MONTGOMERY INSIGHTS

FEATURED POSTS

  1. Are 100-Year Bonds A Surefire Liquidity Trap? By: Jacob Wohl
    22 Jun, 2017
    Are 100-Year Bonds A Surefire Liquidity Trap? By: Jacob Wohl
    Since the election, there has been a lot of talk that Trump's treasury, led by Steve Mnuchin, may issue 50 and 100 year bonds. For a large issuer of debt, this seems like the best possible way to lock-in the unseasonably low interest rates that the market now provides. The discussion about issuing ultra-long term debt has been fraught with uncertainty over whether or not there would even be sufficient demand for this debt. After all, it's hard to imagine that anyone would make the bet that
  2. Is Social Media Sleuthing the Next Frontier in the Prediction of Pre-Payments for MBS Traders?
    19 Jun, 2017
    Is Social Media Sleuthing the Next Frontier in the Prediction of Pre-Payments for MBS Traders?
    For traders of residential mortgage backed securities (RMBS), collateralized mortgage obligations (CMO’s) and other prepayment sensitive securities, the likelihood of prepayment across a range of scenarios is the operative factor in assessing risk and opportunity. Traditional regression models assess the likelihood of pre-payment by measuring historical pre-payments and drawing correlations to those historical prepayments with various indicators, including but not limited to: interest rates,
  3. Are Uber and Lyft to Blame for the Auto Loan Bubble?
    17 Jun, 2017
    Are Uber and Lyft to Blame for the Auto Loan Bubble?
    Fears that auto loans may be the next big bubble are beginning to permeate the market. The levels of car loans that have been securitized are now about $200B more than during the heights of the subprime bubble of 2006. About 1% of car loan applications in the US contain some form of false information. That’s the same rate as existed on home mortgage applications in 2009. Point Predictive, a fraud prevention firm based in San Diego, CA, put together a group of 13 car lenders to share data in an
  4. Trump Doctrine Becomes Clear as China Cuts Buying of North Korean Coal, Buys from US Instead
    17 Jun, 2017
    Trump Doctrine Becomes Clear as China Cuts Buying of North Korean Coal, Buys from US Instead
    On Tuesday, Reuters reported that China turned around 12 freighters of North Korean coal, rejecting the product, amid tensions on the Korean Peninsula. Reuters information pointed to Dandong Chengtai Trade Co. being the largest buyer of North Korean Coal, and likely the buyer for this unsuccessful shipment. This latest development, where China not only bans the import of North Korean coal, but also enforces that ban, demonstrates that the US is once again in the driver’s seat of Asia-Pacific
  5. The Case for Boutique Asset Management
    17 Jun, 2017
    The Case for Boutique Asset Management
    A few weeks ago, my team and I at Montgomery Assets attended an alternative investing conference called ALTSLA. The takeaway from the conference, for managers and investors alike, is that an investor with deep pockets can gain virtually any exposure they can dream up. From non-listed real estate arbitrage to weather speculation, there is no limit to the types of strategies that the hedge fund industry can provide.  Large asset management companies, many of whom are now publicly traded, generally
  6. Why “Take Risk When You’re Young” is Bad Advice
    17 Jun, 2017
    Why “Take Risk When You’re Young” is Bad Advice
    In the investment world, financial advisers and pundits frequently (if not almost-universally) recommend that young people take as much risk as possible while they’re young, and save conservative investing for an older age. This makes about as much sense as someone saying “drive fast while you’re young’, in that many so-called experts recommend that people engage in risky activity without obtaining the expertise and skill required to execute that activity without destroying themselves in the
  7. Is Italy Really More Risky Than Russia?
    14 Mar, 2017
    Is Italy Really More Risky Than Russia?
    Currently, the implied 5-year probability of default (as priced by the CDS market) shows that Italy has a 14% chance of default, while Russia has just a 10 percent probability of default. Chart of the Italian and Russian 5 year CDS (credit default swap) The next few months will be a telling time for the European Union, and for the world. The question remains, ‘Is the end of globalism actually upon us, or are Trump and Brexit just bumps in the road?’ If Le Pen wins the French election, and the
  8. Transaction Costs and Their Effect on Trading Decisions
    10 Mar, 2017
    Transaction Costs and Their Effect on Trading Decisions
    Traders at all levels spend time thinking about transaction costs. Thankfully, in the age of the internet, transaction costs are usually quickly accessible for traders to see. Many unsophisticated traders neglect to analyze margin interest that brokerage firms charge. It is important to note that many brokerage firms tout low transaction costs, but charge above-average margin interest, which eats into returns or amplifies losses over time.     Any number of charts and data sets can show the
  9. Scalping vs. Swing Trading, What’s Better?
    09 Mar, 2017
    Scalping vs. Swing Trading, What’s Better?
    Traders that are consistently profitable understand the value of time and money. They understand that if you spend 3 month trading your way into a $30K profit, and then you lose it, you didn’t just lose $30K, but you also waste 3 months of time.         Good options traders are particularly in tune with the value of time, as every options trade has a set, minimally negotiable time-frame. Buyers of options know that over time, risk exists, and more time generally means more risk. Sellers of
  10. Trading is (sort of) like X,  By Jacob A. Wohl
    05 Feb, 2017
    Trading is (sort of) like X, By Jacob A. Wohl
    One person will pontificate for hours about how trading stocks (or any other asset) is exactly like a sport. He will recite polished quotes about how trading is all about competition, and how one’s psychology is directly reflected in their P/L, and how success is trading comes down to out-competing an adversary, whether that adversary be another trader/market participant, or simply ‘the Market’. Another person will tell you that trading is nothing like a sport. He will spend hours talking about
  11. 19 Year Old Hedge Fund Manager, What's His Strategy in 2017?
    09 Jan, 2017
    19 Year Old Hedge Fund Manager, What's His Strategy in 2017?
    I am dubbing 2017 the 'Year of the Strongman'. With the election of Donald Trump, geopolitics and markets will revolve around the Russia, China and the United States.  Equities- For 2017, I have about as much certainty in the direction of equity markets as I do in what the weather will be like (not much). I plan to continue to invest in equities, but to do so with a great degree of caution. My favorite names remain my favorite names. I am still as confident in owning tobacco names as I have
  12. World's Youngest Hedge Fund Manager Jacob Wohl - What's His Strategy?
    28 Sep, 2016
    World's Youngest Hedge Fund Manager Jacob Wohl - What's His Strategy?
    Jacob Wohl, age 18, is the world's youngest hedge fund manager. In this article he breaks down his strategy.
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