Enterprising Investor Forum

INO.com Platform Thursday, October 23, 2008

For some of you who are more active in the markets, a good source for information and seminars could be the INO.com Platform.

Despite the fact that they are more targeted to active traders in the futures and option markets, they do have some interesting features for more conservative investors or value investors that might want to try some alternative strategies with a small part of their portfolio; in this case, the INO TV service is quite interesting.

As you may know, it is quite easy to read up on almost anything on the web but actually watching a video seminar on a specific topic like money management, dealing with fear in the markets or investment strategies, usually gives you that little bit more… and they have 11 different trading channels you can look into.

They also have all you standard news and quotes with a Trader’s Blog that provides some interesting insights on general market conditions and sentiment.

Check it out and decide for yourselves!

Cramer: investing in 2009 Thursday, October 23, 2008

It’s been a while since we posted anything on Jim! Here is a short but interesting interview where he talks about the kind of companies to look for…. he insists that investors should focus on stocks that have been driven down by forced selling and that have become valuable take-over targets:

Enjoy!

Deleveraging Continues Wednesday, October 22, 2008

As already discussed various times, don’t worry about the volatility – try to profit from it!

The Enterprising Investor is focused on holding for the long-term and these swings should simply represent interesting buying opportunities… we actually recommend that you start placing daily Limit Buy orders say 10-15% below the current price of the stocks you have been following and are current targeting to take advantage of the deleveraging which is still taking place:

• Stocks with the highest institutional ownership continued to underperform the ones with the lowest
• Hedge-fund managers are under increased pressure to liquidate their positions as banks are asking for more collateral to back borrowing
• Most funds are bracing and preparing for investor redemptions (experts say around 25%)
• Investment bank winding down is forcing hedge funds to adjust their strategies

This is a classic catch-22 situation BUT mostly for those who are invested through leverage and not for the long-term buy and hold investor that does not have short-term liquidity needs.

Please read our disclaimer.

Prime Brokerage Tuesday, October 21, 2008

We had a few emails asking about more details on prime brokers and what they do.. here is a great explanation:

Prime brokerage is the generic name for a bundled package of services offered by investment banks and securities firms to hedge funds and other professional investors needing the ability to borrow securities and cash to be able to invest on a leveraged basis and achieve an absolute return. The business advantage to a hedge fund of using a Prime Broker is that the Prime Broker provides a centralized securities clearing facility for the hedge fund, and the hedge fund’s collateral requirements are netted across all deals handled by the Prime Broker. The Prime Broker benefits by earning fees (“spreads”) on financing the client’s long and short cash and security positions, and by charging, in some cases, fees for clearing and/or other services. It also earns money by hypothecating the portfolios of the hedge funds it services and charging a fee to those borrowing securities and other investments.

The following services are typically bundled into the Prime Brokerage package:

• global custody (including clearing, custody, and asset servicing)
• Securities lending
• Financing (to facilitate leverage of client assets)
• Customized Technology (provide hedge fund managers with portfolio reporting needed to effectively manage money)
• Operational Support (prime brokers act as a hedge fund’s primary operations contact with all other broker dealers)

In addition, certain prime brokers provide additional “value-added” services, which may include some or all of the following:

• Capital Introduction – A process whereby the prime broker attempts to introduce its hedge fund clients to qualified hedge fund investors who have an interest in exploring new opportunities to make hedge fund investments.
• Office Space Leasing and Servicing – Certain prime brokers lease commercial real estate, and then sublease blocks of space to hedge fund tenants. These prime brokers typically provide a suite of on-site services for clients who utilize their space.
• Risk Management Advisory Services – The provision of risk analytic technology, sometimes supplemented by consulting by senior risk professionals.
• Consulting Services – A range of consulting / advisory services, typically provided to “start-up” hedge funds, and focused on issues associated with regulatory establishment requirements in the jurisdiction where the hedge fund manager will be resident, as well as in the jurisdiction(s) where the fund itself will be domiciled.

Read the full article on Wikipedia: here.