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Financial markets are a game
Asset Management
<p>Financial Markets Are A Game by EconMatters<br /> Forget about Market Multiples: Totally Meaningless Sell-Side [email protected]</p> <p>Anyone thinking about investing in financial markets should realize that most of the professionals who are on the inside, i.e., have power and access to information and capital to move markets, do not view financial markets as investment vehicles, decisions about P/E ratios, equity multiples, etc. but rather see financial markets as a giant game of making money.</p> <p>Financial Markets are Giant Criminal Playgrounds</p> <p>Consequently the first thing all ‘investors’ need to realize is that markets are crooked, always have been, and always will be despite year after year of new regulations trying to prevent ‘crooked behavior’! Once you understand that the market is a giant game, and you stop thinking about the market from a valuation sense or a fundamentals standpoint; your next task is to identify the rules of the game, or the way the game is being played during your ‘investment horizon’ as in, when you as an investor are risking your capital in the markets.</p> <p>Market Makers Never Risk Anything: They Make Markets Move Directionally</p> <p>Most of the games in the market are about fooling other investors and taking their money, but there are all types of games, some actually can benefit average investors who actually believe in the fundamentals and a fair market. The problem is that you as an average investor will be thinking that the fundamentals are why an asset is going up, which can be the case, but the party will end while you are still looking at the same fundamentals that are in place, and the game players have already sold the stock or asset and bought derivatives in the opposite direction because they are Making the party to be over, there is no guess work involved on their end as they are Market Makers!</p> <p>Sell Dungarees to the Gold Rush Crowds </p> <p>In short, fundamentals do not matter in financial markets! This is the hardest thing that investors have to learn about financial markets because they have been so conditioned to believe that the financial markets are based upon the fundamentals because of all the folks who sell shovels and axes to the market participants. The amount of money made off of the financial markets over its history probably surpasses the amounts of money made from financial assets. Again the game within the game.</p> <p>An Example of Game Playing</p> <p>I will give you an example of a recent game just to get your mind to start thinking in terms of the games behind the financial markets. So remember when the Federal Reserve was dovish at the September Meeting and the markets had sold off in a tizzy fit, don`t be fooled there was a game already in place, and it played out according to the predetermined script.</p> <p>What you have to realize is that this game, and the entire game of selling the markets off because of “China Turmoil” had very little to do with China and a whole lot to do with pushing the financial markets down into quarter end. So when the new money came into financial markets for the Christmas Rally of the 4th quarter the game players have a low base from which to work from and have a monster fourth quarter. Most of the real money is made in derivatives off of the movement in the core assets due to the massive amount of leverage that can be attained. Therefore if you know wher</p>
Cooperman takes a 7.1% in Lionbridge Technologies
Hedge Funds
<p>Leon Cooperman and Glen Capital Partners have bought a 7.1% stake in translation services firm Lionbridge Technologies.</p> <p>With a total of $23 million of shares purchased with Glen Capital, Cooperman is now the third-largest stakeholder in Lionbridge, reports the Boston Business Journal. Lionbridge CEO Rory Cowan has a 6.3% stake in the company.</p> <p>Lionbridge currently trades for about $6 a share on the Nasdaq. In June the company announced a partnership with Californian Rocket Sound to produce voice production and translation for voice over services for video games. Lionbridge also acquired CLS Communication last year for $77 million. The company's current market capitalization is about $380 million.<br /> Photo: Insider Monkey</p>
Video: Third quarter GDP -- A blip or an omen of a slowdown?
Asset Management
<p>In an interview with CNBC,  Lindsey Piegza, Stifel Fixed Income Chief Economist, and David Lebovitz, JPMorgan Asset Management, offer opposing views on the slowdown in third quarter GDP, which came in at 1.5%, slightly less than expected. At the heart of the number: A reduction in inventories. Are inventories shrinking because CEOs are concerned about the consumer or is this a natural part of the business cycle and we can reasonably expect growth to resume at a higher pace in 2016?<br /> Chart: Bureau of Economic Analysis</p>
These ETFs should love the Pfizer-Allergan news
Asset Management
<p>In what could amount to the biggest takeover of a U.S. company in over a year, Dow component Pfizer Inc. (NYSE: PFE) is reportedly mulling an acquisition of specialty pharmaceuticals maker Allergan Plc (NYSE: AGN).</p> <p>"Pfizer recently approached Allergan about a deal, according to people familiar with the matter, with one of them adding that the process is early and may not yield an agreement. Other details of the talks are unclear," reports The Wall Street Journal.</p> <p>Allergan closed with a market value of about $113 billion on Wednesday. Pfizer's market value at Wednesday's close was nearly double that. New York-based Pfizer had nearly$30.3 billion in cash on hand at the end of the second quarter.</p> <p>As is par for the course with healthcare sector deal-making, a batch of exchange traded funds stand to benefit, particularly if ...</p> <p>Full story available on<br /> Photo: e-Magine Art </p>
Oaktree wraps up funding for its first QDLP fund
Hedge Funds
<p>Oaktree may be expected to post weaker earnings on Friday, but it sure scored a big win on the funding circuit the other day.</p> <p>Shanghai Daily reports that the L.A.-based fund manager secured RMB1 billion ($157 million) for its first Qualified Domestic Limited Partner (QDLP) fund, making it one of, if not the, largest QDLP fund currently in action.</p> <p>Howard Marks, Oaktree’s distressed-asset virtuoso co-founder, had this to say:<br /> “The QDLP program demonstrates China’s continued efforts to open up global investment opportunities. The encouraging results demonstrate that investors identify with Oaktree’s investment philosophy and risk-focused approach.”<br /> Investors in the fund were Noah Holdings, CreditEase Wealth Management, and Harvest Capital Management. The fund, which will be managed offshore by Oaktree, is set to be invested using the firm’s bread and butter distressed-debt strategy.<br /> Photo: Charis Tsevis</p> raises $157 million from CMI, other firms
Venture Capital
<p>Investment firms are still hot for online education platforms, and seems to be no exemption.</p> <p>Based in Shanghai, backed by Baidu, and filled with over 90 million registered users, the online school raised $157 million in its recent series D round according to China Money Network, and attracted investors as diverse as China's largest private investment fund, China Minsheng Investment (CMI), and the Hefei-based publisher, Waixin Media.</p> <p>How much CMI invested in the company was disclosed however, and how much the round valued it was not divulged as well. We do know though that is in the process of reorganization as it prepares to go public:<br /> “The company is in the process of corporate structure reorganization, and is planning an initial public offering inside China, according to announcements made at a press conference reported by Chinese media.”<br /> The Hina Group, in a press release entitled – and only containing the words – Raised over RMB 1 Billion with Hina as Exclusive Financial Advisor, said that raised over RMB 1 billion ($157 million) with Hina as its exclusive financial advisor.<br /> Photo: uberof202 ff</p>
Investor risk appetite soars in Asia
Asset Management
<p>While investors in the developed world rush for the exit, risk appetite among Asian investors surged to a new high in October, according to State Street’s latest Investor Confidence Index report (pdf).<br /> “The Global ICI decreased to 114.3, down 2.3 points from September’s revised reading of 116.6. The decline in sentiment was driven by a decrease in the North American ICI from 133.2 to 125.5 along with the European ICI falling 5.8 points to 89.9. By contrast, the Asia ICI rose by 13.2 points to 111.0.”<br /> The asset manager’s Ken Froot says that this is the first time the Asia ICI climbed above the 100-point threshold this year, an interesting data point given that Shanghai and Shenzhen were on full-on risk mode during the first eight months of the year.</p> <p>The main reason for the surge? Cheap money and SOE reforms, apparently:<br /> “[T]he increasingly accommodative stance taken by policy makers globally and hopes for state-owned enterprise reforms in China have had a large impact on Asian investors, boosting risk appetite by 13.2 points.”<br /> With the Fed back at square one and the fifth plenum supposedly focused on reforms, these guys must be having a ball now.<br /> Photo: GotCredit</p>
Asia fund management myth-buster
Asset Management
<p>A recent AsianInvestor survey of the biggest institutional fund managers across Asia-Pacific dispelled several misconceptions:</p> <p>They are not home-bound and instead have a strong appetite for global market exposure; they are willing to explore alternatives rather than stick to traditional assets; and there is little sign that they are switching to passive investment strategies.</p> <p>So, Asian fund managers are dynamic, experimental and keen to take on the world. They’re also a social lot and keen to share.</p> <p>“Respondents are as happy to invest directly and to co-invest with general partners and peers as they are to take a fund-of-funds approach, and they are ready to outsource more to local partners,” notes AsianInvestor. (paywall)<br /> Photo: Mandala Travel<br /> &nbsp;</p>
Pershing Square is down 15.9% for the year
Hedge Funds
<p>Looks like Ackman picked the wrong week to start doubling down on Valeant.<br /> “Pershing Square Holdings, the publicly traded fund run by hedge fund billionaire Bill Ackman, is having a brutal year.</p> <p>The fund is down 15.9% through October 27, according to a performance update. The fund had been down 11.2% a week ago.</p> <p>The fund's performance was primarily dragged down by its largest equity holding, Valeant Pharmaceuticals.”<br /> Pershing Square was up as high as 11% in August, and as Business Insider points out, it was one of the best-performing hedge funds in 2014 with a return of 40.4%.<br /> Photo: marc falardeau</p>
If you see David Einhorn, give the man a high-five
Hedge Funds
<p>After shorting St. Joe the past eight years, the man just saw the SEC hand him one of his greatest victories:<br /> “The Securities and Exchange Commission today charged The St. Joe Company, a Watersound, Florida-based real estate developer and landowner, its former top executives, and two former accounting department directors, with improperly accounting for the declining value of its residential real estate developments during the financial crisis. As a result of this misconduct, St. Joe reported materially overstated earnings and assets in 2009 and 2010.”<br /> As for Bruce Berkowitz – whose latest 13D shows him owning 32.3% of St. Joe – it might be best to give him a hug.<br /> Photo: Insider Monkey</p>