Thu 8:42pm


Interests: Asian Markets, Derivatives, Economics, Emerging Markets, European Markets, International Stocks, Property, Stocks, US Market

Fantasy Fund: Pension Zombies

About Me:

I'm just another amateur investor.

Investment Strategy
I trade... monthly
I tend to buy... after much research
I hold for... years
Diversification is ... essential to reduce risk

I invest in what I think are solid and boring businesses, preferably when they are out of fashion. I expect returns to come more from what I exclude than what I include -- the idea being that "index less crap" should outperform the full index. My current holdings are published on my blog.

Cig's Latest Comments

Re G4M and Amazon: while long tail niche markets are not so interesting for Amazon to attack directly, Amazon Marketplace is their weapon to attack all such markets at a very low cost by just providing a platform that leverages a highly competitive ecosystem of low margin small businesses collectively providing coverage and stock (and even curated catalogues via third party websites which send buy…

Niche markets (for anything that fits in standard traceable parcels) are the target of Amazon Marketplace, where the stock of slow moving items is kept by mom&pop stores, not Amazon itself. In aggregate it makes an offering that’s hard for a vertical retailer to compete with.

Dividends as a stable index metric is debatable: - When tax rules change companies change the mix of methods used to send funds back to shareholders (eg US raw yields look lower than they really are due to this) - Dividend levels are subject to fashion and companies will respond to fads. - Dividends indirectly include the risk free rate.

An external cause for the deal failing means people ready to pay 420 going public, which tends to support the price in the short term, which is what we’re trying to price here (from now to the deal’s conclusion).

Let's play: - Deal is fake (claimed funding doesn't exist): target price 150, probability 10% - Deal fails due to external cause (shareholder vote, regulatory): target price 400, probability 40% - Deal goes through: target price 420, probability 50% That gives a fair price: 385, and a probability weighted fail price of 350. I'm surprised the market doesn't believe it. It's a great time to…

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