Tag Archive: long term capital management


You are a trader or investor ? This is the difficult question that most people do not able to answer,  they take a short blogterm view and when  position goes against them, they prefer to hold the stock as long-term bet.

Most successful investors tend to have clarity of thought and look only at the larger picture. They discount all day-to-day noises and concentrate only on the fundamentals. In the end, fundamentals always prevail over speed.

here is a small description that short-term is more of an emotional based trading where as the long-term provides value for your thoughts.
Short term= Emotions

Long term= Earnings Continue reading

What determines the shape of the zero curve? Why is it sometimes downward sloping sometimes upward sloping and sometimes blogpartly upward sloping and sometimes partly downward sloping?

Lot of theories have been proposed but the simplest one is the expectation theory which conjectures that long-term interest rates should reflect the expected future short-term interest rates. More precisely, it argues that the forward interest rates corresponding to a certain future period is equal to the expected future zero interest rate for that period.  Continue reading

Leverage versus Debt

Few days back Macro business published an article on Leverage versus debt . Found interesting and thought of sharing my point of view on it.Google

Europe, Japan and America are printing money at an extraordinary rate. It has reduced the cost of debt to negligible levels. Usually this is explained with reference to what is happening in the conventional economy, but I suspect there may be another explanation. The systemic effects of the bizarre financial system that we have created, which is based on leverage. That leverage, which is thought of as debt, is not really what we mean by debt.

One of the features of the explosion of derivatives in the last 15 years, the rise of “meta money”, is that it was achieved through the creation of massive amounts of leverage. When Long Term Capital Management nearly destroyed the world financial system in 1998, it was done through a highly leveraged play on the rouble. LTCM was brought undone when Russia defaulted on its bonds.  Continue reading

Very recently CME shared a paper on the famous OTC derivatives and their treatment under Extraterritoriality. Due to the role of imagesunregulated over-the-counter (OTC) financial derivatives in the 2008 financial crisis which began in the U.S. but whose influence was felt globally, the G-20 agreed in its Pittsburgh meeting in 2009 that “all standardised OTC derivative contracts should be traded on exchanges or electronic trading platforms, where appropriate, and cleared through central counterparties by end-2012, at the latest. OTC derivative contracts should be reported to trade repositories. Non-centrally cleared contracts should be subject to higher capital requirements.”  Continue reading

Debt and Leverage

Couple of days back Macro business published an article on Leverage versus debt . Found interesting and thought of imagessharing my point of view on it.

Europe, Japan and America are printing money at an extraordinary rate. It has reduced the cost of debt to negligible levels. Usually this is explained with reference to what is happening in the conventional economy, but I suspect there may be another explanation. The systemic effects of the bizarre financial system that we have created, which is based on leverage. That leverage, which is thought of as debt, is not really what we mean by debt.

Continue reading

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