小時了了 大未必佳

新謠 – Xinyao – Singapore Folksongs

我們這一班 顏黎明 – Our Class by Yan Li Ming:

我們這一班 – 顔黎明

曾經你我有說不完的話題
曾經我們每天在一起
上課不在意
連測驗都忘記
只有玩樂最要緊

老師曾經說過我們嘰嘰喳喳
上課不准我說話
直到有一天 大家都畢業時
才明白老師地道理

我們這一班 上課不專 望著籃球場
我們這一班 測驗偷看 分數都一樣
我們這一班 崇拜偶像 老師地話我們丟一旁
但我們從來都不怕
因為小時了了 大未必佳

如今你和我都已經長大
如今志願不再嘴邊掛
想起學校裡的同學和老師
那無憂無慮的日子

我們這一班…

RI population less diverse now, say many alumni

http://www.straitstimes.com/singapore/education/ri-population-less-diverse-now-say-many-alumni

PUBLISHED AUG 4, 2015

A frank speech by the principal of Raffles Institution (RI) has sparked discussion among alumni and students, with many agreeing that the school’s student population has become less diverse.

At RI’s 192nd Founder’s Day ceremony about a week ago, its principal, Mr Chan Poh Meng, warned that RI is at risk of becoming a school that caters only to a certain class of Singaporeans and must do more to counter accusations of becoming increasingly elitist.

Most alumni interviewed said they agreed that RI, widely seen as Singapore’s most reputed school, has become less diverse in its student population.

Mr Ted Chia, who attended RI in the 1960s, said: “Most of us came from unknown primary schools, gaining entry because we did pretty well in the Primary School Leaving Examination of the old days.

“Most students were from humble backgrounds, taking the bus to school and not driven by mum or dad,” said the 64-year-old director of sales in an aerospace business.

Dr Lee Soo Ann, 76, a senior fellow in economics at the National University of Singapore who went to RI in the 1950s, said out of his group of 10 friends, just three went to university.

“In those times, people would leave school to work because they could not afford to study further or they didn’t do well enough,” he said.

Mr Chia added: “Nowadays, kids are groomed from young to do extremely well in the PSLE.

“So inevitably, you will find the present students belong to a smaller and more privileged group.”

[…]

RI alumnus Tommy Koh, Ambassador-At-Large at the Ministry of Foreign Affairs, said RI should aim to be a “microcosm of Singapore”, with students from all socioeconomic classes and races.

“RI is a great school and we don’t want that to change. I am, however, concerned by his statement that RI has become a middle-class school,” he said.

The concern that top schools are becoming closed circles has been raised before, even by Prime Minister Lee Hsien Loong. In 2013, Singapore Management University law professor Eugene Tan, then a Nominated MP, said in Parliament that he was concerned that RI, his alma mater, was becoming less diverse.

But Mr Eugene Wijeysingha, RI headmaster from 1986 to 1994, defended the school, saying many Rafflesians have served the country despite being “chastised for continuing to live in an ivory tower oblivious of the plight of others around”.

He noted that a “high premium” is possibly placed on one’s linkage with RI today.

However, “these boys slog it out and the best find their way to the school… They deserve to be highly regarded and to regard themselves with pride”.

“I do not believe that all this has gone to the head of the RI boy and destroyed his values as a balanced human being,” he added.

[…]

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“Most students were from humble backgrounds, taking the bus to school and not driven by mum or dad”

Going to school during Secondary One and Two (and the first semester of Sec Three) when the school campus was still in town at Grange Road, I had to take 3 buses, a feeder bus from my house to the bus interchange, and then a bus to go to town, and finally change to bus 104 at the Far East Plaza (Scotts Road) bus stop for the final short trip to Grange Road. (If I remember correctly, the MRT train system was brand new then, and I do use it, but I’ll had to walk 10 minutes for the final part of the journey.) Or, the feeder bus to the MRT train station, then a train to Orchard station, then walk for about 10mins from Orchard Boulevard and down Paterson Road, to reach Grange Road.

Usually by the time I reached the school gates just in time for school assembly, I’d be breathing a little hard from my brisk walking and as always, perspiring more than a bit. And as I huff and puff and make my way up the sloped driveway towards the quadrangle, I would had to dart in between all the cars of the parents who are sending their precious sons to school in air-conditioned comfort and dropping them and their bags right at the quadrangle where our form teachers are taking attendance.

[Just had a memory flashback…
I remember one of those cars was a red Honda Prelude. I would always be looking out for it when I was climbing up the slope, and most times it would vroom pass from behind me as it made it in the nick of time before the gates were closed, snarling all the way up the driveway, scattering leaves and shocked first-year freshie boys in its wake. Now that I think about it, I wonder what kind of parent with a teen-aged-old child would drive a 2-door boy-racer…
But I liked Preludes back then.]

red_honda_prelude

red_honda_prelude

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“RI alumnus Tommy Koh, Ambassador-At-Large at the Ministry of Foreign Affairs, said RI should aim to be a “microcosm of Singapore”, with students from all socioeconomic classes and races.”

Oh, we were certainly that. Sons of hawkers, fish-mongers and cleaners sat next to scions of cabinet ministers, generals and assorted captains of industries.

Within my own merry band of brothers in Sec One, four of us got close and started hanging out together.

Qing was from a more humble background and belonged to a group within our class called the Ghim Moh Boys, RI boys who stayed in the Ghim Moh area and played soccer and basketball together every weekend at the Ghim Moh/Ulu Pandan community centre. The group gradually enlarged over the 6 years from Sec One/RI to Year Two/RJC and even beyond, to include any Raffles boy who joined in the games the Ghim Moh Boys would hold every weekend without fail. Last I heard some of the Ghim Moh Boys were still having regular gatherings to play soccer and basketball into their thirties.

Pat-man’s father was an engineering consultant who helmed a private-public-academic agency which helped bring together the technical and engineering expertise of the Nanyang Technological University’s faculty with real-world business needs and applications. Sort of like an early startup incubator in the 1980s and 90s, I suppose.

My father was a businessman, and Yu…we knew nothing about at first, cause he was always so quiet and doleful. But he was nice enough and he sat next to me for the whole of Sec One year, though it was sometimes a bit of an effort to get through to him and his negativity (and this coming from me who at 13 wrote lines and lines of poetry and odes to Melancholy). But one day, while some of us were talking about board games on war and gushing about that latest expensive WWII board game, Axis & Allies, with its beautiful figurines of infantry, tanks, ships, submarines, planes, factories etc…Yu casually mentioned that he’s got the game but that it’s quite boring and anyway, he’s too busy playing the latest Sega Rockman series. I remember Qing and I (both history buffs, especially military history, who will stop an Axis & Allies game in midplay just to argue the finer points of whether Nazi Germany could had overran all of Europe if it wasn’t banking on an détente with Britain which never materialized; or if the Russian infantry could had reached farther then Berlin and drawn the Iron Curtain on a partitioned Europe just a little more west at say, Paris; and while Qing and I would be arguing heatedly, banging on the game table, Pat and Yu would get bored and go over to the Sega machine to play Rockman) went all agog, and quickly set about getting Yu to invite us to his house to play the game.

Axis&Allies_board_game

Axis&Allies_board_game

I remember on that certain school day after class, the three of us were quite excited about going to Yu’s house to play Axis & Allies. When we asked him what bus do we need to take to get to his place, he mumbled that he wasn’t sure, his mum was coming to get us anyway, only that she won’t be coming herself… Apparently, Yu had been driven to school everyday by his chauffeur; and that is how we found ourselves going to Yu’s house for the first time, riding in an S-class Mercedes driven by his chauffeur to his house at Goodman road, in the Mountbatten area known for its houses with generous land sizes. When the car pulled into the large driveway of a house on a expansive land plot, I remember thinking Yu’s house actually looked small sitting right in the middle of the large sprawling piece of land, surrounded by a neat but simple green lawn which ran all the way around from the front to the back of the house. The same green lawn where we played many water gun battles on hot June holidays afternoons, with his Super Soakers and even a few air pistols (unlicensed?).

Yu’s mother was a nice lady who seemed to be always a little distracted, pottering about the house in her housecoat/robe and who would poke her head into Yu’s room or the separate games room where we would be playing in, to ask us if we wanted more snacks or drinks. Yu’s father came home later that afternoon, cutting a tall and imposing figure in his business suit and stepping out of his BMW 7-series, driven by another chauffeur. I guess Yu’s parents don’t like to drive.

I later found out Yu’s father had studied chemical engineering at MIT, but had gone on to a career in finance and banking and at that time, was just moving from his MD position at Bank of America to take up an early pioneering role at the newly-founded SIMEX Singapore International Monetary Exchange, to develop the futures and derivatives markets in Singapore. SIMEX is later to become SGX-DT, the derivatives trading arm of the Singapore Exchange.

I remember Yu’s parents took quite a liking to me, and his mother was rather effusive (embarrassingly) with her praise: about my grades, my readings, my sports, even my height, which she would compare with Yu, who was not very tall and rather chubby, who apparently just barely made it into RI, and according to his mother, wasn’t very good at anything. I was always embarrassed and a little mortified when she would say all that in front of us, but Yu always seemed unperturbed and would ignore her and just go on playing his Rockman video game. He was very good at that game though. Yu’s father would come talk to me and tell me to study engineering next time at university because it allows so many career options, give Yu a sharp look and say Yu probably can’t make it into the engineering course at university.

His parents always wanted me over, to play or to help Yu with his studies, or just to stay over for the night. They even asked to meet my parents and our families had dinner together a few times, at that seafood restaurant at the old Big Splash complex by East Coast beach, talking and asking my parents questions about how they raised me, how I grew up, which made Yu and I squirm in our seats. Later, I couldn’t tell if Yu was joking when he looked at me with his sad eyes and told me his parents liked me so much, they probably wished I was their son instead. Poor guy. No wonder he was always brooding and looked so haunted, growing up under the weight of such expectations and pressure.

I should had told him then, that: 小时了了,大未必佳 A brilliant and precocious child, may grow up and become less than ordinary.

Yu didn’t go on to RJC, had a hard time at the JC he went to, and went to polytechnic after that. Subsequently, he finally found his calling, left for Australia to study psychology, graduated with his degree and last I know, was working in a public hospital. Good for him.

And what did I turned out to be?

小时了了,大未必佳

Raffles Institution now a ‘middle-class’ school

RI_bishan_campus

RI_bishan_campus

http://www.straitstimes.com/singapore/education/raffles-institution-now-a-middle-class-school-says-principal

PUBLISHED AUG 4, 2015

Principal says school now largely caters to the affluent, and pride in its achievements risks making it insular

Raffles Institution (RI) is a “middle-class” school that now largely caters to the affluent segment of the population. It also risks becoming insular, cocooned by the glowing list of academic and sporting achievements its students have racked up year after year.

These harsh words came from the school’s own principal, Mr Chan Poh Meng, in a speech delivered in front of hundreds of current and former RI staff and students.

Speaking at the school’s 192nd Founder’s Day ceremony about a week ago, Mr Chan, who took over as RI principal at the end of 2013, said the school has been accused of being elitist, a charge he did not deny. He is himself an old boy of RI.

Singapore, on the eve of its 50th birthday, has been successful, building up a system that is admired the world over. But fissures have erupted in the process, one of which is the faltering meritocracy that the country has been lauded for in the past.

“Our system of meritocracy is working less well than it used to, two generations in,” he said.

[…]

For RI, the school is no longer what many alumni remember it to be in the past, with many students coming from diverse family and socio-economic backgrounds. Today, it “can no longer afford the comfortable illusion that RI is truly representative of Singapore”, Mr Chan told the audience of 1,400 students, alumni, teachers and parents.

RI, widely considered the most prestigious school in Singapore, has long prided itself on its students’ academic prowess.

“For a long time, we have measured our success by how high our PSLE cut-off and how low our L1R5 were. By how many Olympiads and competitions and tournaments we won… By the number of ‘top’ scholarships and places in the Oxbridge and Ivy League universities (students) secure,” said Mr Chan.

But he questioned if pride in such achievements may have had negative side effects, making RI “insular – a school unto ourselves”.

“A long period of conditioning means that we often fail to see elitism even when it is staring at us in the face,” he said. “RI has become a middle-class school – that is the current reality. What matters more now is what we do with this reality and this knowledge.”

[…]

Moonlight & Moonshine’s Shadow, Escher, Ramanujan…stringed

Moonshine's_Shadow

Moonshine’s_Shadow

https://www.quantamagazine.org/20150312-mathematicians-chase-moonshines-shadow/

In 1978, the mathematician John McKay noticed what seemed like an odd coincidence. He had been studying the different ways of representing the structure of a mysterious entity called the monster group, a gargantuan algebraic object that, mathematicians believed, captured a new kind of symmetry. Mathematicians weren’t sure that the monster group actually existed, but they knew that if it did exist, it acted in special ways in particular dimensions, the first two of which were 1 and 196,883.

[…]

Soon, two other mathematicians had demonstrated so many of these numerical relationships that it no longer seemed possible that they were mere coincidences. In a 1979 paper called “Monstrous Moonshine,” the pair — John Conway, now of Princeton University, and Simon Norton — conjectured that these relationships must result from some deep connection between the monster group and the j-function. “They called it moonshine because it appeared so far-fetched,” said Don Zagier, a director of the Max Planck Institute for Mathematics in Bonn, Germany. “They were such wild ideas that it seemed like wishful thinking to imagine anyone could ever prove them.”

[…]

Monstrous Moonshine

The symmetries of any given shape have a natural sort of arithmetic to them. For example, rotating a square 90 degrees and then flipping it horizontally is the same as flipping it across a diagonal — in other words, “90-degree rotation + horizontal flip = diagonal flip.” During the 19th century, mathematicians realized that they could distill this type of arithmetic into an algebraic entity called a group. The same abstract group can represent the symmetries of many different shapes, giving mathematicians a tidy way to understand the commonalities in different shapes.

Over much of the 20th century, mathematicians worked to classify all possible groups, and they gradually discovered something strange: While most simple finite groups fell into natural categories, there were 26 oddballs that defied categorization. Of these, the biggest, and the last to be discovered, was the monster.

Before McKay’s serendipitous discovery nearly four decades ago, there was no reason to think the monster group had anything to do with the j-function, the second protagonist of the monstrous-moonshine story. The j-function belongs to a special class of functions whose graphs have repeating patterns similar to M. C. Escher’s tessellation of a disk with angels and devils, which shrink ever smaller as they approach the outer boundary. These “modular” functions are the heroes of number theory, playing a crucial role, for instance, in Andrew Wiles’ 1994 proof of Fermat’s Last Theorem. “Any time you hear about a striking result in number theory, there’s a high chance that it’s really a statement about modular forms,” Kachru said.

[…]

Moonshine’s Shadows

In 1913, the English mathematician G. H. Hardy received a letter from an accounting clerk in Madras, India, describing some mathematical formulas he had discovered. Many of them were old hat, and some were flat-out wrong, but on the final page were three formulas that blew Hardy’s mind. “They must be true,” wrote Hardy, who promptly invited the clerk, Srinivasa Ramanujan, to England, “because, if they were not true, no one would have the imagination to invent them.”

Ramanujan became famous for seemingly pulling mathematical relationships out of thin air, and he credited many of his discoveries to the goddess Namagiri, who appeared to him in visions, he said. His mathematical career was tragically brief, and in 1920, as he lay dying in India at age 32, he wrote Hardy another letter saying that he had discovered what he called “mock theta” functions, which entered into mathematics “beautifully.” Ramanujan listed 17 examples of these functions, but didn’t explain what they had in common. The question remained open for more than eight decades, until Sander Zwegers, then a graduate student of Zagier’s and now a professor at the University of Cologne in Germany, figured out in 2002 that they are all examples of what came to be known as mock modular forms.

After the Zurich moonshine conference, Cheng, Duncan and Harvey gradually figured out that M24 moonshine is one of 23 different moonshines, each making a connection between the special dimensions of a group and the coefficients of a mock modular form — just as monstrous moonshine made a connection between the monster group and the j-function. For each of these moonshines, the researchers conjectured, there is a string theory like the one in monstrous moonshine, in which the mock modular form counts the string states and the group captures the model’s symmetry. A mock modular form always has an associated modular function called its “shadow,” so they named their hypothesis the Umbral Moonshine Conjecture — umbra is Latin for “shadow.” Many of the mock modular forms that appear in the conjecture are among the 17 special examples Ramanujan listed in his prophetic letter.

[…]

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Love it. It’s all stringed together…and coming back to me again. I remember studying Ramanujan for a math class, and picking Escher apart (Deconstructionism) while designing A House For Escher for one of my architecture design studio projects. And of course, this song from the growing years.

Moonlight Shadow (1983):

The last that ever she saw him
Carried away by a moonlight shadow
He passed on, worried and warning
Carried away by a moonlight shadow

Lost in a riddle that Saturday night
Far away on the other side
He was caught in the middle of a desperate fight
And she couldn’t find how to push through

The trees that whisper in the evening
Carried away by a moonlight shadow
Sing a song of sorrow and grieving
Carried away by a moonlight shadow

All she saw was a silhouette of a gun
Far away on the other side
He was shot six times by a man on the run
And she couldn’t find how to push through

I stay, I pray
See you in Heaven, far away
I stay, I pray
See you in Heaven one day

4 am in the morning
Carried away by a moonlight shadow
I watched your vision forming
Carried away by a moonlight shadow

Stars move slowly in a silvery night
Far away on the other side
Will you come to talk to me this night
But she couldn’t find how to push through

I stay, I pray
See you in Heaven, far away
I stay, I pray
See you in Heaven one day

Caught in the middle of a hundred and five
Far away on the other side
The night was heavy and the air was alive
But she couldn’t find how to push through

Carried away by a moonlight shadow
Carried away by a moonlight shadow
Far away on the other side

What a (FOMC) day | lead-lag markets | risk-adjusted returns

S&P_20150318_5min

S&P_20150318_5min

EURUSD_20150318_5min

EURUSD_20150318_5min

BrentCrude_20150318_5min

BrentCrude_20150318_5min

Gold_20150318_5min

Gold_20150318_5min

USDJPY_20150318_5min

USDJPY_20150318_5min

While on days with key market events such as this, all correlations spike intensely especially from the moment of the announcement, there are many unique differences between the markets to warrant carefully going through your arsenal of weapons before selecting the best armament for the campaign at hand.

Lead-lag markets; early morning reaction as true direction or head fake; muted caged movement until the explosive 1400 hour; different holding periods; difference in nominal returns from <2%(USDJPY) to >6%(Brent Crude); different sizing in the different markets based on your measurement and judgement of each individual market’s risk/volatility/nominal size/margin requirement/credit available/personal familiarity; path-dependent trade management/maximum adverse excursions of each market; different risk-reward structures…

Which market provided the best risk-adjusted return today?

Training

The training of a stock trader is like a medical education.

The physician has to spend long years learning anatomy, physiology, materia medica and collateral subjects by the dozen.

He learns the theory and then proceeds to devote his life to the practice. He observes and classifies all sorts of pathological phenomena. He learns to diagnose. If his diagnosis is correct – and that depends upon the accuracy of his observation – he ought to do pretty well in his prognosis, always keeping in mind, of course, that human fallibility and the utterly unforeseen will keep him from scoring 100 percent of bull’s-eyes.

And then, as he gains in experience, he learns not only to do the right thing but to do it instantly, so that many people will think he does it instinctively. It really isn’t automatism. It is that he has diagnosed the case according to his observations of such cases during a period of many years; and, naturally, after he has diagnosed it, he can only treat it in the way that experience has taught him is the proper treatment.”

You can transmit knowledge-that is, your particular collection of card-indexed facts-but not your experience. A man may know what to do and lose money – if he doesn’t do it quickly enough.

Observation, experience, memory and mathematics – these are what the successful trader must depend on. He must not only observe accurately but remember at all times what he has observed. He cannot bet on the unreasonable or on the unexpected, however strong his personal convictions may be about man’s unreasonableness or however certain he may feel that the unexpected happens very frequently. He must bet always on probabilities – that is, try to anticipate them. Years of practice at the game, of constant study, of always remembering, enable the trader to act on the instant when the unexpected happens as well as when the expected comes to pass.

A man can have great mathematical ability and an unusual power of accurate observation and yet fail in speculation unless he also possesses the experience and the memory. And then, like the physician who keeps up with the advances of science, the wise trader never ceases to study general conditions, to keep track of developments everywhere that are likely to affect or influence the course of the various markets. After years at the game it becomes a habit to keep posted. He acts almost automatically. He acquires the invaluable professional attitude and that enables him to beat the game – at times! This difference between the professional and the amateur or occasional trader cannot be overemphasized. I find, for instance, that memory and mathematics help me very much. Wall Street makes its money on a mathematical basis. I mean, it makes its money by dealing with facts and figures.

When I said that a trader has to keep posted to the minute and that he must take a purely professional attitude toward all markets and all developments, I merely meant to emphasize again that hunches and the mysterious ticker-sense haven’t so very much to do with success.

Of course, it often happens that an experienced trader acts so quickly that he hasn’t time to give all his reasons in advance but nevertheless they are good and sufficient reasons, because they are based on facts collected by him in his years of working and thinking and seeing things from the angle of the professional, to whom everything that comes to his mill is grist.

-J.L.

stock_ticker_tape_machine paying_for_an_education

Stock_ticker_tape_machine
The_hopeful_ paying_for_an_education

Noddynomics

http://www.bloomberg.com/news/2014-10-02/albert-edwards-says-watch-japanese-yen-and-be-very-very-afraid.html

Albert Edwards Says Watch Japanese Yen and Be Very, Very Afraid

The Japanese yen goes into freefall. China’s fragile economy tips over the edge. A wave of profit-crushing deflation comes washing over the U.S. and Europe. Investors panic.

That’s the view of perennial pessimist Albert Edwards. The London-based analyst and his team at investment bank Societe Generale SA have been ranked No. 1 for global strategy in surveys by Thomson Reuters Extel every year since 2007, even with a history of saying unpleasant things that few want to hear.

“My role is to step back from the excessive enthusiasm that builds up in the market, and to just say, ‘This is wrong. This is going to go horribly wrong,’” the 53-year-old said by phone last week.

[…]

Falling Yen

The yen fell 5.1 percent against the dollar in September, its worst month since January 2013. That sent it careening through a level of support — basically a line on the dollar-yen price chart — closely watched by currency traders which had put a psychological floor under the yen since 1998, Edwards says.

The yen is now poised for a three-year slide, the first time that’s happened since 1997, the year of Asia’s economic meltdown.

A divergence in U.S. and Japanese monetary policy — with the Federal Reserve slowing stimulus and the Bank of Japan expanding the money supply by record amounts — may have been the main reason for the move. Now that the yen is past a tipping point, the psychology of foreign-exchange traders is likely to take over and turn the currency into a runaway train.

“Now we’re heading to 120, which is the 30-year support,” he said. “You break through that, and you can see it moving to 140, 150 very, very quickly indeed.”

‘Important’ Chart

Edwards found the yen’s price chart so compelling he devoted an entire client note to it last week. He called it: “presenting the most important chart for investors.”

Richard Jerram, the chief economist at Bank of Singapore Ltd. and a long-time Japan watcher, doesn’t buy the argument. A weak yen won’t spur deflation in other parts of the world, he says. Nor would a China crash have a big impact outside of countries like Australia, which supply the larger nation with raw materials.

“Basically, it’s a domestic issue,” Jerram said. “Obviously there’s a growth issue, but I’m not sure it really spreads beyond that.”

Japanese currency forecasters see things differently from Edwards, too. Analysts surveyed by Bloomberg predict the yen will be little changed at 110 by June 30. Only the most bearish estimate, from Ebury Partners, puts the currency at 120.

Like most finance professionals, Edwards hasn’t always had impeccable timing. He’s been telling investors to reduce their holdings in equities for almost 20 years.

Ice Age

In his Ice Age call from the late 1990s, he predicted that deflation would eventually cover the earth, and the resulting bear market wouldn’t end until the S&P 500 index fell to 400. The index is at about 1,950 now.

At the end of 2012, Edwards greeted clients with a holiday missive that said: ‘Expect the new year to bring nothing but disappointment.’’ The U.S benchmark proceeded to gain 30 percent.

When he’s been right, Edwards has been spectacularly right. He made his first big call in 1996, when he was a 35-year-old strategist working for the English investment bank Kleinwort Benson.

While most investors were piling into what they thought was the East Asian economic miracle, Edwards was warning of a regional blowup. He called Malaysia’s policies “Noddynomics,” after the simple-minded title character in a series of British children’s books. Edwards says the witticism cost Kleinwort its Malaysian trading license, but soon enough capital was pouring out of the country.

[…]

Where should investors now take shelter as Japan’s monetary expansion threatens to send the world crashing down around us? Ironically, the answer Edwards is giving clients is Japan itself.

“Japan is a place where we can find quite a lot of cheap, deep-value stocks at the moment,” he said. “Just hedge out the currency.”

“Now we’re heading to 120, which is the 30-year support,” he said. “You break through that, and you can see it moving to 140, 150 very, very quickly indeed.”

That was so last week. Will we see 107 before we see 110 again? A trench is now been dug out around the 108.4 level. We might be settling in for a long bruising trench war before we can reach and breach 110 again, not to even mention 120 on.
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“Japan is a place where we can find quite a lot of cheap, deep-value stocks at the moment,” he said. “Just hedge out the currency.”

What’s that? Sounds so familiar… Where have I heard this before?

Ahh… Sitting on a plush overstuffed chair in a very posh Hong Kong hotel lounge filled with Chippendale-Georgian-Chinoiserie-styled furniture and listening to the big guy Baran of Symphony FP wax lyrical about finding and unlocking value within the capital structure of Japanese stocks. A meeting/informal interview on the sides of a hedgie conference held in HK.

[I had passed muster with the head trader in their then skeletal Singapore office in the initial rounds, and even managed to get through an impromptu meeting/interview with the partner who was their main quant guy running their models. He was on a quick stopover in Singapore and had only a couple of hours before catching his red-eye flight, so we met over late drinks at the Fullerton Post bar. Between the alcohol, the loud music and the late hours, what I thought would be a casual chat turned into a thrust and parry session. He lobbed questions about market microstructure, market impact models, multifactor models, and I returned as best I could. Apparently I didn’t goof it all up and very quickly, found a plane ticket in my email bound for HK to meet with the big guy himself. But, it wasn’t meant to be…]

Symphony FP (Japan) has been through a long 10 years, and they have tried so many things over the years. I even remembered the Japanese finance newspapers denouncing them as shareholder activists/agitators employing poison pen letters. Looks like they managed to catch a second wind this past couple of years. Good for them.

And a hurrah for Abenomics-Noddynomics.

Nikkei, USDJPY

Nikkei on the left, Yen on the right.
4-hourly charts, going back about a month:

Nikkei_USDJPY_4hr_1mth

Nikkei_USDJPY_4hr_1mth

Daily charts, going back about half a year:

Nikkei_USDJPY_1day_7mth

Nikkei_USDJPY_1day_7mth

The turn is looking fast and swift for the currency leg. Unlike the index, nothing below to catch the fall. Watch out below.

Long Yahoo [based on sum-of-parts or negative stub value arbitrage]

Yahoo_5daychart_ after hours

Yahoo_5daychart_ afterhours

Yahoo’s actual own core business (which generates more than $1 billion a year) is now valued at -$500 million, based on negative stub valuation:
Yahoo Stock Gets Crushed As Alibaba IPOs — Core Business Now Valued At Less Than Zero

Pretty good numbers crunching valuations carried out here, with some event-conditional Yahoo/Softbank/Alibaba scenario-ing, and a useful table with a handy and quick YHOO/BABA price ratio heuristic:
Imma Be a BABA Bull: Yahoo, the Morning After

yahoo_valuation_table

yahoo_valuation_table

So. Go YHOO/BABA? (long YHOO/short BABA)
What’s the stock borrow fee like on BABA, and is it even available for short borrowing?

How many “relative value/event arbitrage” traders got killed putting on the long 3Com/short Palm value trade 15 years ago…

Safer to just long YHOO.

[Sum-of-parts or negative stub value arbitrage, 3Com/Palm example:
Negative Stubs – a review of the equity carve-out of Palm from 3Com
“Since stock prices can never fall below zero, a negative stub value is highly unusual.”
]

Brings back memories of my old series of PalmPilots, from the bulky plasticky IIIc to the sleek metallic Palm V.

Palm IIIc

Palm IIIc

Palm V

Palm V

Long Live Global Macro

http://www.finalternatives.com/node/28187

The Cult of Loss Aversion: A Call to Rethink Risk in Global Macro Investing


In the wake of a traumatic loss, whether it is financial or personal, it is just human nature to overcompensate to make sure the experience is not repeated. But while that is understandable, it is rarely the best response. And so it has proved for many hedge fund investors over the past few years. While one could argue that each of the investor responses highlighted above has damaged investment performance, this article will focus on one specific issue: the cult of loss aversion in global macro investing.

The result has been a concentration of assets under management (AUM) amongst a few very large funds, many of which fetishize loss avoidance over all other factors in trade selection and risk management. Of course, risk management is an important part of any robust investment process. However, in modern macro investing the cult of loss aversion is becoming counterproductive given the fundamental and market outlook.

These days, most macro managers can be more accurately described as ‘hedged’ than ‘absolutely discretionary return’ investors. When legendary traders such as George Soros or Stanley Druckenmiller were making a name for themselves in the British Pound or Equities (yes, he was long a lot of them) they did not have a “hedge” against those positions because they truly believed in them. Sadly, very few macro managers have this level of conviction these days. They are too worried about taking a loss rather than a making huge profit.

In a world of many independent opportunities and a widely-dispersed asset base, it is completely rational for firms to use tight trade- and portfolio-level stop losses, because with rare exceptions (such as during times of acute market volatility) each stop loss decision has little bearing on the behavior of the market as a whole. Unfortunately, this does not describe the current state of the market.

Thanks to the static monetary policies operating in many major economies, there are relatively few independent investment opportunities with sufficient market liquidity to absorb a thematic allocation from a large global macro fund. As a result, the few such trades that do exist very quickly become over-crowded, particularly by the few large funds that dominate the AUM base of the strategy. Unfortunately, this leads to paranoia and a fear of loss rather than a healthy balance between risk taking and risk management.

When the markets do move, portfolio managers are incentivized to take profits or reduce risk very quickly. Why? Because macro investing has become a game of musical chairs, where investors need to make sure they are not the one caught out when the music stops. Those on the right side of the market, aware that most of the past five years have been characterized by range trading in foreign exchange and fixed income, move to ensure that they do not drawdown their investment gains. Those with losing positions, on the other hand, do not feel able to view markets through a value prism, and instead worry about the possibility of hitting their modest loss thresholds, and thus closing out positions at disadvantageous levels. Consequently, the de facto “macro” time horizon has been compressed into a few hours to a few weeks, leaving relatively few able to capitalize on the thematic gains that have traditionally characterized the strategy.

Although generating a 10%-12% gross return should not be a particularly hard target in an environment where risk parity funds have produced 20%+ annualized gains over the last few years, the current focus on loss avoidance above all else has condemned the macro strategy to a performance that is mediocre at best. If a portfolio manager is unable to weather a 5% drawdown without having his risk allocation cut or eliminated, how is he to participate in the type of trades that generate double digit returns? The answer is he cannot. Unfortunately, what is individually rational (i.e. cutting risk quickly to avoid hitting drawdown limits) has proven to be collectively irrational as the industry careens from stop-loss to stop-loss.

This negative feedback loop has provided even more incentive for investors to allocate elsewhere, and very often to managers dedicated solely to one asset class, including funds that are far less focused on loss aversion or a metric like a Sharpe Ratio. Remember, investors can market returns. They cannot market a Sharpe Ratio.

It is ironic that the macro strategy has lost its way considering the opportunity for out-performance from some of the big themes of the last four years – long Equities (yes that is a macro investment), long Interest Rates, long Credit, and short Volatility – was very large. These were strategies that in previous cycles made big profits for the macro managers who got them right.

They can do so again. That is why the call right now should be to re-think how investors look at risk. What investors should demand from their managers is a return to old-school macro investing, where themes are given time to play out, portfolio turnover is significantly reduced, and more focus is placed on absolute returns at the expense of fetishizing drawdown limitation.

At the very least, investors should take a look at the macro managers that have evolved post the Global Financial Crisis. A new breed of portfolio managers are emerging who are “risk conscious” and use their expertise in derivative products to add both edge and control to concentrated investing. True, their absolute AUM pales in comparison, and certain strategies may have liquidity constraints in terms of scale, but it is becoming easy to identify this group of “risk conscious” managers from those simply focused on loss aversion.

Ahh… The last highlighted and underlined point: my marketing edge in my pitch deck?
Ha!