Investments - Idea Sharing?

LaoPo · October 19, 2007

In addition to the message above....:

"Buffett identified the Brazilian real as the unnamed currency he said in May that he owned, noting it has doubled against the U.S. dollar in the past five years.

``During much of that time, the Brazilian government has in effect been supporting the U.S. dollar,'' Buffett said. ``They have been buying dollars in the market, they have been building up their own reserves. Their current account has turned into a good surplus,'' while the U.S. is behaving like ``the Brazilians or the Argentinians 10 or 20 years ago.''

Buffett said he wasn't suggesting anyone buy reais. ``We may be cashing out. This is not a huge position. We'll make $100 million,'' he said."

http://www.bloomberg.com/apps/news?pid=206...&refer=news

LaoPo

Naam · October 19, 2007

NEW YORK (Reuters) - Warren Buffett said on Thursday his Berkshire Hathaway Inc (BRKa.N: Quote, Profile, Research) (BRKb.N: Quote, Profile, Research) insurance and investment company has been buying the Brazilian real currency.
LaoPo

unfortunately BRL is still a restricted currency and for us mortals only available through NDFs in batches with a value of USD 250k each. moreover, most banks insist on USD 1 million minimum for trades.

another way would be to buy BRL sovereign bonds with settlement in USD at coupon time. as i have watched (and was indirectly invested in BRL through real estate) the Real appreciating from 4.15 to now 1.78 vs. USD i'd be scared to enter now. but Buffet seems to know (most of the time) what he is doing.

LaoPo · October 19, 2007

NEW YORK (Reuters) - Warren Buffett said on Thursday his Berkshire Hathaway Inc (BRKa.N: Quote, Profile, Research) (BRKb.N: Quote, Profile, Research) insurance and investment company has been buying the Brazilian real currency.
LaoPo

unfortunately BRL is still a restricted currency and for us mortals only available through NDFs in batches with a value of USD 250k each. moreover, most banks insist on USD 1 million minimum for trades.

another way would be to buy BRL sovereign bonds with settlement in USD at coupon time. as i have watched (and was indirectly invested in BRL through real estate) the Real appreciating from 4.15 to now 1.78 vs. USD i'd be scared to enter now. but Buffet seems to know (most of the time) what he is doing.

I agree, although he had to fight his own shareholders and because of their pressure sold his entire stake in PetroChina.........missing a few Billion US$'s in profit...

Nevertheless Berkshire Hathaway Inc. made close to 3 Billion US$'s in profit with their original investment of $ 488 Million in PetroChina some 3 years earlier.

Not bad at all I would say.

LaoPo

Naam · October 19, 2007

some smartasses have for years quite some fun how many billions of profit Buffet has missed. they never mention the billions of profit he made

fletchsmile · October 19, 2007

I agree, although he had to fight his own shareholders and because of their pressure sold his entire stake in PetroChina.........missing a few Billion US$'s in profit...
Nevertheless Berkshire Hathaway Inc. made close to 3 Billion US$'s in profit with their original investment of $ 488 Million in PetroChina some 3 years earlier.

Not bad at all I would say.

LaoPo

Just change your base currency for revaluations to IDR. You too can make billions

BTW Anyone know much about the Chiang Mai Money Expo and what's going on there 19-21 Oct? SET is supposed to be going as are a few of the banks, real estate etc.

Saw Citbank predict 970 for July 2008 on SET, whereas Phatra Securities said 1000 by year-end. Interesting difference of opinion. Feel comfortable being in the middle with my own view of 900 in Dec (excluding elections) and 1100+ mid 2008.

sonicdragon · October 19, 2007

some smartasses have for years quite some fun how many billions of profit Buffet has missed. they never mention the billions of profit he made

News is always asymmetrical in that way. Just like you hear about all the hedge funds losing money hand over fist, but not about any of the ones that are making bundles. People love to hear about other people's misfortunes. /* edit typo

Edited October 19, 2007 by sonicdragon

Naam · October 19, 2007

Just change your base currency for revaluations to IDR. You too can make billions

try Zimbabwe Dollars and look down on the pauper Bill Gates

fletchsmile · October 21, 2007

I am 42. I stopped working in the UK, sold my house in London and moved to Thailand nearly five years ago.
Given that it is increasingly unlikely that I will ever return to the UK, my current priority is to gradually move a greater proportion of my investments into assets demoninated in Thai Baht. As most of my future expenditure will be in this currency this is important to reduce the level of currency risk.

The problem is what to invest in.

I do not want too much on deposit in Thai banks given that a one year deposit here pays 2.25%, whereas Nationwide in currently paying 6.7% for a one year deposit in pounds.

Also Thai equities, while they look cheap to me, are very much more volatile than "developed country" equity markets. If I put too much in Thai equities then what I gain on lower currency risk might be lost with higher equitiy risk.

So I am looking at other assets classes.

The most obvious choose with be to purchase another Condo to rent out. In Pattaya there is fairly strong demand from long term falang stayers who do not want to own property. Rental yields are about 7.5%. However, I am negative on capital values in Pattaya given the very hugh amount of new development aimed at the falang market.

One other possibility would be commercial property funds, such as Future Park Property Fund or Ticon Property Fund. These yield between 7% and 9% and appear much less volatile than Thai equities. Anyone has a view on these funds?

Agree if you go for Thai equities or Thai mutual fund your swapping currency risk for equity risk. As an asset class bought and held over say 5 years equity based investments usually outperfom bonds and cash, before thinking about the abysmal cash rates in Thailand. I don't have enough time to be research individual Thai stocks, and hover over their prices. So as I want the Thailand equity exposure, I'm happy buying Thai mutual fund and monitoring them with a more relaxed and medium-longer time frame. It depends on your risk apetite tho'.

BTW There's a lot to be said for holding elemnts of all not just comparing one investment to another. Building a portfolio and the diversification you get in different markets of cash, bonds, equities, different locations etc can be safer than any one single investment. eg In 2001 and 2002 many of my "developed world" equity investments fell. Aberdeen Thailand Growth on the other hand did the opposite and rose: 25% in 2001 and 48% in 2002. These helped my investment portfolio overall remain positive. In 2003 all my equity based investments rose, and Aberdeen Growth was still best of the bunch with over 100%. In 2004 tho' the opposite happened, and all my funds rose except Aberdeen Growth which lost 4%.

I'm not a fan of property as an investment at the moment. If you buy one to rent, the rental yields on individual properties in Thailand aren't that attractive, plus it just brings hassle with it, and not that liquid either. I'm not familar with the two funds you mention.

Until recently, tho' I held 3 other property funds: Fidelity Global Property Offshore Income, New Star Property Fund, Aberdeen Property Share Fund. These are my worst three funds over 1 year: down 1%, 8%, 18% respectively, tho' together made up only around 1.5% of my investment portfolio, so losses are minor. They were held because I've wanted a little property exposure over the last few years. We didn't own a home, and I wanted some diversification. Now we're in the process of buying a home here in Thailand, I see little reason to hold them, and have all the property exposure I want. I recently sold the last of the Aberden fund. It's down over 1 year, I've been reducing my holding so it's become small anyway, but the main reason for selling it was future prospects. The 18% loss to Oct07, was preceded by 47% gain yr to Oct 06, and 21% gain yr to Oct 05, 26% gain to Oct04, so I feel it's had it's day. Thinks don't look rosey for US and UK property in my view, so the 2 funds probably won't be far behind

Edited October 21, 2007 by fletchthai68

lannarebirth · October 21, 2007

NEW YORK (Reuters) - Warren Buffett said on Thursday his Berkshire Hathaway Inc (BRKa.N: Quote, Profile, Research) (BRKb.N: Quote, Profile, Research) insurance and investment company has been buying the Brazilian real currency.
LaoPo

unfortunately BRL is still a restricted currency and for us mortals only available through NDFs in batches with a value of USD 250k each. moreover, most banks insist on USD 1 million minimum for trades.

another way would be to buy BRL sovereign bonds with settlement in USD at coupon time. as i have watched (and was indirectly invested in BRL through real estate) the Real appreciating from 4.15 to now 1.78 vs. USD i'd be scared to enter now. but Buffet seems to know (most of the time) what he is doing.

For the past several years, except when buying legitimate, value priced businesses (which he always decries the dearth of), Buffets comments about his trades are well past his entry point and usually serve to create liquidity for his sale. He has had to adjust his methods to the masses who turn over investments much faster now.

fletchsmile · October 22, 2007

Anyone know anything about investing in "Cat" bonds? They seem exposed to "event risk" rather than the normal market risk of traditional investments. I'd be particularly interested if anyone knows how to buy a fund or index of these, as a single CAT bond sounds like very high risk?

They don't sound great as a first ever investment, but given their lack of correlation to most traditional markets, it could be great for portfolio diversification, allocating a small weighting to these, particularly in current climates.

Edited October 22, 2007 by fletchthai68

fletchsmile · October 22, 2007

Catastrophe bond, From Wikipedia, the free encyclopedia</H3>

Catastrophe bonds (also known as cat bonds) are risk-linked securities that transfer a specified set of risks from the sponsor to the investors. They are often structured as floating-rate corporate bonds whose principal is forgiven if specified trigger conditions are met. They are typically used by insurers as an alternative to traditional catastrophe reinsurance.For example, if an insurer has built up a portfolio of risks by insuring properties in Florida, then they might wish to pass some of this risk on so that they can remain solvent after a large hurricane. They could simply purchase traditional catastrophe reinsurance, which would pass the risk on to reinsurers. Or they could sponsor a cat bond, which would pass the risk on to investors. In consultation with an investment bank, they would create a special purpose entity that would issue the cat bond. Investors would buy the bond, which might pay them a coupon of LIBOR plus anywhere from 3 to 20%. If no hurricane hit Florida, then the investors made a healthy return on their investment. But if a hurricane hits Florida and triggers the cat bond, then the principal initially paid by the investors is forgiven, and is instead used by the sponsor to pay their claims to policyholders.

FT68: Obviously not for the fainthearted, but a small allocation could be interesting as a hurricane hitting Florida has little to do with world stockmarkets

Edited October 22, 2007 by fletchthai68

fletchsmile · October 27, 2007

Interesting article. Shame it restricts itself to only US markets tho'. Wonder what Thailand would look like...

The Only Investment Style You'll Ever Need?

One investment style has had a clear edge over time.

Casting your net in the fishiest waters gives an edge in fishing. The same is true in investing. The ability to slice and dice data using hundreds of specialized statistics can cause us to lose sight of the fact that the underlying goal for most investors remains very straightforward: compound capital at the highest possible rate over time. Beating the overall market over time is a common goal for many funds and investors. We looked at the performance of broad investment styles over time to see if a particular style had done a better job at helping investors meet this goal. A clear pattern emerged.

Top Fishing Hole

Here's what we did. We compared the performance of all domestic-equity share classes with the Dow Jones Wilshire 5000 Index for the trailing 15-year period through Sept. 30, 2007. We chose this index because, unlike the large-cap-leaning S&P 500 Index, it covers the full market-cap spectrum. This stretch of time also represents more than a full market cycle, encompassing the last bear market from 2000 through 2002 and the fantastic bull-run from 1995 through 1999. And it contains enough funds to make meaningful comparisons. We then placed funds into value, blend, and growth groups based on their investment style. Where possible, specialty categories were placed according to style. For example, specialty technology and communications funds landed in the growth camp, while utilities and financials ended up in the value group. Some specialty categories were tough to pigeonhole, so they were not assigned a subgroup.

As the table below shows, one style stood out from the pack. Ibbotson Associates has shown that value stocks have outperformed other styles by a wide margin since 1927. And they've done so consistently, beating all other styles in nearly every decade over the past 80 years. But because of active management and fees, stock performance doesn't always translate into fund performance. In this case it does. More than 70% of value funds topped the Dow Jones Wilshire 5000 in the trailing 10- and 15-year periods. That's a much better record than domestic-equity funds in general, and growth and blend funds in particular.

Averages Aren't Equal

The Russell 1000 Value Index has easily topped the Dow Jones Wilshire 5000 over the past 15 years, so value funds have had a leg up. But that's the point. Since value has been the superior style over time, even average value funds have beaten the market. For example, the typical large-value fund has equaled the Dow Jones Wilshire 5000 over the past 15 years. Slightly better-than-average value funds have left it in the dust. And value funds haven't just ridden a tailwind. Nearly 40% of them beat the Russell 1000 Value over the past 15 years, even though it was one of the strongest-performing domestic indexes during that time.

Avoiding Losses Pays Off

Two words explain value's long-term outperformance: downside protection. The math is simple. If a fund loses half its value, it needs to gain 100% just to get back to break-even. In the last bear market from 2000 through 2002, the Dow Jones Wilshire 5000 lost about 40% of its value. And excluding value funds, nearly 80% of domestic-equity funds were in the red in that downturn. In fact, many growth funds shed nearly two thirds of their value--a huge hole that would take years to dig out of. Meanwhile, more than 60% of value funds were in the black during the same stretch. Such a big head start coming out of a downturn means that value funds can still outperform over the long haul even if they lag in every bull market.

Never Goes Out of Style

Of course, the past isn't always prologue. But we feel confident about value's prospects. Because of their parsimonious ways and tendency to hold some cash, value funds have always fared better than others in market downturns. There is no reason to believe that this trend will change. So even though growth has been leading a strong market lately, value remains appealing. It may not happen tomorrow or next year, but at some point stocks will experience an extended downturn. When that happens, value's appeal will be even more readily apparent.

AmericanGuy1066 · October 29, 2007

"Stock markets across Asia rallied Monday, as Wall Street's strong showing Friday and hopes for another US rate cut this week sent benchmarks in Hong Kong, India, South Korea, Malaysia and Indonesia to fresh records.

The Shanghai Composite closed up 2.8 pct at 5,748, buoyed by renewed strength in the yuan. The Shanghai Composite has gained 114 pct so far this year, while the DJ CBN 600 has added 163 pct. The Jakarta Composite is up about 48 pct, the KOSPI is up 44 pct and the Sensex is up 44 pct.

By comparison, the Dow Jones Industrial Average is up just 11 pct, the S&P 500 up 8.3 pct and the Nasdaq composite up 16 pct."

Thailand is looking attractive at the moment, and if the last few days are anything to go by, people are starting to realise it. Beating the US, but way behind other Asian markets this year, with 20%+ YTD rise.

Metals also looking good. Platinum hit new peak. Wonder how long before gold hits its Jan1980 peak of 850. Copper near 8,000. Lead has had an excellent time. When the Fed cuts rates, they'll look even more interesting...

fletchsmile · November 3, 2007

Have been holding some rolling USD fixed deposits offshore for the last few months, in case we had to bring the money into Thailand to pay for our condo purchase. i.e wasn't worth changing into another currency, as we might have to change back to baht again, and didn't want to put into longer term investments and take the capital risks.

It's now looking everything is OK with our mortgage, and we have THB 3 years fixed funding at 4.79%, before reverting to variable rate, so we won't need to bring the cash in to Thailand.

As I'm not a fan of USD cash, I'm now looking for another home for the money. The intention is to outperform (as a minimum) THB 4.79% p.a for next 3 years. Anyone any suggestions? I'm happy taking risks, or even being conservative if there's an easy lock in. I'm in no rush as the USD FD rates I'm getting are between 4.55% - 4.95% at the moment, and I expect USD to strengthen slightly vs baht before y/e or at leats remain stable. I have also been considering NZD but know little about it as a currency as never really followed it.

So any suggestions: a better alternative than USD cash fixed deposits? Time frame up to 3 years, and can change throughout that time. Prepared to take risk.?

Edited November 3, 2007 by fletchthai68

sonicdragon · November 3, 2007

Have been holding some rolling USD fixed deposits offshore for the last few months, in case we had to bring the money into Thailand to pay for our condo purchase. i.e wasn't worth changing into another currency, as we might have to change back to baht again, and didn't want to put into longer term investments and take the capital risks.
It's now looking everything is OK with our mortgage, and we have THB 3 years fixed funding at 4.79%, before reverting to variable rate, so we won't need to bring the cash in to Thailand.

As I'm not a fan of USD cash, I'm now looking for another home for the money. The intention is to outperform (as a minimum) THB 4.79% p.a for next 3 years. Anyone any suggestions? I'm happy taking risks, or even being conservative if there's an easy lock in. I'm in no rush as the USD FD rates I'm getting are between 4.55% - 4.95% at the moment, and I expect USD to strengthen slightly vs baht before y/e or at leats remain stable. I have also been considering NZD but know little about it as a currency as never really followed it.

So any suggestions: a better alternative than USD cash fixed deposits? Time frame up to 3 years, and can change throughout that time. Prepared to take risk.?

Precious metals

Kf6vci · November 3, 2007

Well, the Federal reserve Bank takes great pains to leave out energy and food prices of their "core inflation". which will increase. But the Dollar is kinda low considering what it buys. The euro is overvalued and there is rising inflation in Germany etc., too.

1.) buy some long puts on index futures.

2.) Bet on rising inflation, slowing growth and that double-digit earnings growth cannot be maintained ad infinitum.

sonicdragon · November 3, 2007

Well, the Federal reserve Bank takes great pains to leave out energy and food prices of their "core inflation". which will increase. But the Dollar is kinda low considering what it buys. The euro is overvalued and there is rising inflation in Germany etc., too.
1.) buy some long puts on index futures.

2.) Bet on rising inflation, slowing growth and that double-digit earnings growth cannot be maintained ad infinitum.

The Fed does not publish inflation figures - the BLS (Bureau of Labor Statistics) does that.

Inflation is a really big risk now. In fact it's more than a risk - it is already with us. Governments simply don't report it. Most people should be able to, anecdotally, verify that inflation has not been in the 2-4% range for the last few years. Unfortunately the concept of inflation is so difficult to economists that they are unable to form a consensus even on what it actually is, let alone how to measure it, except in either very general or very abstract terms. In my view CPI is not much use at all - being both a tool for political expediency and a flawed measure in the first place. Even if you accept the notion that some arbitrary basket of goods (after removing those "volatile" items such as energy, food and housing costs) is a an acceptable measure, the way that governments have then adjusted with substitutions ("when the price of beef goes up, that's not inflationary because pork can be bought for the same price") and hedonics (adjustments for increases in quality) is quite fraudulent. If you look at the CPI over the last 20 or so years, but use the same calculation basis as at the start of the period you end up with, not surprisingly, *much* bigger increases. Investors need to think about the inflation-adjusted returns, that is, their own *personal* inflation rate - OK, so in practice this is not easy to do. The value of fiat currencies are on a downward spiral - this is partly why gold and oil are (apparently) doing very well. The reality is that the value of gold should be fairly static. It can be illustrative to consider some well known statistics in terms of their value in gold - for example:

US per capital income in gold ounces:

1965: 62

2005: 71

US weekly wages in gold ounces:

1965: 2.7

2005: 1.4

S&P 500 in gold ounces:

1965: 2.2

2005: 3

There are some graphs showing these trends which are quite illustrative but I can't find them at the moment. Apologies for the arbitrary choice of dates, but leaving out the 70's does get the picture accross I believe.

ray23 · November 3, 2007

Sorry nothing to offer just want to follow the thread

fletchsmile · November 23, 2007

Has anyone any experience of buying options on SET, doing so with a broker here in Thailand. I know it was launched not long ago.

I feel pretty bullish about SET at the moment, given the corrections in the last few days, and election closing in. Tho' globally, and politically there are a few uncertainties

Two things I have in mind are:

1) Call options here in Thailand. Where? Who? How much are the premiums etc?

2) Using spare cash overseas to buy mutual funds overseas, but hedging with put options in Thailand, just in case something unexpected kicks in. Again where? who? how much are the premiums?

Would expect better derivative rates onshore here in Thailand, hence looking to do the options here.

Edited November 23, 2007 by fletchthai68

lannarebirth · November 23, 2007

Has anyone any experience of buying options on SET, doing so with a broker here in Thailand. I know it was launched not long ago.
I feel pretty bullish about SET at the moment, given the corrections in the last few days, and election closing in. Tho' globally, and politically there are a few uncertainties

Two things I have in mind are:

1) Call options here in Thailand. Where? Who? How much are the premiums etc?

2) Using spare cash overseas to buy mutual funds overseas, but hedging with put options in Thailand, just in case something unexpected kicks in. Again where? who? how much are the premiums?

Would expect better derivative rates onshore here in Thailand, hence looking to do the options here.

I don't know about the SET, but if one like options I think there's a good play to be had in most markets using an options straddle strategy(purchase put and call of same strike, both ATM, same expiry). I don't know if markets are about to double bottom or plunge, but I'm pretty sure they're not going to hang around at these levels for long.

fletchsmile · November 23, 2007

Has anyone any experience of buying options on SET, doing so with a broker here in Thailand. I know it was launched not long ago.
I feel pretty bullish about SET at the moment, given the corrections in the last few days, and election closing in. Tho' globally, and politically there are a few uncertainties

Two things I have in mind are:

1) Call options here in Thailand. Where? Who? How much are the premiums etc?

2) Using spare cash overseas to buy mutual funds overseas, but hedging with put options in Thailand, just in case something unexpected kicks in. Again where? who? how much are the premiums?

Would expect better derivative rates onshore here in Thailand, hence looking to do the options here.

I don't know about the SET, but if one like options I think there's a good play to be had in most markets using an options straddle strategy(purchase put and call of same strike, both ATM, same expiry). I don't know if markets are about to double bottom or plunge, but I'm pretty sure they're not going to hang around at these levels for long.

Other markets I am less certain where they are heading, but I agree on the volatility. The SET is the one I am most confident in being higher in a few months time, as it's undervalued for a variety of reasons.

I'd be amazed if 6 months from now it is at the 825 level it closed at today. There's a small chance it could be lower, if it gets dragged down by other factors, but I'm really looking at 900 round election time (Dec), then 1000+ after.

Hence a straddle probably attaches equal weighting, whereas I feel more like 80-90% probability it will be 1000+, 10-20% probability it will be 650-700 in 3-6 months. Very small probability it will stand still. i.e less downside and lower probability of it, more upside and higher probability. Will take anyone's bet it won't move.

Not sure of the best way to achieve that for Thailand. Also given I'm not comfortable bringing more money directly into the country at the moment.

Edited November 23, 2007 by fletchthai68

LaoPo · November 23, 2007

Has anyone any experience of buying options on SET, doing so with a broker here in Thailand. I know it was launched not long ago.
I feel pretty bullish about SET at the moment, given the corrections in the last few days, and election closing in. Tho' globally, and politically there are a few uncertainties

Two things I have in mind are:

1) Call options here in Thailand. Where? Who? How much are the premiums etc?

2) Using spare cash overseas to buy mutual funds overseas, but hedging with put options in Thailand, just in case something unexpected kicks in. Again where? who? how much are the premiums?

Would expect better derivative rates onshore here in Thailand, hence looking to do the options here.

I don't know about the SET, but if one like options I think there's a good play to be had in most markets using an options straddle strategy(purchase put and call of same strike, both ATM, same expiry). I don't know if markets are about to double bottom or plunge, but I'm pretty sure they're not going to hang around at these levels for long.

Other markets I am less certain where they are heading, but I agree on the volatility. The SET is the one I am most confident in being higher in a few months time, as it's undervalued for a variety of reasons.

I'd be amazed if 6 months from now it is at the 825 level it closed at today. There's a small chance it could be lower, if it gets dragged down by other factors, but I'm really looking at 900 round election time (Dec), then 1000+ after.

Hence a straddle probably attaches equal weighting, whereas I feel more like 80-90% probability it will be 1000+, 10-20% probability it will be 650-700 in 3-6 months. Very small probability it will stand still. i.e less downside and lower probability of it, more upside and higher probability. Will take anyone's bet it won't move.

Not sure of the best way to achieve that for Thailand. Also given I'm not comfortable bringing more money directly into the country at the moment.

You've got 'Balls' my friend !

The SET:

659 Jan 3 -2007

750 Aug 16 after an earlier 884 end July

900 'sniffing' around end Oct-early Nov.

824 closed today

I wouldn't bet a single satang it will be around 900 with Christmas/election time in LOS.

But, be the SET's guest

http://www.bloomberg.com/apps/cbuilder?ticker1=SET:IND

LaoPo

fletchsmile · November 23, 2007

You've got 'Balls' my friend !
The SET:

659 Jan 3 -2007

750 Aug 16 after an earlier 884 end July

900 'sniffing' around end Oct-early Nov.

824 closed today

I wouldn't bet a single satang it will be around 900 with Christmas/election time in LOS.

But, be the SET's guest

http://www.bloomberg.com/apps/cbuilder?ticker1=SET:IND

LaoPo

Thank you sir. Now to go with those balls, I just need someone to help me put my c*ck on the block so to speak.

Bear in mind. Close Dec 2006: 679.84. (Jan07 dipped slightly). Close Dec 2005:713.73. So it sort of depends whether we want to look at: 1 yr or 2yrs and then compared to peer SE Asia/ Asia Pacific markets. 1st vs 2nd chart below. 1st one is a month old, but gives an idea of 1 year. Last year was cut short by political events. This year has continued to an extent, lagging its peers. and SET hasn't seen the gains other Asian markets have.

Also Close Dec 2004: 668.10; Close Dec 2003 772.15. Only if you g back to Dec 2002 356.48 does it look worrying: 356.48, but that was after a couple of barren years, as Dec 1999 was: 481.92.

Edited November 23, 2007 by fletchthai68

fletchsmile · November 23, 2007

They don't make it easy to find info on futures and options in Thailand. Googling has took some time. For anyone interested:

Thailand Futures Exchange (TFEX) shows future and option prices at the following link

http://www.tfex.co.th/tfex/dailyMarketReport.html

and broker rankings at the following link

http://www.tfex.co.th/tfex/brokerRank.html

Also found a powerpoint presentation, mainly in Thai, so it was time consuming to read, and I'm not really comfortable with specialised industries/vocabularly in Thai. At least it listed the members, tho:

1.ACL Securities 2.Asia Plus Securities 3.Ayudhya Derivatives 4.Bualuang Securities 5.BT Securities 6.CLSA Securities (Thailand) 7.Capital Nomura Securities 8.Credit Suisse Securities (Thailand) 9.DBS Vickers Securities (Thailand) 10.JPMorgan Securities (Thailand) 11.Kim Eng Securities (Thailand) 12.KGI Securities (Thailand)

13.Kiatnakin Securities 14.Merchant Partners Securities 15.Phatra Securities 16.Phillip Securities (Thailand) 17.SCB Securities 18.Siam City Securities 19.Sicco Securities 20.Trinity Polaris Futures 21.Thanachart Securities 22.Tisco Securities 23.UBS Securities (Thailand) 24.UOB Bullion & Futures (Thai) 25.Seamico Securities

Checked out several of the broker websites. None of them very useful

I'd be interested in anyones comments: pricing, experience on this. It looks like a market in very early stages, with low volumes (started Oct 2007 I believe). There might therefore be some good arbitrage opportunities for people who know what they're doing. But pricing looks expensive to me. That said I don't really have anything to benchmark it against, as it's not my area to be honest.

Edited November 23, 2007 by fletchthai68

sonicdragon · November 26, 2007

Very low volume, plenty of arb opportunity *if* you are a market maker, but with huge bid-offer spreads it doesn't look very interesting for customers. As an example you have to pay 1.5% to buy a 10% OTM call with only a couple of weeks to expiration. Still, given your bullishness on the SET maybe it's OK for you ? The 660 strike is a little cheaper in volatility presumably since there is much more open interest in that strike.

up-country_sinclair · November 26, 2007

Anyway. A few ideas. Agree or Disagree. Very happy for ideas/open to debate or suggestions. Don't really care whether you're an expert or novice, optimist or pessimist (BingoBongo special invitation to you sir!). As long as you're open minded want to exchange ideas, learn or any other positive reason for posting.
Everyone's got a view. I believe there's a few of us interesting in hearing it. Just one request: Would appreciate if the flamers and people who just want to insult others go and play elsewhere.

OK, i'm certainly a novice....

a few months ago i got rattled and started to pull out of equities and increase my cash position. i'm from the US and still ridiculously heavy in dollars, however i've got approx. 10% of my portfolio in swiss francs. i'm looking to create a diversified portfolio that will be moderately 'aggressive'.

basically i've been waiting for the alleged correction to take place before i get back in...but it certainly is taking it's time. right now i'm at

10% US equities

10% international equities (a mutual fund)

55% cash--mostly dollars

25% US bonds---investment grade funds

here's my "idea"......if equity markets fall some more in the near term and the outlook for a recession in the US continues, i plan to move into dividend and consumer staple ETFs...at a 70/30 international/US split. i also plan to buy the international bond ETF (BWX). and finally if and when the price of oil and gold drop, i'll buy RJI (the rogers international commodities index). in the end, my proposed changes would look something like this...

20% US equities--primarily dividend and consumer staple ETFs

35% global equities---same as above

15% commodities

10% international treasury bonds

10% US treasury bonds

10% swiss francs

does this seem like a good idea for someone who really doesn't know nearly as much about this topic as he should, but wants to create a well diversified, moderately aggressive portfolio?

sonicdragon · November 26, 2007

Anyway. A few ideas. Agree or Disagree. Very happy for ideas/open to debate or suggestions. Don't really care whether you're an expert or novice, optimist or pessimist (BingoBongo special invitation to you sir!). As long as you're open minded want to exchange ideas, learn or any other positive reason for posting.
Everyone's got a view. I believe there's a few of us interesting in hearing it. Just one request: Would appreciate if the flamers and people who just want to insult others go and play elsewhere.

OK, i'm certainly a novice....

a few months ago i got rattled and started to pull out of equities and increase my cash position. i'm from the US and still ridiculously heavy in dollars, however i've got approx. 10% of my portfolio in swiss francs. i'm looking to create a diversified portfolio that will be moderately 'aggressive'.

basically i've been waiting for the alleged correction to take place before i get back in...but it certainly is taking it's time. right now i'm at

10% US equities

10% international equities (a mutual fund)

55% cash--mostly dollars

25% US bonds---investment grade funds

here's my "idea"......if equity markets fall some more in the near term and the outlook for a recession in the US continues, i plan to move into dividend and consumer staple ETFs...at a 70/30 international/US split. i also plan to buy the international bond ETF (BWX). and finally if and when the price of oil and gold drop, i'll buy RJI (the rogers international commodities index). in the end, my proposed changes would look something like this...

20% US equities--primarily dividend and consumer staple ETFs

35% global equities---same as above

15% commodities

10% international treasury bonds

10% US treasury bonds

10% swiss francs

does this seem like a good idea for someone who really doesn't know nearly as much about this topic as he should, but wants to create a well diversified, moderately aggressive portfolio?

I wouldn't call it "moderately aggressive", but that's just a matter of subjective opinion. Can you expand on what you mean by "commodities" and also let us know your situation - are you living permanently in thailand ?

fletchsmile · November 26, 2007

Very low volume, plenty of arb opportunity *if* you are a market maker, but with huge bid-offer spreads it doesn't look very interesting for customers. As an example you have to pay 1.5% to buy a 10% OTM call with only a couple of weeks to expiration. Still, given your bullishness on the SET maybe it's OK for you ? The 660 strike is a little cheaper in volatility presumably since there is much more open interest in that strike.

Sonic,

Thanks for the feedback. You seem to have confirmed very much what I thought. Low volumes and expensive. Not being my area of expertise, I was keen to have a second opinion. Cheers

Protecting the down side, with an OTM put option also seemed expensive. While I'm bullish, I think there's still a risk (albeit low) of it going in the other direction, and if it does, it wouldn't be for small amounts either. I've already got significant exposure to Thailand. I'd like to add to it, but think if I do, I need to limit the downside somehow. Hence the options interest.

BTW Did you have any view on the futures they quoted. They seemed to have narrower spreads and look better value? But I'd find it harder to limit downside with futures. Don't mind losing my premium on an option, but not keen on the much larger risks futures bring, without close monitoring.

sonicdragon · November 26, 2007

Very low volume, plenty of arb opportunity *if* you are a market maker, but with huge bid-offer spreads it doesn't look very interesting for customers. As an example you have to pay 1.5% to buy a 10% OTM call with only a couple of weeks to expiration. Still, given your bullishness on the SET maybe it's OK for you ? The 660 strike is a little cheaper in volatility presumably since there is much more open interest in that strike.

Sonic,

Thanks for the feedback. You seem to have confirmed very much what I thought. Low volumes and expensive. Not being my area of expertise, I was keen to have a second opinion. Cheers

Protecting the down side, with an OTM put option also seemed expensive. While I'm bullish, I think there's still a risk (albeit low) of it going in the other direction, and if it does, it wouldn't be for small amounts either. I've already got significant exposure to Thailand. I'd like to add to it, but think if I do, I need to limit the downside somehow. Hence the options interest.

BTW Did you have any view on the futures they quoted. They seemed to have narrower spreads and look better value? But I'd find it harder to limit downside with futures. Don't mind losing my premium on an option, but not keen on the much larger risks futures bring, without close monitoring.

The spread on futures is (and should be) very small. You could put on a short futures position to hedge against your perceived risk. I seem to remember you saying somewhere you considered the chance of large correction to be in the order of 10-15% ? If so, and your long positions are well correlated with the SET50 (this is important !) then a 10-15% short position would be a good hedge for you.

Also, if you are seriously looking at this it's probably worth getting some live quotes on those options. Some of the bid-offers are just too ridiculous to be believed. 15-25 for ATM calls !!! 22-44 for the 660 puts ! And these are for the front month !!! Hello !?!?!?!?!?!?......

Edited November 26, 2007 by sonicdragon

fletchsmile · November 26, 2007

I wouldn't call it "moderately aggressive", but that's just a matter of subjective opinion. Can you expand on what you mean by "commodities" and also let us know your situation - are you living permanently in thailand ?

Up_country_sinclair

Interesting post. My thoughts are similar to Soinc's. I wouldn't call it moderately agressive either, tho' it's subjective. By my views it would be moderately conservative. Sonic also hits the nail on the head when he says your situation is important, in addition to your attitudes to risk/reward etc.

For comparison, attached is my portfolio split, (Excluding cash) I hold about 15% in cash (split across various currencies, mainly held in Singapore accounts), so the graph below represents how the other 85% is split. It's not quite accurate tho as there is overlap between each category, but it gives an idea.

I wouldn't recommend this split to very many people, but it does give an idea of the importance of taking into account other factors. It suits my own risk appetite (moderately agressive - agressive) and personal circumstances eg UK guy, living/working in Thailand with a Thai wife and daughter, planning to be here a while, happy to take risks and longer term views, bullish on Thailand and Asia, wants to be linked to Asian wealth benchmarks. No interest in US or Japan as countries. A near 20%+ exposure to Thailand is very high by most people's views. For me tho' I consider here home, in the same way Britains view UK, and Americans US.

BTW Have mainly put this up to highlight the importance of background considerations, etc, as per Up-Country_S's posts. But I would also welcome anyone else's thoughts, on how they might change this, tho' if they were me. (TH - Thailand, AS - Asia, SN/GL - Singapore and Global bonds, GL - global, etc

Edited November 26, 2007 by fletchthai68

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