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.
 
Posted by Singapore Man of Leisure at 13:03
My interests ,

14 comments:

  1. Unknown2 June 2015 at 17:11

    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. Singapore Man of Leisure2 June 2015 at 17:43

      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. Createwealth88882 June 2015 at 18:25

    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. Singapore Man of Leisure2 June 2015 at 19:31

      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. Createwealth88882 June 2015 at 19:33

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

      Delete
    3. Singapore Man of Leisure2 June 2015 at 20:22

      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. Money Honey2 June 2015 at 21:57

      in CW's case, DOUBLE happiness.

      Delete
    5. Rainbow2 March 2016 at 19:42

      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. Singapore Man of Leisure3 March 2016 at 00:00

      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. la papillion2 June 2015 at 22:45

    Hi SMOL,

    Glaring spelling mistake in the title leh :)

    ReplyDelete
    Replies
    1. Createwealth88882 June 2015 at 23:00

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

      Delete
    2. Singapore Man of Leisure2 June 2015 at 23:13

      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. Joyce Leong3 June 2015 at 12:25

    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. Singapore Man of Leisure3 June 2015 at 13:47

      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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