Thursday, March 29, 2018

An investment show

Last night, I went to an investment show of ČSOB, a major Czech bank owned by the Belgian KBC. In essence, it was similar to some 10 previous investment seminars that I have attended – and things are getting a bit repetitive if you attend these things too many times. But this time, there was a genuine progress in the format. The place was more luxurious – a multifunctional room at Techmania, the local science museum that I know rather well (also because I have given a few lectures there).

The speaker was supported by a big canvas, projector, and it seemed that via videoconferencing, some 4 extra ČSOB investment experts were available. They were closing their own windows by grabbing the cross in the corner by their hands and there were lots of other cool effects.

They also repeated a quiz. This time, it was much more controlled. Normally, one fills answers with a pencil, people around me cheat with the timing, so many people win the symbolic prices even though they shouldn't. But I was always among the winners. This time, the quiz was evaluated using people's smartphones connected to a website, mentimeter.com. Everyone started by entering a code and his name. There were 7 questions with 4 options each. Correctness mattered but so did the speed.

That was a wonderful rule. People who can't use phones are screwed, people who cheat are screwed, people who aren't ever fast are screwed, and of course, people who don't know are screwed. So I would have been willing to bet 1-to-1 that among the 100 or so people in the room (only 30 or so have answered a typical question, however), I had to be the #1 at the end. And yes, make no mistake about it LOL, I was. A bottle of Portuguese sparkling wine was the prize.




After the first question, I was the leader. In the second question, I chose to be excessively fast. How much did the stock market grow since 2007? So I vaguely thought about the bottom and tapped 100%. Of course, what was meant was since 2007, before the real collapse of the market (I implicitly assumed the question "had to be" from 2009), and from those good times, it's just 70%. I knew within seconds that I did a stupid thing, and dropped to 3rd place. But I was still confident that this was a fluke and I would return to the gold.

There were additional questions e.g. how many cryptocurrencies there were (around 1400), how big a profit you would score if you omitted 80 best days in some period (a slightly negative one), who's the richest guy now (Bezos), and so on. I lost some speed points because during one question, I pressed the correct answer too quickly, it said "you were too fast", and I had to reload! ;-) And I hesitated in the last 7th question in which all answers were correct. It seems all answers were correct but didn't know what to press for some time. So I pressed a random, last, option after a longer time than necessary. So at the end, my edge was just 4300-to-3500 of the frontrunner. But most of the people had a tiny fraction of those scores.




There's some sense in which these investment seminars are always the same – they explain that stocks are the best assets in the long run, there's some volatility, however, you can remove some of it by investing regularly, the prospects look rosy. But the detailed part about the state of the markets is obviously changing and it's fun to observe.

So some of the things that were covered was the disappearance of the hysterias that caused corrections in recent years. Some renewed Greek debt crisis scared the investors three years ago, Dieselgate two years ago, war with North Korea one year ago (Kim and Trump are besties now, they plan to play golf, and Kim persuades China to want him to abandon the nuclear program – Kim was probably told by the Olympic cheerleaders how wonderful the things were in South Korea and he listened instead of executing them), ... The impact of all these things would be tiny but the hysteria mattered because people overreact and media add the positive feedbacks and when there is the blood in the street, you should buy, Warren Buffett said.

Right now, he said Brexit to be negative for stock markets, and especially Trump's irresponsible playing with the trade war concept. The lower U.S. corporate taxes are a big win, of course. This guy really evaluates events by their positive/negative impact on stocks and in some sense, I think that this is the most neutral evaluation of policies and events and maybe even the politicians should try to maximize the stock markets' growth (given the targeted inflation guaranteed by the independent central banks). I am not quite as financial as he is so I also have values and opinions that go beyond stocks – so in particular, I think that Brexit is the right thing despite some medium-term economic losses and it surely shouldn't be reversed. (But I am somewhat skeptical about the claim that the British "mainstream" forces are much better than the EU's ones. If they're the same or worse, the Brexit is unlikely to be a miraculous cure to most diseases of the EU.)

But otherwise his views on all these matters were perfect – which means that I agreed with them. ;-)

Cryptocurrencies were also mentioned – as a typical example of a bad investment, one with the highest possible risk (which is often being obscured by those who promote this stuff). He showed some projects at zonky.cz where someone borrowed money from informal lenders (it's a people's own system to lend money to each other) to buy one Bitcoin. Well, Zonky is probably too amateurish but it's a bit unfair to associate them with the Bitcoin because their folks try to discourage the purchase of cryptocurrencies and have the official anti-crypto policy. (By the way, the Bitcoin just made the death cross, the recent 50-day moving average dropped below the 200-day one.)

He showed how 2017 was a good year in stocks, although it just recouped some 2015-2016 losses – and 2018 started with the annoying correction which seems mostly unjustified. The U.S. stock markets grew by some 20% but that meant that the "American fund", not insured against exchange rate swings, was constant in crowns. That's because our currency gained 6% on the Euro which gained 15% on the dollar – so it gained on the U.S. dollar just like the U.S. stocks. (Thankfully, I did predict all these things 1-2 years ago.) Facebook will probably not be killed and the fixes will be modest, he thought, and so on.

There were some nice slides about the different philosophies of the generations, different technological and communication novelties that shaped their formative age, new ways to invest in the bank and get some recommendations, and many other things.

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