On Trump

People who believed Trump would lose were  unprepared for his winning.

The same people believed he would be bearish for market were unprepared for the Trump rally

Now the very same people believes market should be bullish start to ignore the destructions brought about by the Trump administration.

Be prepared

Max drawdown: ~ 40%

Max Drawdown duration : 12 trading days

Loss in market cap: ~ 33.5 B Euros

Retification budget: (16.2 B Euros)

Final settlement with US (~ USD 16.15 B )

Contingent liabilities in EU (unknown, probably minimal)

It took 14 months to break out of flat trading range, after it reached settlement agreement with US gov’t.

Recovery since Sep 17  2015 ( 53%)

Recovery since Nov 2016 (29%)

Moral of the story: In highly uncertain lawsuit cases, investors would stay on the sideline until liabilities are cleared. In this case, share has recovered more than the claims & liabilities from diesel engine scandal, but over half of that return comes AFTER the legal settlement.

To keep Europe’s giants in good shape, I suspect that Europe would be lenient on VW. The biggest uncertainty is now gone.

While there are potential risks arising from Trump’s protectionism actions, I do expect VW to fully recover to its pre crisis level (which had already dropped 30% from its record peak).

Hold and see.


VW’s scandal wiki

VW’s settlement with USA




on Trump Plunge

I had long suspected Trump would win, and have been cutting longs and building shorts since October.  The key was to keep a small long book and a small short book.

Another important preparation I did was to investigate whethere Trump wins would be good for market or not.  It seemed he is not so bad for market afterall, calling for higher infrastructure & lower corporate taxes. His take on the Fed, however, is uncertain.

Last night, I added VIX longs. VIX has came down significantly to 16 after FBI drops accusation on Hiliary this Sunday. However, This did not make her more likely to win the presidential election than a few days ago.

The position was oversized and cut to 1/6 by the end of US closing. (oh well..)

During today’s plunge, I covered my long VIX and short HSI in the first plunge (around 11:00).

I built a  sizable long in Mexico PESO , speculating that it had overshot ( comeon, 11% a day?), and keep adding in the afternoon

I repurchased some stocks I have sold before the election, adding net long exposure

I longed the HSI futures as Trump win was almost certain and HSI started rebound

the incremental FX & index positions should be settled in coming few days as market rebounds.

The fate of Deutsche bank became ever bleaker now.


Delineating from China Policy

No doubt, many have profited from speculating on China’s policies.

Yet, I’m trying to steer away as much as possible, from policy concept stocks, even they may be real, substantial near term beneficiaries.

Reasons are simple:

  1. I’d be always behind market since I’m not in the close circle of CCP
  2. Chinese officials adobts a fluid policy enforcement doctrine. This means things could turn 180 degrees overnight.
  3. This is especially true for government spending related policies

1) means cost disadvantage, while 2) induces pricing uncertainty & limits portfolio exposure.











Investor’s reading habits

Starting the first few days of my investment life, I’ve been reading mainland Chinese news in mainland media/ newspaper. They are always ahead of HK media, somtimes by a few minutes, sometimes by 1-2 days.  And I read HKEJ for the insightful articles by 林行止 and 曹仁超.

Bloomberg is a must read, too.  Sometimes I read The Big Picture Blog.  However I spent typically 1/10 weak of time reading english financial media.

This hasn’t been changed even after the financial tsunami.

Recently, I’ve picked up reading the Economist & FT.  If you compare the depth of analysis with HK media… there is good reason to simply skip HK financial media except for company specific news.

In a globally conmingled financial market, a good investor need to have a deeper understanding of global political & economic issues so as to exploit more opportunities.

Even more importantly, to avoid uncessarily losses.

Save your life, read English  media.


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