Articles

TASA ID: 11532

PREFACE

International franchising has fascinated me for many years.  I still get excited seeing a familiar trademark when driving down a street in New Delhi, Cairo, or Paris.  While traveling outside the United States, my wife and I will frequently play a game seeing who can point to a recognized sign first such as McDonald’s or Gold’s Gym with the same exuberance of children playing car-trip games.  

Much has been written in recent years extolling the virtues of franchising as it exists in the United States.  However, there has been a dearth of information and analysis of the economic impact and potential of franchising, or similar economic expansion systems, in developing countries. Most of what has been written about international franchising has dealt with the legalities pertaining to franchise law, licensing, and trademark and patent law, and their disparities from country to country.  In spite of the scarcity of academic and research analysis, the period between the 1980s and the early-2000s witnessed a dramatic increase in international franchising and similar commercial expansion activity. This has occurred not only in Western Europe but also in Asia, South and Central America, Eastern Europe and, to a more modest extent, Africa and the Middle East. In this article, I attempt to point out some of the benefits and consequences of importing Western (essentially American) franchises and franchising techniques into developing economies.  

TASA ID: 11532

There are references in American history to early business relationships which, while possibly not meeting the current FTC definition, were without a doubt, franchise/licensing relationships. These relationships existed in the selling of wares from town-to-town by peddlers, licenses granted for general stores at military outposts, and certain livestock sales and other goods in which exclusive territorial rights were granted to the "franchisees" by the holder of the rights. Unfortunately, while the relationships are mentioned in the literature, the names of these early franchise founders and the structure of the business arrangement are not. 

Throughout its long history, there have been four constants that have fueled the growth of franchising, the desire to expand, the lack of expansion capital, the need to overcome distance, and managing people from a distant location.

The use of franchising can be traced to the expansion of the church and as an early method of central government control, probably as far back as the Middle Ages. Some have written that it may indeed date back as far as the Roman Empire or earlier and given the necessity of large territorial controls, coupled with the lack of modern transportation and communication at the time, there is reasonable basis for this assumption.

TASA ID: 13992

This article was originally published on NavesinkInternational.com and in Albourne Village, village-us.albourne.com. 

 

OptionSellers, LJM, Catalyst are among the prominent fund managers currently facing litigation for large losses due to short gamma positions. Retail investors regularly lose their savings by shorting options as well. It is time to explain a few things about the short gamma and the “gamma scalping” strategies.

This article is split in two parts for convenience. The first part, Gamma Scalping 101 – Gamma/Theta Trading, explained:

• How the daily P&L of a portfolio of derivatives can be expressed with a simple parabola.
• The concept of break-even, and when gamma brings more value than theta.
• How historical and implied volatilities explain the gamma scalper’s long-term P&L.
• How this trader can improve his odds by trading options of high implied volatility.
  
  

This second article explains some of the un-stated risks associated with the gamma scalping strategy.

TASA ID: 13992

This article was originally published on NavesinkInternational.com and in Albourne Village, village-us.albourne.com. 

OptionSellers, LJM, Catalyst are among the prominent fund managers currently facing litigation for large losses due to short gamma positions. Retail investors regularly lose their savings by shorting options as well. It is time to explain a few things about the short gamma and the “gamma scalping” strategies.

This article is split in two parts for convenience:

• Gamma Scalping 101 – Gamma/Theta Trading, is this article. It explains the concept of gamma and theta, the daily P&L of an option market-maker, and the purpose of gamma scalping. It explains the difference of historical and implied volatilities, which are the long-term roots of profitability for the strategy, as well as why and how gamma-scalpers select the options to trade.
  
  
• Gamma Scalping 102 – The undisclosed risks, will explain the not-so-obvious risks associated with the gamma-theta strategy: large losses and how frequent they are, the impacts of the gamma distribution and of volatility increases during large moves, the importance of institutional infrastructure, before concluding on its dangers.

TASA ID: 13992

This article was originally published on NavesinkInternational.com and in Albourne Village, village-us.albourne.com

Portfolio modeling and information selection

Any investment decision should be grounded in solid market or economic information, not in the investor’s last emotion. This is true no matter which investment segment the portfolio manager is in:

• In global macro / asset allocation, CIOs use econometric information (GDP, growth, balances, unemployment, PPP…), as well as market information (FX rates, interest curves, index PE...) to decide their asset class allocation.
• In discretionary equities, portfolio managers ground their analysis in corporate fundamental information (cash-flow models, ratios, balance sheet metrics and their growths), more qualitative information (business strategy, management quality, relative positioning, provider and client data, new products) and many types of market & economic information.
• Statistical arbitragers use technical information (momentum, acceleration, volatility, oscillators…), fundamental information (ratios, cash-flows, balance sheet statements...) and pretty much any data source they can put their hands on.

To read more, download the pdf below.