My experience with novice traders is that they trade three to five times too big. They are taking 5 to 10 percent risks on a trade when they should be taking 1 to 2 percent risks. The emotional burden of trading is substantial; on any given day, I could lose millions of dollars. If you personalize these losses, you can’t trade.
A commodity producer should be comfortable being exposed to prices.
I look to work with businesses that know what they are doing but need larger distribution or exposure.
Optimization tells us precisely how to diversify the portfolio, whether I should have 12% in semiconductors or 4% in biotech, etc., and it literally tells me how to diversify not only the industry groups but the stocks.
By turning every Yahoo search box into a Bing box, Microsoft may have bought itself the exposure it needs to be the next Google.
Of course if you happen to time the market really well, you can make more money with some of these smaller companies, but for someone with no exposure I wouldn't want to take the risk that they timed it wrong.
I'm dubious about having Social Security put into the stock market. I think that we have gotten very far away from the idea that there's something sacrosanct about retirement investments.
Just being able to trade financial commodities is a serious limitation because financial commodities represent only a tiny fraction of the reality of the real commodity exposure picture. We need to be active in the underlying physical commodity markets in order to understand and make prices.
Every morning when I pick up the newspaper and read about an earthquake in Japan or problems in European financial institutions, the first question I ask our staff is 'What is money-market-fund exposure?'
There will be a lot of competitive and strong companies coming here and even though Kosovo is a small country that undoubtedly has a lot to offer to global trade; one of our main interests is to expose it to the world market.
Active investment is a zero-sum game. Passive managers don't play the game. They buy something resembling the market as a whole, or some segment of the market, and they don't respond to the actions of active managers.
Buy a cross section of American industry, and if a cross section of American industry doesn't work, certainly trying to pick the little beauties here and there isn't going to work either.
We concluded that you cannot rely on delta hedging alone. It sounds simplistic to say that now, but back then, this was the sort of thing people were only just beginning to realize.
Forty percent of my portfolio is in the U.S. In the rest of the world, most of the places I invest in or invested in are Brazil, Russia, Germany with a little bit of Turkey, China, India, France and Israel sprinkled in there.
Our belief is that it is a basket of well-diversified companies that are playing the Internet, but are not direct Internet companies.
I personally do not believe in protection mechanisms. It’s like a false friend. It makes you believe that you can compete, but you can’t compete and as the protection mechanisms fall away—the world is going for this—then you are in trouble.
We have a broad range of investments. Anyone who invests in emerging markets around the world has investments in Russia. This is a tiny portion of our portfolio.
The best way in my view is to just buy a low-cost index fund and keep buying it regularly over time, because you'll be buying into a wonderful industry, which in effect is all of American industry... People ought to sit back and relax and keep accumulating over time.
