Fusing Fundamental and Technical Analysis with lashings of Behavioural Finance. Investing in Australia and North America.
Using the Kelly Formula for Portfolio Management:
I have two main uses for the Kelly formula, neither of which are the intended purpose. My third and less important use is the intended purpose of Kelly, an aid in determining my indiviudal investment size.
I use Kelly as a comparitive tool and as and aid to focusing on probabilities, risk and returns. Before we dive into each of those I should explain how I use a method that is designed to be used with binary outcomes with known odds for investing, where their are multiple possible outcomes with unknown odds.
At the bottom I link some great articles from Ed Thorp, John Kelly, Michael Mauboussin and Paul Samuelson
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Hunter Hall looks compelling with a reward/risk profile of 7:1.
High on uncertainly low on risk, a classic Dhandho investment.
“Wall Street sometimes gets confused between risk and uncertainty, and you can profit handsomely from that confusion. The Street hates uncertainty, and it demonstrates that hate by collapsing the quoted stock price of the underlying business.”
Ultra Funds should only be used for short term investments, measured in days. Due to volatility these funds do not return the expected two times performance over longer periods.
Great Southern today became the second major Australian agribusiness to collapse in the past month. It was arguably a complete scam and certainly it had all the hallmarks of a Ponzi scheme.
Strategies to lock in ANZ profits form the share purchase plan. Including selling calls, buying puts and CFDs. Plus the dangers of a cash rich company.
Today I give thanks to my dad. When several people told me what I wanted to do was impossible and I was too late, it was my dad’s voice reverberating in my mind which drowned out their negativity. My dad wise saying, “there is no such thing as can’t” , was my life jacket in the sea of negativity which four authorative people cast me adrift in.
The Fusion Fund has applied for a full $15k allocation to the ANZ share purchase plan.
I will write more about this later, but if anyone still wants to apply you have a little under one hour to get to 380 Bourke St, Melbourne with your application and cheque. Make sure you have it in a letter with a stamp, as theat is the GPO Box location and you’ll be posting it over the counter.
More later on as I relay the trials and tribuations of how I made $1875 in an …
Since the success of The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb, I have wondered how many readers have actually seen a Black Swan. For those who haven’t seen one, here I took this photo today as I played with my kids at Newport Lakes. I wonder if anyone had ever used a Black Swan in a turducken.
As these beautiful water fowl are relatively common in my neck of the woods I have always been bemused by the title of The Black Swan. I do know the underlying story of the phrase, unfortunately stupid arrogant white guys are quite as rare as these fowl. Anyway, I thought a better title would be The Honest Banker.
I started to write the following reply to a question on the Hot Copper disccusion board. As it became longer than I intended I decided to post it here.
It seems I have not made my position clear, so perhaps a little clarification is in order. I have a sizable investment in Biota, which I bought around 40 cents when I was analysing Biota on this site. I have not sold any shares. I do not care where the share price in today, tomorrow or next week. When I see a …
