THE ORPHEUS NEWSLETTER - 30 NOV 2009

The Hedge Opportunity. Performance cycles indicate that Hedging could be an opportunity and not just an imperfect risk management technique. The history and the idea. Hedging is one of the first ideas modern finance taught us. Hedging as an exercise was started for a farmer, who wanted to insulate himself from movements in agricultural commodity price. The commodity prices fluctuate and create a risk. If the actual price of agricultural commodity rises a lot between planting and harvest, the farmer stands to profit, but if the actual price drops, it could lead to a loss. A hedge allowed the farmer to sell a number of wheat futures contracts equivalent to his crop size at planting time. This way he could effectively lock in the price of wheat. Now he no longer cares whether the current price rises or falls, because he is guaranteed a price by the contract. Overtime the risk management shifted to stock prices. Change the farmer for a stock trader, who believes that the stock price of Company A is volatile and could fall. He offsets the position with the index or another sector peer, now if the market falls and the stock, the investor has locked in a price and will not lose. read more.

The Inefficient Pair. A recurring divergent performance on an equity pair could redefine alpha. Robert Arnott’s, Research Affiliates LLC, has received a patent for an indexing methodology that selects and weights securities using fundamental measures of company size, such as dividends and sales. Fundamental indexing has gained popularity with $27 billion tracking the indices. This is 3% of the total investments tracking the S&P 500. Apart from the fact that the patent gives intellectual rights to Research Affiliates and generates license fee for the company, the revolution here is challenging the benchmark. read more.

TIME ANALYTICS - ECONOHISTORY

ALPHA.INDIA – TCS VS NIFTY UP 60%
ALPHA.INDIA – Grasim to outperform L&T
ALPHA.ROM – Can BRD outperform BETXT by 100%?
ALPHA.CEE – CENTRAL AND EASTERN EUROPE INDICES
ALPHA.ENERGY – Long Gazprom, Short Chevron
ALPHA.GLOBAL.INDICES – Long Nikkei, Short Brazil (BVSP)
ALPHA ENERGY: Chevron moves up in rankings
ALPHA.GLOBAL – Short Pfizer, Long J&J continues

INDIA

WAVES.INDIA – NSEBANK ALTERNATE
CHANNELS.INDIA – NTPC. ANTICIPATED AND HAPPENED
CHANNELS.INDIA – EARLY ECONOMIC MINOR CORRECTIVES
WAVES.INDIA – NO CLEAR SIGN OF AN IMPULSE YET
CHANNELS.INDIA – TELECOMMUNICATIONS REMAIN DOWN
WAVES.INDIA – CNXIT. ANTICIPATED AND HAPPENED
CHANNELS.INDIA – ENERGY SHOWS SIGNS OF NEGATIVITY
CHANNELS.INDIA – EARLY ECONOMIC – ANTICIPATED AND HAPPENED SPECIAL
WAVES.INDIA – PREFERRED CONTINUES TO LOOK LOWER

ROMANIA

CHANNELS.BVB – MID ECONIMIC UPDATE – CONDMAG PERFORMANCE CYCLE START TO UNDERPERFORM
WAVES.ROM – BETFI PUSHES LOWER FROM KEY FIB LEVELS
CHANNELS.BVB – LATE ECONOMIC UPDATE – OLTCHIM READY TO TURN UP
CHANNELS.BVB – EARLY ECONOMIC UPDATE – TLV INDICATES EXHAUSTION
WAVES.ROM – BETFI. ABOVE 24,000 GET READY FOR 27,000
CHANNELS.BVB – MID ECONOMIC UPDATE ON INDUSTRIALS
WAVES.ROM – BETFI READY TO OUTPERFORM DOW
CHANNELS.BVB – LATE ECONOMIC UPDATE – UTILITIES ARE POSITIVE
CHANNELS.BVB – EARLY ECONOMIC UPDATE – RESISTANCES TURN INTO SUPPORTS

GLOBAL

WAVES.GLOBAL – DOW. THE CORRECTIVE STRUCTURE SEEMS OVER
WAVES.GOLD – PRICES ARE CONTINUING THE CORRECTIVE STRUCTURE UP
WAVES.OIL – HEATING OIL. FUTURES. POTENTIAL ENDING DIAGONAL
WAVES.GLOBAL – DAX. THE CORRECTIVE STRUCTURE UP SEEMS COMPLETE
WAVES.FOREX – GBPUSD. CONTINUING THE CORRECTIVE STRUCTURE DOWN TILL 1.6
WAVES.GOLD – Gold 1200 is here

NEWS

Alternative Research – Reasons for Optimism
Intergrity Research – The failure of financial analysis
Integrity Research – Outsouring as a profit driver

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