Foresight Capital Partners

Sometimes it is best to take a step back and invest some time in developing a deeper understanding of finance, investing, economics, and associated areas such as mathematics and software. Since a young age I have always been interested in these topics and since 1996 I have been an active investor. However, I am still very much on the learning curve and I really see no end in my personal training program.

Below I point out some useful educational resources:

Investing

The Apprentice Investor - “In this special series of articles from RealMoney contributor and market strategist Barry Ritholtz, learn about becoming a better investor — not just a better stock picker”.

Investopedia - Huge resource which is useful for just about any investor. The site also contains (cost effective) guides which can be purchased for those working towards formal professional qualifications (NASD Series, CFA, CFP).

Warren Buffet’s Berkshire Hathaway letters to shareholders (1977-present) - Warren Buffet is not only an exceptional investor but also a very good communicator of investment ideas. His letters to shareholders offer numerous valuable lessons for us all.

Economics

Wikepedia - Homepage on Economics at Wikepedia

Economics Network - Online Texts and Notes list at Economics Network a UK base resource of learning and teaching economics.

Internet Resources for Economists - Good selection of links to blogs, books, journals and more.

Mathematics & Software

FreeTechBooks.com - Online computer science and engineering books (+ lecture notes).

MIT’s OpenCourseWare - MIT’s is a world class university which values the teaching process. Now much of there teaching materials have been made available over the web to self-learners. When I visited MIT in 1998, I discovered that because the education system in the US is basically a product which is sold to fee paying parents the quality of the education is very high.

Paris Tech - Similar idea to the MIT’s OCW but the resources here are provided by the collection of world class universities in Paris, France known as the Grandes Ecoles. Like MIT I also had the good fortune to visit a number of these institutions when I was in academia.

Textbooks in Mathematics links by Alex Stef - An updated collection of links to math’s texts kindly provided by Alex Stef.

To be continued…..

Though a certain amount of care should be taken when reading information and discussing ideas on forums they can form a useful source of information and/or an arena to test/exchange/find ideas. Please note I use the term information (rather than tips) and I use the term care because forums are used to propergate “ramping”, “pump & dump” scams, so please take care!

General Investment Forums

Motley Fool - Just about the oldest investment and personal finance forum in the UK which cover a wide range of topics for a wide range of users.
iii Community - User moderated finance forum in which mainly individual stocks are discussed.
Elite Trader - Mainly US focused traders (rather than UK investors) but still very useful to know about.
ADVFN Forum - Forum for LSE focused investors and traders.
Raging Bull - Mainly US focused investors where I recall having a number of detailed discussions on IT hardware.

Quantitative Finance Forums

Wilmott.com - The large and active Quant forum which has many informed and helpful users. Though I am not as active on this forum as I once was you may see me post from time-to-time as DrBen.
Nuclear Phynance - Quantitative finance forum with an orientation towards trading rather than analysis. I post on this forum as MrBen.
CQF.info - Forum and Resource on Maths, Finance & LaTeX; which has a rather academic atmosphere.
Global Derivatives - In there words, “a site aimed at promoting the education and expansion of all things related to financial engineering, derivatives and quantitative finance”.

Directories

Money Science - As the name suggest this site offers links, articles and a forum, seemingly on all topics associated with the application of the scientific method to the domain of finance.

Though this book is worth buying just for the 37 page second chapter written by Anthony Bolton about his investment approach, the book over-all does fall along way short of what it could have been. This chapter gives a good first hand account of the philosophy and process of Mr Bolton, and re-affirms for the reader many age-old rules such as do your own research, do not follow the heard, and be systematic. The real short coming of the book is that this chapter only represents 37 pages of the total 177 pages. The other material contained within the book is either written by Jonathan Davis and is a reproduction of earlier reports and industry analysis, and as far as I can tell is essentially just padding in order to allow the publisher to publish a book rather than a 37 page article.

Anthony Bolton is definitely an outstanding investor and this is precisely why such a book has been produced. Moreover, this is the reason why everyone excluding his immediate friends and family have brought this book. Saying this, a large portion of the book namely chapters 3-4, just endlessly repeats this statement in numerous numerical and linguistic forms without providing almost any insight into the investment process by which this investor works. Unfortunately such material fails in the primary aim of any investment text which surely is to make the reader a better and more informed investor.

Saying this, I did learn one or two new facts such as the interesting fact that Mr Bolton uses sell side analysts, rather than just his (large) in-house analyst team. Also the point concerning how central the use of charting is to Mr Bolton’s over-all approach. But I was also very much left wishing to learn more and hopefully when Mr Bolton leaves Fidelity he will get the chance to write a follow up on chapter 2, with a full 200+ page book detailing not only his investment philosophy but also numerous worked examples detailing particularly investments which illustrate the application of his philosophy.

On this page I have collected together a number of links to useful investment blogs which I have come across:

Closed-end Funds - http://closed-endfunds.blogspot.com/
News and news of mainly US listed closed-end funds.

Quant Investor - http://quantinvestor.blogspot.com/
A Quant developers investment activity and views (incl. closed-end fund activity).

Random Roger’s Big Picture - http://randomroger.blogspot.com/
US Portfolio Managers view on portfolio management, foreign stocks (ie non-US), exchange traded funds, options.

The Big Picture - http://bigpicture.typepad.com/
A marco prospective of the investment envoiroment.

ThinkBlog - http://www.thinkequity.com/blog/
NYC equity research teams blog focused on growth opportunities.

Quantitative Trading - http://epchan.blogspot.com/
Quantitative investment and trading ideas, research, and analysis.

Contrary Investor - http://www.contraryinvestor.com/index.html
Monthly research, commentary and perspectives on the financial markets.

The Oil Drum - http://www.theoildrum.com/ Detailing development within the Energy sector.

John Kay (FT Columnist) - http://johnkay.com/ Articles on microeconomics.

To be continued…..

BT has just opened it first customer lines on its 21st Century Network (21CN) at Wick near Cardiff. The 21CN will eventually be rolled out nationwide and be a complete upgrade of BTs infrastructure. Allowing BT going forward note only to offer more value added digital products and services but also to reduce its fixed ongoing costs associated with maintaining its network. After pouring 10B GBP into this project (over several years) which has had a natural drag on the earnings this long term investment will soon start to pay-off. It will also reduce BTs operational risks since the 16 existing networks will ultimately be reduced by just 1 integrated technology platform which naturally will significantly simplify BTs operational position.

As was widely reported BT also launched its BT Vision service which is a home TV service. The offering is not really news since it has been in the pipeline for at least two years and for those for are interested to learn more I refer the interested parties to either the front page of today’s Companies and Markets section of the FT, or the numerous company reports of the matter which are available from BT’s corporate site at:

http://www.btplc.com/

It seems that the best strategy a manager can take to ensure survival during a risky project is to hire what I refer to as a “blame me” consultant. The “blame me” consultant in theory is hired to provide management with expert advice, but in reality the motivation is that the management will have someone to blame if anything goes wrong with the project. Hence, the term “blame me” consultant. This approach is used to great effect and offers a compelling pay-off to all parties, namely the consultants can pick up large fees and the management never gets blamed for anything.

In the world of investing we also have managers who are involved in a risky project known as investment management. Now in the investment world such managers would also like to adopt a similar strategy however by the very nature of their position they cannot hire a third party to decide investment decisions because that is the essence of their job. In order to get around this problem the investment management community has invented the notion of “Mr Market”. Any under-performance of a fund is often explained with regard to this notional person “Mr Market”. In particular, you will often hear statements like: “Due to market volatility the fund experienced underperformed during Q3”. Hence, in the investment world the usual “blame me” consultant has been replaced by a notional construct where the notional construct serves the same purpose but has the added advantage that he cannot disclose any information and does not require any fee.

This is not meant to be taken completely at face value but I think I am on to something. Moreover, there is a very serious point that any investor should take personal responsibility for their investment decisions and over-all investment performance. The reason for this is that an investors (long term) performance is primarily determined by the ability of the investor rather than the prevailing market conditions. I would even go so far as to say that every day of every year there are opportunities in financial markets. This is just one example of the many psychological pit holes within the investment world and getting into a “Mr Market” blame me Consultant mentality really is a rather dangerous pit-hole since it delegates the responsibility that every investor has to continually strive to make themselves a better investor.

According to the Organisation for Ecconomic Co-operation and Development China now has the world’s second largest R&D budget at $136B USD, with Japan now pushed into Third place with a budget of $130B USD, where the US is still the clear leader with a total budget of $330B USD. However the absolute numbers are slightly misleading because of the differing cost basis of differing centers. After all as someone who has run IT operations in differing locations I know from experience that you get very different levels of bang-for-the-buck in differing locations. So to put this into perspective in China there are now 926,000 researchers, where as in the US there are 1.3M, hence China is not as far behind the US as the absolute dollar amount would imply.

Going forward China (at least officially) is committed to developing 100 world-class universities, with a focus on science and engineering. If this aspiration is put in place then China (a generation later) will outstrip any nation state in terms of “intellectual human capital”.