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Strategies & Market Trends : Electronic Contract Manufacture (ECM) Sector
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To: Pierre who wrote (2059)5/10/1999 6:10:00 PM
From: MGV  Read Replies (1) of 2542
 
If you want to challenge, challenge what I said about the valuation and trade. If you want to learn, read a book or work through trying to understand contrary points here. There is nothing sophisticated about what Klemencic purported to trade. It was not a hedge. It did not minimize downside risk. It was not profitable.

For your edification, it was not a hedge because, CLS was undervalued relative to FLEX by Klemencic's own definition and because both names are in the same industry. If you hedge you want to choose assets that have negative correlations, not positive ones. It was not profitable because CLS rose in price. In fact it has risen in price from the point Klemencic denigrated it at $28 in March. Now what is it exactly that you understood?

You know enough to know that a "hedge" is supposed to "minimize downside risk" but you don't seem to know how to measure risk or to know how to construct a hedge. How did the trade "minimize downside risk?" Why do you think it was a wise hedge transaction? What is your own standard for determining relative value?

Your "hanging out" to learn something is laudable. Maintain intellectual integrity and objectivity and you just might learn something useful.

Now, if you want to attack, attack my points about why the trade was not a hedge and why it was not profitable and why it could not reasonably have been expected to be profitable.

I take offense at efforts on these boards by some to advocate trades based on some feigned superior knowledge or not. This guy, in particular, has been significantly wrong on a number of trades. He has no business advocating any trades to anyone.

The value of these boards is limited almost solely to catalyzing thought and exchanging information for that purpose.
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