Blog Profile: Chovanec, A great intimate blog about China

This blog by Patrick Chovanec of Tsinghua University is one of the most intimate blogs about China and its economy that I have come across.  Besides blogging and being a professor, Patrick makes regular appearances on CCTV making comments about government policy and the Chinese Economy. I find this important and that it further solidifies his position as a critical commentator for China because the state run TV has actually allowed for criticism against the central government by him.

Some issues he has covered include highlighting that even though there even though there is little leverage in the Chinese property market unlike the US, but the Chinese property market is still overvalued as the rich use property as a storer of value like gold. Hence the phenomenon of empty cities of luxury malls and apartments have appeared since the rich constantly purchase second, third and even fourth homes. This has led to insufficient housing for the poor as they are unable to keep up with the rising cost of housing. Recently, such exuberance in the property market has led to some Chinese turning to gold as a storer of value.  He also points out that the government policy of imposing transaction taxes on property will be futile as only holding taxes will stop people from using housing as a storer of value which artificially props up the prices. Read more of this post


You Analyze, I Analyze, We Analyze, But we disagree (Part 3)

This will be last part of my series on analysis and I will be touching on noteworthy ideas that i wish to investigate further through this blog and also on my free time. But before I start I want to make some minor additions to my prior posts. Firstly, I would want to add that qualitative analysis is also actually a model, it just that its a mental model and hence like any other model  cannot be all encompassing.  In addition another article form the NYtimes once again highlights that even irrelevant information can effect our decision making. Now back to noteworthy ideas.

Firstly a study on momentum.  Momentum basically states that strong stocks will stay strong and continue higher. AR has also summed up strength of momentum strategy how to mix it with other strategies.  Meanwhile CSS analytics has also provided a nice starting point on how to think and model momentum otherwise also known as relative strength.  CXO advisory adds to this by showing testing out the different variables of momentum here, here and here.  But above all we have a great blog really focusing on systematic relative strength. Read more of this post

You Analyze, I Analyze, We Analyze. But we disagree (Part 2)

Having discussed about the Economists and Analysts and their frailties, I would like to discuss how we can approach analysis. But before i get started I would like to highlight a great article from AR, it basically sums up the lack of transparency of punditry. They hence made a suggestion.

Given these two eternal truths, pundit scorecards are a necessary feature that would allow viewers to help judge the credibility of pundits.  However scorecards are not sufficient.  Until we are allowed to, as they say in math class, see the work, we will be somewhat at a loss when those predictions turn out true or false.

Hence do not accept anybody’s forecast or analysis unless they show you their results and most importantly their underlying hypothesis behind their ideas.  Although it is unlikely anyone will give you their full details but knowing its underlying philosophy can help one to judge whether its feasible or not.  Its also a good idea to track what they are saying. For instance at CXO advisory they track, investing gurus and how they are performing based on public available information. Read more of this post

You Analyze, I Analyze, We Analyze. And we disagree.

In messy world of finance, every single individual tries to provide their two cents worth. There many groups of people ranging from, economists, analysts, news commentators, astrologers, professors and an ever growing group of econbloggers (finance related bloggers).  In addition, there also qualitative and quantitative ways to form arguments. Lets start with two of the most common groups of people who will make their judgments on the markets, economists and analysts.

Firstly analysts, these groups of people usual belong to brokerage firms, investment banks and are investment related entities. As seen from the image below from Mckinsey,

Optimism Bias of Analysts Read more of this post

Blog Profile: Abnormal Returns, Collating the best of the web daily

In the world of news and media most people are mainly exposed to content creators. These are people who write and create their own content. For instance we read the papers and their commentary and watch TV news for their coverage. Meanwhile with the onset of the internet there is also another type of media congregation, these are aggregators, for instance we can use RSS feeds to pick out our favourite news sites and feed it to out RSS feeds, or we can use google reader for such purposes. Read more of this post