Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Bosco who wrote (5740)	8/21/1998 11:19:00 AM
From: John Dally	Read Replies (1) \| Respond to of 9980

Hi Bosco, Yes, what I found interesting is that there is limited downside risk and potentially a big reward. There is little "pain" in being wrong: "If he believed the peg would depreciate about 30%, as a number of hedge-fund managers do, then it would have made sense to enter the trade if he thought there was a one-in-four chance of the peg going in a year. That's because the cost of making the trade -- US$63,000 -- is less than one-fourth of the potential profit of a 30% depreciation, or US$300,000. For those who believe the peg might go, "it's a pretty good trade," said Mr. Kaye, the hedge-fund manager. He said that in recent months he hasn't shorted Hong Kong stocks or the currency." So, I think that the pigeons will keep on pecking! -Nice analogy- Best regards, John.

To: Bosco who wrote (5740)	8/21/1998 11:30:00 AM
From: Frodo Baxter	Read Replies (2) \| Respond to of 9980

>However, if it starts receiving electric shock [according to my old notes from a few decades ago <G>, the most effective is a variable schedule,] then it may start to learn not only it won't get any reward, such behaviour will result in severe pain.] My god, finally someone gets it! Except that the government (generally) shouldn't be stacking the deck. The interest rate for HK debt is 12%, which is higher than most junk bonds. Is this a fair price to attract buyers? Absolutely. Because if it wasn't the yield would be 20%, 40%, 150% (like Russian sovereign). That's how markets work. For every buyer there is a seller and price discovery results. p.s. have you seen the yield curve today? That's a market signal for the Fed to ease.