Forex Yellow Pages

In developing our options research methodology, we have taken many lessons from Warren Buffett, whose philosophies are also a touchstone of our equity research. One way the Oracle of Omaha shares his lessons is through Berkshire Hathaway’s BRK.B annual letters to shareholders.

In his 2008 letter, Buffett discusses his derivatives positions and the mark-to-market losses on those positions last year. The background discussion of this topic is an excellent read for investors seeking a basic understanding of the involvement of derivatives in the financial crisis. Read more…

This article is part of a series on Trading Today’s Market.

As the historic market collapse felled many investors, a handful set themselves apart by scoring big profits.

Now, several of these money managers expect more bad times ahead, including struggles for consumers, limp earnings and a possible surge of inflation.

They also see pockets of opportunity.

George Soros is bullish on China, India and Brazil. John Paulson is investing in distressed debt, residential mortgages, even companies in bankruptcy proceedings. Alan Fournier, a lesser-known investor with a strong track record, likes some health-care shares, while James Melcher, also successful lately, likes corporate bonds.

“We’re trying to make hay while the sun’s still shining,” says Mr. Fournier, who runs $2.8 billion Pennant Capital. “Maybe we can rally through the summer, perhaps for another year, but there are a lot of difficult issues that we’re going to have to deal with.”

Mr. Soros is just as wary. The renowned 78-year-old investor and philanthropist calls the current terrain a “trading market,” saying in a recent interview that investors should take profits when shares surge, even if they look promising long term. Read more…

Small investors, afraid of being left behind in a big rally, are piling into mutual funds that invest in emerging markets, junk bonds and volatile energy businesses.

It’s amazing the difference a rally can make in investors’ appetite for risk.

A few months ago, mutual-fund investors were yanking money out of stocks and high-quality corporate-bond funds and parking it in safer places, like money-market funds and U.S. Treasurys. Lately, however, as stock and bond markets have rebounded, mutual-fund investors have had a split personality.

They’re back to buying relatively safe investments like high-quality corporate bonds. But they’re also pouring money into the riskiest investments. They’re lukewarm toward U.S. stocks but plunging into high-octane vehicles like emerging-market companies, commodities and junk bonds—making these among the 10 best-selling mutual-fund categories this year.

“Some have said, ‘Well, if we’re going back in [the market], let’s take a real risk,’ � says Iain Clark, chief investment officer of Henderson Global Investors.

Some market watchers think these investors are trying to quickly recoup their massive losses from last year. Or they believe these investors are simply chasing performance.

Whatever the motivation, though, they may be overdoing it.  Read more…