L'Information est d'Or

In October 2009, I posted a message on the fantastic business story of Iliad . I said "their model is based on innovation in products and simplicity in marketing." After having revolutionized the French Internet broadband access with the "FreeBox", they have done the same when entering the mobile network operating business. Their new offer of unlimited calls and text messages, unlimited Internet access and no commitment for 20 euros per month is both simple and innovative. They managed to dramatically reduce the price compared to existing competitors by not subsidizing the purchase of the phone. As a result, this new offer has forced their three competitors: SFR, Orange and Bouygues Telecom to reduce their prices, hence breaking an oligopoly. The presentation of the new offer by Iliad's CEO, Xavier Niel, one of France's greatest entrepreneurs. (in French) Free : la conférence de Xavier Niel en intégralité par LeNouvelObservateur And this ...

The current rally is the biggest since World War II. A lot of good news are now priced in. Although the long-term outlook is still positive with the global economy getting out of recession, there is now significant risk of a short-term bear market. One could benefit from a pull-back by buying "short ETFs" like Lyxor Short CAC40 (code=SHC on Euronext Paris) or short commodities like ETFS Short Crude Oil (code=SOIL on LSE)

After seven years of decrease during which the US Dollar lost 40% of its value against the Euro, it is now time to reverse the trade and buy EUR vs USD. Euro zone has fallen into serious recession while the US, though close to recession as well, have much more capacity to rebound quicker. GDP growth forcecasts (Source JPMorgan) 2008 2009 United States 1.5% 2.0% Euro area 1.2% 0.4%

Warren Buffet has bet 1 million dollars that over the next 10 years, the S&P500 index will beat a selection of carefully selected Hedge Funds. His argument is that huge Hedge Funds fees ( 1.5% management fees + 20% performance fees + 1% management fee for the fund) will eat up any potential gain. Hedge Funds focus on absolute returns and low volatility so they tend to do better when the markets go down. As a result, it's likely that the result of this bet will depend on how the markets and the economy overall does. Who do you think will win? Join the survey

Trade Idea Now is a good time to start investing in India. Fears of inflation and global recession have taken the Indian index down. It is now trading at 4,500 down from 6350 in early January (30% loss). Although the Indian economy is forecasted to slow down, it will still do reasonbly well: JPMorgan predicts a GDP growth of 7% in 08-09 compared to 8.7% in 07-08. The inflation risk comes from surging commodity and food prices. I don't believe that commodity prices surge will last forever: it has the caracteristics of a bubble (just remember that a few years back oil was trading at $17, has now reached $135 and an oil company executive recently predicted $250). And by raising rates, the Federal Reserve of India has shown that it is ready to fight inflation. NIFTY now trades at 15.7 times the 12M forward earnings. That is a discount from the S&P500 who has to face a US recession. Incredible, isn't it? Lyxor offers an easy product to bet on the rise of the Nifty index: the Ly...

Let's have a look at the market saying that you should sell in may and walk away. Is there anything statistically true about it? Well, you will be surprised by what I found. If you split the returns of the S&P500 into two semester, one from May to October and another one from November to April, you find out that most of the gains happened in the first part of the year. Here is the strategy: - Invest 1st May $X of S&P500 - Sell 31st October whatever your investment is worth: $Y of S&P 500 - Then reinvest 1st May of next year $Y. ... This strategy would have returned 13 times your initial investment over 45 years. when the same strategy between November and April would have returned only 1.5 times your initial investment over 45 years. It is less than the total progression of the S&P but considering that you would thus reduce your exposure and risk considerably (by half), it is very rewarding.