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i have a question for anyone starting their own LLC for the purpose of investing/trading in an aim to generate alpha for investors. As a startup, how do you deal with having no track record? for most cases, isn't this is the one thing that bars new investment/hedge fund/mutual fund/ ? i mean...

heres whats going to happen, they are going to walk away, group together, and start a new firm all over again.

LOL

i think they do, because the system is flawed.

sorry, that url is not working ?

so for security analysis, say for kraft foods (relatively less risky company), would 6% to 8% be adequate ? this is still boiling my mind, because EPV fluctuates a great deal depending on the Cost of capital number that is used....should i be conservative and just use 10% ?

thanks thanks. it was very helpful. im just surprised why they didn't bother with WACC....they just like pulled numbers of 8 or 10%,,, cuz 12% is the long term return of equity....according to the book.

so debt would be all of the current and long term debts added together? what about the cost of debt, and cost of equity how do you find those ? it seems like the book, they were just grabbing numbers out of air but saying that they were not....there was one page that explained how they...

i'm reading the book, beyond graham and dodd, I have a question about Earnings Power Value EPV = Adjusted Earnings * (1/R) where R is the cost of capital. how do you calculate R ? do i just use the risk-free rate and add 1 or 2 points to it? it talked about Weighted Average of Cost...

his one of the few, being an academic, he has done very well in trading desks. read his books. theres a difference between someone who has gone through all the academics, years of study, and admit that it has major flaws, to someone who never went through the process and claims the same...

yea of course, buffett is not a "trader". but theres commonality that both exploit when everyone is panicking or have lost their shirts.

Nassim Taleb was one of the guys i know and was very familiar with this. in fact i thought about doing this a year ago, but i really was not confident on my understanding of option pricing. if you think about it, nassim andj buffett share common character in that they both make ton of money...

yes. you've read my mind. so i guess if you knew something big was happening (IV low, but i guess some other people knew this big event would be happening, so IV won't be insanely low ?), with straddles you would just be bullish on volatility not the direction of the market.... i think...

thats wishful thinking.

so if the premiums are too expensive, but you still expect a huge price movement, would it be good to do a long strangle instead ? but this would mean that you are sort of guessing which way the prices would move by a big amount ?

i heard that saxobanks has some neat fx options, like where you can do No-touch options, or touch options....anyone has experience with these, i wonder how they price the premiums for fx options... http://www.saxobank.com/retail/products/forex/forexoptions.aspx

so you mean like doing covered calls and covered puts at the same time ? but i thought writing options were considered a big no no....there is unlimited risks when someone excercises.... but then again, i heard no on really excercises....

i would like more inputs from guys who are doing similiar stuffs...

wtf 160k ??? did he like stay in school for 10 years on campus ?

yes. long straddles. so im guessing that IV will adjust accordingly to make it too expensive to buy just before an important announcement ?