just a suggestion
thread is damn informative...
but its simple CCP..
i do not want 2 take credit frm TRIS
he is doin a geat job..
but when i saw this thread i first thought that ..
its an ONLINE GD where topic is changed everyday.
a little different than "ONLINE GD" thread. coz " O GD" topic is alive untill topic becums saturated
Now, I thought I had to chip in cause the debate seems heavily in favour of Israel.
Not for a moment am I defending what the Hizbollah's have done(capturing 2 soldiers).
But how is Israel's defense justifed. Not its right to defend its borders but the way its bombarded Lebonan. Its not me but its covered extensively by international media but huge Human right violations and consistently Israel has been criticised not for its right to defend but the way it responds. Bombs cities, cripples basic infrastructure.
How does happless people in palestine who find it difficult to manage a polic force, get no support from the powerful nations cause Unkil Sam and his commardes are all jews.
I tried to avoid the word Jew in the previosu post but its a well know fact that the role jews play in the US and the powerful and influential postions and they have held have always tilted the tide towards Israel.
For christ's sake Israel is a nuclear weapon state. Destroyed cities and driven palestianians to the corner. What good does it do to the issue if Plaestianians are living under Israeli occupation. Oh c'mon its easy to debate that an act of terror does no good to any cause. But if u were living under the watchful eyes of demons like Ariel Sharon what would u do, Obviously retaliate. Through means that suit you.
I mean how does David(Palestine) fight a Goliath(with all its f-16's and 100,000 strong troop with the best artillery).
Oh c'mon are we defending consistent arrogance of power? Why shouldn't Israel Leave the occupied land. That's all people want. But Israel's argument is that terrorists first surrender then we'll move.
Dam it, the brat has had problems with and has bullied all its neighbours, not spared anyone.
Hedge funds are basically funds that invest in markets primarily thru Arbitrage oppurunities.
Heavy selling, investing using derivatives are something you would associate with any normal fund. Most MF's today offer invesment thru derivatives. What distingusihes them from Hedge Fund is the invesment style.
Hedge funds would employ
1. Arbitrage - Exploit differences in a market. ONGC quotes at rs 100 at BSEand rs 110 at the NSE, A HEDGE FUND would pick the stock at BSE and sell it at NSE. So its about the return oppurunities the market presents.
It wouldnt buy ONGC cause it found new reserves but use the news to benefit from the rise or any change in the price of the stock.
2. Selling short- Sell the stock/securities without owning them. Like I'll buy 10 shares of Mc Dowells at rs 100 and if during the day or at any point witness a surge in the price a hedge fund would sell the shares without taking the delivery of the share or owning them.
So basically even though a normal fund would employ derivatives like stock options while investing towards capital appreciation, the basic objective of a hedge fund is not to benefit from that Growth stories of lets say India's Infrastucture but to generate returns that would take place as a result of movement of various stocks and other securities.
Also Hedge fund managers generally are paid a 1% or 2 for the return that they generate on the fund and given the analysis, discipline and detail involved in managing such funds.
In a nutshell If i had to sell a hedge fund to a person on the street, I would say that this fund would only invest in a manner to generate returns by Trading strategies and whose primary concern is returns through various trading opprntes by preserving ur capital and hedging ur risks, whereas a normal fund would look towards Capital appreciation i.e. expecting the share price of a certain co. to go up over a period of time.
Nope, that ain't hedge funds egg-zactly.... infact its quite a different omelette
But since Hedge Funds is quite a beautiful concept.... and as per the convoluted path of reasoning i follow, it has a bearing on the cons of CAC... so lemme try me hand at it.... BTW will try to reach it logically from single stock, through portfolio ... upto Hedgeing... bear(bull) with me??:
Disclaimer: Losses accrued due to any investment decisions taken on basis of what follows is not my liability. Any profit, though, that would be 2% please... payment accepted in hard cash or cold bottles
Any investment in the stock market is liable to risk... as in you may gain or you may lose and that too at different rates..:(
So ... enter portfolio diversification that reduced the risk ... by diversifying within the market or even cross-market. The unique risk associated with a particular stock is mitigated by holding different stocks with low correlation coefficient (basic statistics... try it out!!). Now lower the correlation coefficient lower the risk.... perfect lock-step (same or very similiar falls and rises of fortune) has highest risk... and risk reduces as correlation reduces...
Now mathematically we see that totally unrelated (mutually independent fortunes) stocks will have correlation coeff, p=0... and will have quite a low risk.... now if we sort of go a li'l further we see that at perfect negative correlation, p=-1 (A rises by x then B falls by x and vice versa) then risk can be totally banished by using suitable portfolio weights (ratio of value of stocks of company A to total value of portfolio). Sadly perfect negative correlation does not exist.
So the next logical step taken was "hedging of risks". The most basic and easily understandable form (for me that is ) is the risk-neutral form or the Equity Market Neutral type of hedge funds.
Let's try a chillar example :
A Hedge fund for the Beer manufacuring Sector (yup.. me am a fan!!!).
There are two stocks, the leader and its next competitor, FoOShTERS (F) and KaBaL (K). Now the hedge fund manager after his analysis of the two, decides that company F is the stronger of the two, with better business plan, goodcorporate governance and stuff. So he goes Bullish for F, i.e. bets on it gaining value and goes Bearish for K, i.e. bets on it losing value.
We are now betting that if the sector has an overall increase F gains more than K, and if the sector has an overall decrease F loses less than K.
So whatever happens, if our original judgement stays true, the hedged bet gains us moolah... and it is either (Gain of F - Gain of K) or (Loss of K - Loss of F)...
Hedge-funds use more complicated mechanisms, involving derivatives, futures and stuff ... though this basic example gives a simplistic approach.
Ok... now to my claim of this having a bearing on CAC... the nay-sayers hold that on full convertibility with no limitation, a lot of un-hedged investments in foreign markets shall cause a net outflow of capital, along with the accompanying ill effects of the same... that's why the tier wise opening up... gives priority to stabler and more-astute investors first... with domestic households being the end of line.:(
Hope my verbal diarrhoea ain't being a nuisance
Wouldn't it apply to shares held by Inistitutional investors. Large banks inlcuding promoters can liquidate/sell their stake in the stock market. HCL when it lost a certain contract, it's owners started selling the stock that they held.
So FDI's stake is as good as the promoter stake as they own a certain part of the equity of the co. as any onter major investor.
Also, as FDI or foreign direct investors can sell their holding to another investor using the secondary market as in the stock market price as a indicator. Citibank can sell its stake in NDTV to ABN AMRO at a premium to what the market offers. But if u have bought the shares through the stock market u would have to sell it at the price quoted in the market.
So its about the nature of your holding, whether its a controlling stake or just plain private equity.
Apologies if I have put the discussion off track....:(