ETF's for the season

If you are bearish about the dollar as I am, take a look at these two ETF's.
Here is my commentary

Brics are going nowhere

Was hilarious to see financial news broadcasters commenting on BRIC's running out of steam earlier this here.
Here is my take.

Japan in Focus

Dated article on Japan.
Just to remind readers, this article was right after the earthquake in Fukushima
Click here for a read.

Oil Correlations

We are all intrigued with the way the stock market has been increasingly tracking the crude oil price movements.
But there are some startling facts when we take a closer look at the numbers behind the story.

For my analysis, I looked OIL (iPath S&P GSCI Crude Oil TR Index ETN), which tracks the Goldman Sachs Crude Oil Return index which is composed of WTI crude oil futures contracts traded on NYME.

Now if we compare the correlation based on yearly returns on this ETN and the 3 major US based Indices we notice a gradual increase of correlation for the last 4 years, from 2007 to 2010.
Yearly S&P 500 Dow Nasdaq
2010 72.25% 70.09% 67.83%
2009 56.43% 54.32% 51.41%
2008 39.58% 36.58% 34.97%
2007 10.26% 6.90% 6.47%

But what will be startling is the correlation of YTD returns for the same combinations as above and also compare it for the last 5 years for the same time period (first 68 trading days).
YTD S&P 500 Dow Nasdaq
2011 -19.46% -18.61% -23.74%
2010 63.96% 62.81% 54.80%
2009 47.86% 44.92% 43.53%
2008 60.71% 59.49% 58.58%
2007 9.55% 7.35% 4.86%

2011 shows us that the equity markets are negatively correlated to the crude oil prices but instead of a behavioral change in relationship, I would attribute it to the systemic pressures on the market such as the Mid-Eastern political upheavals, Japanese nuclear meltdown and the Capital Hill crisis.

Japan Research- Investment Advice in troubled times

The recent Japanese earthquake is of epic proportions and has led to unchartered territory in terms of Japan’s preparedness for a nuclear catastrophe. The Japanese archipelago is located in an area where several continental and oceanic plates meet. This is the cause of frequent earthquakes in the island nation. The worst natural calamity to strike Japan prior to the most recent tragedy was the 17th Jan 1995 Kobe earthquake.

Let us look at the Nikkei-225 prior to the 1995 earthquake. The chart below shows us the price graph from October 1994 till Jan 20 1995 with the highlighted portion detailing the market collapse after the earthquake.

To compare the US markets, we have looked at the S&P 500’s correlation with the Nikkei-225.

This chart shows the 60-day rolling correlation of the S&P 500 from March of 1994 till the 17th of Jan 1995. The trend line in the chart indicates very little correlation between the Nikkei-225 and the S&P 500. But what is interesting to see is the change in the correlation chart post the Kobe earthquake, as shown in the attachment below.

The trend line indicates the clear shift in the trend between the two indexes.
What will be interesting to see is how, the Nikkei-225 fared after the Kobe tragedy.

As is evident from the chart the Nikkei bounced back and followed the S&P 500, which was in the middle of an extended bull run, continuing its upward surge throughout 1995.

Cut to the recent tragedy in Japan, let us take a look at the correlation of the two indices in question, S&P 500 and Nikkei-225 in recent times.

This above chart shows the 60-day rolling correlation of the S&P 500 from April of 2009 till the 15th of March 2011. The trend line in the chart indicates significantly higher correlation between the Nikkei-225 and the S&P 500 than that witnessed in 1995. In fact if we take a closer look at the trading week of the tragedies in 1995 and 2011, we will notice that the average 60-day correlation for the 5 trading days after the 1995 disaster was 7.7% while the last week has seen an average 60-day correlation of 25.5% between the Nikkei and the S&P 500.
Of course part of this could also be attributed to the impact that the North African crisis but there is no denying the significant coupling of the Japanese and US equity markets. If we take a closer look at the volatility in the Nikkei-225 before and after the 1995 tragedy we will notice that the 6-month standard deviation before the 1995 crisis was 0.69% whereas 6 months after the crisis this volatility doubled to 1.4%. This would suggest that with the increased correlation between the two markets and also accounting for the greater damage caused by the recent tragedy, the US markets would share some burden of the volatility going forward.
In addition to the equity markets, the currency rates have also been impacted by the tragedy. If we take a closer look at the USD/JPY exchange rates in 1995 we see a short-term strengthening of the dollar due to the yen inflow in the country post the tragedy.

If we look at the YTD exchange rate chart in 2011, we will notice a similar trend reversal which we think will be similar to what was witnessed in 1995.

From an investment opportunity stand-point, I feel this should be a good time to re-evaluate new positions in VXX and FXY for the short-term.

Marriage Video

The start of a new life with the woman of my dreams.
I love you Rita.

First brush with GS

Had my first one-on-one with Goldman Sachs NYC, albeit for access to research portal.
One small step at a time.....

MBA!!

Done with my MBA...yipppeeee!!!!
Go hawks!!

The Magic of Sehwag

Loved this bit from CricInfo....
"Murali was in his ninth over, Sehwag had crossed 100, the field was well spread, the helmet had made way for a cap. He had just inside-outed the bowler for four, and Murali came back with a doosra, slightly short of a length, around middle and leg and turning towards off. Sehwag read it early, went deep into the crease, waited for the ball to arrive, and give it a full-face defensive.

Murali's malleable wrist and forearms dropped off in frustration, and he said something to Sehwag that made him smile; he turned away and continued smiling. Sehwag was reading the doosra and Murali knew it. More than the 14 fours and four sixes in his 100 at the time, it was one defensive pat that exasperated Murali. And Sehwag enjoyed it.".....

Sidharth Monga - 10/10
Sehwag - Incalculable....

Sonnet of the day....

From Dil To Bachcha Hai Ji - Ishqiya
hail Gulzar and Vishal Bharadwaj...

"Darr lagta hai tanha sone mein ji
Dil to bachcha hai ji
Thoda kaccha hai ji

Dilsa koi kameena nahi
Koi to rokey, koi to tokey
Iss umar mein ab khaogey dhokhe
Darr lagta hai ishq karne mein ji
Dil to bachcha hai ji

Aisi udhaasi baithi hai dil pe
Hassne se ghabra rahe hain
Saari jawani katra ke kaati
Piri mein takra gaye hain

Dil toh bachcha hai ji
Thoda kaccha hai ji
Haan dil toh baccha hai ji"

Spicing it up.....

Just what I was looking for Cook Book

2010...more surprises...

So just when you thought it coudlnt get any worse..it does...
Murphy's Law in action fellas....

Crashed my car head-on yesterday....was totally distracted...
thankfully nothing happened to me....now what else...cmon..bring it on

Missing Home.....Amar Kolkata

Its been a while since Ive been this homesick....
I'll blame Bong Connection for that.....
i really dont know how to express what I feel right now..probably will just "itemize" my memories...
Nandan r "premik" para
JU r maath...
Second Campus r "Santineketan"..
Bhakta-da Bhuto-da
Hot Kati Rolls..
Shiraz..
Globe, Jaya, Metro, Priya..
Academy of Fine Arts....
Shyambazar r paanch-matah mor..
enchor/mocha/ilish...
Gariahata r mor..
Outram Ghat...
aar....aaro onek kichu

Amar Kolkata....tomaye bhishon mone porche aaj...

Markets going up but....

With fears about Dubai World subsiding, the US markets seemed to be subsiding. The key indices were up by about 2%.
i succeeding in loosing my first $100 in the market.
Invested $100 more...looking primarily at Dell Equity options....
More on that later....

Let the trades begin.....

So finally decided to take the plunge into capital markets trading using the little that I have learnt in school and working with Breneman Winbush....
It might sound strange that having spent 6 in the industry I decided to invest in US markets when I am in school....:)..But I think my rationale was that i have never understood the capital markets and their fundamentals till now...
Ironically though, i have decided to trade on them using technical analysis....
This is a snapshot of my trades thus far......

1 trade on Dell options remains to be determined...
More on my trades later....

Henry Fund Snap-2009

Back Again.....

Been a really long time since I had the urge to log into blogger.com and ramble about my life, musings which somehow didnt make sense for a while.
But here I am again.
Why?
Well I think I know, its kind of complicated, but let me see if I can transform my self-prophesied concept into prose....
I think humans have this inherent nature to nurture, could be attributed to evolution.
Blogging is like nurturing a child, watching it grow and having satisfaction in your perseverance.
Been a tough 12 odd months for me. Tougher than I thought it would be. Hopefully the road ahead is less bumpy, but again, who knows. Life strangely has always managed to conjure up a concoction which has surprised me. We'll see what lies in store for me in the future.
But Im sure...something NEW is coming my way....so time to crank it up a notch folks..ROCK IT!!....

Tippie 9th in the world in Finance.......

So we are 9th in the world in Finance...
Tht's great news for the program, just shows the commitment of the faculty and staff, the success of the Henry Fund and the final placement of the finance course students....feels great.....

Commentary

The winter break is about to end. As I sit here in the premises of Widernet , in the University’s Communication Center, the lines of swing code sitting right next to the word file, glare at me. Its January 2009, a term at business school is already over.
Term I was fascinating, eventful and scary. It’s been a really long time since I have learnt so much in such short a time, in fact to be honest, its never happened earlier. Finance and accounting were great value-adds.
The coming term will be all the more challenging with the Henry Fund, CFA and the all important internship search. A lot depends on the internship, including the fate of my continuing at the school next year, with finances being a major concern. As of now I’m keeping my faith in my abilities, but very soon the Almighty will be summoned upon.....

Yippeee....

Finally some good news....made it to the prestigious Henry Fund for 2009.
On my way to be an equity analyst. Only time will tell If I like it or not, but time for me to bask in the sun and brace myself for starting my CFA.....
More from time at school a little later...maybe after my finals which start in 10 days time...