Tag: contracts

Bold Calls: Jan 2016

On By Chen Yu YanIn Bitcoin, Equity, Fundamental Analysis, Futures, Policy, Technical Analysis, TradingLeave a comment

In private, I’ve made some bold calls. This affects my trading and I see it as a way for me to exercise my ability to predict long term movements based on an unique style of analysis. I won’t bore you with specifics as that isn’t the point of this entry.

In 2015, over a ramen lunch with close friends, I made a bold call to say that the US equity market will fall 30% from the peak, the Aussie will fall 40%, and China 50%. This was around June 2015. So far, China is looking to have almost hit my target as it is almost touching that magical 2600 mark. Honestly, being a massive Chinese hedge fund, the Australian markets is gonna tank a little as well. I guess we’ll see some results by mid year. The US markets are probably the most difficult to predict. I believe it will be heavily affected by who gets elected for presidency this year.

My new bold call for 2016 is Gold (gold vs US to be precise). I am fairly bullish on gold and I expect an initial target of $1200/oz followed by a rally to $1400/oz (it is currently $1100 as I am writing this). This is based on increasing volatility, the distrust in the growing Chinese/other emerging economies, a beautiful technical bottom plus reversal patterns emerging.

My second call would be for bitcoins. As mentioned in my very first post here, the block chain technology is worth a lot of money. The ability to decentralize the settlement system alone is enough to save enough money to make Scrooge McDuck drool. This along with the fact that we’re half way to mining everything out means that suddenly there is a supply squeeze that can raise the prices faster than twitch chat raising dongers (a very specific reference so kudos if you got this one). My personal target is $1000/coin but I believe we have to wait for around the end of the year for that to come about.

To sum up, bitcoin and gold will be the best performing currencies in 2016 (I’m counting gold as a currency because it pretty much is) and your phone is ringing because I’m calling it!

Some thoughts on gaming: urn reel monies

On By Chen Yu YanIn Gaming, TechnologyLeave a comment

Continuing from my earlier lengthy article, I am going to talk about what I think will happen in the future. The trend has been somewhat established and the wheels are now turning. Needs a bit of grease but generally speaking, it sounds pretty good… well, not sounds pretty good since it needs grease but you should be able to come to the correct conclusion despite the bad metaphor. I must admit that I once again succumb to the temptation of bad research (as I have a few deadlines looming chillingly over the horizon) but I will aim to provides links to my sources whenever I feel inclined to do so.

E-sports is essentially the name of the game now (all puns intended). As the name suggests, it is considered a sports, with professional athletes competing for the top spot in global scale events. ESPN has covered the growth of e-sports as well as notable events across different games. With the massive reaction and cheering of TI5 still ringing in my ears (I need to get that checked out), the e-sports community is pushing ahead by organizing not just bigger events, but more events, allowing the general gaming community as a whole to enter. Amateur tournaments are event being hosted in backwater countries like Australia!

Lured by the scent of money, betting companies are now entering the fray. I am not talking about betting hats (please refer to my previous article for an explanation on hats), I am talking about real money. Sportsbet (a major player in Australia) is currently covering the Nanyang Dota2008 2 Championships, LoL World Championships, CS Go Dreamhack Open, and I’m sure there’s more but I got the idea after scrolling through 3 pages. As with fantasy baseball that has been popularized relatively recently (compared to the actual sport I guess), fantasy e-sports, along with gambling is clearly going to be a space worth watching.

Seeing as I live in Australia, I enjoy simple things such as using the metric system, riding in my kangaroo to work, avoiding dropbears while commuting, and using Aussie statistics. From the Australian Wagering Council website, I found some interesting facts and figures. Sports betting only contributes 1.2% of total betting revenue, around AUD$200 million. It has over 2 million Australians involved yearly, which doesn’t sound impressive until you realize that we have a total population of around 23 million. Now, I know that Australia is not something most people would consider as a standard, and that we do have a gambling problem like a middle aged alcoholic found in a casino… which is a fitting simile when you realize that most of our gambling laws are made under the same act as our alcohol laws.

While gambling doesn’t provide much investment opportunities, outside of the current rudimentary system of calculating odds which can be arbitraged by those who are keen enough to accumulate data for themselves, the e-sports community provides other interesting opportunities. One of the more prominent would be Virtual Reality (VR). I assume that it is already common knowledge that some of the larger tech companies are addressing VR as a serious investment opportunity. Looking at Oculus Rift, the version that I’m referring to is due to be released Q1 of 2016, it essentially brings portable entertainment into the real world. I believe I’ve made jokes about how the real world has awesome graphics with crappy gameplay. Well, that’s all about to change if I can be seeing the world through a VR augmented lens. Hot girls? Check. Zero need for human interaction? Check. ability to immerse myself fully and integrate my current technology into it (you can plug in your phone)? Check. Well, I guess this is where the human race goes extinct. Not by nuclear warfare, but by being too obsessed with virtual things such that all productivity drops to a level where only the maintenance of said virtual world is sustained. Kind of like Wall-E.

One step further is the world of augmented reality (AR). Looking at companies like this must truly make one reconsider the concept of reality. I just came back from Melbourne, where I played a VR/AR game. It was a Left 4 Dead styled shoot ’em up zombie first person shooter. Apart from the fact that you cannot adjust the field of view, so the focus makes people like me suffer from motion sickness around half an hour in, the game was pretty good. There are some other problems with the actual aiming and the fact that there were some other restraints, it was a pretty good experience. Nothing good enough for me to actually name them but enough to give them a mention so that if you’re interested, you can go google for it.

Major tech companies such as Facebook, Google, Amazon are all investing in some kind of ‘reality’ technology. Perhaps in the future, all our wants and needs can be fulfilled by virtual or augmented reality. To the point where we can simply sit back and consume virtual products that are delivered straight to our brains via the headsets. Where the world’s only professionals are pretty much those who live in the real world maintaining the servers and creating newer and better ways for the hardware to tickle our pleasure sensors in the brain. It seems that if there is artificial intelligence set out to destroy us, this would almost seem the most logical and fool proof. With everything we want at immediate disposal, the need to procreate etc. all disappear and the human race eventually dies out in this slippery slope scenario. On the other hand, I get to live in a world where I get to sleep all I want and eat everything I want and have fun with whomever I want. Sounds almost fair.

Hmm… the matrix almost sounds like a nice place to live. I’ll take that blue pill thank you very much.

My everyday life in the age of super long and unnecessary titles and the future sticky impact on icecream

On By Chen Yu YanIn Environment, Futures, TradingLeave a comment

Among my work and research, somehow summer crept in without me noticing. The cool winds of winter replaced by the fiery sun is a nice change of pace. Although this year, summer arrived a little too quickly (even by Australian standards). I recall merely a week or two back when people were complaining about the harsh wind and rain and pretty much sacrificing their first-born just to get some sun. I’m pretty sure it went above 40 C (104 F) yesterday. The immense heat struck me as I was lazing about thinking about what to write, which in turn made me want to write about the heat. (It’s worth noting that I don’t necessarily write all of this in one sitting so the day I publish it, in this case today, can be a completely miserable day)

Irregularities in temperature has been all the crazy for a while now. A notable changing point, for me at least, is when I saw Al Gore’s An Inconvenient Truth. How does this affect trading? You ask as you lower your sunglasses ever so slightly while enjoying the last of the Mediterranean sunset (once again… I don’t always have the best grasp on what my reader demographic is like) . Well, that’s a fair question. If you actually read till the end of my title, you’d know that it’s about icecream (which everybody loves… apart from those with allergies, but even then). If you happened to be eating an icecream while reading my title, apologies if the length made it melt away…

Before I am accused of unsound research, let’s grab some figures first ( I am going to go by my favourite icecreams because they’re delicious). June 1996, a Golden Gaytime (fuck you if you laugh at the name, it’s one of the best icecream I’ve ever had) cost $1 AUD in just about any supermarket you go to if you just buy one block (Sydney prices). A Golden Gaytime today in a similar store would cost $2.70 (if you’re lucky enough to find it. For a while, these things were impossible to find). That’s a 170% increase in the span of 20 years! If you annualize it compounded, some simple math would yield you the sweet sweet 8.5% return per annum not adjusting for inflation. If we calculate the returns on the S&P500 index between June 1996 and September 2015, we get an annualized return of 7.67% (this is with reinvested dividends. Without is only 5.77%). So basically, the icecream is outgrowing the benchmark by almost 1%! Scoops of icecreams at the same time in Australia were $1 AUD, today, you can easily expect $3 AUD. When you consider the inflation in Australia over the past decade has never gone above 4% on an annualized basis, the price is crazy!

Now, you’d question my argument and say that the S&P index is well diversified while icecream holds a lot of idiosyncratic risk. You can also argue that my research is incomplete as I only used one icecream in my sample. That is correct. Feel free to complete my research in your own time (if you can bothered digging through the internet for prices of icecream two decades ago). Regardless, what I want to discuss next is my main purpose.

In case you didn’t know, basic ingredients of icecream are milk, butter, sugar, and probably a huge freezer. The freezer aside, milk, butter, and sugar are all available to trade on the futures market (I don’t know what you call a basket of the three but I’m going to call it the icecream basket… or as a friend calls it, the ‘icecream tub’ because who really stores icecream in baskets). Let’s just leave the world of trading for a minute and come into the real world where the graphics are good but the game play and story sucks. Who eats icecream? Mainly children, and parents who steals a bite or two and end up eating everything anyway while their child watches leaving them traumatized and not knowing how to feel because they’re only 5 and can hardly pull together a coherent sentence to express their thoughts. What about when? Well, I know that summer is a big season for icecream (citation required). And I’m also fairly sure that they’d sell in spring and autumn (the name of the season that comes after summer for those who uses ‘fall’ as if the season is purely based on falling leaves. By that logic, falling rain, falling snow, everything is going to be fall!). Heck, when I went to Europe with friends in December, I ate gelato almost everyday while in Italy (I ate other stuff too, not just gelato). Geography? Well, anywhere that has electricity would store icecream right after beer is stored to an acceptable level. Basically my point is the demand will be there. It almost always will be there since it is somewhat a ‘luxury’ good. And cheap luxury goods will always be in demand (look at the Daniel Wellington watches. Tasteless? Yes. Overpriced? Yes? But it takes advantage of human weakness in that it creates an illusion of elegance, and via clever marketing fools its audience into buying it because hey, paying $200 for a piece of shit that is luxury is worth it! Mainly because you can afford it. Which is also why you don’t see everyone just go around in that sweet Vacheron Constantin. All just my opinion… if you like DW watches, good for you… and please stay away from me). The demand in affordable luxury will not wane because of human psyche. Hence icecream will always be around. That or because it’s delicious…

Looking as the icecream tub, climate change does have its subtle effects. The price for processing butter, cream, milk, sugar, flavouring etc. has far exceeded inflation (citation required). After a bit of digging through the archives of the International Trade Centre (ITC) website,  when developed countries such as the US and Germany (I’ll just group the rest of the EU under Germany for simplicity), it causes problems. Both the US and the EU has tariffs and subsidies protecting its agricultural sectors. Hence, the sensitivity to policy changes can only be described as substantial. Given the current financial situation in the EU (the US’s contributions towards milk exports is fairly small next to the EU’s, with the EU contributing around 1/3 of the total production with their top 3 countries alone and the US making up around $4 billion of the $60 billion market). Any negative externalities to the environment becomes a global problem and hence key ingredient prices will be driven upwards because damn it, icecream demand isn’t gonna go down. That’s not how icecream price elasticity works, or as I mentioned, it’s not how the price elasticity for low-end luxury item works. As for the diversification risk? Well, if you want safe money, diversify by all means. If you want to make some money, concentrate your investments (citation required).

TLTR? Well, allow me to sum it up, mainly because I’m actually tired of writing.

Make less pollution, eat more icecream.