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Tuesday, 2 June 2015

I don't know... But I recommend you buy!



Imagine you are a Hedge Fund Manager and your own buy-side analyst puts forth a buy recommendation report to you.

After reading it, you don't know whether to laugh or throw this report back to your analyst's face...

Peppered in this report you get sentences like:

I don't know...

If I am not wrong...

Seems to be...

And everywhere in this report you get more qualifying statements like "if" and "unless"...  


No, you can't fire this analyst; he is your wife's nephew...  I know... Relatives from her side of the family... LOL!


This sotong buy-side analyst should take a page from his sell-side brethren.

Must pretend to have high conviction even though we may have little clue to what we are talking about. If not how to sell snake-oil?

Just refer to the Oil and Gas sector sell-side picks like Ezion, Nam Cheong, and Keppel. Any reports from the past 9 months will do.

No one foresaw Brent dipping below USD 80 did they?

How to downgrade your own high conviction buys from 9 months ago?

"In the light of new information...."

"New facts have come into our attention..." 

See? Everything is based on facts! Never on guesses or assumptions!

That's how you backtrack with a straight face without losing the aura of "professionalism". 

Wink.




 

14 comments:

  1. Hi SMOL,

    I wonder is it easy for you to snake oil through your teeth regardless of any situation?

    Again, a good read.

    Thanks.

    ReplyDelete
    Replies
    1. L Young,

      Snake oil will only work on "weak-willed" individuals; it has no effect whatsoever on "strong-willed" people who can think for themselves.


      The inspiration for this post came from chancing in Facebook, the discussions from some young hobbyist financial bloggers on what they intend to buy.

      I find their discourse very "cute".

      Didn't want to poke them there as it would sound very "wah kali kong" from my side. And it will not help in their journey of self-discovery anyway...

      So I adapted it to this post.

      We all can recite: Buy what we know and understand.

      Actual practice is another matter... LOL!


      I envy them. I was like them when I started. So full of confidence; so fearless. That's the strength of youth!

      Now?

      I verify a lot more. Harder to squeese the trigger. The curse of experience :(

      It's better to be young and innocent!

      Delete
  2. I don't have single share in my company which is listed in SGX. So I didn't practice "buy what you know"?

    I do the reverse. I practice risk management and avoid buying.

    :-)

    ReplyDelete
    Replies
    1. CW,

      Fair enough!

      There's more than 1 way to skin the cat.

      You assume you'll be wrong and start from there ;)


      Can you explain "avoid buying" a bit more?

      I understand avoiding over trading, but how do you accumulate your meaningful core position in Keppel then?

      Delete
    2. I already work there so there is no need to more risk by buying company stock

      Delete
    3. CW,

      Ah so!

      Avoid buying the stock of the company you work in!!!

      Enron employees vested with their company's own shares and stock options found out the hard way what's the meaning of DOUBLE jeopardy....

      Concentration risks.

      Delete
    4. in CW's case, DOUBLE happiness.

      Delete
    5. That's why some CMI companies would polish their medals until very pretty to IPO to some investors who would be willing to share the business risk by buying into their IPOs. If the cake so nice why would they want to share it? :P

      Delete
    6. Rainbow lady,

      That's why its important to think like land owners and consider when to SELL.

      Most retail investors are more concerned with what and when to buy...

      Delete
  3. Hi SMOL,

    Glaring spelling mistake in the title leh :)

    ReplyDelete
    Replies
    1. At workplace, we don't call it spelling mistake. We call it typo error. LOL!

      Delete
    2. LP & CW

      LOL!

      No wonder I thought it looked a bit "odd"...

      Just goes to show we can still "fall asleep" while awake!?

      Thanks for waking me up!

      Times like these, I need friends who don't mind giving me a hard kick :)

      Delete
  4. I thought the typo error was on purpose! Haha

    Anyway, the analyst is a protected species so nothing will happen even if he's wrong ;p

    I also fall under the category of young hobbyist financial blogger but I've no disclaimer since nobody is going to follow me. Haha

    ReplyDelete
    Replies
    1. Joyce,

      LOL!

      Took me 3 times to get it "right".

      First time it was "recoomend". I spotted it so changed it to "reccomend"...

      That's until LP nudged me ;)

      Well, that's the reality of my England without the aid of spellcheck... LOL!


      I've no disclaimer for I never talk about individual counters or my positions.

      Abstinence is the best form of birth control ;)

      Delete

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