Moon Kil Woong
Moon Kil Woong
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Approaching Market Tops, Takeovers and Technology Stocks [View article]
The tech runup is very justified on earnings and I enjoy hearing about NXPI which I own and have mentioned several times before. The scary part about tech is while great companies are there the top of tech's rich valuation is looking very scary (CRM, RAX, NFLX, etc.) Stuff that trades well over 80x PE gives me the jitters unless their growth is approaching or over 50% which isn't the case. So when the overpriced top of tech blows off I hope the strong vibrant and growing middle part holds together or we will see another 2000 dip into another recession.
The Downside of Companies Staying Private [View article]
Facebook has raised flags with respects to its private placement in order to avoid going public, its unwillingness to disclose its financials, questions regarding its handling of private data, and the legitimacy of its inception (primarily that it reneged on agreements in development and stole ideas from a rival). That is more than 4 strikes. Certainly the market is giving them plenty of leeway, but that leeway will only last as long as there is not a major competitor chomping away at its market share.
Failure to raise enough capital and grow fast enough will only encourage the rise of more powerful opponents in the long run. Facebook doesn't live in a vacuum. In the long run, public companies have a lot stronger history of becoming global titans than the private ones. Thus I would not worry as much as Felix about the demise of the public company. It is still the way to go in terms of getting capital, recognition, and fueling growth. A Google without an IPO would be nothing like it is today. I surmise the same will be with Facebook once the glow starts fading. IPO Facebook or face the ire of an IPOed competitor someday.
Galleon's Defense: Insightful vs. Insider Information [View article]
I have yet to have heard compelling proof by a hedge fund about how they can maintain a consistent market edge over other sophisticated investors. Past history usually only proves they were on 1 side or the other in the standard deviation of returns or that they boughtr a lot of volatility. Market timing as we now know by them is mostly a bunch of hot air given how terribly they fared during the downturn or the up cycle before (if they were mainly short). And the Bernie maddoff, insider theory, and criminal element has proven that unethical behavior can burn the hedge fund investors just as much as hedge funds can theoretically burn other market participants. Last, if you invest because of a star performers, realize they come and go from these firms like so many flies to dung.
Like Maddoff, those often seeking hedge funds often don't ask questions or don't want to know the particulars under the hood because often but not always, they feel that what they are doing is not quite kosher. They tend to think there is a premium for illegality and an insider's edge. I it's called 2 + 20%.
We need better disclosure and better oversight into hedge funds and how they peddle their funds. This is not because their strategies or business methods are so bad, but to dispel the appearance and appeal for illegality in this market even if it costs them by wringing lower fees from investors. Marketing food as miracle drugs or packed with vitamins when they are not is illegal. Shouldn't marketing financial products this way be too? It certainly can be fatal to your financial health.
I have a suspicion in such a world of hedge funds market their funds fairly would revert them into financial cults, consisting of a mad following of some people believing that one or a group of people are magically endowed with supernatural financial powers. In many ways it is already like this. Really, most hedge fund investors need to go back to reading Harry Potter and start reading Graham and Dodds when it comes to investing.
CalSTRS Using Same 'Calculations' as CalPERS [View article]
Is Private Equity the Next Shoe to Drop? [View article]
They told financial institutions they don't need to mark to market anymore and let all the banks merge with brokerages or let the brokerages become banks. The exact opposite of what everyone told them to do. And still no real regulation is in sight. So how exactly are we better off now than when we saw the problem?
We aren't. The administration has effectively buried its head in the sand and the losses and is telling you everything is better now. It's not.