aneris | alex king

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Posts Tagged ‘Hedge Fund’

Retirement is Exhausting

September 9th, 2010

: Image via Wikipedia

As many of you know, 2 months ago I quit my job to pursue a mini-retirement, and boy has it been busy! I never thought unemployment would keep me so active. I ceased nearly all online communications (ie. twitter and blogging) in order to re-assess my life’s direction, and now I’m finally getting back to the grind.

Here’s a brief recap of what I’ve been doing. I’ll go into more detail, however, on individual blog posts.

July 1 – Flew to Kansas City to surprise my brother for his birthday. I hung out with my brother almost exclusively for a few days, which was a blast. A few highlights of the birthday bash include convincing my brother’s law school friends that my name was Waltham and getting harassed by brother’s girlfriend for drinking and driving…under the influence of water (in her defense, she was slightly inebriated and thought I was walking around alcohol). July 4th was lame considering it got rained out, but such is life.

July 6th – 11th – Flew to Southern California to spend quality time with my parents. Quality time interspersed with hectic real estate craziness, as my parents are trying to find a nice home out there amidst the region’s financial ruin. What was amazing to me was seeing how many foreclosed properties had been destroyed by previous tenants as they rushed to rip out all appliances, faucets, toilets, etc before they got kicked out. Never have I seen so many nice houses that have been so tattered. I also played golf a few times at some of the resort courses out there (PGA West Palmer Private and Citrus) and managed to shoot an 86 and an 84, which is all the more impressive considering I hardly ever play golf any more.

July 12th – July 16th – Back in Kansas City to relax…except I didn’t relax…at all. Every morning by about 9:30, I was up with a cup of coffee analyzing the financial markets trying to investigate options mispricing and how to exploit this for financial gain. More about this in another blog update. I literally didn’t see any friends during this period, regretfully, but I did spend some more good time with my parents.

July 17th - July 18th – The Lake of the Ozarks! For those of you who don’t know, the lake is the largest man-made non-flood control lake in the US, and despite being very “country” is rather charming. We got to see our good family friends, the Naylors, and enjoyed tubing, sunbathing, swimming and jet skiing. This was my first time actually driving the jet ski (if driving is the correct verb). I also managed to get hideously sun burned, which looked horrible given my already red complexion .

July 19th – While I was supposed to come back to Boston on this night, Southwest airlines felt differently. Southwest decided to strand me in Chicago, and informed me that any hotel expense would be “out of pocket”. Luckily, I have a good friend in Chicago named Ed who was happy to take in a homeless man for a night. He offered me a comfortable couch and some homemade beer, which, for a 26 year old kid, is all I really need. The following evening I left to come back to Boston.

July 20th – August 5th – Back in Boston, back to market research, back to freaking out about my future but calmed by the fact that I still have another month to figure things out.

August 6th – Sept 1st – Europe! Specifically, I was travelling to Bulgaria to attend my girlfriend’s brother’s wedding. Bulgaria in and of itself deserves a HUGE blog post, so you’ll have to wait.

Now I am officially back Stateside and I’m trying to figure out what to do with my life. I’ve got a lot of options, but unfortunately, I’m struck with the paradox of choice! Do I get my MBA? Do I investigate hedge funds more? Do I stay with the startup path?

I’ll keep you posted as I figure things out.

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Tags: Boston Chicago Hedge Fund Southern California Vagabond

Competing with Hedge Funds

June 19th, 2008

A while ago I read an interesting quote from Google saying that because they can see searches in Real Time they are able to effectively see market trends long before the public consciously recognizes them. This struck me as really cool, so when I came across a Boston startup called Compete (www.compete.com), and saw that you could download data in regards to web analytics, I became pretty excited. If page hits is covariant with web trends and consumer habits then Compete tells me that I should be able to predict the next web trends based on their data. I thus became curious if we could predict stock prices.

Therefore I took a sampling of 3 companies where I thought web hits would directly relate to economic success: Apple, Ebay, and Amazon. The more people who visit these sites, the more transactions these companies are going to generate…or so the theory goes. Further, one would hope that there is some sort of delay between site hits and stock price such that one could set up a stock portfolio and trade upon our non-public information (semi-strong theory of price efficiency). Unfortunately, I’m slightly limited in the data that Compete provides (for non-paying, and or, cheap-skate, users), as they only have aggregated monthly numbers for 1 year. Thus, for a comparison, I averaged daily stock prices to get a monthly average. This makes it increasingly difficult to separate noise out of visitor numbers and stock price, but hopefully the numbers can provide us a “trend” of sorts. Later on, to add robustness, I might look at the “Engagement” metrics that are provided to see if this can tell us anything…but for now, I’m lazy.

First: The basic overlay between stock price and site volumes.

From the graphs above its hard to tell if there is any causation, but there definitely seems to be a trend occurring and possibly correlation (Amazon at .39, Apple at .28 and Ebay at a negligible .10). Although, the T-Stats, p-values and R squareds of each basic regression of price to volumes indicate that we can’t make any conclusion from a basic overlay.

However offsetting the price by 2 months increases the correlation pretty significantly by the following: Amazon at .72, Apple at .57 and Ebay at .75. (Offsetting means that Volumes from T-2 months prior are matched with Prices @ T 0)

Here are the results of a basic regression on the Offset Data:

You can see that our T-Stats are now meaningful, p-values are all great with the exception of Apple which is slightly higher than you would normally like, and R^2 show that half of the movement in price can be explained by site volumes.

Obviously, a much more rigorous analysis would need to be completed in order to prove anything, hopefully with much more data on many many more companies, but the preliminary results are kind of cool. Maybe our next hedge fund will come from Compete. Oh, and btw, no secondary research was completed so its entirely possible that this study has been done before. Let me know if you’ve seen anything like it.