Monthly Archives: February 2017

Weekly market opportunities in T-Advisor: the best on February, 27th

T-Advisor updates weekly a list of market opportunities from several stock exchanges around the world. We sum up a selection of the best ones:

EUROPE

  • Arseus (Brussels). A supplier of products and services to professionals and institutions in the healthcare sector in Europe, the United States, Brazil and Argentina.

Arseus main figures in T-Advisor

Arseus chart in T-Advisor

AMERICAS

  • Paypal (Nasdaq). One of the world’s largest Internet payment companies.

Paypal main figures in T-Advisor

Paypal chart in T-Advisor

ASIA-PACIFIC

  • Shinsei Bank (Tokyo). A leading diversified Japanese financial institution that provides a full range of financial products and services to both institutional and individual customers.

Shinsei Bank main figures in T-Advisor

Shinsei Bank chart in T-Advisor

Find more opportunities from the main exchanges in the world on our module “Market opportunities” in T-Advisor.

France: Looking at the presidential election

This year is not going to be easy for Europe. Apart from the next negotiation between the European Union and Great Britain for the Brexit, the continent will celebrate three main elections: Germany, Netherlands and France. These three countries are founders of the EU in the 50’s and there is a reaction against Europe in all of them.

The current president, the socialist François Hollande, announced last year his intention to not to repeat as a candidate for a new term. His presidency dealt with several difficulties both in economics and in politics, specially related to the terrorist attacks (in Paris and Nice). The polls were very negative, as he was rejected for a huge number of voters. Hollande retreat has opened new chances for other candidates. The best positioned was the right-wing candidate François Fillon, but the corruption scandals linked to his family have reduced his chances. In this case, the second best positioned candidate is the far right politician Marine Le Pen.

Marine Le Pen promises to abandon de EU (also known as Frexit) if she win the election in next April-May. Her popularity and the scandals around Fillon have worried the markets. What if she wins? What effects would it have? If we look at the chart of the evolution of the French benchmark index CAC40, the trend was bearish when the Fillon scandal popped up. It is also interesting the parallelism amongst the British, the German and the French markets.

Comparison between Germany, France and Britain in index evolution

How can we understand this chart? Well, this correlation also means that all three economies have deep boundaries. It is not so easy to change such narrow financial and economic links just with a referendum or a decision of abandon the EU.

In any case, the French stock exchange benefits from the general bullish trend, as we can also perceive in this chart:

Global trend evolution in France

If we consider the CAC40 best performers, there are several industrial and banking companies, as the T-Advisor list shows:

Best performers in CAC40 in France

So, France is still a powerful economy with several competitive banks and industries and the markets have strong trend boundaries with Germany and Britain. It is possible a surprise, but it is difficult to think that this structure will change even in the middle term. In any case, a victory of Marine Le Pen would have very relevant consequences for the evolution of the European united economy.

Weekly market opportunities in T-Advisor: the best on February, 20th

T-Advisor updates weekly a list of market opportunities from several stock exchanges around the world. We sum up a selection of the best ones:

EUROPE

  • Tomra (Oslo). The largest reverse vending machine (RVM) producer globally and leading sensor-based machines for sorting and recycling.

Tomra main figures in T-Advisor

Tomra chart in T-Advisor

AMERICAS

  • Aon Corp. (NYSE). A company with business in risk management, insurance and reinsurance brokerage, investment banking, human resource solutions and outsourcing services.

Aon Corp main figures in T-Advisor

Aon Corp. chart in T-Advisor

ASIA-PACIFIC

  • Wesfarmer (Australia). An Australian conglomerate with interests in retail, chemicals, fertilisers, coal mining and industrial and safety products.

Wesfarmer main figures in T-Advisor

Wesfarmer chart in T-Advisor

Find more opportunities from the main exchanges in the world on our module “Market opportunities” in T-Advisor.

Comparing my assets with its benchmark: some figures for analysis

Comparative figures asset benchmark

As investors, we look for the best performance. A good performance is not only an absolute figure, but also a relative one, when we make comparisons. For instance, if a share in our portfolio has a performance of 10% in a year, we can think that it is a nice number, in absolute terms. But if the reference index of the share has performed a 15%… well, it is not so nice. That is why it is interesting to take into account some figures to understand if our securities have a good quality compared with their benchmarks:

  • Relative trend of the security versus index: it compares both behaviours. If the figure is positive, the security is strong versus the index. If it is negative, there is a weakness. It is one sign to detect if our stock or fund is performing properly against the index.
  • Tracking error: this indicator measures the deviation of the difference in daily returns of the security and the benchmark. A higher figures shows that the daily returns of the security has a larger difference compared with the daily returns of the index.
  • R 2: it measures the similarity of the daily behaviour of both the asset and the index. If the figure is near to 1, there is a strong parallelism. If it is near 0, there is no relation.
  • Correlation: if R 2 measures the similarity of the behaviour, this provides more specific information. If the figure is near to 1, there is a positive correlation (both move identically in the same trend). If it is near to -1, the correlation is negative (both move identically in opposite trends). If it is near to 0, there is no correlation.

R 2 and correlation are very important to find assets not linked with the benchmark if its evolution is negative, for instance, when the index drops. On the other hand, it is also interesting to find correlated assets when the index soars.

  • Alpha and beta: both are quite important to measure the outperformance and volatility of the asset compared with the benchmark. We have an extended explanation in this post. Typical investor behaviour is looking for assets with good alpha.

Of course, the analysis of a single reference is not enough to get an idea about the relationship between the asset and the index. We have to look at all data and connect them to understand in a right way if we should put our money there or just go our quickly.

Weekly market opportunities in T-Advisor: the best on February, 13th

T-Advisor updates weekly a list of market opportunities from several stock exchanges around the world. We sum up a selection of the best ones:

EUROPE

  • Inmobiliaria Colonial (Madrid). One of the main Spanish real estate corporations.

Inmobiliaria Colonial main figures in T-Advisor

Inmobiliaria Colonial chart in T-Advisor

AMERICAS

  • Finisar (Nasdaq). A manufacturer of optical communication components and subsystems.

Finisar main figures in T-Advisor

Finisar chart in T-Advisor

ASIA-PACIFIC

  • Zhejiang Expressway (Hong Kong). An infrastructure company engaged in investing, developing and operating expressways in Zhejiang Province, China.

Zhejiang Expressway main figures in T-Advisor

Zhejiang Expressway chart in T-Advisor

Find more opportunities from the main exchanges in the world on our module “Market opportunities” in T-Advisor.

How to understand the figures of my portfolio to obtain better results? (I)

It sounds very nice when you think that you have your own investment portfolio. It is an important step to improve your finances and get your goals. The question is that a portfolio has its own life since its inception and your responsibility as investor is guiding the portfolio to your interests. What are the signals that you have to follow?

Well, there are many figures and parameters to measure the quality of your portfolio, but we will select the main ones in order to get the most important data:

  • The performance evolution: the figure alone is not enough, because it has to be put in comparison to others. We recommend comparing it with the smart benchmark. This comparison provides the view to understand if we have chosen the right assets or not. For instance, this example shows that we are far from the benchmark and there is a wide improvement to manage.

portfolio performance in T-Advisor

  • The weight of the assets in your portfolio: it is also relevant to understand the allocation. If we have a concentration in a country or a sector, there is a high risk to suffer from instability, if the trend changes. Diversification reduces risks, but we can have some assets with lower returns. A good analysis can help us look for similar assets with better figures in order to rebalance the portfolio.

weight of assets in a portfolio

  • The relationship between performance and volatility: first of all, volatility does not mean necessarily more risky, as we have already commented. However, we can understand the connection between performance and volatility through the Sharpe ratio. This figure shows how profitable an investment is related to the historical volatility. The higher the ratio is, the better the investment is… but this idea is not totally right if we do not compare two assets. You can find two assets with similar ratios but with different figures. We have to look into the numbers to understand if it has a high performance with a high volatility.

Portfolio sharpe ratio

There are some other figures that we will soon comment.

Weekly market opportunities in T-Advisor: the best on February, 6th

T-Advisor updates weekly a list of market opportunities from several stock exchanges around the world. We sum up a selection of the best ones:

EUROPE

  • Topdanmark (Copenhagen). The second largest insurance company in Denmark.

Topdanmark main figures in T-Advisor

Topdanmark chart in T-Advisor

AMERICAS

  • LATAM Airlines (Santiago de Chile). A Chilean airline company resulted from the merge between LAN and the Brazilian TAM.

LATAM Airlines main figures in T-Advisor

LATAM chart in T-Advisor

ASIA-PACIFIC

  • ICICI Bank (Bombay). The second largest Indian bank in terms of assets and the third largest in terms of market capitalisation.

ICICI Bank main figures in T-Advisor

ICICI Bank chart in T-Advisor

Find more opportunities from the main exchanges in the world on our module “Market opportunities” in T-Advisor.

Ideas to survive with your investments in political risky times

Investments: bearish against bullish

The current year has been commented several times as a year in which political risks will play a role: Brexit, Trump, elections in France and Germany, amongst others. We usually think in other kind of risks when we speak about investments, but in this case it is possible that we have to consider the political factor.

Anyway, we want to obtain the best returns with the lower risk. How could you move your assets in 2017 with this scenario?

First of all, check yourself. No, we do not speak about your health, but about your financial needs and plans. Do your budget, organise a cash flow, analyse your expenditures and think about your financial goals.

Secondly, analyse quietly your portfolio. Is it correctly diversified? Have you recently checked the evolution and consider a rebalance? It is important to take into account that diversification is not a matter of number of securities or different kind of them (equities, fixed-income…). It has more to do with avoiding correlations and considering factors. What does factor here mean? Think about that you have different kind of securities from UK. If all your investments are connected with this country, you have the Brexit factor and this political issue will condition the returns. That needs a wide view over the reality.

Thirdly, in order to choose the best assets for your portfolio in uncertain times, remember to check some figures, as:

  • Trading volume and liquidity: it is very relevant that the asset has a high trade rate and it is easy to sell, in order to avoid counterparty risks.
  • Volatility: the higher it is, the higher is the risk that you have to deal with deep price changes.
  • Past performance and bootstrapping: it is true that past returns do not guarantee future ones, but an analysis of the past trend combined with a forward testing with a bootstrapping tool can be helpful to select better securities for your portfolio.
  • Correlation with its benchmark: this is quite important, even more if the market is risky.

Finally, the main rule for investors in uncertain times (as we are living now) is common sense. Invest only the money left, not the amount to pay your mortgage, think about how regular and safe are your incomes and be reasonable with your goals.