04/08/2006 newsletter
Portfolio: $13.4 +34% since 12/1/2004 and +14% YTD.
SP500: +12% since 12/1/2004 and +4% YTD.
Mid/Small cap: ~20-24% ~8-14%
Update on Samual. He is now having two theraphy sessions each week. He made quite some progress these days. He is now able to stand up and cruise along the edge of sofa or bed. So we are still hopeful he will be able to walk by late summer. We are much relaxed after witnessing his progress over time.
Last week I made a move to register the "Stephen Lihn Partnership" from IRS although I am not sure who would be interested in investing with me. If you are interested, you can take a look at my website http://www.ecoin.net/slp/ . I will personally move about $70K into the account and it will need at least $200K to make a portfolio according to my model. Let me know if you are interested. I will not be compensated until 6/31/2007. That is I will give you a free ride for a year in exchange for your risk to invest with me. Is that fair :-) My overall risk bearing will be much higher than yours for many years since I have more than $250K invested accordingly, which amounts to a very high percentage of all my liquid asset. I hope this does not convey a message of riskyness, but rather confidence.
Now, weekly update. A fun thing happened in my portfolio. You know I own CME. But I did not tell you I also own another exchange ICE, which is a startup exchange trading energy future. Its IPO is detrimental to the still-private NYMEX. ICE is all electronic, in contrary to NYMEX, which is open-outcry and is struggling to go electronic. This week after ICE is flying high, NYMEX finally bowed down to the competition and made alliance with CME's advanced global electronic platform. This move crashed ICE's lead and made it a head-on competitor of the formidable CME. For CME, this enlarged its market place with very little investment, which CME desperately needs due to its high valuation. The result is ICE dropped 27% in a week, and CME advanced 10%. Since I have much more stake in CME than ICE, it is an overall gain for my portfolio. But I am not selling ICE as some may fear ICE would be worthless since it will eventually be crashed to null by CME. ICE is more than 25% owned by Morgan Stanley, majorly owned by Total, BP, Fidelity. It will not go under easily unless something terribly wrong.
This is a vivid story of Buffett principle -- always be aware of the dominant market leader (the moat). In a lot of cases, the leading company has such a market dynamics on its side, that there is no way a secondary company can compete. The other morale is that the market scope can change suddenly when the alliance reshuffles. Once the scope is changed, the leader changes accordingly. ICE was a market leader in energy trading if you compare ICE with NYMEX. But when NYMEX makes alliance with CME, the scope changed and CME is the leader compared to ICE and NYMEX. This type of reshuffling can be quite dramatic after merger, spinoff, asset exchange, and all the new games played on Wall Street.
Steve
SP500: +12% since 12/1/2004 and +4% YTD.
Mid/Small cap: ~20-24% ~8-14%
Update on Samual. He is now having two theraphy sessions each week. He made quite some progress these days. He is now able to stand up and cruise along the edge of sofa or bed. So we are still hopeful he will be able to walk by late summer. We are much relaxed after witnessing his progress over time.
Last week I made a move to register the "Stephen Lihn Partnership" from IRS although I am not sure who would be interested in investing with me. If you are interested, you can take a look at my website http://www.ecoin.net/slp/ . I will personally move about $70K into the account and it will need at least $200K to make a portfolio according to my model. Let me know if you are interested. I will not be compensated until 6/31/2007. That is I will give you a free ride for a year in exchange for your risk to invest with me. Is that fair :-) My overall risk bearing will be much higher than yours for many years since I have more than $250K invested accordingly, which amounts to a very high percentage of all my liquid asset. I hope this does not convey a message of riskyness, but rather confidence.
Now, weekly update. A fun thing happened in my portfolio. You know I own CME. But I did not tell you I also own another exchange ICE, which is a startup exchange trading energy future. Its IPO is detrimental to the still-private NYMEX. ICE is all electronic, in contrary to NYMEX, which is open-outcry and is struggling to go electronic. This week after ICE is flying high, NYMEX finally bowed down to the competition and made alliance with CME's advanced global electronic platform. This move crashed ICE's lead and made it a head-on competitor of the formidable CME. For CME, this enlarged its market place with very little investment, which CME desperately needs due to its high valuation. The result is ICE dropped 27% in a week, and CME advanced 10%. Since I have much more stake in CME than ICE, it is an overall gain for my portfolio. But I am not selling ICE as some may fear ICE would be worthless since it will eventually be crashed to null by CME. ICE is more than 25% owned by Morgan Stanley, majorly owned by Total, BP, Fidelity. It will not go under easily unless something terribly wrong.
This is a vivid story of Buffett principle -- always be aware of the dominant market leader (the moat). In a lot of cases, the leading company has such a market dynamics on its side, that there is no way a secondary company can compete. The other morale is that the market scope can change suddenly when the alliance reshuffles. Once the scope is changed, the leader changes accordingly. ICE was a market leader in energy trading if you compare ICE with NYMEX. But when NYMEX makes alliance with CME, the scope changed and CME is the leader compared to ICE and NYMEX. This type of reshuffling can be quite dramatic after merger, spinoff, asset exchange, and all the new games played on Wall Street.
Steve
posted by Steve at 5:31 PM
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