Disclaimer: This content is for information only and reflects only my views. I am investment analyst at an investment bank (six years experience).

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New Bull Market in Gold? Depends on demand vs. real rates and FX

The case for higher gold is conceptually simple. Gold is a unique asset vs. other financial assets because it is the only asset that is not someone else’s liability. The attractiveness of gold increases when the ability to meet liabilities is at risk.

Gold is another instrument of liquidity similar to currencies which can be exchanged for services. Gold is less liquid vs. the U.S. dollar or the U.S. treasuries with the Fed providing liquidity. For the buyer of gold, the decision therefore considering the liquidity and return of the “risk-free” financial asset, namely sovereign bonds, such as U.S. treasuries vs. …


Disclaimer: This content is for information only and reflects only my views. I am investment analyst at an investment bank (six years experience). This is my personal view in reflecting on equity market structure.

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In the applied framework of asset allocation and equity risk premium and passive investment market structure, stock arguably “cheap” in this financial environment…!

This is based on the fundamental principles applied for asset allocation:

Implied equity returns. Advisors will recommend estimate the expected returns of equities based on the equity risk premium or the expected additional returns provided by equities vs. the risk free rate, using the mean historical rate of 4% (from historical returns from the 1900s) for equities. …


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Disclaimer: This content is for information only and reflects only my views. I am investment analyst at an investment bank (six years experience). This is my personal view of the characteristics of exceptional leadership, not a view of any kind of the companies mentioned.

There is a special “edge” of leaders in the data & analytics business that separates the best companies (and stocks) for investing and M&A that I’ve noticed from covering services companies across labor, education and data.

It’s what I’ll call a TRANSFORMATION VISION.

To illustrate I’ll share a brief anecdote of Henry Fernandez, the CEO of MSCI, a company that provides data and tools for the investment industry. Think the indexes used for investing, such as the “emerging markets index” or the idea of the “value” factor for investing. …


Disclaimer: This content is for information only and reflects only my views. I am investment analyst at an investment bank (six years experience).

Macro /futures systematic initial design, stock frameworks: themes, single-stocks, weightings, valuation.

This post will explore the first principles for the valuation of select financial assets within a broader framework of capital movements. This will explore valuation of equities, bonds, and commodities (financial assets), in the context of economic activity and capital flows, synthesized (briefly) with currencies.

For background, the NAV of the portfolio (use to test these ideas) has now recovered nicely (now up 130% YTD from starting equity of 26K) as the losses June/July (admittedly sloppy risk management) were offset by some well-timed trade reversals in early August. …


Disclaimer: This content is for information only and reflects only my views. I am investment analyst at an investment bank (six years experience).

This is an initial design of a macro / futures strategy that can be systematized. In this design there are three key components for returns for a futures / macro strategy. The risk premium (the premium for holding the financial asset), portfolio positioning (aligning assets with economic environment) and money management (risk management).

Risk premium: Nearly all financial assets have an embedded return (usually observed after the fact) that compensate investors for holding the asset.

Simple example of this in bonds and equities: Equities currently have implied rate of return (about 6.4% yield for 2020 expected earnings) implying about a 4.4% premium above the risk-free rate (2% for the 3-month treasury rate). This premium compensates the investor for the risk that actual earnings next year could less than the implied level of yield. These risks include slower revenue growth or lower profitability. …


Disclaimer: This content is for information only and reflects only my views. I am investment analyst at an investment bank (six years experience).

Data-focused firms can be difficult to value. While it is easy to conceptually understand why a proprietary source of information has value, it is difficult to value on an absolute data-basis. Unlike resource commodity like oil or metal, which are “inputs” across several different industries, a thus have a wide market of buyers, the utility or buyer of data is limited to specific industry or function. …


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Performance of the stock component (since 4/22/19 — when most were entered)

The broken paradigm of nutrition and what to do about it.

This post summarizes the fundamental issues I see in food and nutrition with ideas for potential solutions. The mission is to empower individuals to take charge of their health and wellness. The overarching problem is that people are sick. Obesity is one symptom of a poison epidemic in food. And there are no tools or means for individuals to take charge of their health.

Issue #1: Limited access to good information.

Top-down recommendations based epidemiological studies (i.e. eating patterns) don’t work. One of the biggest disasters in U.S. health (I believe) is the low-fat diet guidelines from the U.S. government in the 1970s. The well-intention government at the time took Acel Keys recommendations to reduce saturated fat consumption (with falsified data) and replace it with vegetable oils to reduce heart disease. …


Disclaimer: This content is for information only and reflects only my views. I am investment analyst at an investment bank (six years experience).

In my study of investing in an area I’ve found there are three components of returns that can come from active decision making:

  1. Theme of Sector (i.e. focusing on the theme of business models based round the sale of data — the “information services” theme)
  2. Picking the best stocks of the theme (i.e. picking what I believe to be the most valuable companies — the “proprietary data assets” group)
  3. Structuring the portfolio weights of the stocks (i.e. …

Follow up to the current portfolio positioning.

Should clarify some of the elements involved in futures positions.

A long gold futures — since it is leveraged — is a combination of a short cash (paying the cash interest rate plus cost of storage) and short currencies (currencies to go down in value vs. gold).

The gold futures curve (the price of contracts extending to the future — either upward sloping “contango” or downward sloping “backwardation), which reflects both the cost of storage and cash interest rate (i.e. the cost to hold the commodity into the future) implies about a 2.1% cash rate of interest rate plus storage (v.s the 2.07% …

About

Henry Chien

Investment analyst and biohacker

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