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Vladimir Senkov
81 Comments
New Russian Ruble ETF Offers Several Interesting Trading Possibilities
i guess since the rate changes dramatically and on a daily basis there is no telling what the effective rate will end up being for an investor willing to buy or short it. so any of those strategies being suggested are a gamble with yet another unknown variable.
General Electric: Genuine Risk of Collapse?
It would have been nice to read a few months ago :)
Now most of this stuff may already be priced in.
With access to the window and tarp GE should be able to survive, even though excel junkies at GE capital hedge fund almost brought it down.
Shorting Russia Via Ruble ETF Trade
You mentioned that "this writer" intends to short XRU.
How much of an interest rate are you expecting to pay on that short position? In other words, what do you think is the distribution rate going to be? And if you can give me that number, could you also tell me where that number is coming from?
Thanks in advance,
Vladimir.
Sun Micro Is Now Trading at Cash
While I can't disagree that SUN is getting cheaper, I think you're overlooking some things on the balance sheet.
What about short term/current long term debt of 565M, deferred long term liabilities of 541M and other liabilities of 1055M?
So your scenario of getting the company "for nothing" is a bit too optimistic.
I'll give you a better example: TRID.
This company REALLY can be had for nothing.
But they are burning cash, maybe not as much as SUN, but still. And I guess the execs probably have "off balance sheet" parachutes written into their contracts, or maybe there are some other off balance sheet liabilities or poison pills. Otherwise why wouldn't we buy it today, close up shop and earn a huge return overnight?
With institutional holders like Renaissance Technologies it would seem like someone with resources would have done something already if it was actually doable.
So there, you have a much better candidate to take over and "have for nothing", but it still isn't happening.
So SUN is a long way from being "had for nothing".
New Russian Ruble ETF Offers Several Interesting Trading Possibilities
These numbers do not make sense. Central bank rates did not change that much.
When initial prospectus came out with 3.8% central bank rate was 11%.
I understand that prospectus was amended on November 7th with 6.05%. That was less than two weeks ago.
Central bank rate went up 12% on Nov 12th.
If you call 11% considerably lower than 12% I am going to have to disagree here in the context of 3.8->6.05->20 discussion.
Why would JPM London branch move their rate from 6.05 to 20 in just a few days if no other bank has done that?
No russian bank currently pays 20% on ruble deposits.
Foreign banks holding ruble deposits typically pay less than russian banks.
If 20% is going to be paid it would have to come from the elsewhere, but prospectus states that interest would be distributed after interest is earned after deducting the management expense.
It seems to me that 20% number is erroneous and real number is still unknown, but is most likely to end up being 6.05%?
Or the payout number really could be 20% but it's not generated by the interest paid on deposits and comes from somewhere else entirely. If it does come from somewhere else than my original question remains: why does JPM get to make a killing while the ordinary guy thinks he is only paying 0.4% management fee.
There are errors on that webpage btw, for example, the link to edgar filings currently points to Australian dollar filings . . .
Not a big deal but it shows that QA process is lacking and if 20% was indeed a typo it is possible that it just wasn't caught.
When something looks too good to be true it usually is. And 20% is definitely too good to be true.
So what's the rate JPM is paying on those ruble deposits?
If you are still convinced it's 20%, would you mind a small wager?
On Nov 19 10:18 PM Jonathan Liss, SA Editor wrote:
> Valdimir,
>
> As far as I can tell, the rate listed here (www.currencyshares.com...)
> is the rate paid out by the fund, which I am told will be done on
> a monthly basis. At the time of the prospectus, the central bank
> rate was considerably lower. As Moscow continues to raise rates,
> the fund's monthly payout rises.
>
> Hope this helps.
New Russian Ruble ETF Offers Several Interesting Trading Possibilities
Could you tell me where you got those numbers from? 15.5%? 20%?
The only update to the prospectus that I can find mentioned 6.05%.
When you say "It is currently over 20%" what do you mean by "it"? do you mean the rate JPM London branch pays to the fund or do you mean some other rate i can get somewhere else on ruble deposits?
I'm interested in the rate JPM London branch is paying, not any russian central bank rate or any other rates as they have nothing to do with this fund.
On Nov 19 02:14 PM Jay H wrote:
> The rate was 3.8% at the time of the prospectus writing and shot
> up to 15.5% recently. It is currently over 20%. It is clear enough
> to me.
New Russian Ruble ETF Offers Several Interesting Trading Possibilities
If this number continues to grow at this rate XRU would become a fair product soon. maybe this rate will really become 15.5% in a few weeks? :)
New Russian Ruble ETF Offers Several Interesting Trading Possibilities
Your article quotes two guys suggesting two "ideas". Both "ideas" are from the sell side guys and surprise, surprise, both involve buying XRU :)
Is there actually any truth to what those guys are saying?
Did you have a chance to investigate that?
First, I'm not 100% sure how Ruble can have high degree of correlation the Euro and to crude at the same time, if Euro doesn't have particularly high correlation to crude. So either one idea is bogus or another or both.
Btw, in the other version of mr Bak's quote, correlation to the crude was stated as 89%. I guess someone finally looked at the 6 months chart of ruble vs crude and decided that 89% needs to be stricken from the record :)
Second, while central bank may have set the rate at 12% and XRU might even "pay the 15.5% as of last Friday", I have a very difficult time understanding how these statements aren't misleading. According to the prospectus, JPM in London will hold ruble deposits of the fund and will pay an interest rate currently set to 3.8%. According to the prospectus fund will deduct management fees from interest earned and pay the rest as dividend. Where is 15.5% going to come from i'm not sure, but if it is really going to be paid, it must come from the NAV.
These two issues have nothing to do with the fact the ruble may be a short or long candidate. That's not where the focus should be when the new "product" comes to market. Let us first see if the product is actually going to deliver what it promises.
From what I can see so far, the guys on the sell side are misleading the public by suggesting strategies that can't be implemented using the fund and having journalists and bloggers put out articles where these strategies go under the titles such as "fund uses" or "possible trading strategies".
Possible? Sure, but not with this fund.
I have to wonder how JPM got such a sweet deal. Hold ruble deposits and pay 3.8% on those.
These guys are making a killing!
Jonathan, Could you do me a favor, I really need my confidence in "people are generally good" restored,
Would you mind explaining to me how I misunderstood everything in the prospectus, how you did the investigative journalism part, how 3.8% is really 15.5% and how these guys are actually honest sales men delivering good product to the market and average investor is not being misled and treated like a fool.
Once that is out of the way, I'll be glad to discuss if ruble is a long, a short, if russians can be trusted, etc :)
Please excuse my tone but this is a 3rd time i'm trying to get someone to explain to me how wrong i am about XRU and so far everybody ignored me so i figured i need to bring it up a notch to get responses :)
John Hussman: The Market Is Not in Uncharted Territory
Congrats on your 8 good trades and your high YTD return.
Why do you think that any of this has something to do with TA?
I don't know what your exact method is, but most TA methods I'm familiar with are an attempt at pattern recognition. Human brain is very good at confirmation bias. If you already believed that gold was "expensive" your TA would always confirm it.
Do you believe that you can establish cause and effect based on 8 trades? Have you closed all of them yet? My guess is no, since you are still in the market.
You seem to believe that making these kinds of returns is easy.
I guess if it's so easy you have probably already quit your day job.
I guess it must be easy for you but impossible for the rest. What makes you so special? I know we are all special, but seriously?
Good luck climbing the easy money mountain!
On Nov 17 07:26 PM Jase wrote:
> chrisb,
>
> Your comments regarding the futility of TA are amusing. "And did
> any squiggle-people predict the current bear market?" Yes, many
> did. But most of them wouldn't bother telling you about it. Unfortunately,
> you still think you understand what technical analysis is by reading
> about it from a Wikipedia page while eating a sandwich. It takes
> time to learn the art behind the science; in time you'll see the
> charts in a completely different way. This is about as kind a message
> as I can proffer considering that I gain nothing by telling you this.
> If you must know, this year I "used the squiggles" to:
>
> - short gold (DZZ) at $970/ounce;
> - short Encana (ECA) at $92/share;
> - buy SKF at $89/share (more than once);
> - short Goldman (GS) at $137/share;
> - short crude oil (HOD.TO) at $119/barrel;
> - sell CAD against USD at parity;
> - short SPY at 130.00/share (via SDS); and last but not least
> - short BRK/B at $4390/share.
>
> The list goes on. How many long-side trades do you see? I've only
> been doing this for 18 months and my measly initial couple of hundred
> grand bankroll isn't big enough to crack the billion mark yet; this
> and this alone is the reason that I'm writing you--I'm still in the
> market. My 135% year to date return, however, suits me just fine.
> Doubt me? Send me your postal address and I'll fedex you my trade
> tickets. Take this advice: keep your toilet shut before discounting
> a method you know absolutely nothing about.
>
UltraShort ETFs: At a Tipping Point?
> The double shorts do a very poor job of tracking. They do a decent
> of tracking only in the very short term - week or so. The fund sponsors
> somehow seem to be able to get away with it.
would you like to know how exactly?
if so, read the prospectus.
folks, i'm amazed at 3 things here:
1) retail investor never reads anything except the infomercial-like material that the sell side is pushing through any avenue they can, including, unfortunately, respected publications and now bloggers as well.
2) "journalists"... and "bloggers" repeatedly write BS articles trying to give retail investor "new ideas" on what to gamble with so that every new "instrument" find it's sucker.
YOU ARE BEING INTENTIONALLY MISLED BY THE INDUSTRY! WAKE UP PEOPLE!
READ, READ, and READ again the prospectus before you buy.
if there is ANYTHING at all you don't understand DO NOT BUY!
and to point to an elephant in the room:
3) when you see a person trying to do TA on anything, especially an ETF that is attempting to track an index - RUN!!! RUN FOR YOUR LIFE!!!
If your doorbell rang and you asked "who's there" and they said "we are here to tell you how the world works", would you open?
if so, then by all means, listen to the TA guy trying to explain the same.
General Discussion on XRU
it says was written by SA Editor Jonathan Liss, but for some reason I can't find this article here on Seeking alpha, so I'm going to start a conversation here and see if anyone cares to discuss this.
Article is quoting Eric Rosenbaum who was quoting Rydex’s Director of ETF Strategies, Ed Lopez, as suggesting a long ruble/short euro pair trade, so i'm going to quote that here :)
------------------
These two currencies (Euro and Ruble) “have a particularly high correlation, so investors can short the euro and its smaller yield (due to central banking policies in Europe) and go long the ruble, which has a central bank rate of 12%.”
----------
I'm not going to argue about the validity of the strategy here, where the "high correlation" statement is coming from and i'm not going to bring 1998 up or even the elephant in the room (the supposed energy correlation, more on that later) but I can't help but notice that it almost sounds like mr Lopez is implying that an investor could use XRU to implement such a strategy. I don't want to call anyone a liar, but I have tough time understanding how this could possibly work when JPM pays 3.8% and the fact that russian central bank pays 12% is completely irrelevant at this point?
If mr Lopez didn't want to imply that the fund could be used to execute this strategy, the placement of this quote in the article under "Fund Uses" is very unfortunate. The combination of these statements and the manner of their presentation is extremely misleading and in my opinion could be interpreted as fraudulent!
Essentially the investor trying to execute such a strategy with XRU would break even in best case scenario while JPM would profit handsomely.
Now let's look at a couple of other quotes.
This time by mr Phil Bak:
------
Another way to take advantage of the ruble’s high yield was suggested to me by Rydex Sr. Product Developer, Phil Bak, who points out the ruble has a 92% correlation to the energy sector and an 89% correlation to crude prices. By shorting oil and going long XRU, investors can collect the current dividend of 10.5%, paid out monthly, with minimal risk to their underlying capital.
------
Aha!
Does mr. Bak ever talk to mr. Lopez? I just heard from mr Lopez that ruble has particularly high correlation to the euro, now mr Bak says it has 89% correlation to crude? So i guess euro/ruble carry trade is going bust if oil goes down? And I guess there is not going to be "particularly high correlation" to the euro at that point? :)
OK, now I just have to ask . . . where did the 89% come from?
A quick glance at the last 6 months of crude prices should convince you that ruble must have come down at least 50% over that period? Either that really did happen in mr Bak's parallel universe, or the 89% number was invented by mr Bak.
Is it asking too much of journalists and bloggers to be at least somewhat critical and analytical about the material they push?
Or is all of this just a marketing channel for the industry badly in need of cash, to help find the next sucker, i mean, investor?
General Discussion on XRU
It says that the bank holding ruble deposits (JPM) will pay an interest rate of 3.8%. ON RUBLES!?!?! WHAT? Russian central bank pays how much? Now i read stories on index universe, on yahoo finance, here. All quoting each other . . . or quoting the sell side guy. Has anyone actually read the prospectus? Or is this like forwarding along the Friday joke e-mail?
11 Stocks Selling Below Cash
excel junkies can not be trusted!
And by the way, I assume there is no fraud.
They will always tell you one thing: we are not subject matter experts, we are excel experts! Apparently they really believe that 6figure salaries are justified by that skill alone.
They also know how to copy&paste.
So when they tell you how much cash YCZ has per share, or any other company, please make sure you understand where they got the data they plugged into their excel "models".
when they tell you "from finance.yahoo.com"... then HANG UP and stop wasting your time on them.
You know how much crap data is "out there on the internet"? a lot.
it is very difficult to get error free data. everybody is guilty. I once wrote to a person who worked at Forbes and asked him why he wrote that a certain fund paid a dividend of X% in his article. You know what he said? He said "because I got that from finance.yahoo.com. When i explained to him how wrong that data was he asked me if I WANTED him to post a correction.
I of course just wanted to know if I could trust data i got from Forbes articles. Now i knew that I couldn't. Forbes of course isn't alone. So when Moody's tells you that a certain pile of paper is AAA you MUST ask where the inputs came from. You'll be surprised! Or (I hope) maybe not so much.
So, whoever actually ANALYZED (by that i don't mean running bogus screener on bogus data) Yazhou Coal Mining, would you PLEASE come out and tell us where the data came from?
If you are silent I'm going to assume that it came from finance.yahoo.com and that you are also extremely proud of 1850% institutional ownership :))))
Nortel: Look Away from the Charts
If you had to guess who had more VOIP phones per employee internally, a Nortel (VOIP leader of the world) or Cisco (A whole lot of everything company) who would you put your money on?
And it has been this way for years, btw.
So this information you are mentioning is interesting as an anecdote, but that's about it. Focusing on stuff like that at this point, trying to predict Nortel's bright future based on those anecdotes may yield very predictable results indeed.
This is why I asked you to expand on your "NT Long" disclosure. I had a feeling this was probably not your first NT prediction.
One really smart guy once said "Forecast tells you a lot about the forecaster but nothing about the future", so take my skepticism for what it is. I'm just looking at what your forecast tells me, I'm not trying to be difficult here.
I can't give an NT forecast at this point. Simply because it depends on what some people are going to do. If those people continue to do what they have been doing so far (cut costs, implement 6-sigmas, etc) the results are likely to be more of the same, for some time, until such time runs out. If, on the other hand, some drastic changes are made ASAP, outcome may still be changed, but there is less and less time for that and I'm not sure anyone in position to do something about this is sufficiently motivated. And if they are motivated now, why now and not a year ago? It just seems less and less likely.
Nortel: Look Away from the Charts
You're disclosing that you have a long position.
Could you also disclose for how long you had it? What's your average?
I think this is very relevant to understanding your point of view.