Some random things: Ireland, Traders@MIT, and Horseback Riding

Over the weekend, Ireland approached EU/IMF for a bailout, leaving European market slipping and erasing last Friday’s gain for U.S., especially for the financial industry, including the GS shares I have in my Roth IRA. This is the second episode in recent history for a Eurozone country to seek aid; Greece is the predecessor, also triggering downgrading of the sovereign bond and the creditworthiness of European countries last year. Of course aid would arrive just as it was for Greece, preventing possible outcry that might hold off the value of Euros, but the Irish government is rather reluctant to let go control of its monetary and fiscal policies, especially its 12.5% corporate tax rate, which gives Ireland a leg up over its neighbors in terms of luring economic activities. It makes me wonder who is going bailout us when the treasury is insolvent. It’s almost universally agreed that our deficit will be 5x to 7x of GDP by 50 years later with the ubiquitous exponential projections. It wouldn’t be too bold to say that we are “too big not to fail” in a sense that no one would be able to provide enough assistance to us to actually bail us out. But if we failed, what would happen to the worldwide economy given that the measures of currencies and credits of other countries and corporate entities would be in a disaster because there is nothing else to be compared to?  To me, it seems like we are running on a crazy Ponzi Scheme in which we know we are going to fail sooner or later anyways that worsening it a little bit more by cutting taxes wouldn’t be too bad after all. However, although the congress has reached historical high in Republican ratio, it is unlikely that they will revert back to the Bush tax cuts.

Fortunately, the depressing market didn’t alter my personal life much. I had a great time this weekend winning one of the cases in the Traders@MIT competition and going on a trail for horseback riding in Randolph, MA.

Tong tagged John and me as “the couple team” when we applied as a team to Traders@MIT Intercollegiate Trading Competition over a month ago, quite embarrassing. We built models and discussed all possibilities we could think of for preparation, but almost all trading activities were momentum-driven since the stock prices were sliding down to South Pole after news “economic statistics are higher than expected” was displayed. But we got rank 1 for the CDS case because this is the only case involves value and by pricing everything correctly, we were paid what we had expected. I guess we are just better at valuing the securities than getting onto the rise and getting off of the correction before everyone else does. I am also very happy because it proves that we are really compatible when we work with each other, especially during the Sales&Traders case where I was in charge of doing the technical analysis to prop trade the stocks and John was in charge of working out favorable institutional orders. We each got $25 Amazon gift card as reward for the CDS case, and I made the executive decision to buy a pair of matching squash racquets for us by paying a little extra. Amazon’s two-day free shipping will again please me by delivering them here on Tuesday! I’m super excited!

Naisi and I went on horseback riding on Sunday in Randolgh, a little over 20-min drive from Cambridge. We were going to take a half-an-hour lesson then exercise on the trail but it was too late to do that when we got there, so the lady just made decision for us to go on the trail only. I was a little confused at the beginning, but it was fun overall. My buddy is named Be; she was kind of lazy when we were on the trail, stopped moving every now and then. I got a little mad at her so kicked her hard to move forward because I wanted to take picture for Naisi. But I think she is good looking, so I won’t pick on her too much...Not that I am superficial, but I just find it hard to pick on beautiful creatures.

PS:
A friend has asked what is the QE2 video that the GS panelists were talking about and why is it such a bid deal to GS in particular. I'm sharing a video here and I'm sure you'll understand.
http://club.ino.com/trading/2010/11/laugh-or-cry-watch-this-qe2-video-and-tell-us-which/