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emikonii090909 · 2 years

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The extended occasion from the games wagering provider

The extended occasion from the games wagering provider,

in organization with Gambling Insider, dove further into the universe of sports wagering and its futureKambi's Festival of Sportsbook gave a point by point the present status of issues in the realm of sports wagering.스포츠배팅사이트

Points, for example, sports wagering uprightness, esports and how the gathering use its organization information to convey sports wagering encounters were the extended occasion, which ran from 23-27 May 2022.해외배팅업체 배당률

Sports wagering is unquestionably a hotly debated issue, with a few states and territories in North America gradually sanctioning the diversion, meanwhile the European business sectors keep on flourishing. Include the 2022 World Cup, notwithstanding, and it might simply be the main year sports wagering has at any point had. 아시안커넥트 가입안내

Betting Insider was available to start off Kambi's celebration in style, with Editor Tim Poole facilitating the Sports Betting Focus: Executive Roundtable. He was joined by BetWarrior CEO Zeno Ossko, LeoVegas Director of Sports Christian Polsäter and Canadian Gaming Association CEO Paul Burns, to talk about the most recent intricate details of sports wagering in LatAm, Europe and Canada separately.

The three visitors started with a concise prologue to their separate districts, with Ossko commending the third commemoration of BetWarrior, which sent off in May 2019. The gathering centers around LatAm, having sent off managed markets in Argentina, both in the region and city of Buenos Aires. It's the organization's greatest market, with Brazil a nearby second, trailed by other South American nations.

Canada, in the interim, while not another market with regards to lawful games betting, has been ruling the titles of late with regards to single-occasion sports wagering. The Canadian Gaming Association has been urgent in the most recent advances the nation has taken concerning sports wagering, with the developing dim market a significant inspiration while changing the law and revising the crook code in June 2021 to allow legitimate single-occasion sports betting.

Furthermore, LeoVegas' Polsäter affirmed the gathering is most known as a club brand, having begun with just club a long time back. However, circumstances are different for LeoVegas from that point forward, with the organization stopping its sportsbook back in 2016, preceding gaining any semblance of BetUK and 21.co.uk, as well as Royal Panda and Expekt, the two of which work with a sportsbook.

As referenced, it is an intriguing time for sportsbooks for additional reasons than one, however maybe driving the plan right currently is the impending 2022 World Cup. As made sense of by its CEO Ossko, BetWarrior is occupied with delivering content and ensuring everything is set up in time for the occasion this colder time of year. He added the competition is the greatest obtaining an open door since the gathering sent off its Argentinian licenses.

"In our two greatest business sectors - Argentina and Brazil - everybody is as of now very energized all over the Planet Cup," he noted. "Our group is situated in Argentina and Argentinians are very bullish about the current year's competition. According to my viewpoint as CEO of the organization, the main thing is to ensure we are prepared so as to ensure we catch the most extreme out of this extraordinary chance with regards to obtaining and concerning marking."

There is, obviously, gigantic European interest in the opposition. Furthermore, it is one in which LeoVegas expects to take advantage of, especially the more drawn out term point of developing its games wagering advertising.

"As consistently with these huge competitions, it's really significant for us - basically as an obtaining driver - to truly acquire new players," noticed LeoVegas' Director of Sports. "We're really eager to perceive how this World Cup will vary from the ones we have encountered previously.

"A great deal of our center business sectors take part in it, so it's significant as far as we're concerned, and it's something we've anticipated, for some time in fact."

With respect to Canada, and Ontario particularly, everything is on the cards, as made sense of in more detail by Burns. The NHL end of the season games have demonstrated immensely well known with sports bettors, while NFL wagering keeps on being very famous in Canada.

"The market has left everything open, there's actually no avoidances, everything's accessible, which is vital," he said. "We needed to ensure the clients had a wide cluster of decision and accessibility for every one of the items.

"A few significant brands are entering the commercial center and clients are getting heaps of decision, so it will be an intriguing time for them," added Burns. "There's been bunches of nearby administrators, like NorthStar Bets and theScore, giving a Canadian flavor. It's been a great chance for those organizations to fabricate their business in Ontario."

Obviously, the 2022 World Cup isn't the main idea as far as the fate of the games wagering industry. The world will watch the worldwide occasion, yet locales, for example, Canada, Europe and LatAm each have their own issues to zero in on as the long stretches of time go on.

Polsäter is hoping for something else of what the business has encountered over the most recent few years, and concurs with the overall agreement that esports will keep on developing. In any case, one significant advancement he anticipates is the manner by which individuals consume sport.

"The capacity to focus is getting more limited and more limited, and that is the thing players are expecting now when they enter a sportsbook to wager," he said. "They anticipate that the site should be quick, they hope to find the business sectors rapidly, they hope to have the option to put down the bet rapidly and get the payout rapidly, etc, so I feel that pattern will proceed."

One more possible improvement for LeoVegas and for sure the business overall is the inclination of numerous more youthful games bettors to zero in on huge names, rather than large groups. Polsäter accepts football for instance, with the more youthful age following any semblance of Cristiano Ronaldo and Lionel Messi, with details based markets and player props beginning to arise thanks to such a-list, high-profile players.

"I feel that pattern is about to go on to an ever increasing extent, and clients will hope to have the option to wager on anything player-related across various games," he said. "So that is one pattern that will go on without a doubt."

While such player markets may not arrive at the ubiquity of the more conventional groups markets at any point in the near future, Polsäter accepts they will keep on developing. He presumes that the ongoing conversation inside this space is a lot of football-situated, yet will form into different games in the years to come.

There are, obviously, the "seriously exhausting" changes that can be anticipated, as Polsäter put it. With an ever increasing number of business sectors directing, guidelines will without a doubt keep on being harder, particularly around issues like bonusing and motivators.

Such issues, as made sense of by the LeoVegas Director of Sports, mean administrators might need to marginally reexamine their methodology, yet it is in no way, shape or form a significant disturbance, especially when they bring areas of strength for a to the table.

Polsäter remarked: "There will be an ever increasing number of rules around how you boost players, and that implies us administrators need to influence from the technique that could have been there generally of shouting most intense about the most noteworthy reward, to having a truly impressive item players like and need to return to."

Progressively extreme guidelines on bonusing and motivators, alongside the inflated costs in regions like information and live streaming, added Polsäter, could unquestionably drive off numerous sportsbook administrators from beginning without any preparation.

What's more, the issue of rewards and motivators is one that is now being firmly checked in Canada, with Burns practically matching Polsäter in exactly the same words with regards to administrators choosing a more grounded item offering, rather than the shouting out of rewards inside their showcasing efforts.

"On publicizing, one thing that has been truly special - particularly from a North American point of view - is that there is no mass-market promoting of rewards and impetuses. That has been removed - not through subsidiaries, not through web-based entertainment powerhouses, you can't make it happen. You can offer them, yet the player needs to come to your site to track down them. As that is actually the one major change.

"What we've found in the degree of offers, while cutthroat, they're not anywhere close to at the levels found in the US. That is fine, and administrators are quite satisfied with a portion of this. They can contend on item or client care, that's what they're anticipating."

BetWarrior's Ossko is a lot of in concurrence with the rising meaning of guideline, with the CEO taking note of that the entire of LatAm is "counting during the time for Brazil to control." He accepts that once the greatest market in South America manages, a ton of different business sectors will follow after accordingly.

Brazil, in any case, may require an opportunity to understand its maximum capacity. "It's another item classification for a many individuals on the lookout," said Ossko. "Indeed, everybody thinks often profoundly about football in Brazil, and different markers for the market point in the correct heading also - portable entrance is very high for instance. However, it'll take additional time than individuals could suspect for the market to understand its full potential."He added: "Yet certainly as far as market size, as far as premium for football and different games, there are the right finishes paperwork for Brazil to be quite possibly of the most thrilling game wagering markets in the following five years."

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elle-smells · 3 years

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this is such a silly thing but I look at Miss Luciana Coronel Palacios, and Andrea Ivonne Barazorda Riquelme, and Diana Beatriz Canseco Marrull, with their long names and I think “omg theyre just like me 🥺😌” lkdfjsdfkds

#its so stupid i know sdkjfdhd #but like my full name #its kinda long too #two names and two last names #and its not like a special niche thing or anything #i guess its nice to see something Im so used to #in a show thats gonna be seen by an international audience #and not treated neccessarily as a joke??#I bet oyuve seen american tv shows give their token latam character an insanely long name #and use it for comedic purposes #and like...I laugh ngl dsfkjdsfds #but still its treated as a joke and this is not #its completely normal in roche #....anygays just little things #roche pe #roche

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saso615 · 3 years

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More spuk headcanons 👁👁

More Spuk HCs

First and foremost: I've accepted the name Adrían 'Salvador' Fernández García for APH Spain. I've grown to find Antonio kinda boring tbh and while I was searching for names for LatAm OCs, I saw García come back a lot as a surname. I love the idea of Spain having a long ass name.. it's just really appealing to me uwu 'Salvador' means 'Saviour' which is ironic since Spain wasn't much of a saviour :) As for Fernández, well, I like the different spellings and unisex alternatives it has. Fairnanda or Fernanda, Fernando... you can even nickname with Fairni/Ferni, it's cute. And it's his canon middle name :|

Moving on,, Here is the first part(?) of my hcs (go follow @chiring-art for EngPort and Spuk content)

Imagine a nice walk on the Spanish coast or a riverside in England. Them walking side by side, talking occasionally, but there isn't really a need to fill silences between them. Because those silences are louder than words. More important than holding hands. More meaningful than a gaze.

Imagine them laughing about some bad jokes or about the past, about how ridiculous old beliefs used to be and how much the world, how much they have changed.

Imagine how comfortable they are around each other, how relaxed.

Let "Hell & Back" by Sticky Fingers take you away like the wind. Like the sun blazing through your window and heating the wooden floors of you bedroom as you imagine these two assholes waking up in the same scenario next to each other, perhaps Arthur's head is resting atop Adrían's chest, rising and dropping on time with his breaths. He listens to his heartbeats and smiles, closing his eyes again so he can memorize this moment. So he can stay in it a little longer...

Their arguing is rough, intimidating and sometimes on the verge of them breaking up or never speaking to each other ever again... But they always somehow make up. They know this is a useless fight and they've been through worse. They can find a way to have a compromise or apologize if needed. Most of the time, Spain doesn't realize how far he's gone with his remarks (genuine or playful), but on the other hand, England is cruel and sassy. They both know what they got into, but they also know that if they lose each other, they will lose a part of themselves. They have known each other for far too long and alas, can not see a future without the other.

Soft caresses, embraces, kisses and cute, affectionate pranks fills the kitchen with chuckles. Adrían probably has the biggest laugh, the most whole-hearted, but Arthur has the most authentic laughs even if they aren't as loud. And I can guarantee you that Ade feels accomplished when he hears Art laugh like that. He gives his most loving/caring grin and admires him for a little. Just to capture the view. His green eyes brighten like how the sun gleams on a Persian lime tree, showing its most favoured features.

You can bet your life Arthur makes the effort to speak Spanish for his lover. He knows Spain has to make that effort constantly and it can be exhausting sometimes, especially since Adrían probably makes a lot of mistakes. Arthur has a hard time speaking in Spanish for a long time, but at least he's gotten used to saying more than just "Holá" or "Buenos dias". Ade is very happy about that, but he tells Arthur he doesn't need to most of the time.

I don't want to get too NSFW but I can give a little something soft for you (I'll share details to ADULTS in DMS if it ever comes up. No segs for you >:0c ): In their more intimate times, Arthur and Adrían are very careful with each other. When they are rough, there's consent and usually a talk about what they want and don't want. When they are 'vanilla' or well a lot softer, Adrían constantly asks if what he does is alright (when he tops). Consent is important to him.

When Arthur tops (bc he does too, get those 'TwinkArthurSupremists' out of my blog), he makes sure to have a clear safe word. He likes to praise a lot and does so with devoting kisses. Other than that, you can guess they have fun. Trying new things and having a laugh when it doesn't work. They have a lot of gazes, cuddles and quiet appreciation.

They're doing their best. Ugh, I love them being in love,,

Anyway I can come up with more, but that's it for now lmao

#spuk #aph #aph spuk #APH Spain #APH England #hcs #aph headcanons #ask #thanks Chiring

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ask-vrnickyboys · 3 years

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pftt ey uhh pop and bonnie along with there bros since i dont think i've seen people asking ya yet. what are your hobbies and jobs to pop and his bro. :o

Pop: im also a teacher along with my bro! But he is more in.. bachata, cumbia, eh..

Tango: dances of latam and Spain. He is more about hip hop dances that require being flexible like ballet

Pop: we cover a lot of dances by ourselves. And hobbies i guess i enjoy dancing by my own? I enjoy yoga too

Tango: my hobbies are helping my students and enjoy seeing them improve! But normal ones.. cleaning the studio, i can dance while doing that

Bonnie: having the game night with my Friends count as hobbie? Because its the thing i really enjoy.. heh. Me and my bro work at the casino

Clyde: Patrone and Chief are the guards and we take care of every bet and take care of the ones who cheats... I enjoy writing or just chill watching funny videos with paps (their gaster)

#the boys answers!#dancetale #mafiatale #gamer boys!#mt sans #mt papyrus #dt papyrus #dt sans

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meriahdominique · 2 years

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Is Sonia Sotomayor A Secret Poker Star?

Over the most recent couple of years, I took up playing poker. I read books about it. I watched the World Series of Poker on TV. I've observed preferable players over me play and I've taken shortly. My playing is somewhat of a cause. I welcome individuals to my home, I feed them, I give them all the alcohol they need - you purchase any benefit you can in poker. Thus when I win their cash, I don't need to report it.

- Equity Sonia Sotomayor, kidding about her freshly discovered interest in poker, during a new talking commitment at Washington University in St. Louis. Watch her comments completely, underneath. 온라인카지노

The Golden Nugget Grand Poker Series returns this late spring and will run from May 31-July 3, including 81 occasions and presenting more than $3 million in ensured prize cash.

Adjusting pleasantly with other competition series' in Las Vegas this late spring, including the 2022 World Series of Poker and Wynn Summer Classic, the Golden Nugget Grand Poker Series will highlight poker variations including Pot-Limit Omaha, Big O, Mixed Triple Draw Lowball, Limit 2-7 Lowball, H.O.R.S.E. what's more, Triple Stud.

HERE'S EVERYTHING YOU NEED TO KNOW ABOUT POKER AT THE GOLDEN NUGGET!

A Look At the Schedule

The series will start off with four competitions on May 31: Event #1: $250 Dealer's Choice - 6 Handed $5K Guarantee, Event #2: $150 Daily No Limit Hold'em $10K Guarantee, Event #3: $200 Big-O and Event #4: $125 Nightly No Limit Hold'em $3K Guarantee.

Activity proceeds with the following day with Event #5: $250 H.O.R.S.E. $5K Guarantee and Event #6: $200 Pot Limit Omaha - Fire Til You're Tired! - which highlights $100 re-purchases - as well as everyday and daily No-Limit Hold'em occasions.

An early feature in the late spring series will be Event #10: $200 No Limit Hold'em $250K Guarantee, which has an astounding nine beginning trips for players to browse. The beginning flights will occur June 2-4 and Day 2 will work out on June 5.

Brilliant NuggetGolden Nugget

A couple of days after the fact, Event #26: $200 NL Hold'em $250K Guarantee will occur, one more competition with nine beginning flights. The competition will run from June 9-12 and will permit limitless reemergence. 바카라사이트

Secret abundance competitions are as well known as could be expected, and the current year's Golden Nugget Grand Poker Series will give players their fix Event #39: $300 Mystery Bounty NLHE $250K Guarantee, which will run from June 17-20 with nine beginning flights.

Another enormous feature will be Event #55: $1,100 NLHE, which has three beginning flights and a gigantic assurance of $1 million. The tournamentwill start off on June 24 and wrap up with Day 2 on June 27.

The series will finish with the $600 No-Limit Hold'em Championship, which starts off on June 30 and will wrap up on July 3. The occasion will have three beginning trips for players to browse as they hope to turn into the following boss.

Worldwide betting's greatest exhibition will see the WPT feature new innovation unit is accused of rethinking poker encounters and commitment for another age of crowds.

Perceived as the most renowned coordinator of supportive of poker competitions, the WPT will send off new specially assembled stage will give the most attractive of contending conditions for cash games and competitions accomodating all degrees of poker fans.

Set apart as a significant mandate, the WPT Global Platform will at first be sent off in the business sectors of Brazil, LatAm (barring Mexico) and Canada (barring the area of Ontario).

The send off of WPT Global intends to put poker at the front of problematic Web 3.0 developments. Getting ready for change, last month, the WPT declared the send off of its 'Poker Heroes Club' - supportive of poker's first NFT people group fueled by GAMAVRS.

The Poker Heroes Club has been coordinated straightforwardly with the WPT Global empowering players to involve the NFT symbols in poker games and to additionally vie for once in a blue moon prizes.

WPT Global will send off with another stable of poker envoys to draw in with all ages of poker fans including unbelievable WPT competition have Vince Van Patten, poker geniuses Lynn Gilmartin, Tony Dunst and whiz DJ Steve Aoki.

At last, as an ICE London selective, WPT has joined forces with VR expert Wingsuit to exhibit delegates with its awe-inspiring poker-themed VR experience.

During the meeting, representatives will actually want to partake in the 'WPT Wingsuit VR Challenge Championship', where an ICE participant will claim an elite Poker Heroes NFT.

Technamin has commended EvenBet Gaming as the "wonderful accomplice," after the substance and stage supplier fortified its foundation presenting with its scope of poker items.

The arrangement will see the previous' administrator network get sufficiently close to more than 30 unique varieties of the game kindness of the web-based poker programming engineer. 카지노사이트

Moreover, Technamin, which last month acquired the whole BetGames item suite, will likewise offer clients the adaptability to decide to be a piece of EvenBet Gaming's poker local area or use its independent skin.

Dmitry Starostenkov, CEO at EvenBet Gaming, said: "Technamin has all that an administrator could have to launch their igaming business and we are certain the expansion of our poker items will set their standing as a powerful supplier.

"It's generally extraordinary to see our games being acquainted with new players and we're certain this arrangement will assist with placing our items before more gamers than any other time in recent memory."

The expansion of the gaming suite from EvenBet, which has commended the chance of contacting a more extensive crowd, becomes the Technamin list to in excess of 6,000 club games from more than 100 internet based studios.

Suren Khachatryan, originator and CEO at Technamin, added: "The elite presentation of our administration relies vigorously upon the nature of the items we can offer, which caused EvenBet Gaming the ideal accomplice for us as we to extend our arrangement of poker games.

"Poker has substantiated itself consistently as an extraordinarily compelling cross-channel vertical and is upgraded altogether by EvenBet Gaming's multi-design interactivity and drawing in satisfied."

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orabasesolutions · 3 years

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Daily Crunch: The early-stage tech talent crunch is real

By now everyone is familiar with the tech world’s talent crunch: Developers are scarce and expensive, while data scientists are maybe even scarcer and expensiver. Some folks I’ve spoken to think that rising acceptance of remote work may help reduce the supply-demand imbalance. Hell, every early-stage startup I’ve spoken to in weeks is remote-first. Many were born during COVID, but they all love the ability to hire anywhere in the world.

But if a more distributed workforce is not enough to lower the pain that many companies feel when it comes to attracting and then retaining technical talent, good news could be coming. The sibling product philosophies of no-code and low-code are not only attracting lots of venture attention, public companies that dabble with either are posting interesting results.

Perhaps the solution to needing lots more code is no code at all? — Alex

TechCrunch Top 3

Today’s TechCrunch Top 3 come from the three phases of startup life: Early stage, when startups are still getting their product and market in order. Late stage, when they are prepping for an eventual exit. And the exit stage, when a former startup is looking to spread its wings and fly the private markets.

The anti-venture movement is global: Today Mary Ann reported that Divibank, a Brazilian startup offering revenue-based financing to other startups, has raised $3.6 million in a seed round led by Better Tomorrow Ventures (BTV). TechCrunch thinks it could build something akin to the Clearbanc of Latin America.

London’s Lyst looks to list: When you raise a pre-IPO round, you’d best be heading toward the public markets. With fashion e-commerce app Lyst saying that its new $85 million funding round is pre-IPO money, well, we have big expectations.

Bird hopes to take flight: Bird is going public via a SPAC. TechCrunch has the big news here, and a more dorky financial analysis here. I helped write the latter. The short version is that a business-model shakeup is helping the scooter unicorn lose less money over time.

Startups and VC

Scootin’ into startup mode, TechCrunch covered a huge number of funding rounds in the last 24 hours, so what follows is a sampling of the most interesting. Enjoy!

Pomelo raises $9M to build a payments infrastructure for LatAm fintechs: Building fintech infrastructure is a huge global task, so it’s not a surprise to see companies at work on the problem raising money. In this case, Pomelo is $9 million richer to tackle what might be the most interesting fintech market in the world.

Collective, a back-office platform for the self-employed, raises $20M from Ashton Kutcher’s VC: Going indie is not easy, despite what the Substack hype might have you believe. So, Collective is betting that it can make bank off of helping folks run their own microcompany. Both the company and the investment are a wager on the creator economy.

Stampli raises $50 million in Series C to help companies intelligently manage invoices: The Stampli round stood out because it was more capital in a single investment than the startup had raised during all of its previous life — by around 50%. So, something is going on at the corporate-invoice optimization software shop that has investor attention.

Planck, the insurance data analytics platform, raises $20M growth round: Two of the three Planck co-founders are bald, so I had no choice but to include my follicle-deficient brethren in today’s newsletter. Jokes aside, Planck collects data that it sells to commercial insurance companies. And now it has fresh capital from 3L Capital, Greenfield Partners, Team8, Viola Fintech, Arbor Ventures and Eight Roads to help it grow.

For unicorns, how much does the route to going public really matter?

Natasha Mascarenhas and Alex Wilhelm recently hosted Yext CFO Steve Cakebread and Latch CFO Garth Mitchell on an episode of TechCrunch’s Equity podcast.

In their discussion, “The morality and efficacy of going public earlier,” the group discussed the myriad paths startups are taking to go public and assessed the pros and cons of each method, and, importantly, the potential impacts on employees and business operations.

“I think when money’s chasing money, you don’t want to be the last guy holding the money. You want to be the chase,” said Cakebread.

Since Latch is currently going public via a SPAC and Yext followed a traditional IPO route a few years ago, the discussion is heavily weighted toward experience, not opinion.

Big Tech Inc.

Turning to tech’s largest companies today, we have three things for you to chew on:

First, Waymo is losing key talent in a very public fashion. Kirsten reports that “Waymo’s chief financial officer Ger Dwyer and its head of automotive partnerships and corporate development Adam Frost,” both long-time execs, are “leaving this month.” The exits come after the company’s former CEO also departed.

I guess we’ll have to drive ourselves for a bit longer.

Next up is a story that came out yesterday, but we missed in the newsletter. But after burning up the TechCrunch analytics all day, I decided to make sure that you saw it. With the simply excellent headline Prime today, gone tomorrow: Chinese products get pulled from Amazon, Rita writes that several Chinese retailers have evaporated from the online megastore. “In total, the suspended accounts contribute over a billion dollars in gross merchandise value (GMV) to Amazon,” she reported.

Changes afoot at Amazon? We’ll have to see, but the news is driving mega-attention from, we presume, confused shoppers.

Finally, looping back to no-code for a hot second, Salesforce is only adding to its own efforts. It’s everywhere!

This Article Original Source is From : https://techcrunch.com/2021/05/12/daily-crunch-the-early-stage-tech-talent-crunch-is-real/

#tech talent #talent acquisition #talent services #talent #orabasesolutions #hr #consulting services

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palmettocapital · 4 years

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Hedge Fund Market Wizards (Jack Schwager, 2012)

Takeaways:

This is an extremely long set of notes because it’s a long and dense book and every trader has something valuable. Very long book but also quite skimmable if you skip the interviews (which are full of interesting stories) and only read Schwager’s conclusions to each chapter as well as the “40 lessons” at the end (there is also an excellent Intro to Options at the end that is the best I’ve ever read in only 4 pages). *Best interviews are: Colm O’Shea, Jamie Mai, Ed Thorp, Tom Claugus & Michael Platt.

Much of the advice in this book can sound pedantic, but more often it’s deceptive in its simplicity. Worth considering these traders are not just high-return but extremely high R/R over long track records.

To me, the message boils down: figure out exactly what works best for you and do only that as much as you can, structure bets with asymmetric payoff schemes (relative to probabilistically-considered outcomes) and do it in a size/manner that keeps you from making emotional mistakes.

Really crucial is the ability to adapt over a long career, because no system works forever--market structure changes.

My sense is trade structuring and risk management is something the average equities investor doesn’t not pay enough attention to. Structuring can make mediocre or ok R/R into great R/R -- this is basically the key insight of Beat The Dealer and also highly achievable through options.

I like Schwager’s Gain to Pain Ratio, which is defined as the sum of all monthly (arithmetic, not compounded) for a strategy divided by the absolute value of the sum of all losing months. He considers >1.0 very good and >1.5 excellent. 1.0 implies an investor experiences on average an equal amount of monthly losses to the net amount gained over a year. Preferable to Sharpe Ratio because it doesn’t penalize upside vol.

Loved Steve Clark’s advice about not staring at the screens if you’re the sort of investor who sets your bets and has to wait for them to work -- I’ve witnessed first-hand what he means by over-processing and over-trading that results.

Greenblatt’s Magic Formula does not seem to fit a world where the best companies invest via the income statement and employ primarily intangible assets.

Macro

*Colm O’Shea

Wrong at least 50% of the time but never lets a mistake get anywhere near where it would make a good story

Views his trading ideas as hypotheses

The mathematization of economics has greatly narrowed scope of field -- true economists reside in history, poli sci and sociology fields

Policymakers don’t understand they’re not in control. Speculators aren’t either -- fundamentals actually matter

All markets look liquid during a bubble, but it’s liquidity after that matters

Buyer of options in 2006-2007 because low ERP meant option prices were too cheap. Prefers being long options, never short a horrible tail

During 2005-2006, got paid repeatedly to bet that maybe Fed wouldn’t stop hiking. People were fighting the Fed

Avoid conceptualizing the market in antropomorphic terms -- markets don’t think, like mobs don’t.

Prefers macro because HFs tiny there, playing against real money and not against true competitors in a zero-sum way

Prior to 1998 financial crisis, he’d never heard of LTCM - just saw T-bond futures limit up every day, meant something was up and to trade accordingly. Often if you wait to find out the reason first, it’s too late. Soros: Invest first, investigate later. Empiricist at heart.

“Fundamentals are not about forecasting the weather for tomorrow, but rather noticing that it is raining today”. Soros GBP short in 1992 was based on something that had already happens (deep recession in UK = unable to maintain high interest rates necessary for ERM)

LT inflation-adjusted housing prices were sideways from the 19th century until mid-2000s (excluding post-Depression bust), and then 2x’d in a few years

Roulette = world of risk, economy = world of uncertainty

Equity vol tends to be expensive because no natural sellers and everyone is a natural buyer

Markets often confuse liquidity and solvency. You can’t fix a solvency problem by adding liquidity.

Ex: on a $100k house with $200k mortgage, lending you another $100k doesn’t solve the problem.

Seeks asymmetric trades -- like betting against TED spread narrowing after Bear Stearns bailout in 2Q08. When sentiment improved, didn’t lose much because he’d bet at levels already reflecting optimism

Lehman going under was not a surprise - it was expected, but people failed to understand what it meant

Stayed short in GFC until April 2009, until they started losing money. Economy stopped getting worse -- what matters for markets is better/worse > good/bad. Sought out another hypothesis-- Asia-led recovery

Marco is 10% storytelling, 90% flexibility and implementation

Soros plays up to his image as a guru, but as a trader he has no regret and no emotional attachment to an idea.

You have to embrace uncertainty and risk

Biggest mistakes are missed opportunities - often believing something acts as a constraint on making profitable trades

Bubbles last a long time and there’s money to be made. Worst thing to do in a bubble is be stubborn and then late to convert

“If it trades like a bull market, it’s a bull market.”

“Beliefs that are completely invulnerable to evidence and passionately defended are quite durable”. Ex: gold is special

Natural way to trade a bubble is from the long side. Uses options to structure to avoid taking on gap risk on collapse -- low vol bubbles are great for this because premiums stay low

Rare to find comfortable shorts in bear markets. You won’t find a lot of people who have made majority of their money shorting bubbles

Looks for deviations between fundamental probability distribution he perceives and the one priced in by markets

Successful traders adapt and break their own rules. Frameworks > rules

VAR is maligned but does what it claims -- tells you how volatile your current portfolio was in the past.

Most common error he sees is people setting stops at pain thresholds and not at prices that tell you you’re wrong. People who aren’t convinced they’re wrong by being stopped out will keep putting the trade back on. Sets stops at a level where it would be proof he’s wrong and sizes trades according to what that implies potential loss is. If he gets stopped out, it’s because prices are inconsistent with his hypothesis

Recognizing > forecasting

Ray Dalio

Quadrant conceptualization -- two factors and two states = four conditions. All Weather looks at growth and inflation, increasing or decreasing. Divides world into creditors and debtors x independent monetary policy / don’t control monpol (US/UK = debtors with control; Greece/Portugal = debtors w/o control; Brazil = creditor with control; China = creditor w/o control because of USD peg)

Loves mistakes because they provide learning experiences that catalyze improvement

You will certainly make mistakes and have weaknesses. What matters is how you deal with them

Two core concepts in Principles: 1) improvement through mistakes, 2) radical transparency

8/15/71, when Nixon took US off gold standard, sticks in his mind because stock market went up a lot. Learned currency depreciation/money printing is good for stocks, and don’t trust policymakers. Also, markets anticipate bearish events (rumor --> news phenom) and also bearish events can trigger new events with bullish consequences

Don’t fight the Fed (unless you have very good reason to believe their moves won’t work)

Holy Grail of investing: x-axis = number of investments, y-axis = stdev. Curve slopes down and to the right, ie volatility of portfolio goes down as number of assets goes up. Can only cut correlation by 15% with stocks because avg stock has 0.60 correlation to any other, but if you diversify across 15 assets with average of 0 correlation, you can cut vol by 80%. Structuring trades is key to producing uncorrelated bets. Correlation is an outcome, not an input. Doesn’t look at the correlation when setting up bets, looks at whether drivers are different.

People experience drawdowns bigger than they expect because of lack of understanding of how their strategy performs in diff environments. BW tests criteria to ascertain they are 1) timeless (hold across all diff time periods) and 2) universal (across all diff countries)

Hold ~20 signif positions consisting of 80% of the risk, uncorrelated to each other.

Universal truth that you can enhance R/R by reducing correlation

Transaction costs are a function of the amount you have to move in a given timeframe

Did well in 2008 because critera for trading a deleveraging had been established by study other deleveragings (inflationary = 1920s Germany, 1980s LatAm; deflationary = Great Depression, 1990s Japan)

Avoiding unmanaged contraction is essential in preserving social/political order. Spread problems out to keep g>r with fiscal/monetary policy.

He believes US has gone through 4th of 5 cycles a country goes through; went from “country that thinks it is rich but isn’t” to “decline”. Entire cycle is 100-150 years, decline = ~20.

Biggest mistake people make in investing is believing what’s happened in recent past is likely to persist.

In a deleveraging, monpol is ineffective in creating credit. Diff from a recession where rates can be cut to ease debt service, stimulate economic activity and produce positive wealth effect.

In the business cycle, availability & cost of credit driven by central bankers; in the long-wave cycle, depend on factors beyond bankers’ control

Bubbles occur frequently in countries in Stage 4 (getting poorer but still think they’re rich) because economic actors (investors, policymakers, operators) bet big on trends continuing as they have in recent past. Believe investments that have gone up are good rather than expensive, borrow money to buy them.

Larry Benedict

Risk mgmt dominates his approach. If monthly losses approach 2.5%, liquidates entire portfolio and starts over, trading at reduced size. ~2% loss, cuts unit size to 50% or less than usual. Plays at small size until profitable again.

Key experience for him was being on floor on day of 1987 crash. Learned early that ANYTHING CAN HAPPEN.

Learned from Marty Schwartz: Don’t average losing trades. Be smaller than you need to be. Take profits.

You can’t be emotional. (Ex: lost a bunch of money going long right after 9/11)

Leave opinions at the door

85% of the time, they mark up market on day of opex. Going on for 25 years.

Trader’s fail because of gambler mentality, ie when they’re losing look for one trade to make it all back.

You are not a trader, you are a risk manager. Never stay in a losing trade because you think it will come back. Minimize the loss. Accept it and walk away. Worst thing a trader can do is freeze. Need to know how you will respond in any situation.

Scott Ramsey

Process: received a printer chart book every week, updated it every day for over 10 years. Made him pay attention to every market, every day.

Buy the rumor, sell the facts puts you on the other side of retail trading

Tries to imagine where the guy on the opposite side of the trade feels and where he’ll capitulate.

Learn a lot when markets have crisis events. Measuring which markets are the strongest during a crisis can tell you which are likley to lead when pressure is off. Always wants to buy stronger and sell weakest.

Only risks 10 bps of AUM on a typical trade but often out before even that is breached--Very quick to cut trades based on how quickly they go in his favor.

Might lose 10x on an idea but on the 11th it works and more than makes up for the losses. (Opposite of O’Shea, similar to Benedict)

Uses RSI a lot -- looks for divergences between RSI & price

One principile you can’t violate: Know what you can lose.

Trading on exchanges or the interbank market give you so many advantages (ie liquidity not at the whim of a dealer) that giving up those benefits not worth it. His style requires liquidity (being able to stop out at 10 bps)

You should always be swinging the bat - reduces position size in a drawdown

Keep a journal of your trades - if you make a mistake, write it down

Ex of shorting the weakest: when QE2 was implemented, Turkish lira couldn’t rally against USD -- meant it must be pretty bearish and would continue to weaken when QE2 ended. Waited for breakdown out of 2-year range to confirm.

Buying a laggard as a proxy for a leader is a bad idea.

Risk-on/risk-off framework broke down in mid-Sept 2011, when commodities diverged negatively from stocks

Jaffray Woodriff

As a CTA, started out using market-specific models but realized they broke down more because over-fitted to past data. Realized more data used to train models = better performance, switched to using same models across multiple markets.

Avoids trend-following or mean-reversion, the two main strategies for CTAs. Instead looks at things like volatility measure which are derived from price without any direct relationship to price direction.

He does not start by formulating a hypothesis and then test that to see if data supports-- blinding searches through data for emergent patterns

Trains models on fictitious (random) data with a certain distribution which provides a baseline -- then come up with models that do much better. Performance difference between real-data model and baseline indicative of performance, not the full performance of the model in training.

Out of sample results >50% of in-sample results indicative of a good model

Stationarity of patterns they’ve discovered surprises him. Takes a ton of deterioration for them to drop a model, because 1 year’s performance is simply not predictive of the next’s. Test it over 30+ years, so 3% provided by most recent year rarely meaningful

Capacity of a model is not statis, move around with changes in volume and vol

Core of their risk mgmt is evaluating risk of each market based on exponentially weighted moving avg of daily dollar range per contract. Target 12% annualized vol.

Key trading rule: Adjust position sizes to overall risk to target a particular vol

Multi-strat

*Ed Thorp

His key insight in blackjack was that while average edge was against the player, player could overcome this by varying bet size (ie betting big when edge is positive and small or not at all when it’s negative)

Picture blackjack probability problem as a 10-dimensional space where every card is 1/13 (except 10-values which pool to 4/13) and every possible deck is some point in that 10-dimensional space whose coordinates are determined by the fraction of each card value remaining in the deck)

With 4 aces out, edge goes to -2.5%. Implies with 4 extra aces, edge of +2.5%. Can’t have 4 extra aces, but can have half a deck with none of the aces out yet, where odds are the same as a full deck with 8 aces.

5s strategy provided higher probability bet, but went with 10s because it provided more opportunities (goes 5s, Aces, 10s, 6s in terms of influence)

“I just don’t scare. I am aware, and I avoid taking foolish risks”

Provable that complete-point-count system (high cards -1, low cards +1) is approximately the best possible system for equivalent simplicity

Don’t be more than you’re comfortable with. Take your time until you’re ready.

Historically, ideas don’t just appear in one place -- appear in several places at nearly the same time (Newton & Leibniz, Darwin & Wallace). This is due to technology

Beat The Market insight was that warrants with <2 years to maturity traded at premiums that were too high, so shorted warrant and bought stock. Initially on static hedge, later with dynamic delta hedging.

His option pricing model came out of deciding he could derive a formula if he assumes all investments grew at RFR.

Kelly Criterion for bet sizing: F= P(w) - [P(L)/W) where F=fraction of capital, W=dollars won per dollar wagered, P(W)=win prob, P(L)=lose prob. Aligns your bet with your edge (win rate - loss rate). KC also implicitly assumes there’s no minimum bet size which is simplifying. F (fraction of capital) is actually fraction of riskable/losable capital (ie less than 100% of capital if you can’t tolerate 100% drawdown) -- if you have $1m purse but can only tolerate $200k loss, KC perspective is your F is based off $200k. If you hedge and neutralize risk, KC may imply using leverage.

Half Kelly is psychologically better because you get 3/4 the return with 1/2 the vol (ie better Sharpe). Also prevents you from overbetting due to miscalculating -- negative impacts of overestimating trade size is 2x as large as negative impacts of underestimating correct trade size by same amount, so err smaller, esp if precise win/lose prob is not known (usually the case in trading).

60-day lookback is usually the best for measuring correlation between assets.

Degree of confidence is key in determining size of trade and also in deciding on how to risk manage (ie take your lumps or employ safety mechanism to limit drawdown)

*Jamie Mai

All trades are structured and implemented to be highly asymmetric and positive-skew

They love bull-bear battlegrounds -- while markets are good at estimating magnitude of contingent liability, they’re poor at evaluating outcomes probabilistically (eg, litigations, regulatory actions, anything else that creates perception of going concern risk)

Whenever a market is pointing at something and saying this is a risk to be concerned about, most of the time the risk ends up being not as bad as anticipated

Looks for cases with binary outcomes where the options market assigns normal probability distribution

Often, the longer the option’s duration, the lower the IV, which makes no sense. Ex: bought far OTM DJIA call as an inflation hedge with very low IV. Taking exposure on the RFR implicit in option pricing models

Another ex: selling vol on Brazilian interest rates where 6-month forward rate was >400 bps from current, implying rates staying similar to current over 6 months was a >4 stdev event. Structured trade around +200 bps strike which was cheap because it was far OTM based on forward rate.

Creative structuring: bespoke “worst of” option for shorting EUR while IV on Euro puts was high. Shorted “worst of” EUR/AUD and EUR/CHF which was cheaper but they expectd both to weaken. If one had expired OTM, option buyer would lose entire premium. Expected correlation between the two crosses is a key input. Their insight was that in a Euro crash, neg correlation between EUR/AUD and EUR/CHF would decouple and both would go down. Allowed them to get short at 1/10 the premium as % of notional as the straigh Euro puts.

Grantham places relative valuations in context of cycle--low-quality outperforms early, and high-quality toward the end.

Strategy called “cheap sigma” -- options prices dramatically understate potential price move of markets that trend. Options prices tend to be underpriced in smoothly trending markets. (Sounds similar to Woodriff who doesn’t bet on trends or on mean-reversion but on vol of prices around trends)

Options math works better over short intervals - options pricing assumes vol increases with the square root of time. Reasonable <1 year, but doesn’t scale properly beyond that. Ex: if 1-year stdev is 5%, 9-year stdev will be priced at 15% (sqrt(9)*5%) which is prob too low. This is because the longer the time, more potential for a trend and for price move to exceed stdev-implied probability.

Their trades combine: a mispricing that arises because standard market pricing assumptions are inappropriate for a given situation + asymmetric R/R profile.

Don’t have high level of conviction in an outcome, instead high conviction in that the odds were mispriced.

High conviction on an event path prices like a low-prob event is their Holy Grail. Subprime CDS was that. Got to the trend late which is typical for them because they like situations where there’s a compelling reason a trade should be working but the only counter-argument is that while it should work, it hasn’t yet.

Their view was that the GFC started on Feb 1, 2007 when ABX started tanking, more than a year before Bear failed. (This is also what Colm O’Shea observed before MMF liquidity dried up in Aug 2007 which showed banks weren’t comfortable lending to other banks)

Their model is to find experts in the domain to follow. “River guides”

Never go outright short a stock due to upside-down R/R. Buy OTM puts, but when rising IVs make that too expensive, shift to ITM to reduce time-value decay.

Require that the expected value of a trade (W * P(W)) >2x expected loss (L * P(L))

They use cash to target portfolio risk (50-80% typical), since the premia they pay put on a lot of risk relative to cash deployed.

Options prices being based on normal distribution implies what’s likeliest is prices near current -- this isn’t always true! If the odds of a large move in either direction are >stdev, OTM options are too cheap.

Optiond models ignore potential to trend and use only vol and time. Implicit assumption is that direction of daily price moves is random, which is not true.

*Michael Platt

Starts from the perspective of “what do I know for sure” -- one of the only things he could say with certainty is that markets trend. Observable in any market, in any era (ie timeless & universal, as Dalio would say)

Markets trend because rather than discounting all information and holding static until new information arises, people remember the past in bullet points and then use thoughts & feelings from the current moment to fill it in.

May initially trend for fundamental reasons, but prices overshoot ludicrously

Another thing you know is diversification works

Best systems degrade -- ways of making money in the market don’t last forever

Describes seeing LIBOR jump 10 bps in Aug 2007 and thought, “this just feels bad and scary” -- was a major signal to him because it happened “for no reason at all”

He moved firm’s money in 2008 to 2-year Tsys to reduce exposure even to MMFs.

Trades that accounted for gains in 2009 were fading very big call/put skews, selling OTM options and buying ATM.

His firm (BlueCrest) is structured so every trader starts the year with a risk allocation, if they lose 3% their risk gets cut by 50%, and if they lose 3% of the remainder, they’re liquidated. Want people to scale down if they’re getting it wrong and scale up if getting it right. Rebases annually unless a trader carries over PnL (ie doesn’t get paid on a portion of what they made in a calendar year in order to start the next with more leeway). Effectively structures traders like they are options.

Risk management is the most important thing. Key thing his risk mgmt team monitors for is breakdowns in correlation. Most of their positions are spreads, so lower correlations are riskier. If two assets have a correlation of 0.95, can put on a large spread position with relatively small risk. If that correlation is 0.50, can be wiped out very quickly.

Risk managers scan portfolios for vulnerabilities and ask traders, “if you were going to lose $10m, where would it come from?” Traders will typically known

Bias is neutral-to-long vol, great protection against all scenarios. Hates shorting OTM strikes.

For traders, he wants “people who know that anything can happen” -- as opposed to analysts, people are more prescriptive. Wants someone who understands an edge.

Market maker traders know the market is always right and you are wrong if you’re losing money for any reason at all. Know value is irrelevant in times of market stress, and in those times it’s all about positioning -- markets will trade against positions.

Key problem with analyst/economist types is ego - can never admit when they’re wrong

No tolerance for losses - kills you by impeding you psychologically, making you miss opportunity. 80% of profits from 20% of ideas, so tightening up at the wrong time can have big opportunity cost.

Looks at every trade in his book every day and asks if he’d enter it today at that price. Usually stops himself out of positions due to time, not price. If the trade isn’t working, alarm bells start ringing

Need 3 things to make money: 1) decent fundamental story, 2) good trend and 3) the market handling news the way you think it should. Bull markets ignore bad news, and any good news is reason for a rally.

Ex: 2s10s steepener trade in 2009 where he kept seeing news that he thought meant he was going to get screwed, but position didn’t move against him. Realized curve could not get flatter no matter how bad the news, 4x’d his position and made a great trade.

Likes to know consensus view because you make the most when consensus shifts. Rather than ask people their position, asks people their position -- they are more willing to talk because they feel important.

“When I am wrong, the only instinct I have is to get out” -- want to be the first one to sell. In investment mgmt, you have an option to keep 20% of PnL, but want to own the serial option of being able to do that every year. Can’t blow up.

Equities

Steve Clark

Price is where anyone is prepared to deal, and it can be anything. Need to internalize that

Being inexperienced can be good because fear often cripples people who have been in the business too long. Too many fat tails damages people. You can’t afford blowups emotionally.

Used volume as a screen for what stocks to be looking at because clearly something is going on.

Can’t predict the future from past data - can talk about percentage probabilities of what might happen next, but can’t go any further

When you are trading over short to medium term, your views on the fundamentals are irrelevant - have to gauge what the market thinks of the story.

“Do more of what works and less of what doesn’t” -- dissect your PnL and see what works for you and what doesn’t

Favorite trades in risk arb were parents buying out subs because no due diligence issues and you knew deal would close.

He is very confident in his abilities -- holds the view that he can do anything he wants to.

There is no career in trading, you’re only as good as your last trade.

Enjoyed being a trader more than running a business, because you can’t walk away -- it’s a prison, while being a trader is very free.

You have to train yourself to trade within your emotional capacity

When a merger deal breaks, they cut right away because there is a pocket of liquidity, even if price lower. Price is irrelevant, it’s size that can kill you -- too big in an illiquid stock and there’s no way out

Being busy as a prop trader is important to get you away from the screen. If you have positions on and are waiting for the market to do what it needs to do, need to find something else to do in the interim. Staring at the screen won’t tell you much, you’ll start to overprocess and overtrade. You’ll be less patient and start feeling pain with every tick against you.

Need to be willing to call people to hound them for information, and “ask the next question” -- can infer a lot that way

Nearly all successful traders he’s known have been one-trick ponies -- do one thing very well, and if they stray it’s a disaster.

In 2007-2008, got out of everything directional or long-dated and put all risk into short duration risk arb (wide spreads due to liquidity crunch and high likelihood to close). Only risk he could see to that strategy was brokers changing margin requirements, which would only happen with major market distress, so he bought OTM puts / sold OTM calls on SPX to hedge.

When vol quadrupled in 2008, he decided the world had changed and they need to trade a fraction of before. Most people didn’t do that and got blown up. Doesn’t believe in cutting exposure gradually, cut drastically. Gut feel is important.

Trading rules he lives by: “If you wake up thinking about a position, it’s too big”, “never stop asking questions, speak to as many people as you can, research every opposing opinion.” If a position starts acting in a way you don’t understand, you need to cut it because the market is telling you you don’t know what’s going on.

The market is not about facts, it’s about people’s opinions and positions. “Anything can be at any price, any time.”

When trading poorly, he liquidates everything and takes a vacation -- helps you regain objectivity.

Martin Taylor

Describes being super bearish on Russia in 1997 but the reason it didn’t blow up until Aug 1998 is because the money pulled out of Asia due to the crisis there went to Eastern Europe and Latin America and created big bull markets there.

Officially, Russia was running a current account surplus, so it seemed diff from Asia (which was a CA deficit issue when countries couldn’t service debt). True measure of balance of payments is what happens to reserves -- even though Russia supposedly had large CA surplus and capital inflows, reserves were going down, not up. Knew reserves numbers were truthful because central bank couldn’t lie without getting found out quickly (by comparing to other CBs). What was happening was exports were hugely overstated in cash terms. Yeltsin government inept and theft of company asset rampant. Money from exports was being diverted into Swiss accounts and never making its way back to Russia. $100m of goods would be sold, would be booked as $50m, missing $50m would go to a Swiss bank account, and $40m of the $50m booked as revenue would be booked as a receivable and also go into that Swiss bank account. So you’d end up with only $10m cash inflow on $100m of goods leaving the country. Simple capital flight.

Money fleeing Asia flowed into Russian market due to post-Communist “miracle” story. First crack was a rumor in Oct 1997 that Yeltsin was in failing health and market dropped 23% in a session. Rebounded 30% the next day as Yeltsin gov’t denied and people rushed in for the buying opportunity. But a sudden break emotionally reminds people they can lose money, and they started studying the fundamentals more closely, which he already knew were bad. Was then -50% by Feb. He doubled down on bearish positioning, and market ultimately declined another 88% from there. Ultimate catalyst was a $25B bond sale done by GS in summer 1998 that should have doubled foreign reserves but only added $3B -- became obvious money was going elsewhere.

Int’l funds were long GKOs because the rates were ridiculously good, but they were so good because nobody domestic wanted to buy. In an EM, the smart money is domestic, not international.

Buying low beta stocks instead of cash is a mistake - market -40% means your stocks -20%, market +50% your stocks +10% = negative asymmetry. For the same reason, EM bonds are inherently unattractive. Structures his portfolio as high-beta stocks balanced by cash or shorts.

He looks for favorable macro situation, a secular trend and good company management.

Ex: As a result of the collapse in 1998, Russian balance of payments picture changed dramatically --> 80% ruble devaluation led to a surge in foreign reserve, “liquefaction” of economy and end of nonpayments culture, meaning workers started getting paid real money and there was a massive increase in purchasing power for middle class, drove a strong secular trend. He saw mobile phone penetration increasing 25% pa and mobile carriers with good mgmt teams, so he owned the Russian mobile carriers from 1999-2005.

Always tells new investors they will lose money with him at various points in the year and it will be unpleasant. Considers it a crucial “health warning”

Net exposure ranges 20-110%. Holds net long positioning even when bearish because he thinks if you’re trading volatile instruments, can never get totally out because you’ll never get in on a reversal. When the market is so bad that you think it’s obvious you should be net short, that’s usually when it’s all in the price and you should be buying. Maintaining 20% exposure helped them avoid getting whipsawed (3 15-20% rallies in 4Q08 alone, all followed by new lows)

Running OPM, can’t take extreme positions and maintain his mental equilibrium.

Targets upside capture of 70-80% and downside capture of 30-40%

“Tyranny” of HF monthly returns -- comes from FOFs whose clients receive monthly data

Forecast earnings for every company they follow for 3-4 years out, then invest in the ones cheap vs. sector where they have earnings > consensus. Catalyst should be earnings surprise

He was super long AAPL despite the move because it was still cheap on his estimates. Anecdote about RIMM PlayBook which they rushed to market to compete with iPad but without ability to do email on it despite being for corporate market. Predicted RIMM would be bust in 3-4 years.

Bad companies in EM are always at risk of being taken over, because EM is full of sectors where multi-nationals want exposure and their only option is a bad company because regulators won’t let them buy the good one, instead they approve purchase of the bad one because it’s saving jobs.

As such, they focus on shorting bad companies that can’t be taken over because they’re owned by gov’t or their own pension fund -- means it will never be sold because the workers are afraid of layoffs. In EM, that’s ~1/3 of companies owned that way.

His estimates often differ from consensus because he sees a new trend while they are extrapolating history.

If he’s bullish on a stock without a full position and sees a breakout on the chart, will go to full position because market is now seeing same thing he is. Charts are supplemental.

Only time he will initiate a trade based on chart is if a company is extremely oversold, like 3-year low on RSI. Usually means whatever is killing it is in the price. Doesn’t believe RSI works for overbought because stocks can stay overbought for a long time, whereas oversold is usually something pretty acute that resolves in a few weeks.

Gut feel is crucial -- understanding if something isn’t “acting right” is a sign to recheck your work.

Have to be an expert in what you invest in. Need to understand what you invest in. If you don’t understand why you’re in a trade, won’t understand when the right time to sell is.

Post-GFC, volumes took a long time to recover to pre-crisis levels

He had to return outside money in mid-2010 because his confidence was shaken from post-GFC. Only that allowed him to return to his former style.

*Tom Claugus

Obsessed with financial independence from a young age -- attributes to his dad being a product of the Depression, scared to death of being poor and managing to transfer that insecurity to him.

When he went to college, his dad told him he was going to feel like he was going to prison. “You can go out Friday night or Saturday night, but you can’t go out both, or else you won’t get ahead”

Adheres to a discipline of living on 1/3 of his income + 3% of NW (1/3 of ~10% pa target return) and investing the remainder.

Grossing up in a crash -- went into 1987 crash very net short, bought high quality longs that day to raise his net rather than covering shorts, since he was short low quality stocks and saw no need to cover.

Super interesting life story where he was on track to be CEO of Rohm & Haas in Philadelphia but making more money investing than at his job. Hit $1.6m in NW, realized he could live on 3% of that ($48k) and economic necessity to work completely disappeared. Launched a fund, but OPM responsibility weighed on him, closed quickly and almost went back to work.

Can only manage OPM with complete dedication -- “If I am 100% dedicated to managing your money, and I lose you money, I can look you in the eye and say, ‘I did my best,’ and I could be okay with that”

He thinks in terms of reversion-to-mean. Manages exposures relative to a best-fit regressions line for log of prices from 1932-present and calculates a 95% confidence interval (used to be 90% but that failed in 1999) -- output is two lines parallel to best-fit line that encompass 95% of all the months. At lower band, exposure will be 130/-20; at mid 100/-50 (want to be net long at midpoint because of secular uptrend in equities), at high end, 20/-90. Do this for SPX, Nasdaq and Russell 2k and derive a composite target exposure based on those.

Spend 90% of their time figuring out why a sector or stock is expensive or cheap, and what is going to change that.

Looks for anomalies -- screens for quarterly earnings +50%+ or -30%+ and tries to understand why.

Ex: Rock Tenn earnings up huge recently. Paper co, had been cheap for 4-5 years, mediocre business, looking for a reason to buy but never found anything. Ultimately, industry growth reduced capacity because no new supply and industry consolidated. Ultimately there was an inflection point in favor of suppliers.

Considers +/-7% a normal range of monthly outcomes for his fund -- where they’ve been 90% of all months. Being < -7% and not knowing why is a major red flag. Doesn’t do much proactive risk mgmt. Losing money on longs is diff from on shorts for him

“Evel Knievel short screen” -- companies trying to jump the Grand Canyon that prob won’t make it, his job is to figure out why they won’t make it. Two criteria: FCF burn & >5x BV. Normally ~60 companies, in 1999 it was 180 and 2/3 of them had 2x’d in price in the last quarter.

When market sells off really hard, it’s usually a liquidity issue -- no place to hide in a liquidity sell-off, people sell everything because they have to, not because they want to. Reverse rarely happens on the long side.

Shorts are actually easier to find than longs -- easier to spot a broken company than a good company, easier to identify bad mgmt than good mgmt.

Track basic indicators to get a feel for economy. Rail traffic & truck traffic tell you whether there’s expansion or contraction. Load factors on airplanes. RevPAR. Construction & housing starts.

He was bullish airlines -- believed airlines’ lack of profitability went back to regulated days, because pricing umbrella encouraged inefficiency in cost structure. Deregulated made legacy carriers compete with newcomers (Southwest) with lower cost structures. Ultimately, all but AA went bankrupt and rx’d costs. And industry mergers have consolidated down to major 3 players.

Describes his process as trying to find oil companies whose price reflects only current production without accounting for ongoing exploration with potential to increase future production. IE, free optionality. People who use fundamental screens (P/FCF) do not see the future revenue in those statistics. AAPL was recently priced at value of existing products without potential for new ones despite a record of consistent innovation. Can also work for asset values -- Paramount Resources which identifies land with potential for O&G exploration and sells it when the area becomes discovered by E&Ps drilling exploratory wells. Numbers never reflect that value because they are not developing it themselves.

Often finds market won’t pay anything for production potential >1 year away

General principle is future revenue generation that can be “reasonably anticipated” but is not reflected in current market price

Joe Vidich

Described by an acquaintances as "an intellectual who was always a trader” -- combined longer-term investment themes with reading of market sentiment in indiv names

Begins by formulating a big picture of the economy & stock market. Looks for themes that drives him to sectors or subsectors. Does fundamental analysis and observes trading activity to select best stocks in those sectors.

Timing in entering and exiting is heavily influenced by assessment of sentiment, which is mostly price action relative to events.

Feels he has most skill on trading from short side due to years as market maker -- if retail order flow long-biases, market maker by definition trades from short side, and is constantly trading out of a short position for every buy order he fills.

Paints as a way to relax

It is always preferable to do your own works and get your own info because then you will have more confidence. If you listen to someone to get into a trade and it goes against you, have to listen to that person again to get out.

A good growth stock is always overvalued and a lousy company is always undervalued. Until you get a turn where market recognizes improvement in business model, a value stock will always be undervalued.

Had a good year in 2008 by realizing banks were heavily leveraged to MBS even though he didn’t understand the securities. Had seen it all before -- a number of big banks went to zero in S&L crisis with insiders buying on the way down.

In 2009, went looking for best business models and balance sheets ot buy -- stocks with lowest financial risk, no need to refi debt and able to ride out a prolonged, deep recession. Ex: no-debt retailers with lots of cash (Gap at $11 with $5/sh in cash and $1/sh of earnings); Shaw at $18 with $12/sh in cash

In a bull market, prices open lower and then go up rest of the day. In a bear market, open higher and fade rest of day. Toward end of a bull market, prices start opening higher

If there is bearish news before the open and market does not trade down much during first hour, indicates smart money is not selling and it’s a buyable dip.

Market sentiment (stock moves) > public sentiment (what CNBC says). How the market responds to external events is extremely important.

Determines where stops are and places buy orders half-point below where they believe that is.

Every stock has its own risk profile. Some stocks can go -50% without it really meaning anything, whereas with KO you should be reevaluating if it moves 5% against you.

“Don’t ever consider yourself right” Begins by selling 20% of a position if it’s on the way down because that way he can feel like he was right either way.

Often best to liquidate entire positions. Harvesting losses forces you to revisit the trade. If you’re in it, you’re always defending it. Liquidating forces you to reevaluate it relative to other opportunities.

To be successful, must be willing to change your opinion. Most people aren’t. Have to be humble about your ideas.

Most people are more afraid of making money than losing money -- sell a stock that’s +20% but not one -20%, because it would confirm they were wrong.

Big diff between informed sentiment (CEOs) and investor sentiment, which is usually what you want to bet against over the long term.

Considers charts extremely important. One of the best patterns is a sideways stock for a long time that has a sudden sharp upmove on large volume. Wake-up call that you need to take a look.

Critical risk controls are being diversified and cutting exposure when you don’t understand what markets are doing and why you are wrong.

Even if you are wrong to harvest a loss, it cleans the slate which is therapeutic and valuable. Getting out sometimes right before a stock turns is the price you pay to keep your losses under control.

“Don’t try to be 100% right”

“Limit your size in any position so that fear does not become the prevailing instinct guiding your judgement”

Kevin Daly

Regular reading he finds helpful (beyond the obvious): Wall Street Transcript, Dick Davis Investment Digest, Grant’s IRO, VII, Santangel’s Review, Form4Oracle, VIC, SumZero, Vickers Stock Research

Finds reading sellside initiations a valuable first step when researching an idea because of the industry comparisons and background on the company. Found IAA (then IAAI) this way when reading a CPRT report.

Holds a stock “as long as the share price doesn’t get too far ahead of a company’s intrinsic value”

Exposure is usually 30-90% long and 10% short.

Esoteric economic data point he watches is weekly rail car loadings.

Stays as unemotional as possible when things go against him

Jimmy Balodimas

Trades against trend (short ~75% of the time career in aggregate). Always takes money off the table when it’s in his favor - “always always always”

Doesn’t let himself panic, even if he does’t know what’s going on, won’t exit something going against him until he finds out what’s going on and can make a decision, rather than responding out of emotion.

Used to be that intraday trading was more volatile and gave him more opportunities to take chips off when in his favor. Last 5-8 years (prior to 2012) that changed with higher HF participation, they’re now the main players intraday and there are far fewer pullbacks, trends in indiv stocks are smoother. This is why the 2 years from April 2009-March 2011 have devastated shorts much more than any other period (including the Internt bubble), because no opportunities to get out.

Never afraid of missing anything -- market is always providing opportunities. All he thinks about is making money, not being right.

Divides stocks into those he’s looking to buy and short, and then recognizes a pattern in those where there’s a possibility for an accelerated move in a short period of time -- chart, group

People who run most of the money on Wall Street are never going to put their necks out there -- waiting for the trend to be intact and to catch middle part of the move

Joel Greenblatt

Magic Formula: combined rank of earnings yield (EBIT/EV) and ROTC (EBIT / Tangible Capital Employed or NWC+PPE). Basically systematizes Buffett’s cheap+good methodology.

magicformulainvesting.com

First job on Wall Street was trading options at Bear Stearns, doing risk arbs when forward conversions (long stock + synthetic short of short call/long put at same strike/expiry) returns 18-19% annualized.

Did risk arb on the buyside but negative asymmetry of merger arb turned him off. Instead, attracted to periphery with weird deals or interesting paper being issues. Situations the typical analyst was not equipped to evaluate. Reading the 400-page document he knew no one else was reading.

Example of an early trade was MAR spin of HST. Marriott got caught owning owning hotel properties in early-90s hotel downdraft, Spun those out with the debt into Host Marriott and kept the good (franchise) business, Marriott Int’l. Host was “toxic waste” and heavily leveraged, out of favor. Knew institutions would sell because it was only 10-15% the size of original, too small to hold, diffrent business, looked ugly. He found insiders including the Marriott family kept a big stake and the guy who planned the spin-off was going with HST -- told him HST wasn’t structured to fail. Equity was $3-5/sh with $20-25/sh of debt -- so a 15% improvement in EV 2x’s the stock

Early 90′s trade on WFC where it was trading for $80 and CA was going through a RE recession. Binary outcome in a year, stock was either worth $150+ or $0. Used 2-year LEAPS to turn a 1:1 R/R trade into 5:1

Value approach is very hard to follow -- that’s why it works. Need to have a ton of confidence in it or you won’t be able to follow it.

Gotham just built a database of 4000 US + foreign stocks where they have sourced the historical cash flow and balance sheets themselves. No forward estimates.

By definition, a market cap-weighted index owns too much of overpriced stocks and too little of bargain-price stocks. Comping to equal-weighted index can show you whether that’s costing you performance. Historically over last 40 years that’s been 2%pa. EW index does have more txn costs.

Lesser-followed companies more likely to be misvalued, either under or over. Doesn’t believe there’s a directional bias on that on average.

If you can’t value a business, you have no basis on which to invest.

Investors avoid owning the stocks that are painful to own and thereby miss some of the biggest winners. Observed this empirically from self-managed accounts using their Magic Formula website--letting investors make their own decisions about which of the stocks to own destroyed all of the outperformance.

Believes vol is widely used as a risk metric because it’s easy to measure, not because it’s a useful gauge of risk.

Diff between investors who succeed and don’t is how they think about the market. Everyone bombarded with price movements and news, successful ones build a process for cutting through that.

“no called strikes” mentality

Always assumes minimum bogey is 6%, even if interest rates are near 0. Compares normalized earnings (yield) to higher of RFR or 6%.

Presumably normalized earnings means “owner earnings” in the WEB sense.

Time horizons for investment performance have shortened. Institutions increasingly likely to redeem from managers who have a bad year or two. This means most managers can’t wait for two years for an investment to work. That’s why companies that are not expected to do well in the next 1-2 years or are subject to near-term uncertainty are systematically underpriced.

Study of managers from 2000-2009 showed 97% of top-quartile managers spent at least 3 years in bottom half; 79% spend 3+ years in the bottom quartile, and ~50% of them spent 3 years in the bottom decile. Probably just as difficult to pick a good manager as it is to pick a good stock.

He is super involved in education reform, charter schools -- believes capitalism works better when everyone has a fair chance and education gives you the most bang for your buck for achieving that goal.

You are setting yourself up for failure if you invest differently than you want in order to place investors.

Manage your PA if you can -- nothing like doing it and learning what it’s like when you lose money and what your emotions are when doing well and not well.

Studying ROIC is key for keeping you out of value traps (not sure I agree with this)

#Investor Profile

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wkyi-blog · 5 years

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5 Reasons Why LATAM Tech is Growing Now

Original article on Linkedin:

https://www.linkedin.com/pulse/5-reasons-why-vcs-investing-now-growth-latam-tech-wilson-kyi-%E6%9C%B1%E4%BC%9F%E4%BF%8A/

Hola a todos! Having worked in Mexico for the past year, visited Brazil, Peru, Chile, Argentina, and worked with Mexicans, Colombians, and Brazilians, I’ve witnessed the tech growth in LATAM. Between research and firsthand experience on the ground, I believe there are 5 key forces driving the recent growth and years to come.

Demographics are fundamental to its growth. There are currently 658M people in LATAM, of which 454M (69%) have access to the internet, which has grown 2411% from 2000 to 2019, adopting technology much faster than before (Internet World Stats). With access to internet, learning to code could be done more quickly and remotely, without formal changes to the education system. This story has been told before, but why now?

1. Increase in demand for “daily upgrades” for growing middle class

As a proxy for standard of living, GDP for LATAM has been on a run for the past 70 years. While recently it had hit a speed bump in the past 5 years, IMF projects that there will be more than 2x the GDP growth. With a higher standard of living, middle class Latin Americans will be able to make “daily upgrades,” which is not necessarily massive purchases (house and car), but actually affordable, premium consumables that are either at the margin whether to purchase, better quality, or more convenient. Examples are being able to spend more on apparel, convenient transportation, or order food delivery.

Since the middle class is making these “daily upgrades,” and the middle class itself is made of those who are able to earn income through traditional or technology jobs. Below we see that Mexico’s age group is pyramid, where the massive base of about 50% is from the age of 0-30, and in the next decade, children will enter the workforce, many of whom will earn enough to become part of the growing middle class. So if the working class is growing, then we have a compounding effect of these “daily upgrades.”

2. Increase in supply to meet demand enabled by technology platforms

In order to meet the increase in demand, technology platforms have capitalized on these opportunities by providing a scalable way to make e-commerce (Mercado Libre $27B), ridesharing (Uber $51B, DiDi), and food delivery (Rappi) more accessible every individual through their mobile app. In order to deliver their services, they’ve built the appropriate supply chains, logistics, and payment infrastructure to support the scale. Since fraud due to cash payment is a serious issue for LATAM, these platforms have not only made services more convenient, but also safer, thus educating and instilling confidence in consumers. Below is Rappi’s exponential growth in the past two years that reflects an increase in consumer demand and supply, driven by venture capital.

3. Increase in existing regional and global venture capital

As many of the above tech companies have reached a level of maturity where their talent have left to start businesses that will continue to further build infrastructure or services on top of existing ones, these founders begin to seek out venture capital to build scalable companies. Hence, existing VC’s like Monashees (Brazil) and Kaszek (Argentina) have been able to double down, while outside VC’s like GGV Capital (in Yellow), General Atlantic (in Clip), Sequoia (in Rappi), and DST Global (in NuBank) have been proactively entering LATAM. Even global accelerator’s have accepted more Latin American founders than before. Y-Combinator accepted Grin (S18), while MassChallenge, Techstars, and Startupbootcamp also made LATAM investments.

Despite its recent controversies, Softbank allocated $5B to invest in LATAM led by Marcelo Claure to focus on fintech, e-commerce, healthcare, and mobility. This is effectively an announcement to founders that they should pursue these massively impactful areas, and indirectly to early and growth stage funds around the world that there are massive investable opportunities. Softbank immediately poured $1B into Rappi to scale across LATAM, while growing their share and services in existing markets, hoping it will be a hybrid of Alibaba and Meituan of the region.

4. Chinese companies have expanded aggressively into LATAM

LATAM has similar demographics and tech adoption as Southeast Asia, where Chinese tech companies have already found success (Grab, Gojek, Tokopedia), and have identified LATAM as the current growth region. In late 2017, DiDi bought 99app for $1B the largest tech acquisition to establish its presence in Brazil, the largest LATAM market. In late 2018, Tencent further invested $180M in Nubank, valuing it at $4B. Now, as the largest messaging and payments network, Tencent is able to guide Nubank in giving access to many of the unbanked. Traditionally, Tencent makes small bets to partner and grow its network, and sometimes acquires. With $27B in cash, acquisition is certainly an option for its payment network at the right price. Also in late 2018, Tencent’s other half Ant Financial (Alipay) committed $100M to Brazil-based online payments platform StoneCo, and Mexico-based OpenPay to connect local merchants with the growing Chinese population that prefer to use Alipay. This year, Tik Tok (parent ByteDance $75B) and other similar apps have also made key hires and expanded into Brazil and Mexico.

5. Key countries Brazil, Mexico, Colombia, and Chile are leading the way

Though LATAM has a population of 658M, investors have prioritized the largest markets - Brazil (210M) and Mexico (130M), where 76% of LATAM venture capital have been invested. Large rounds have already been invested in Brazil in mobility logistics (iFood, Loggi, CargoX), fintech (Creditas, Nubank) and in Mexico in fintech (Clip, Konfio, Credijusto, Bitso). However, healthcare has been an under-invested opportunity area, where Softbank’s thesis has not been fulfilled. In the next 3-5 years, there will be more founders outside of Brazil and Mexico capitalizing on their large market, like Cornershop founded in Chile and expanded to Mexico.

Strategically located between Brazil and Mexico with relatively smaller 50M population, Colombia has already made a name for itself with Rappi, and will continue to do so in the coming years due to the wave of founders post-Rappi and its demographics. Israel has been known to create global companies due to its restrictively small population 8.7M; though Colombia is much larger and dense enough to test consumer marketplaces, its market is still too small to create unicorns on its own, so it’s forced to think more broadly for LATAM, hence Rappi expanding to Brazil and Mexico. As early employees are leaving Rappi with their international expansion experience, they’ll be equipped with the vision and ability to build teams and raise capital.

Lastly, though Chile is only 18M population, it’s GDP per capita is 2.5x Colombia’s, meaning consumer products can be charged higher. Walking around Santiago feels like I’m back in Los Angeles with well-paved streets, highways, and office buildings. Also, there is the “Groupon mafia,” after Groupon acquired a bunch of copycats including Chile-based ClanDescuento, whose founders started Cornershop. Also, Chile is proud of its accelerator Start-Up Chile, who’s supported by Groupon’s Founder Andrew Mason. Finally, its government has given out high incentives for startups as much as $40k equity-free seed capital, 1 year visa, and other extra benefits to make it easier to do business. With these resources and talent, Chile has the potential to produce a few more Cornershop’s.

Final thoughts

Many have said LATAM is a “hot market,” displaying many of the characteristics of Southeast Asia 2-3 years ago, and China 4-5 years ago, where super apps, payments, and logistics are already built at scale. The key challenge will be for entrepreneurs to create not only single country companies, but at least LATAM scale, and maybe even global scale. LATAM scale will always have localizing challenges of language between Brazil and Spanish-speaking countries and organizational leadership. But I’m optimistic, because at the end of the day, LATAM countries have more similarities than differences when it comes to lifestyle, family, music, and consumer spending. However, those similarities also include challenges like logistics infrastructure, cash payments, and corruption that are true opportunities but also speed bumps that can slow down the growth. With that said, LATAM tech will further establish itself on the map, as there will be more regional unicorns built in the next 5-7 years, attracting both global talent and capital.

Since my experience and especially language in LATAM has its limits, please let me know if you have any ideas or thoughts from inside or outside of LATAM.

Gracias y Saludos,

Wilson

P.S. India tech is often an overlooked region for its growth in the next few years, while Africa tech is not too far off in the distance.

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cepmurphy · 7 years

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Those Tired Old Cliches

In the bar of Sydney’s FantastiCon, a man and woman – one white, one Asian, one Melbourne, one Brisbane, one in a SILHOUET T-shirt and so was the other one – studied, respectively, a press release and their drink.

Union, depicting the events leading up to a North American intervention in the Rape of Europe, will take place in an alternative timeline in which the United States defeated the Confederacy, “giving rise to a conflicted nation in which slavery has been abolished but powerful interests are trying to prevent full equality”.

“Oh look, someone finally merged The Northern States Win and The Nazis Lose into one story. Two, two! Two clichés in one!”

“Don’t watch it then.”

“It’s the principle of the thing.” Mohammed Gillard held up three fat fingers. “There’s three clichés that squat on the whole bloody genre of alternative history. One: the Confederacy doesn’t win the United States Civil War. Two:” The middle finger flipped down to leave the V sign. “The Nazis don’t conquer Europe. Three:” The V flipped down and the middle finger went up. “China stayed a unified nation in the last century and is now a big power. So I bet the Chinese show up in this one.”

Gwen Nguyen – her middle name rather than first but she’d been stuck with the school playground rhyme too long to bother fighting – stared at his finger until, finally, it lowered. After that, she added, “You’re leaving out the Brisbane Line.”

“That’s just us in Oz that care about the Line.”

“No, no, you wanted to talk clichés, I grew up watching The Warwick Line just as you did, all plucky Sydney kids evading sinister Japs, and my uncle was in it because the only way to fill out the occupying hordes was with the ‘Line Babies’ even though none of us are Japanese. That’s a cliché.”

Gillard shrugged, literally with his body and figuratively to remove the weight of history. “Right, okay, but my point is, that’s just us – the Big Three are the clichés for the entire Anglophone, not to mention the bloody Chinese and the Latams and Europe. What’s up with that?”

“Your new book didn’t sell?” Up went the fingers. “It just all ends up being the same,” he said. “The South loses, the US is the 20th century superpower instead of the Latams and all diverse and there’s one big country instead of four. The Nazis lose, Europe becomes a really nice democratic place and heroic Brits march into Berlin. Heroic Russians, sometimes. I bet it’ll be heroic Yanks now but – I can see this clearly – one will be black, yeah, and the other will be white, and wait, no, the white one will be from Alabama because in this world there’s still an Alabama and white people where Jerusalem is. That’d be dead clever. I know the Jerusalemites hate this sort of thing too, the last good South Loses book was The Rising Smoke by Baldwin, where the slaves revolt during the war and a version of Jerusalem becomes a US state. That’s different. ‘Look a southern President!’ is bunk. Almost as bunk as all those Petain Saves France ones or that moron Churchill being a big figure in Britain’s politics. It’s all a big blur.”

“It’s the bits of history every punter knows. Your New Holland book, great stuff, but you kept having to explain all about the Dutch explorers and Dutch imperial practices and so on – no, let me finish, Mo – nerds like us like that, but the average bloke wants something easier. So it’s the same events, places, and people. Every genre does this.”

“And every genre is full of boring hacks, Gwen, I know this.”

“You’re also forgetting the other reason because, and I’m going to have to be rude, you can’t get it,” she said, quietly this time. “Australia has done well over the decades, we’re a regional power. The worst thing that happened to us was the brief occupation of the north, which ended with us winning anyway. We’ve met our potential. Latin America has reached theirs, which is why their approach to a unified United States is fear that they wouldn’t have reached it. But China, North America, Europe, they had reached their potential and they lost it. They fell. And they are never getting back up again, not the way they could have. China and North America have been fragmented too long. Texas and the United States can dream of unification but won’t do it, and Jerusalem won’t, and Mexico won’t give its reclaimed land back. TV shows, that’s it for them.

“And Europe, nothing from Flanders to Siberia is capable of being anything anymore. It’s all fragmented nations and old graves. You don’t think people would want to imagine that they’d remained better, that people in the southern states hadn’t refused to change or the German Empire hadn’t been bitter that they weren’t getting their assumed due and pissed away all they had and washed away so many others?

“God, why do you think we had the bloody Warwick Line as a story for kids? Victory turns occupation and oppression and unmarked corpse pits into a bit of fun. No, your chosen genre’s never going to stop being a wistful plea for what might have been instead of the grim horrors those continents got. You can complain because we didn’t suffer enough.”

There was a muggy silence until, tentatively, Nguyen changed the subject to the newest Indonesian sci-fi film but the talk did not last much longer.

In the end, Gillard was right about the Berlin scene and wrong about China.

#Alternate History #alternative history #confederate #althist #sff #writing #short stories

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terrancedkennedy · 7 years

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Argentina: Think Globally, Act Locally

Fed as expected...go ahead and whack bids on the levered VIX vehicle of your choice. They did have to keep that December dot implying a hike--if they took it out it would be a major mistake to try to put the toothpaste back in the tube and hike after all--but if the data rolls over it will be no surprise if they simply decide to stand pat. Deep dive time again folks...there was a quick mention on usd/ars in the comments last week--circling back to this market, the Argentine peso has been left out of the EMFX fiesta the past few months.

ARS has been a notable laggard over the last three months, and finishes dead last YTD, according to data from WSJ. Yet carry is over 20% per annum--a veritable tractor beam for sucking in EM and crossover investors.

While there has been continued optimism in the local political scene and inflows have continued, there is a divergence between tighter USD bond spreads and the value of the peso. Let’s break this down into its component risks.

The Credit

Frequent readers will remember my post on the government’s issuance of a 100-year bond back in June, an event many in the media, and even some old hands like Howard Marks, viewed as the end of times. The point I wanted to make is that it was driven by reverse inquiry--real money wanted a more capital efficient vehicle to express a positive view of Macri and his reforms, and the duration was better defined as a leveraged bet on medium-term credit improvement rather than a bet that the country wouldn’t default on my grandchildren.

If all goes well until year end, a couple of PMs that made that reverse inquiry are going to clear a pretty nice check...After tapping the market around 90, the century bond is going looking to take a crack at par...and that’s not even counting over 7% carry, payable in USD and settled in New York.

After winning an important election in June, Macri’s ratings are still relatively good by the standards of Latin America--with approval ratings ranging from the 40s to low 50s, and polling for the upcoming senate race shows Macri’s candidate with a small lead over former president Cristina Kirchner. A victory in this election would be a big signal that Macri’s platform will be sustainable politically and improve the odds for him to win a second term.

I continue to believe global trends will buy time for Macri’s agenda to work--and while an Argentine election is always a bit of a crapshoot, the trend in Latam favors center-right candidates as the pendulum has swung away from the neo-socialist candidates that won victories in the early 2000s in Argentina, Brazil, Peru, Ecuador, Venezuela and Chile.

Beyond the political risk, the fiscal situation is far from healthy--and will require a bout of austerity and likely significant spending cuts. The 2017 primary balance is a nasty -4%/GDP, which means the government is going to be running up a larger debt load for the foreseeable future.

With the economy still sluggish, here’s another chart that keeps the reformists awake at night:

Put another way, just as in Brazil, nearly 40% of the budget is going to pensions and social security obligations. That is simply strangling government finances. Slashing these benefits to cut the budget deficit isn’t going to be easy on the economy, on voters, or on the government’s relationship with unions.

Will Macri have the political capital to push through a pension reform? I’m skeptical--higher taxes seem more likely, but that can’t fully close the gap. A “fiscal rule” law would be a politically palatable intermediate step. Either way, as the charts below show, an acceleration of public debt at this pace for a sub-investment grade credit is simply unsustainable.

Which brings us to how Argentina fits into the broader EM sovereign credit universe. Below I have highlighted the public debt burden in Argentina, and circled a couple of similar credits--Brazil and South Africa.

From a debt sustainability perspective, Brazil and South Africa have similar burdens--Brazil is certainly trending fast in the wrong direction--but has a much bigger stock of domestic savings and (maybe) a reform movement of its own. South Africa has a worse political situation but a stronger domestic economy and not near the primary budget gap of its Latin brethren. Pairing that with a look at 5y CDS levels (as a proxy for credit spreads at large) demonstrates just what kind of premium investors are being paid in Argentina:

Yeah, juicy….so you can see why that kind of premium compared with a center-right, technocratic, reformist government is an attractive combination for foreign investors, especially when those investors have been starved Argy exposure (and yield) for years as they were locked out of international markets.

My takeaway on the credit is that there is much more beta than alpha at these levels--I continue to believe in the positive local theme, and it will work so long as the “reach for yield” theme works globally. I expect Cambiemos will win in October, which should provide a short-term tailwind, but the medium-term is fraught and highly dependent on local and international factors that could throw the reform movement into a state of chaos.

The Currency

As the century bond ripped 10 points in less than three months, an investor that sold a 3mo usd/ars NDF at the same time has essentially made nothing. Spot ARS has cheapened, but with that spicy 20% carry (in ARS), you’re basically flat here.

So what gives? USD has weakened across the board….”risk-on, reach for yield, buy EM” is arguably the theme of the year...Macri’s coalition performed well in primary elections and remains relatively popular….What’s not to like about ARS?

There are some fundamental and technical headwinds that have prevented further ARS appreciation. The first is a combination of the political economy of the Macri administration and the continued triage of the damage wrought by years of the Kirschners populist policies.

The first is local real rates. ARS rates are 20-22% are for a 1-3mo non-deliverable forward (NDF). The idea here is that if you want to buy pesos via an offshore derivative, you receive an ARS asset vs. a USD liability, to be settled in New York at an agreed, published fixing rate linked to the spot rate at the maturity of the derivative contract.

While rates are fantastically high by global standards, much of that value is eroded by inflation around 22% YoY. As I have mentioned before, at that level of real rates in Argentina you are highly levered to a positive economic and political outcome rather than a simple “cash and carry” trade. You’re gonna need help…. from inflation, from the BCRA, from Macri, and from voters. Will BCRA make progress in the battle against inflation? Will voters be patient enough with reforms to continue to support the government?

Another headwind for the peso is the central bank’s desire to accumulate foreign reserves after years of drawdowns. Earlier this year the BCRA announced they would continue to increase international reserves. The central bank is targeting a reserves-to-GDP ratio around 15% over the next two years, which according to a report from the Brazilian bank Itau, would require an increase of 48.3bn USD.

The central and provincial governments will issue more bonds in USD during that time, which the central bank will exchange for pesos. But there will be a significant gap between USD issuance and the accumulation to bring reserves to adequate levels.

That means the central bank will be on the bid in USD when there is significant appreciation not tied to improvements in the political situation and/or sovereign risk. Getting back to the opening point, that also fits with the administration’s incentive to keep ARS competitive and allow export markets to heal and grow after years of capital famine. Similar to the credit, this is an attractive carry trade if you buy into “the story”, but not without its risks. I think ARS will appreciate over time, but it won’t be quick.

A trade I like more than the credit/politics driven trades in outright usd/ars or the USD bonds is the local t-bill market, known as Lebacs, which sport a yield of roughly 27% for maturities under one year. The catch here is that you have to bring USD into the country, sell it in the spot market, and buy the Lebacs.Then you hedge that ARS exposure by buying a usd/ars ndf to the same maturity in the offshore market around 22%. You pocket 5% per annum for running the local credit risk and risk that the government again implements currency controls.

Why does this spread exist? I think it is a combination of three factors: 1) the bid for spot USD by the BCRA, 2) bullish fast money traders hitting bids in front end NDFs (Johno, I’m looking at you), and 3) higher local yields driven by supply of lebacs the BCRA issues to sterilize the ARS they are selling into the spot market when they buy dollars. Quite simply there is a shortage of dollars in the local market and there aren’t enough investors brave enough to step into the breach.

Any EM trader with stripes on their back, or one with even a cursory knowledge of Argentine financial history will tell you the catch there--one day the government may decide to implement capital controls because they don’t want to give your dollars back. You’re stuck with Argentine pesos with no way to exchange them back into dollars. Ask any US airline with connections to Caracas how that worked out for them.

But compared to 5yr CDS under 300bps, this is a very attractive spread. An investor sells USD into the local market and receives about 500bps with no FX or duration risk. The lebacs and ndf hedges mature every one to three months, so you have the opportunity to get out if the fundamentals or political situation deteriorate. That is unlikely--Macri’s structural reform agenda may or may not materialize, but he has embarked upon capital market reforms that aren’t going to be unwound before the presidential election in 2019.

Long story short, at 500bps this spread is well in excess of the risk that the government will again implement capital controls over the next 3, 6, or 12 months. It’s a clean single to right field if you have the cash and local legal set up to do it.

Not sure if the MM audience is well versed in the dynamics of on-off spreads, but feel free to step up and throw in your two cents on the credit or the local scene.

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