunyi Gitar

Possibly Malaysia's best guitar player, and a friend of mine, Roger Wang, somehow managed to cajoled Guns N' Roses' lead guitarist, Ron "Bumblefoot" Thal to jam alongside him ... and jamming Bunyi Gitar no less.

p/s look at the two, .... long hair is not necessary to be a rocker!!! LOL!!!

Recorded on 4 November 2013 at JKKN Auditorium, Kota Kinabalu.





Wednesday, December 18, 2013

Good & Bad Habits

OK, this is an OK visual presentation by a Kathryn Davis, who works on Phd programs recruitment. Most of the stuff are closer to the truth. But there is one glaring bad use of statistics and data. Can you spot it ... my answer at the bottom. 

The Habits of the World's Smartest People (Infographic)

Have you spotted it? Here is a compilation on things which supposedly differentiate great entrepreneurs, great thinkers, great performers, great inventors ... Now, first of all, she assumes that SEX has something to do with it all, or that early loss of virginity has anything to correlate to intelligence, drive, analytical skills, etc...

She puts that category as "Self Discipline", there is a FUCKING BIG DIFFERENCE between not wanting to lose your virginity till its an appropriate person/time AND cannot even give away your virginity for free even if you wanted to = both have the same result.

So, the undergrads at Princeton, MIT and Harvard have a higher ratio of virgins. That may have very little to do with "self-discipline". They may be already very nerdy, LACK SOCIAL SKILLS (watch The Big Bang Theory), ... may have committed a lot of money by their folks/companies/study loans, so no fuck ups, so no time for anything else but books.

Plus, staying a virgin may have a lot more to do with a person's religiosity/beliefs rather than self-discipline. Its like trying to figure out how many Jewish undergrads eat pork, and link that to brilliance.

So, be careful with statistics and data, you can use it so wrongly or rightly to support your point of views.


Hottest Real Estate Globally In 2013

Are real estate prices a reflection of their domestic economy, or QE, or QE indirectly owing to depressed interest rates, or  a surge in domestic liquidity for lack of assets to invest in??? Or all of the above. Bubbles everywhere.

The London-based real estate consultancy Knight Frank has released the latest reading of its Global House Price Index, showing that residential prices are now 4% higher than their previous peak in 2008 and 12.7% higher than their 2009 low.
“The index’s strong performance has been assisted not just by headline grabbing price rises in Dubai, China and Hong Kong, but also in a number of emerging markets.Taiwan, Indonesia, Turkey and Brazil recorded price growth of 15.4%, 13.5%, 12.5% and 11.9% respectively in the year to September,” according to the report. One country showing surprising strength is Ireland, which recorded three-month prices increases of 4%, when less than two years ago the country was still seeing price declines of 5% or more per quarter.
So what are the other hottest housing markets around? Here are the Top Ten:
RankCountry12-month Change in Real Estate Prices 
1
Dubai, UAE
28.50%
2
China
21.60%
3
Hong Kong
16.10%
4
Taiwan
15.40%
5
Indonesia
13.50%
6
Turkey
12.50%
7
Brazil
11.90%
8
Colombia
11.80%
9
Germany
11.20%
         10
United States
11.20%


Read more: The 10 Hottest Real Estate Markets Around the World | TIME.com http://business.time.com/2013/12/16/the-10-hottest-real-estate-markets-around-the-world/#ixzz2nhl5FJFe

Wednesday, December 11, 2013

S&M Show Podcast

NOT THE LEX COLUMN - FOCAL & ICAP

Discussed the recent "vents" by Remisiers Association; Looked at Focal's amazing share price run up; the hard to swallow discount of iCap.

http://www.bfm.my/sm-salvatore-dali-malaysiafinance-not-lex-column-focal-icap-20131211.html

http://www.bfm.my/podcast.html?category=&keyword=&program=15478&industry=&subject=&media=


SONG PICK:  Strawberry Letter 23 by Brothers Johnson ... the album went platinum largely thanks to the producer Quincy Jones, when funk meets r&b meets disco.

Sunday, December 08, 2013

Asset Class Returns As At 30 November 2013

A significant shift in money flows saw smart money leaving REITs, in anticipation of higher rates sooner than later thus making these almost fixed rates REITs less attractive in the near future. Where did the funds flowed to? Surprisingly, equities. Which is to say, while smart capital sees higher interest in the near future, they also see good corporate profits outlook and/or a more robust economic recovery, esp in the USA.

The negative skew for November’s returns overall kept last month’s advance for the Global Market Index (GMI) to a tepid 0.8%. The numbers still look encouraging on a year-to-date basis, however. Indeed, GMI is higher through the first 11 months of 2013 by a strong 12.9%, thanks in no small part to soaring stock markets in the developed world. The MSCI EAFE’s total return so far this year is an impressive 21% while the Russell 3000 in the US is ahead by more than 30%. If you exclude those two pieces of the global asset pie, the performance numbers for global multi-asset class strategies are considerably weaker. 
Genius is a bull market, as the saying goes. For 2013, we might add that brilliant investing is also about two seemingly innocuous decisions about asset allocation.
gmi.02dec2013.gif





Sunday, December 01, 2013

A Non-Economist View Of QE

We are now trapped into a vicious cycle of quantitative easing, mainly by the EMU and Federal Reserve. Even the hint of tapering seems to shock the markets into a tailspin. Then we have the rising share prices and property prices almost globally, and when each country tries to pull the handbrakes on property prices, the developers complain that its not their fault, its the QE stupid!



a) USD/Euro devalues - For every dollar/euro that is printed, the existing dollar or euro gets depreciated a little as these are technically not backed by anything, they just roll off the printing press. It is HIGHLY UNLIKELY that the Fed or EMU will be buying back all the notes they have printed, that's a given. 

b) The Bastardisation of Currency - Gold went on a tear as that was said to be the best keeper of value in an era of drastic bastardisation of real currencies. When it is printed by a small country, you can be assured that the currency will be devalued almost immediately. However, the situation is a bit different with the top two currencies plus the yen getting into the picture albeit a bit late. Can you, will you technically devalue these currencies? These three currencies can get away with a lot of indiscretions. Most central banks keep large amounts of these three currencies as a way to build up reserves to shore up confidence for their local currency. In a big way, the smaller developing countries are subsidising these heinous acts by the 3 major central banks.

c) Inflation, What inflation? - All things being equal, the amount of QE should have, would have seen a much larger circulation of funds chasing after the same amount of goods, services and assets. But inflation has been benign for most countries. Much of the QE funds reside with the big banks which basically get cheap funds, but do not lend the same amount out. It is safer and more profitable to take advantage of the interest rates differentials. Thus big banks profits have been rejuvenated. It looks like inflation will still be muted as not much of the QE gets to flow to the end consumer in loans.



d) Main reason why excessive QE is bad - Do we have excessive QE, yes by a very huge sum. The WORST thing as a direct result of QE is "false confidence" in the economic system. Stock prices do  not need to correct, investors do not get penalised for making bad decisions or taking on miscalculated risks. When stock prices do not correct, property prices also do not correct. In fact, it is the very "safety option" that a lot of liquidity or wealth (not from QE) were diverted into property investment and speculation as share prices did not correct and did not present "genuine value" to the broader spectrum of investors.

e) Did investors flee USD, Euro? - To a certain extent yes, but the pendulum has swung back already (too swiftly). The best performing country bonds for the past 18 months has been Greek bonds.

f) Commodities - as these are priced in USD, by right they would have devalued. In reality they already have, its just that they have not gone up. This tells you a lot about the uncertain recovery in the global economy. If demand had been the same now as it was before the 2008 crisis, commodities may have moved up by 30% by now. The fact that it did not tells you suppliers cannot move prices up as demand was not there over the last 4 years to take up the supply. Another side shot was that there had been over-investment in commodities (oilfields, mines, etc...) and these came onto the supply chain following the 2008 crisis, which would give you the current supply-demand imbalances.



g) Property - Property is still very much in negative equity territory for many Americans and Europeans, and that is probably the only segment that actually had a correction that they had to deal with. The flip side now is that other developing economies not so affected by the 2008 financial crisis are really seeing property as a great storage of equity and wealth, so much so that domestic demand and liquidity for those respective economies are very much tied to these perceived huge jumps in property equity/wealth and/or unmitigated mortgages/debt linked to ever rising property prices - can anyone not see what is very dangerous here!!!

h) Destabilisation? - So, when your government tries to rein in property prices, IT IS A GOOD and NECESSARY THING, its not that we do not understand why it happens. Just because it is cause indirectly by QE by some other central banks does not mean we should not rein in property prices. Developers must shut up more. When you are recipients of imbalances, you enjoy the ride and enjoy the profits ... when these very imbalances causes massive dislocation in "inflated wealth perception" and excessive speculation and drives away affordability equation for most - it is a recipe for disaster if left untreated. Property developers cannot suddenly pretend to be CHIEF ECONOMIST as well, and then tell the government not to pull the brakes or do something else to address the affordability issue.



i) Currency Wars - In a classroom of theoretical economics, there would have been currency wars and massive destabilisation already. These has been very little because of issues mentioned above and the lack of options by major holders of Euro-US debt papers. Plunging the USD and Euro  by dumping half your debt papers onto the market may make your currency strengthen a lot but the end result is not one anyone wants - a weak, destabilised USA and/or EU will almost immediately plunge the rest of the world's economy into a tailspin.

So what is my conclusion - There are already pockets of bubbles being formed, in particular global property prices, and many stock indices are getting there as well. However, we do not yet have catalysts that would bring about any kind of correction in shares, property or currency. It will happen but probably not so soon. We need USA and EU to stage strong economic recoveries, thus supplanting the need for QE, thus making way for robust lending and investing again. But mind you, there WON'T BE much buying back of the QE which they released for the past 5 years - thus these would force the banks to start deploying back into the real economy .... thats when another bubble will burst, my feel is that we are 12-18 months away.