For any beginners in the stock market, they should try to gain experience by trading in the active , listed stocks. The beginners should learn to control their emotions through this exercise. After this they can start to choose a particular subset of the market to focus on and trade exclusively. The idea that someone can trade equity, bond, IPO, OTC and other exotic products equally well all at the same time is absurd. In today’s world the advantage of specialization is already evident. The same holds true in capital preservation.

The main advantages of investing in leader stocks are the following: The transaction fee is usually cheaper, and it is possible to monitor the stock performance daily.

Beginners should avoid IPO because the prices are usually mispriced on the high side. Even if the IPO price is lower than fair value of the underlying, it will immediately lead to over-subscription. The amount allocated will be so small that it is hardly profitable.

Secondly beginners should avoid buying shares directly from broker/dealer. We can hardly expect the salesman to be unbiased when they try to sell you their holdings.

One should also avoid secondary distribution because of the lack of price transparency.

Lastly, simply avoid the promoter, the penny stock and stock with romantic titles.

I believes many “investors” in Hong Kong will dispute this.



Quick link to The Battle for Investment Survival by Gerald M. Loeb

By happenstance I picked up the book “Using the Wall Street Journal” (5th Ed.) by Michael B. Lehmann. This book has been sitting idly on my bookshelves, gathering dust, for a very, very long time.

On p. 99, there is a reprint of a news story published on 30, Jan 1995. In which it reported,

Greenspan Defends Moves

The Fed has been criticised for raising interest rates before seeing any evidence of worsening inflation, but Fed Chairman Alan Greenspan replied in remarks prepared for delivery over the weekend: “If we have waited until inflation had become evident, it would have been too late.”

A lot has been changed since then.

I haven’t posted much recently because I am starting a new job. It is the third time I switched language. Now, I am officially a Python Developer. Hurray!

Since I have always kept myself busy by constantly picking up new computer languages, I know a dozen of odd and exotic languages. Therefore, after I landed on this job, I am surprised by some “interesting” questions about Python that people asked. And these people are no amateur. They are C or Java developers by profession.

Here are the questions:

1) What is Python?

Well, it is a dynamic scripting language. A good overview here.

To emphasize that it is a real programming language, I’d also add that Python is used very extensively within Google.

2) Isn’t Python an very old language?

Oh, this question makes me feel like I am the last Eyak speaker!

Python appeared in 1991 when the creator Guido van Rossum released it to the public. It is actually a very young language.

Let’s compare other still active languages and the time of first appearance:


Ruby – 1995
Java – 1995
Visual Basic (VB4 to VB.Net) – 1995
Lua – 1993

Perl – 1987
Erlang – 1987
C++ – 1983

C – 1972
Cobol – 1959
Fortran – 1957

The debut of Python is a rather recent event in the history of computer language chronologically.

But another meaning implied by ‘Old’ is related to the vitality or dynamism of the language. A low public profile seems to indicates there is not much going on in this language.

It is entirely a matter of perception.

To me, python never feels old. The language is continuously improving and evolving. The community is healthy and the members on the mailing list are friendly, helpful and intelligent. The language users are willing to embrace changes to make Python better.

It is in stark contrast with Java. The discussion of the Closure has highlighted the inertia of the Java language.

But don’t get me wrong: in other arena of Java eco-system, there are still a lot of energy and innovation such as OpenJDK. OpenJDK may even eventually force the hand of Microsoft to open-source their CLR. (Hopefully)

3) Is Python more powerful than Java?

Wow, it is a dangerous questions! My PC answer is: they are designed for different tasks, and each of them have their distinct advantages in the problem domain that these languages are created to serve.

Besides, everyone has their own notion of Powerfulness. We will end up comparing orange to apple.

For me, power is only one of the consideration. Python’s readability is another attractive feature. While Python cannot stop a programmer from writing cryptic code, at least it spares you the eyesore caused by bizarre programming styles that some ‘gifted’ programmers use.

4) Isn’t Python dead?

The news of Python’s death is largely exaggerated.

Postscript:

• I think the latest announcement of Google App Engine will make a wider audience aware of Python and how good it is.
  
  
• Lately a lot of innovation in programming languages (groovy, python and erlang for example) have an European root. Is it a sign that US has under-invested in research in both public and private sections?

From the Auther’s point of view, an ideal investment vechicle is one that will repay income and principle in units of the same purchasing power as was originally invested. As far as we know, this kind of investment does not exist.

To quote,

“It is not hard to see why it should be merely a theoretical formula. Nothing is safe; nothing is sure in any field of life. Specifically the wealth of the world does not increased fast enough to allow payment of compound interest or pyraminding of profits on existing “invested captial”. Every so often adjustment are made partly through bankruptcies and other scaling down of obligations and partly through deprecation. And it’s all as old as the hills.“

I find this passage specially relevant to the current sub-prime crisis. An triple A rating from a rating agency is never a guarantee of performance.



Quick link to The Battle for Investment Survival by Gerald M. Loeb

If investment is as simple as just buying something for income, then compound interest should be suffice for this purpose. For example, if the Medici family had set aside $100,000 in a fund for 5% compound interest return, its 1933 value will be a staggering $517,000,000,000,000,000!

But there are a lot of threat to the preservation of capital: war, political change, new technical breakthrough, to name a few. As a result, only a handful of poeple can turn a profit from investment. Actually, for those who lost a portion of their purchasing power, they have done a lot better than most in the market.

Therefore , the author urged the readers to set a very high goal in their investment. The investors should aim at return so high such that it can cover the average loss sustained in the overall investment activities. The loss can be a consequence of, for example, poor investment decision, the effects of exchange rate changes, and unexpected closing position due to change in circumstances etc.



Quick link to The Battle for Investment Survival by Gerald M. Loeb