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Donkey Kong

Donkey Kong
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  • The Stock Market Bubble's Achilles' Heel [View article]
    So some generalities made by you along with a link to a one page description of HFT on Wikipedia makes your case???? I'm glad to see you like to set such a high bar for yourself.

    There is actually plenty of interesting information in the links I provided, but I guess you were too busy or too lazy to click on them (I would think with 10,000 + comments on SA you have plenty of time on your hands.).

    Anyway, I would be happy to provide you with my synopsis, but it doesn't make sense to do it on this thread (too much back and forth already). Therefore, I will send it to you via direct message on SA. I look forward to receiving a return message with your detailed synopsis as well.

    Some highlights on the problems with HFT (not that it will ever matter to you):

    (1) Flash Crash in May 2010
    (2) Bankruptcy of Knight Trading -- algo goes amuck
    (3) Quote stuffing
    (4) Front running
    (5) Sucking out massive amounts of liquidity at the worst times
    Oct 29 08:05 PM | 1 Like Like |Link to Comment
  • The Stock Market Bubble's Achilles' Heel [View article]
    I made no vague assertions. I simply stated that your claim of truly understanding HFT based on a read of Wikipedia lacks veracity. You can't even begin to understand something as complex as HFT by reading a one-page summary on the subject, especially one that is primarily descriptive in nature. Unfortunately, we live in a world where too many people are afflicted with ADD and can only focus on soundbites, tweets, etc.

    At least you could have referenced "white papers" from the largest players in HFT like Getco, Jump Trading, etc. to support your argument. They obviously are conflicted and believe that their activities are benign, but at least they made an effort to present their case beyond a one-page summary.

    Sal Arnuk and Joe Saluzzi from Themis Trading have really dug in when it comes to HFT and why it's detrimental to the integrity of the capital markets. Nanex Research has also done a ton of work when it comes to issues with HFT. It might change your opinion if you gave Broken Markets an honest read or reviewed the work by Nanex, but I'm guessing you prefer to make up your mind on various subjects first and then pull material that supports your thesis. We call this type of behavior confirmation bias.

    http://bit.ly/19QxyVV

    http://bit.ly/WXAOu3

    I have ample credibility with those whose opinions matter to me. I'll let you worry about winning the hearts and minds of the SA readership.

    EOM
    Oct 29 05:56 PM | 1 Like Like |Link to Comment
  • The Stock Market Bubble's Achilles' Heel [View article]
    You're in trouble more often than not when relying on Wikipedia to make your case. This seem to be a textbook example of confirmation bias in action.
    Oct 29 04:17 PM | Likes Like |Link to Comment
  • The Stock Market Bubble's Achilles' Heel [View article]
    You know not of what you speak.

    I suggest you read "Broken Markets" by Sal Arnuk and Joe Saluzzi if you really want to understand HFT and its many unintended consequences, particularly for the retail investor.
    Oct 29 03:48 PM | 1 Like Like |Link to Comment
  • The Stock Market Bubble's Achilles' Heel [View article]
    Haven't I seen or heard you before on CNBC?
    Oct 29 02:56 PM | Likes Like |Link to Comment
  • The Stock Market Bubble's Achilles' Heel [View article]
    I find it interesting that you keep using the phrase "in nominal terms" in your statements. Given your fixation on nominal returns, I assume most of your asset allocation has been in the Zimbabwean stock market which has produced the highest nominal returns globally. The focus should always be on real returns and real purchasing power based on a more accurate cost of living index than CPI.

    You also highlight returns over thirty year periods (stocks for the long run, right?) and the power of compounding. Yes, the Rule of 72 is incredibly seductive and doubling your money ever 7 years with "only" 10% annual returns and then simply extrapolating those annual returns ad infinitum (Who wants to be a Millionaire!!!!). This concept could be fine if you are a 20- or 30-something and have a thirty-year earning horizon and an even longer investment horizon. Unfortunately, 30-year investment horizons don't work for people in their 50s and beyond. There is no time for "do overs" if market returns falter and the focus is rightly return of capital instead of return on capital.

    Yes, there is an upward bias in stock returns over time, but I will wager that returns over the next thirty years will be below post-war averages (mean reversion). People should expect 3-4% total real returns. That's why you SAVE for retirement and INVEST to maintain real purchasing power. There is no free lunch.

    I am not waiting for the apocalypse, but I'm also not a pollyanna. Our immediate family has 8 figures of liquid capital which took years of hard work and savings to accumulate. There is no time to rebuild that capital base if we piss it away due to reckless investment decisions. I'm more than happy to keep the focus on risk management and prudently growing our real purchasing power.
    Oct 28 10:07 PM | 4 Likes Like |Link to Comment
  • The Stock Market Bubble's Achilles' Heel [View article]
    Just consider an investor, who has been fully invested in the S&P500 for the last thirty years and wasn't clever or nimble enough to shield a single dollar from any major downturn, but instead took it on the chin each and every time. He got crushed in the 1987 largest one-day decline in history. He got blasted on 9/11. He suffered the Enron/Worldcom panic. He got murdered in the subprime collapse. Well, where is that "poor dude" today? He must be on food stamps, right?

    In fact, he's up 1060% from 1983, that's what, and that doesn't even include thirty years of distributed dividends, which would add another several hundred percentage points on a compounded basis.

    So your forecast for the next 30 years is based on an extrapolation of stock price performance over the past 30 years which was primarily fueled by a debt super cycle (both on- and off-balance sheet) unprecedented in history?

    Good luck.
    Oct 28 06:32 PM | 2 Likes Like |Link to Comment
  • Netflix Jumps On Earnings [View article]
    It's super cheap at 113x 2014E EPS!!
    Oct 22 09:18 AM | 1 Like Like |Link to Comment
  • Best Performing Russell 3,000 Stocks Year-To-Date [View article]
    Is this for informational purposes or simply Bespoke Investment Group's "buy list"?
    Oct 17 09:23 AM | Likes Like |Link to Comment
  • Raymond James upgrades Harris Corporation [View news story]
    12% potential upside represents an upgrade to a buy? Congratulations to Chris Quilty for missing the prior 40% move to the upside.
    Sep 25 01:03 PM | Likes Like |Link to Comment
  • Time For Emerging Markets To Emerge [View article]
    Michael: Thanks for your kind offer. It would be interesting to learn more about your process and models, but I also recognize you guys are busy. I know a manager can't give the same level of personal attention to a mutual fund shareholder (particularly one with a modest investment) compared to your managed account clients.
    Aug 12 03:03 PM | 1 Like Like |Link to Comment
  • Time For Emerging Markets To Emerge [View article]
    Michael: As the CIO for a small family office ($25 MM) and a sophisticated investor, I believe I understand your approach well (better than you might think). I am fully aware that your fund moves across various asset classes so I understand the argument that you can't be compared against any single asset class. However, every fund utilizes a benchmark and I simply referenced the performance comparison between ATACX vs. the S&P 500 since you and Ed used the same comparison in your last semi-annual report to shareholders. That being said, when ATACX is betting on the reflation trade, you often use leveraged equity ETFs to boost the funds equity exposure (in excess of 100%) and hopefully returns. In terms of performance measurement, I guess it would be best to create a customized benchmark, maybe by looking at ATACX's average equity exposure over a certain time period. I know Morningstar benchmarks ATACX against (1) Moderate Target Risk and (2) World Allocation, but I would think investors would be looking for "common equity-type" returns given the net expense ratio of 2.16%.

    P.S. I made an initial investment of $25,000 (minimum at the time) at the beginning of 2013 because I was curious about your investment approach (certainly different). As I said previously, it's much too early to conclude ATACX has been a good or bad investment.
    Aug 12 01:41 PM | 2 Likes Like |Link to Comment
  • Time For Emerging Markets To Emerge [View article]
    Every manager goes through periods, sometimes lengthy, of lagging performance. I was opining on your statement of "the fund doing so well for so long relative to the S&P" so I looked at the longest measurement period available. I guess you are focused on the number of months the fund beat the S&P 500 while I focused on the relative total returns over the entire investment period. Interestingly, the ATACX managers highlighted how the fund's performance crushed the S&P 500 in the semi-annual report, dated 2/28/13. Unless there is a dramatic turn of events in the last 3 weeks of August, you will see very different relative results in the annual report, dated 8/31/13.

    As I alluded to in my previous post, I'm not sure how much can be inferred from the 9-month return stream (relative outperformance) vs. the 11-month return stream (relative underperformance). With respect to ATACX, their current performance grade from me is an incomplete due to insufficient history. My major concern is the potential negative tax implications (i.e. realized capital gains) for investors who hold ATACX in taxable accounts given the fund's high turnover which is central to the "buy and rotate" strategy. Unfortunately, investors won't know the magnitude of any tax implications until December 2013.

    NOTE: I am an investor in ATACX, albeit an initial position of only $25,000 in a taxable account.
    Aug 12 10:27 AM | Likes Like |Link to Comment
  • Time For Emerging Markets To Emerge [View article]
    "...I was pleased to see your fund doing so well for so long relative to the S&P."

    Total return since inception of ATACX (9/19/12):

    VFINX: +17.9%
    ATACX: +15.2%

    It's debatable what time period is reasonable for evaluating the performance of an investment manager (1-year, 3-years, 5-years, "over an economic cycle", etc.?), but the inference in your statement above is not supported by the return data available.
    Aug 12 09:13 AM | Likes Like |Link to Comment
  • High Yield Spreads Decline From Another Lower High [View article]
    Wouldn't it have been much more attractive to be buying high yield when spreads were +2,000 bps than at today's spread of +437 bps? I think pundits call it as "buy low, sell high".
    Jul 22 10:07 AM | 1 Like Like |Link to Comment
COMMENTS STATS
184 Comments
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