Grow your money, Trader – the Anthem of

As the risk-free rate is so upset,
Let your money grow
Stock mark’t is tough and turbulent
Let your money grow
So God sayeth “model, Trader,
Your risks by every trade,
Estimate risk-reward and
Let your money grow

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Why German real estate market will likely crash

growing rates will crash the German residence market

German residential market is booming due to extremely low interest rates and, respectively, very cheap mortgages. But if the rates grow, the market is going to crash! For instance, a current rate for 10 year mortgage without a downpayment is about 2%. A new rural house costs about €300000. A typical borrower can pay about €1000 monthly installment + €5000 extra redemption in the end of year. If the rate jumps to 4%, the house price will drop to €246303, i.e. 17.9% (this is just estimation, however, it is not implausible). And additionally the residual debt refinancing costs will increase by €31762 (this is a precise calculation).

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Warum Sie äußerst vorsichtig beim Immobilienkauf sein müssen

Steigende Zinsen koenen die Hauspreise kippenZinsänderungsrisiko ist aktuell so hoch wie noch nie! Die Kredite sind wegen extrem niedriger Zinsen zwar günstig geworden, aber die starke Nachfrage trieb die Immobilienpreise so hoch, dass barwertig gesehen, ist der Erwerb einer Immobilie doch teuerer geworden. Und wenn Sie dazu Ihre Immobilie nicht auf einmal, sondern mit dem Anschlusskredit finanzieren, kann die Restschuld für Sie sehr teuer werden. Selber Schuld, wenn Sie Ihre Risiken nicht nachkalkulieren ( hilft Ihnen gerne bei Kalkulation).

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Anti-Asimov’s Three Laws of Robo-Advisory

  1. Falsely affirm that nobody can beat the market
  2. Substitute the idea of wealth maximization with the idea of cutting-off the management fees.
  3. Don't disclose anything about the underling portfolio optimization model and avoid showing possible future portfolio dynamics.

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Trump trade: case study of DAX intraday on 09.11.2016

Donald Trump's victory on 09.11.2016 was likely as surprising for markets as Brexit was. However, the expected (and factual) aftermath was completely different. This case is good to learn when you should urgently sell and when notIntraday sketch of DAX on 9.11.2016 Continue reading "Trump trade: case study of DAX intraday on 09.11.2016"

Einstein’s rating agency: easy and clear for everyone

Recently we revied the performance of Einstein, a German trader who managed (without a leverage) to make almost 2000% in less than three years. translates his investment grades in layman's terms:

  1. Tenbagger - the stock will grow ten times within 3 years.
  2. Doubler - the stock will grow twice with a year
  3. Outperformer - the stock will be better than peer group by factor 2
  4. Money - one may but not necessarily need to buy the stock
  5. No-hoper - one will neither lose nor earn money with this stock
  6. Pinocchio - the board does not get along with the truth
  7. Brief - one may but not necessarily need to sell the stock short
  8. Short - one can earn money if sells this stock short
  9. Snot - avoid buying this stock, do sell it short!
  10. Snot to the power of 10 - target zero, total loss, blacklist and megashort!

A Russian Frank Cowperwood: Oleg Barmin’s case from risk management point of view

Oleg Barmin Book - КнигаБарминаAs I read Oleg Barmin's book "Я помню всех, кто мне когда-то не перезвонил" (I remember everybody who once did not call me back) I saw a lot of parallel to Theodore Dreiser's Financier Frank Cowperwood (Charles Yerkes). Like Cowperwood (who being a teenager bought and re-sold a soap with profit), teeny Barmin bought a frozen fish, smoked it and re-sold with profit. In the age of 21 he built a flourishing car business ... and like Cowperwood was wiped by crisis and was imprisoned (however, only on remand). Like Cowperwood, he rose again (in florist business). Though Barmin had not (yet) built something like London Subway, he is only 35 and who knows, maybe we will see more parallels with Cowperwood...
In spite of such praising summary the post is going to be critical: we will concentrate on what Oleg missed from risk management point of view.

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