Thursday, September 6, 2012


1. Greed - army of dedicated retail investors would hang on to each word said by an 'expert'
2. Sood's story - The short trade on Timminco was brilliant but as said, "it was a USD 20 Mn gain buried under USD 250 Mn of losses."
Goes back to one of my favourite adages - "there are old investors, there are bold investors but there are no old bold investors." The fund was leveraged
3. Global links - Veritas was one of the research houses that came out with a scathing report. Interestingly, it is the same house that came out with short calls on DLF, RCom and Kingfisher
4. Just like Paulson's Sino Forest trade, some hedge fund managers become over-ambitious and don't do the right kind of ground work. As said at Safal Niveshak, returns are the one thing you cannot control, but risk is. Am referring to Sprott's and fidelity's trade with Timminco
5. The ferocity with which polysilicon prices fell was outrageous - from a USD 400 per kg to USD 27 per kg within the year
6. In times of crisis, even the best managers run to the regulators. All investments are fraught with risks and as a manager, you have the fiduciary duty to take care of that risk (and I am not talking about a stupid Beta)

I first got this story here, which took me to this masssssive article here and a beautiful chart here.

Euphoria will remain timeless but there is no investment basis for a company that does not have cash earnings or real assets.

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