Trader?

Thanks
Paul

The Social Network

Such a great movie, Thanks for the recommendation, Jason
But it seems like cinemas in HK are neglecting this film a bit. Whatever~

Groupon attracts Google

Dear All

As i mentioned a few months ago, Groupon is expanding rapidly worldwide. Now it has caught Google's attention. Google might acquire the company. Take a look at this article:

Google Inc.'s (GOOG) reported interest in closely held Groupon Inc. could lead to the most expensive acquisition yet for the Internet giant, which has been in the midst of a buying spree.

While most of Google's recent acquisitions have been relatively small, online coupon provider Groupon could spur Google to pay as much or more than the $3.1 billion it paid for online display-advertising firm DoubleClick in 2007, in what was the biggest purchase ever for the Mountain View, Calif.-based company.

The AllThingsD blog reported early Friday that Google is considering paying "well above" $3 billion for Chicago-based Groupon, which has garnered a wide following for its daily online offers of heavily-discounted local deals on everything from cheese steaks to theater tickets.

According to SharesPost, which provides an exchange for equity in private firms, investors have been seeking shares of Groupon for roughly $38 apiece, implying a valuation of about $1.6 billion.

An acquisition of Groupon would represent a significant foray for Google further into the market for locally focused online services and information.

A Google spokesman declined to comment. A Groupon spokeswoman also declined to comment, referring to the reported merger talks with Google as "just speculation."

Google, which emerged from the recession relatively unscathed, began the year by announcing it intended to buy at least one company per month.

The company disclosed last month that it spent roughly $1.6 billion on acquisitions during the first three quarters of 2010--which included $681 million paid for mobile phone advertising firm AdMob, $179 million for social-networking software developer Slide, and $626 million spread across 37 smaller purchases.

In addition to DoubleClick, other significant Google acquisitions have included YouTube, the popular video service bought for $1.65 billion in 2006.

Google recently disclosed that it is now pulling in revenue from over 2 billion video views on YouTube per week.

Google's M&A activity has drawn increasing scrutiny from antitrust regulators. Google's purchase of AdMob, for example, was delayed several months before receiving approval from the U.S. Federal Trade Commission.

Google currently intends to purchase travel software developer ITA Software for $700 million. The company said in August that the U.S. Justice Department would be conducting an extended antitrust review of the deal.

Groupon, which was launched in late 2008, says it now offers daily deals in over 300 different markets around the world. The company announced earlier this week that it signed a distribution agreement to make its offers available on Yahoo Inc.'s (YHOO) websites.



-By John Letzing, 415-439-6400; AskNewswires@dowjones.com

Thank you

MC

License

You can find me in SFC website now
Thanks
Paul

Shift

More the HK government do on the real estate,
More the hot money float into the market of stocks

Thanks
Paul

US Sino Currency Rap

Thanks Jason

Warrants

Points to know before we trade warrants:

1. Leverage

a. Definition:

i. Leverage expresses the relationship of the warrant price to the price of the underlying instrument.

ii. Leverage= So / warrant price x conversion ratio

iii. For “deep in the money” warrants, leverage can be used as an indicator for the expected (stronger) price change in the underlying (share) price, given a 1% change in the underlying (share) price

iv. Unfortunately, many investors still use leverage as their exclusive indicator when choosing warrants. Although this makes sense for deep-in-the-money warrants, delta and effective gearing are more suitable valuation indicators for out-of-the-money or at-the-money warrants.

2. Delta

a. Definition:

i. From a mathematical perspective, delta factor is the first derivative of the warrant price by the price of the underlying instrument.

ii. It indicates the change in a warrant’s theoretical value, in absolute terms, given a one-unit change in the price of the underlying.

iii. Multiplying delta by the change in the price of the underlying – taking account the conversion ratio – indicates the theoretical change in the warrant price.

3. Effective gearing

a. Definition:

i. Contrary to the leverage indicator, which is based on the assumption of a parallel (absolute) change in the prices of the warrant and the price of the underlying, effective gearing takes the delta into consideration. It therefore provides a measure of the actual leverage effect provided by the warrant.

ii. This helps to avoid mispricing which might occur due to purely focusing on leverage, especially for warrants that are deep-out-of-the-money

iii. Effective gearing = delta x leverage

4. Theta/ Time to maturity

a. Definition:

i. Theta describe the effect of a change in the remaining lifetime on the warrant price

ii. It expresses the change by one day or one week

iii. The theta – which always has a negative sign – is a daily or weekly indicator

iv. Warrants that are deep-in-the-money have a low theta because they have high intrinsic value and a relatively low time value component. Similar to warrants which are out-of-the-money, their time value tends to fall on rapidly to the end of maturity

v. Theta is highest for at-the-money warrants, where the time decay can be enormous, especially as such warrants approach expiration.

vi. “ The life time of the warrant should be at least 3 months longer than the timeframe during which the investor expects the price of the underlying to change “

5. Rho/ Interest rate

a. Definition:

i. Rho describe the effect of a change in interest rates on the warrant price

ii. The term of a call warrant usually specify that the issuer bank is obliged to make a cash settlement of the intrinsic value of the warrant at expiration. The bank typically purchases the underlying instrument when the warrant is issued so as to manage its obligations under the warrant. It therefore holds a position, which it normally finances on the money market over the entire lifetime of the warrant.

iii. Since the interest costs incurred would be factored into the price of the warrant, a call warrant becomes cheaper of the interest rate fall and more expensive of they rise

iv. As an issuer of a put warrant, the issuer bank typically sells the underlying to hedge its warrant position, since it is obligated to give the investor a cash payment reflecting the intrinsic value of the warrant at expiration.

v. As the bank would include in the price of the put warrant the proceeds resulting from the sale of the underlying a put warrant becomes cheaper if money market rates rise and more expensive if they fall

vi. Rho expresses the change in the warrant price, given a one percent change in interest rates. The indicator is always between 0-1 for a call warrant, and between 1-0 for a put warrant. The impact of financing costs on the warrant price decreases with a shorter remaining lifetime. Consequently, Rho declines towards expiration.

6. Vega/ Volatility

a. Definition:

i. It only measure the magnitude of the fluctuation

ii. The higher the volatility, the higher the price of the warrant

iii. Historical, implied and future volatility

iv. Historical volatility is based on the price data of the past

v. Implied volatility reflected in current option prices. A bank’s warrant trader uses current warrant prices to compute and assess implied volatility. Implied volatility is critical for the pricing of warrants. Even the best warrant traders cannot predict a warrant’s future volatility, since future data is an unknown quantity. Besides the price of the underlying, volatility is the most important factor influencing the value of warrant

vi. Vega is the indicator reflecting the effect of fluctuation in the implied volatility on the warrant price. Vega indicates by how much the option price will change given a 1% point change in implied volatility.

vii. A Vega of 0.3 means that if the volatility of the underlying price changes by 1% point, the value of the warrant rises/ falls by 0.30 currency units, adjusted for the conversion ratio. Looking at a warrant that is trading at a price of S$0.5 and has a conversion ratio of 10:1, a one percentage point rise in the implied volatility means the warrant will rise to $0.53

viii. Vega is always positive and is calculated in the same way of call and put warrants. Investors beware: the implied volatilities of warrants are high when the market underlying prices have fallen sharply.

ix. This is because downward trends are often faster and more pronounced than upward trends. Hence, it can happen that the positive rise in the price of the underlying for call warrant sometimes is offset by the loss in implied volatility of the warrant and the price of the call will not increase. Investor should therefore always check for a sound relationship between historical and implied volatility. Warrants on the same underlying, with comparable lifetime and exercise price have different implied volatilities, the warrant with the lowest implied volatility should be chosen, taking into account the bid/ask spread and the issuers’ credit quality

7. The spread

a. Definition:

i. In contrast to equities or bonds, where the market liquidity (supply and demand) has immediate impact on the exchange price of the respective instrument, the pricing of structured warrant is not dependent on traded volumes.

ii. Issuers adapt their pricing to the price development and volatility of the underlying instrument, and the warrant’s lifetime.

iii. The size of the bid/ask spread can, of course, be affected by the market liquidity of the underlying: in the case of a wider spread in the underlying instrument, issuers are faced with higher hedging costs which they will factor into the pricing of related warrants.

iv. Having said that, issuers define a maximum bid/ask spread when listing structured warrants.

v. In conclusion, whether or not a particular warrant is actively traded does not have a significant impact on the pricing of structured warrants

vi. The wider the bid/ask spread set by the issuer, the bigger the underlying price change required to get into the profit zone

Steve Jobs on Marketing

Steve Jobs on Marketing from Patrick Soon-Shiong, MD on Vimeo.

Bicameral Legislature

General map and information:

• All ideas and thoughts have to be passed by both Senate and House of Representative in order to become a new policy
• Only the House of Representative has the right to imply policies that involve Government Revenue Bills
• The House of Representative is more powerful in altering economical policies relative to the Senate
• After the vote on 4^th November, 2010, Obama’s Democratic got 183 seats in the House of Representative while the Republican got 239 seats in the House of Representative

Thanks

Paul

Think deeper about the QE2

QE2 is finally out on Thursday, November 4th. Here are some quick points for it:

1. The total QE2 amount is 600Billion, separated into 8 proportions, with each equal to 75Billion
2. Starting from November in 2010, FED will purchase 2-5 years bill, notes and bonds from the US Government
3. The aim for the QE2 is to increase the " Expectation Inflation " in US by keeping the 2-5 years interest rate in a certain range
4. Separating the QE2 into 8 different proportions shall increase the " Expectation Inflation " in the market of US
5. Yet, this is not the end of the story
6. Obama should have known that his party will lose seats in the House of Representative
7. In the coming days, it will be harsh for Obama and his party to make up policies that involve spending money or printing money
8. Personally, I predict that the US Government will cut off some spending in the coming months
9. It may not involve the money that printed in the QE2 plan, but there must be some plans that will be adopted by the US government to reduce spending
10. While " Expected Inflation " keep on increasing, US Government will keep on reducing spending
11. Government will not increase interest rate in the coming 8 months, otherwise, the QE2 plan is a failure

For general investors, I suggest:

1. Buy real estate stocks in US, hold it until May of 2012
2. Buy real estate stocks in HK, hold it until May of 2012
3. Buy commodity stocks, especially oil and natural gas, hold it until March of 2012
4. Include gold stocks in your portfolio, hold it until May of 2012

Thanks

Paul

Photo: http://www.wretch.cc/blog/makoto771/22365264

Paul Krugman

November 5, 2010, 1:30 PM

QE Madness

It has been really interesting to watch some of the commentary over quantitative easing by the Fed: while people like me see the Fed’s actions as way too timid, there’s a substantial faction out there that sees them as the end of Western civilization. Right now the most popular story on Bloomberg is Jim Rogers saying that Bernanke doesn’t understand economics, that he’s “debasing the currency.”

I’ve seen Rogers in action; he seemed to me to be confused about issues like the difference between assets and liabilities. And please note that inflationistas like Rogers have been wrong about absolutely everything this cycle (and the last cycle, and the cycle before that).

But they have their devotees. And this means that monetary policy, our only real hope at this point, must climb a wall of stupidity.

Link: http://krugman.blogs.nytimes.com/2010/11/05/qe-madness/

I am a little worried

Hi

QE 1 was introduced when Dow Jones is near 6600 points. Right now, QE2 was introduced while Dow Jones is at 11200. This is already in the two year high. Do people still believe that the stock market will continue to soar while the unemployment rate remains at this high level? I am a little worried. I personally think QE2 is a good move but the market is just too optimistic. I think the stock market will rise to 11500, then it will start to drop at that point. There's good news in the industries but the rally has started since August, 2010 when Dow is below 10000. Thus, I suggest investors should be careful in this rally. The market might shift position anytime.

Thanks

MC

Paul Krugman

November 3, 2010, 3:59 PM

QE2: Meh

Seconding Brad DeLong here.

Conventional monetary policy involves buying short-term government debt; it has no traction now because interest rates on short-term debt are near zero.

So now the Fed is buying longer-term debt — but still only 5-year debt, with a current interest rate of slightly over 1 percent. How much more effective is that likely to be?

And $600 billion really isn’t a lot when you’re trying to move a $15 trillion economy.

One more thing: the Fed statement basically reaffirms the existing inflation target, it doesn’t raise it. So not much traction on the expectations side either.

In short: meh.

Quote from: http://krugman.blogs.nytimes.com/2010/11/03/qe2-meh/

QE2

Thanks

Paul