Tuesday, April 24, 2007

Trading Tactics of George Soros

Investment Ideas by Yaser Anwar

This post is lengthy but i promise that it will tremendously benefit
your investing/trading as it has mine. I would recommend you save this
post in word or notepad &/or save this link, so you can refer back
to it.

  • One of Soros’s most useful qualities has been his
    ability to detach his emotions from his dealings in the financial
    markets. In that sense, he is something of a stoic. Invest First and
    Investigate Later While others permitted their egos to get in the way
    of making intelligent market decisions, Soros understood that the wise
    investor was the dispassionate investor.

  • It made no
    sense to claim infallibility. Although it may have been difficult when
    a favorite stock suddenly took a plunge, it was far better, as Soros
    constantly did, to admit when he made mistakes.

  • One day
    in 1974, Soros was playing tennis with an acquaintance. The phone
    rang.It was a broker in Tokyo, letting Soros in on a secret: That year
    President Richard Nixon was immersed in the Watergate scandal that
    would eventually cause his downfall. The broker was calling to let
    Soros know that the Japanese were reacting poorly to Nixon’s troubles.

  • Having
    taken heavy positions in the Japanese stock market, Soros had to decide
    what to do-stay in, get out. His tennis partner noticed that sweat had
    formed on Soros’s forehead that had not been there during the match.
    Then and there Soros decided to sell. There was no hesitation, no
    feeling that he needed to consult anyone else before taking such a
    large step. It had taken him a fraction of a second to decide. That was

  • Allan Raphael, who worked with Soros in the 1980s,
    believed that Soros’s stoicism, a rare trait among investors, had
    served him well. “You can count them on one hand. When George is wrong,
    he gets the hell out. He doesn’t say, `I’m right, they’re wrong.’ He
    says, `I’m wrong,’ and he gets out, because if you have a bad position
    on, it eats you away. All you do is think about it-at night, at your
    home. It consumes you. Your eye is off the ball completely. This is a
    tough business. If it were easy, metermaids would be doing it. It takes
    an inordinate amount of discipline, self-confidence, and basically lack
    of emotion.”

  • Then there was the vaunted Soros
    self-confidence. When Soros believed he was right about an investment,
    nothing could stop him. No investment position was too large. Holding
    back was for wimps. The worst error in Soros’s book was not being too
    bold, but too conservative. “Why so little?” was one of his favorite

  • Finally, there was his instinct. Invest
    First and Investigate Later This was the immeasurable ability to know
    when to speculate heavily, when to pull out of an investment
    position-when, in effect, you were on the mark, and when you were not.
    “Basically,” said Soros, “the way I operate is I have a thesis and I
    test it in the market. When I’m short and the market acts a certain
    way, I get very nervous. I get a backache and then I cover my short and
    suddenly the backache goes away. I feel better. There’s where the
    instinct comes in.”

  • Summing up George Soros’s
    investment skills, Morgan Stanley’s Byron Wien suggested that “George’s
    genius is that he has a certain discipline. He views the market very
    practically and he understands the forces that in?uence stock prices.
    He understands there is a rational and irrational side of markets. And
    he understands that he isn’t right all the time. He is willing to take
    vigorous action when he is right and really take advantage of an
    opportunity, and to cut his losses when he’s wrong. He has great
    conviction when he’s sure that he’s right as he was in the sterling
    crisis in 1992.”

  • Part of Soros’s instinct was in
    detecting movement, one way or the other, in the stock market. This was
    not something one could learn in school; it was not part of the
    curriculum at the London School of Economics. This gift is one that few
    possess. And Soros had it.

  • Edgar Astaire, his London
    partner, had no trouble pointing out the source of Soros’s success:
    “His greatest key to success is his psychology. He understands the herd
    instinct. He understands when lots of people are going to go for
    something, like a good marketing man.”

  • Soros’s theory
    about currencies: One part of that theory had it that if a huge decit
    arose at the same time as an expansionary fiscal policy and a tight
    monetary policy, a country’s currency would rise.

Excerpted from: SOROS: The Unauthorized Biography, the Life, Times and Trading Secrets of the World's Greatest Investor.

hope you have found this guide helpful. Personally, I've read the above
points at least 14 times! The bullet points above distill the
psychology of one of the greatest investors of our time & i would strongly
recommend you get the book (mentioned above) as it's the only book on
Soros, other than Alchemy of Finance, that will reveal some of his
tactics & ways.

Thursday, April 19, 2007

Venture capital resource

CBS Private Equity and Venture Capital Club


  • "The Insider's Guide to Venture Capital"
    - Provides a "day in the life of a venture capitalist" plus other
    helpful hints on landing a job in VC. Also has a list of the larger VC
    firms.Location: CRC Availability:
  • "Vault Career Guide to Venture Capital " - Location: CRC Availability: Overnight
  • "Inside the Minds: Venture Capitalists" - Location: CRC Availability: 3-Day Loan
  • "The VC Way : Investment Secrets from the Wizards of Venture Capital" - Location: CRC Availability: Overnight
  • "Done Deals" - Location: CRC Availability: 7-Day Loan

Magazines/Journals in the CRC and/or Watson Library

Technology Related Information

  • Business 2.0 – One of the few tech/business magazines to survive the .com bubble.
  • Fast Company – Generally interesting articles on emerging companies (CRC)
  • Red Herring – One of the hottest magazines covering technology that had closed, but is now back (CRC)
  • Wired – Another popular technology magazine (CRC)

Other Directories/Trade Journals

  • The Daily Deal (CRC)
  • The Private Equity Analyst (CRC)
  • Venture Capital Analyst (Watson)
  • Buyouts (Watson)
  • Nelson’s Directory of Investment Managers (Watson)
  • Asian Venture Capital Journal (Watson)
  • European Venture Capital Journal (Watson)
  • Institutional Investor (Watson)

E-mail Lists and Online Newsletters

Wednesday, April 18, 2007

StumbleUpon has been rumored to be in acquisition


High-flying startup StumbleUpon has been rumored to be in acquisition discussions since at least last November. Recently we’ve heard that talks have heated up again, with Google, AOL and eBay as potential suitors. A source with knowledge of the deal now says the company has signed a term sheet with eBay to be acquired. The price is somewhere between $40 - $75 million. (update: GigaOm is now reporting the price at a $40 - $45 million).

Tuesday, April 17, 2007

Ten Conversation Tips Frankly,

Ten Conversation Tips

Frankly, I don't see how people can advance in their careers if they don't know how to have a conversation. For most people, work -- not investments -- is their livelihood.

So I thought I'd offer up a few basic ideas on how to have a conversation with someone you just met.

Friday, April 13, 2007

Read more on it

Warren Buffett's Priceless Investment Advice [Fool.com] April 07, 2007

"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

Read more on it

India’s Edge Goes Beyond Outsourcing - New York Times

Our analysts will cover equities on their own,” said an advertisement posted on an Indian career site last year by Thomas Weisel Partners, an American investment bank. “They do not report to another analyst in the U.S. They will do their own research, come up with their own opinions on the stock and offer them directly to U.S. institutional investors. Simply put, we are not a back office in India.”

Wednesday, April 11, 2007

Man see this

Paul Kedrosky's Infectious Greed

Top Ten Highest Paid Hedge Fund Managers
Traders Monthly has out its list
of the top 100 highest paid hedge fund managers. While these sorts of
lists are always prone to errors and missed managers, the numbers are
still staggering, as the following subset of the top ten payees shows.

than shock and awe at the numbers, the main takeaway is the diversity
in the strategies underlying the comp figures. We have two energy guys,
two macro guys, two quants, a macro guy, two multi-strategy firms, and
a would-be Buffett. In other words, there are as many strategy paths as
ever to the top of the comp charts.

NameCityFirmAgeEst. Income
John ArnoldHoustonCentaurus Energy33$1.5-2B
James SimonsEast Setaucket, New YorkRenaissance Technologies Corp.68$1.5-$2B
Eddie LampertGreenwich, ConnecticutESL Investments44$1-1.5B
T. Boone PickensDallasBP Capital78$1B-1.5
Stevie CohenStamford, ConnecticutSAC Capital Advisors50$1B
Stephen FeinbergNew YorkCerberus Capital47$800-900M
Paul Tudor JonesGreenwich, ConnecticutTudor Investment Corp.53$700-800M
Bruce KovnerNew YorkCaxton Associates62$700-800M
Israel EnglanderNew YorkMillennium Management58$600-700M
David ShawNew YorkD.E. Shaw & Co.55$600-700M

Sunday, April 01, 2007

Indian M & A.

Venture Intelligence Blog

Deepak Thomas and Vineet Buch have published a case study on YouTube.

Boom time for lawyers as i-banks excel-Corporate Trends-Companies A-Z -News-The Economic Times

The M&A activity in the first three months of the year has crossed $37 billion, which is close to twice the deal value for the whole year of 2006 and, law firms and consultants are cashing in on the boom. The average revenue at most of the well-established firms operating in this space has gone up around 30% over the past year. While in 2006 they were estimated to have earned close to $100 million this year’s promises to be a much better one. Most firms have already earned nearly 40% of what they netted in the past year’s last three months.

Vinod Khosla: This guy is really a super hero

VC Circle - Indian Venture Capital, Private Equity, M&A :: Main Page

Where Does Vinod Khosla's Money Go?
by Sahad on Fri 30 Mar 2007 19:10 IST
Vinod Khosla has been actively investing since he floated Khosla Ventures. (It helps that the fund is made up of his own money). VC Ratings has a list of investments in cleantech. And we add a few Web 2.0 investments he has made recently.

1) Cellulosic - Mascoma, Celunol, Range Fuels, 1 stealth startup
2) Future Fuels - LS9, Gevo, Amyris Biotechnologies, Coskata Energy
3) Efficiency - Transonic Combustion, GroupIV Semiconductor, 1 stealth startup
4) Homes - Living Homes, Global Homes
5) Natural Gas - Great Point Energy
6) Solar - Stion, Ausra
7) Tools - Nanostellar, Codon Devices, Praj Industries
8) Water - 2 stealth startups
9) Plastic - Segetis, 1 stealth startups
10) Corn/Sugar Fuels - Altra, Cilion, Hawaii Bio

VC Circle adds:

11) Brenco (Brazilian sugar ethanol company)
12) SKS Microfinance (Microfinance)

Plus a list of Web 2.0 companies where Khosla has invested.

13) Frengo (Mobile messaging and contests)
14) FatKat (Quant-based stock investing)
15) iSkoot (Skype-to-mobile phone service)
16) Xobni (Email analytics)
17) Slide (Slide show creator of photos)

(The list may not be exhaustive.)

Investing in China good article by Raj Kapoor

Online Ventures: Lessons from China

investing in China

1. Opportunities exist, but are harder to find.

2. Hire a stellar CEO and management team.

3. Model businesses to reflect cultural differences.

4. Understand and mitigate risk

5. Find early-stage opportunities

10 key slides for investor pitch

How To NOT Write A Business Plan

ou might structure the 10 slides as follows:

1. The cover slide should offer complete contact info, and a tagline if you've got it. One of the benefits of a powerpoint plan is that it forces you to perform the critical exercise of describing the business in very few words.

2. A mission statement is a good idea to present, unless it's rather obvious from the tagline (as in BlueNile.com: Education, Guidance, Diamonds and Fine Jewelry). Select a mission statement that is achievable, but not yet achieved. Bad mission statements:

"To create the world's largest software company." [too broad and unrealistic to practically guide decision-making]

"To develop the world's best technology for defending DNS servers from worm attacks." [er, you said you've already done that, right? Mission accomplished!]

A clear mission statement also includes a clear idea of what the startup will NOT do. Here are some nice ones...

"Healthia will operate America's most widely used comparison shopping portal for consumer driven healthcare, enabling businesses and their employees to choose health plans, ancillary health benefits, and medical services objectively and transparently."

"Prolexic will create and dominate a new network service category that defends web applications from distributed-denial-of-service attacks."

Sometimes the white space on the slide is filled with customer logos or testimonials.

3. Introduce the team. On one slide, highlight the backgrounds of the key members of the team, and any directors or advisors (not too many) who bring something special to the startup. Explain verbally whom you intend to add to the team in the next year. (If that includes a CEO, say so up front, without waiting to be asked.)

4. Without yet getting into your product or service, describe the nature of the problem you address. Emphasize the pain level and the inability of incumbents to satisfy the need.

5. Introduce your product, and the benefits (which should obviously address the market problem you just described).

6. Elaborate on the technology or methodology you have developed to enable your unique approach. If appropriate, mention patent status.

7. Show off early customer or distribution progress: numbers, logos, testimonials.

8. Sales strategy. Show the expected cost of customer acquisition.

9. Competitive landscape. Be sure to anticipate competitive responses (before the VC does), and never deny that you have competitors, no matter how unique you think you are. Really, it's okay to compete. Even against Microsoft (as Flock will prove).

This is also a good slide on which to show market size estimates.

10. Earnings Statement, historical and forecast. For each time period, add headcount and cash balance. It should be clear how you expect the company to perform top line and bottom line three years out, and how much capital will be required now and later. Prepare lots of backup slides to illustrate the assumptions behind these financials.

Venture investments summary 2007

SF Venture

In 2006, 58 venture-backed IPOs raised a total of $5.3 billion, up from $4.5 billion in 2005, according to Thomson Venture Economics and the NVCA. The 4th quarter of 2006 showed 21 IPOs.

M&A yielded $16.6 billion in 2006, up slightly from $16.1 billion in 2004. Average disclosed deal value for the year was $114 million in 2006, up from $96 million in 2005.

The year ended with a boost from Google’s $1.65 billion acquisition of YouTube. This transaction distorted the numbers in Q4, which showed a decline in the number of deals, but an increase in the aggregate value. Net returns from M&A continue to be mixed. Looking at Q4 of 2006, out of 23 deals, 7 returned more than 10x the amount invested, 8 returned more than 4x the investment, one 1x-4x, and 7 less than the amount invested.

What are the exit prospects for 2007? We see all the signs of a receptive IPO market. IPOs from Q4 mostly performed well in the aftermarket. Anecdotally, we understand there are at least a half dozen reasonably high profile technology IPOs in the pipeline for the first half of 2007, including NetSuite.

Why did the Industry Standard die

A failure is a better lesson learnt?

            Why did the Industry Standard die?

McGovern: In 1997, the magazine was launched as many big Internet companies were launched, and investors needed a weekly publication covering the industry. In its first year, ‘97, the magazine made $9 million in revenues, and in its second year it made $25 million. And then at that point, there was $800 billion invested in Internet companies.

But then the bubble burst. The magazine went from making $200 million in revenues in 1999 to making only $50 million in 2000. Unfortunately the management had put the magazine on an IPO track. They bought very expensive CRM software, and had $120 million in fixed costs per year. It was a hopeless situation. The gap between costs and revenues was too large.

The magazine had made a volcanic rise and fall. We’d never seen anything like that before or since. In 1999 the magazine set a record for the number of ad pages, and the next year it set a record for the largest drop in ad pages.

The paradox was that in 1999, we were approached by Time Warner and Hearst, who wanted to buy the Standard for $400 million or $500 million. But [then-CEO] John Battelle had a plan to be making $1 billion a year by 2006, wanted to take the company public, and planned to make a tender offer to buy Dow Jones. It was a plan for world domination, and we should have taken the money from the magazine publishers and run. Business 2.0 sold for $350 million right before the bust.

Fed and interest rates

Consumer spending and incomes up - Yahoo! News

WASHINGTON - Consumers' spending and income showed bigger-than-expected gains in February, and construction posted the first increase in nearly a year, hopeful signs that the economic slowdown will not worsen.