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How to invest HK$30,000/month?

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  1. #31

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    A few side thoughts...

    1/. You never get a real crash when everyone is talking about it.

    2/. I wouldn't buy into Canadian assets right now but that's just me.

    3/. I wouldn't buy into RMB if the only reason I'm doing so is for RMB to appreciate against the USD or HKD.

    4/. I have borrowed, and I would borrow again for major IPOs that I like... But you should try and find out everything you can about that company, and the IPO details before buying into the hype.

    5/. Know your time-horizon, know your risk tolerance, know your investment goals.


  2. #32

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    z75 >> ok this is going to be a majorly long answer, but i shall attempt to do it anyway just for the interest of everyone and to right misconceptions..

    hedge fund by itself is a very loosely coined term. it generally means most collective investment that is outside the mutual fund world, and is investing in publicly listed assets. there is a loosely defined set of investment guideline, but since investors are officially investing into an investment company as a partner, the SFC kind of guidelines do not apply and fund managers can have the flexibility to do alot more things.

    mutual fund on the other hand is governed by a very strict set of rules. funds usually have a predefined scope of product it can invest in (e.g. bonds, asian equity, european equity...). It must have at least maybe 80% or 90% of the value of the fund invested in the said portfolio (i.e. if today 1mio USD is invested into a 10mio mutual fund, the money has to be used to increase the portfolio in the same proportion by 10%).

    so when the market turns downwards, mutual fund bare direct hits because it holds in its portfolio 80~90% of straight investment into the assets (i.e. stocks).

    as mentioned, HFs are loosely grouped. there are thousands of funds all doing different things. some HFs are very similar to equity mutual funds, just that they have the allowance of buying maybe bonds or borrowing money to increase their leverage. some HFs deal largely with forex, or commodities (the blown up amaranth, motherrock, etc.).

    alot of hedge fund uses equity one way or another. but instead of only direct investment in equity, they might be doing convertible arbitrage, equity long short or merger arbitrage.

    equity long short is easiest to explain,
    --> if you think that over long term citibank will perform better than JP Morgan, you buy 1million of citigroup and you short sell 1million of JPM, and bet on the relative performance of the two shares. even if the whole finance market is to crash, as long as JPM shares falls more than citigroup, your portfolio would still make money.

    or merger arbitrage:-->
    assuming company A offers to buy company B at $1 per share or $1.50 worth of company A shares. As company B shares would hover around the 1.10 or 1.20 mark, you can buy company B shares and short sell company A shares, once the merger is approved, you accept company A shares as exchange and use the shares to return the short sold position you had.

    trading strategy that uses both long/short side of the market and derivatives are what traders in bank had been doing all decades, and they are generally lower risk, allowed for each trade to be leveraged by borrowed money. traders that did well in the banks believe they can replicate what they have done and set up their own hedge funds.

    so why the blown up...
    some hedge funds take extremely huge bet relative to their value of investor asset. those are the funds that made 25~50% annually for the last 1~3 years. an investor has to know he/she is taking extremely huge risk.
    similarly, LTCM (another famous blown up story of nobel price winners) did such a high leverage on some bond portfolio that when russian government defaulted on their payment of government bonds, their portfolio were killed.

    a typical hedge fund gains maybe 8~12% a year, and can do it on a consistent basis.

    hope that gives a better picture of why I say hedge fund is less risky compared to mutual funds.
    you have bad eggs once in a while but overall the flexibility given to the manager can help your money grow in a more controlled pace.


  3. #33

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    Quote Originally Posted by beafan:
    toronto stock exchange.
    How do you get there?

    Local Broker? Canadian Broker? Other?

  4. #34

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    Quote Originally Posted by philippe:
    How do you get there?

    Local Broker? Canadian Broker? Other?
    suit cases of canadian dollar by air canada there every month end ? 8-P

  5. #35

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    other, but i want to be able to do this locally
    i buy and hold typically anyway so there really isnt online trading involved.
    i know about canadian companies more than HK/chinese companies.. so i should start reading up more about local companies


  6. #36

    Hedge fund talk is rather academic anyway. Any HF worth its salt would only accept super rich investors worth millions.

    I don't see any mainstream commentators talking about a crash. Everyone still seems bullish. It’s perhaps why we’re seeing record highs in the Dow, Hang Seng and such like, maybe? Corrections, yes, and some say maybe even fairly serious corrections. But I think it's much more serious than that.

    Someone mentioned currency reserves. Yes, China holds the most currency reserves, over $1 trillion in fact. Japan not far behind, along with many other Asian countries. That’s precisely one of the problems. They are held mainly in US $s. What’s gonna happen to the value of those holdings now that the dollar is sliding big time? They’re gonna stand by and watch their reserves erode by the billions every day? Central banks have a duty to defend currencies but ultimately even a concerted global central bank push to defend the dollar will prove futile against the power of the markets. China may well be forced to sell dollars to buy gold, creating a mad gold rush. And a crash of epic proportions looks very likely.

    Previous mini crashes were staved off from becoming full blown affairs with huge injections of money supply created from thin air by policymakers. It worked because there were willing investors to buy up US govt debt. But now the game may well be over. Whose gonna buy US debt in this climate? With no fresh loans, AND a dollar sell off, the US is gonna implode under its debt burden in probably a matter of months. Very few people ever get the timing right, but its just a question of time.

    And no, you don’t wanna buy index funds at this point. They’re gonna be the very worst investments possible. China will not be shielded from the crash. The global economy is intricately linked like a set up of dominoes. One falls, all falls. Whose gonna buy Chinese exports when the US goes bankrupt?


  7. #37

    The man from planet doom. Yes, I tend to agree with you, but then when other more optimistic people come along, I can see their point too. Basically, the last thing that China (and Japan, and everybody else) want, is their US dollars to depreciate even further, and they know very well that if they start a massive sell-off, that will happen. They also don't want their main buyer to go bankrupt. Better lend him some more money, so he continues buying your stuff.

    In any case, what would you suggest I buy? I was going to buy 40,000 of Chinese index fund today, but haven't got the salary in the bank yet.


  8. #38

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    hedge fund is academic ? that's interesting. 8-)


  9. #39

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    Quote Originally Posted by HK_Newbie100:
    But now the game may well be over. Whose gonna buy US debt in this climate? With no fresh loans, AND a dollar sell off, the US is gonna implode under its debt burden in probably a matter of months. Very few people ever get the timing right, but its just a question of time.

    And no, you don’t wanna buy index funds at this point. They’re gonna be the very worst investments possible. China will not be shielded from the crash. The global economy is intricately linked like a set up of dominoes. One falls, all falls. Whose gonna buy Chinese exports when the US goes bankrupt?
    Profound
    A Pretcher admirer?

  10. #40

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    there is one problem with the all crash theory, the US deficit had been at all time high for like 5 years, just went on increasing and increasing. if it can crash this quarter, it would have crashed 2 years ago or 3 years ago. nothing changed from then till now.

    one issue I do have, is the potential of Chinese government (or party) linked company to get blown up. the potential of banks hiding chunks of bad loans is highly probable. that's why despite the huge potential, i'd rather stay out of it for a while and see how things go.


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