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Blinkx video search is a start-up founded by ex-Autonomy guys with no revenues to-date. The company first started out making a web-search toolbar and then Google came out with one. So they licked their wounds and decided to do video search instead. They told everyone they had $10 million in angel funding but in reality, Autonomy (their former parent company) had a 90% ownership share in the company for the licensing of the technology that runs the Blinkx video search. So far so bad.

Later, Autonomy’s demerger filing shows that its “consumer unit” (Blinkx) had $3.8m revenues in 2006, all of which was “generated by Autonomy salespeople who are not transferring to the Blinkx business”. The proposed revenue model of the demerged company is primarily advertising-based, but “no significant “advertising” revenues have been earned to date.” The document is full of promises of potential future revenue streams as one might see in any (perfectly valid) start-up business plan. As a consumer I’m delighted to benefit from the service but as a fund manager I should be shot for buying this stock. (Investors beware!) Continue Reading »

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The Federal Reserve recently raised its target federal funds rate for the first time since March 2000. This could be just the tip of the iceberg, though, as many experts believe rising inflation and a strengthening economy will spur continued rate hikes for the foreseeable future.

This is bad news for bond investors, since bonds lose value as interest rates rise. The reason stems from the fact coupon rates for most bonds are fixed when the bonds are issued. So, as rates rise and new bonds with higher coupon rates become available, investors are willing to pay less for existing bonds with lower coupon rates. Continue Reading »

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I’m sure some people know about Efficient Frontier, but I’m guessing that there are less investors that know about Kelly Criterion. So what is Kelly Criterion and who is Kelly? Kelly worked at AT&T, and published his original paper back in 1956. Its math is quite involved with communication and information theory, mostly dealing with probabilities.

However, behind all the maths, there lies an astonishing result: by placing bet amounts according to Kelly Criterion (originally applied to horse-race gambling), one can maximize the returns in the long term. Here is the betting formula which has been tailored to stock trading: Continue Reading »

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Forex trading is an unpredictable market that is followed closely by economists the world over. The forex market is absolutely enormous with some reports indicating that around 2 trillion dollars worth of trading is done daily on it.

While it requires some of the best financial minds to predict the movements of currencies on this exchange, a number of average investors have succeeded in making money on these movements in the past. In fact, the business of forex trading has become a rapidly growing one, with an increasing number of people looking to it for a supplementary income, or even a primary one. The exponential growth in the numbers of investors has led people to believe that the returns are slowing down. Continue Reading »

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