Best Money

More Hype for Halo 3

It starts in a dark bunker with the rallying cries of an officer. The space flickers with the beams from our fellow soldiers’ rifle-mounted flashlights, bringing out a dull gleam on the parked Warthogs in the shadows. Marines bellow bullish whoops before we mount up and proceed up a wide rough-hewn tunnel, intermittently lit by a chain of reddish floodlights.

This may not be the first level of Halo 3’s campaign but it is early on. It seems an appropriate place to continue the adventure, given the ambiguous ending of Halo 2. The Covenant is splintered by civil war and Earth is under full attack from the remainder of its forces. Cortana has been captured by the mysterious Gravemind and Master Chief has announced his intention of “finishing this fight.” But right now, in this grittily inauspicious bunker, all those plot complexities are moot. We’re on reassuring terra firma, and allies are all around.

The game is taking place in the similarly dark, over-air-conditioned boardroom of Bungie’s Seattle studio, which is a similarly inauspicious bunker-like building. A clutch of journalists from around the world are sitting ready, their faces illuminated by bright, new, LCD TVs. Behind them stand Bungie staff, arms folded and pensive. This is the first time anyone outside of Bungie and Microsoft has seen the single player focus of the game, the last part of a console-defining trilogy that began six years ago.

One by one, the screens brighten still further. Players are reaching the top of the tunnel. Before us spreads wide savannah under blue skies. Grunts flee before our thundering tires, up a gentle incline scattered with low trees and rocky outcrops. This is Silent Highway, the third level in Halo 3’s campaign. It’s a triumphant re-envisioning of Silent Cartographer’s drop-ship beach landing — a thrilling chase across open ground alongside your victory-hungry fellow soldiers.

And before we know it, we’re back in the familiar instinctive, free-flowing combat that makes the Halo series so distinct among first person shooters. But though it feels familiar, it’s not the same. The environments are more expansive than ever before, and they’re spanned by fighting enemies and allied forces. Tens of Brutes and Grunts bearing varieties of armor and weaponry are visible and active at any one time, attacking both you and your fellow marines. The scale is immediately evident, and remarkable.

Naturalizing something only smoke and mirrors managed to achieve in its forebears has subtly changed Halo 3’s battlefield. “In Halo 1 and 2 you’d have to spawn a load of guys at the front, and once the player has killed those guys, you’d spawn some guys behind a rock and so the entire battle would sort of play out the same way,” says Jaime Greisemer, Halo 3’s sandbox design lead, the man behind the new weapons and equipment, damage systems and AI behaviors. “But now we spawn a whole battlefield full of guys and have fun. If you want to engage these guys right up front, you can. If you want to stand up on a ridge, they’ll start shooting back.”

The result is a lot more variety. Encounters have even greater fluidity than before, organically ebbing and flowing with your actions. It’s common to push forward too quickly and find yourself attacked from all sides, so apart from managing your weaponry, it’s now important to tactically manage your troops. It’s often wise to hang back and give support, allowing them to clean up less powerful enemies, and protect them by carefully taking out threats. In the same spirit, AI is the same, but more. A new group dynamic means leaders will audibly give their troops orders, such as to throw grenades, and they will, in an alarming barrage. Meanwhile, your troops interact with the environment with new sophistication. They’ll hop over debris on the ground or kick it out of the way, and they’ll open doors if you’re in a vehicle.

U.S. Consumers Far from Being Spooked this Halloween

Despite shaky economic news recently, U.S. consumers are not expected to be scared off this Halloween, a new survey shows.

The average person plans to spend $64.82 this Halloween, up from $59.06 in 2006, according to the National Retail Federation’s Halloween Consumer Intentions and Actions Survey, conducted by BIGresearch.

Almost 60 percent of consumers will celebrate in some way, spending an estimated total of $5.07 billion on costumes, candy, and decorations.

“Halloween should give retailers a nice boost in sales as they open the crucial fourth quarter,” said Tracy Mullin, president and CEO of the Washington-based National Retail Federation.

With nearly 34 percent of adults planning to dress up, Halloween is no longer just for the kids. In fact, 18-24 year-olds will spend more than any other age group this October, the survey says.

While the average person will spend $23.33 on costumes Д including children’s and pet’s costumes Д 18- to 24-year-olds will spend an average of $34.06 on the perfect getup.

Diminishing consumer confidence will not have a negative effect on Halloween spending, according to Phil Rist, vice president of strategy for BIGresearch.

“Halloween is often a time for consumers to set aside their real concerns to focus on the imaginary,” Rist said. “As news about the economy floods the airwaves, many Americans want to take a break from reality to have a bit of fun.”

BIGresearch polled 8,877 consumers for the survey.

More From The Inc. 5,000:

«www.inc.com»

«www.inc.com»

«www.inc.com»

«www.inc.com»

Copyright 2007 Mansueto Ventures LLC. All rights reserved.

Carry trade partially unravels

Yesterday, the collapse which roiled global financial markets spread to forex markets, causing the Yen to loosen from its moorings and sending the currency upward against most of the worlds major currencies, including a 2% rise against the USD. While the Yen has already given back some of these gains, many analysts are already speculating that this jolt some life into the Yen and put an end to the carry trade which has sent the Yen to record lows. Ultimately, it is volatility that will lift the Yen, and Yen bulls are surely hoping for another week like this one. CBS Marketwatch reports: “One of the things that carry trade relies on is relative low levels of volatility. Clearly the most recent catalyst has been the Chinese market meltdown triggering a meltdown in other emerging markets and basically a shift out of riskier assets into less risky assets.” Read More: http://www.marketwatch.com/news/story/carry-trade-unwinding-roils-currency/story.aspx?guid=%7BD649A4E9-FEB2-4BDB-93DF-BFEEE4CD4D10%7D

Bridgeway Beats Market With Numbers

Bridgeway’s aggressive growth funds aim to beat the market without taking any additional risk.

Since 1998, Bridgeway Aggressive Investors 1 has met its goal every year except 2006.

But fund manager John Montgomery doesn’t fret much about turning in a gain of just 7.1%. “It was a bad year for us on a relative basis,” Montgomery said. “But so what? Our bogey is three years.”

Aggressive Investors 1 going into Wednesday was up 12.01% year to date vs. 10.94% for its mid-cap growth peers tracked by Morningstar and 6.19% for the S&P 500. The fund produced an average annual return of 15.34% for the past three years vs. 12.97% for its peers and 11.43% for the S&P 500.

Bridgeway Aggressive Investors 2 was up 16.48% for the year and cranked out an average annual return of 17.74% the past three years.

Bridgeway Aggressive Investors 1 and 2 are pretty much the same, except Aggressive 2 shuns low-liquidity names, which tend to be small caps. Aggressive 1 is closed to new investors.

Montgomery uses several quantitative models to find stocks, including high-octane growth, deep-value large caps, growth at a reasonable price, momentum, and a combination of growth and technicals.

Taken together, the models are designed to find growth stocks trading at cheap prices.

“We use a proprietary measure of valuation that nobody uses,” said Montgomery. “It’s more sophisticated and is more than just a ratio.”

The six models work independently of each other. The fund buys the best ideas from each model.

Montgomery’s strategies remain the same regardless of market direction. He may not even know whether the market was up or down on a given day, nor does he care.

“If you’re invested in the market, it’s a long-term deal,” said Montgomery. “You should yawn through the downturns.”

Fund Turnover

Portfolio turnover comes out to 100% to 125% a year.

The company aims to keep costs low. All research is quantitative, so there are no expenses from company visits. Montgomery only listens to conference calls if he doubts the quality of the data provided by a company.

The firm donates half its fees to charity. More than $1 million has been donated to the firm’s pet causes: peacemaking and reconciliation, fighting genocide, community development, education, and Third World development such as potable water projects and microfinance.

Aggressive 1 has an expense ratio of 1.58%. Aggressive 2 charges 1.12% of assets a year.

Both funds’ biggest winner this year, Crocs, () is also among the top five largest holdings in both funds. Quarterly filings show both funds bought the stock in the third quarter of 2006. Shares of the specialty shoe maker jumped a whopping 113% year to date and 287% in the past 12 months.

On June 18, Crocs finalized a deal with comic book publisher Marvel Entertainment () to create a line of shoes that feature Spider-Man, X-Men, the Fantastic Four, the Incredible Hulk and Captain America. That day, Wedbush Morgan analysts raised Crocs’ 2007 and 2008 earnings estimates and rated the stock as a strong buy.

Crocs opened its first U.S. store in Santa Monica, Calif., this month.

The stock gapped lower Wednesday on nearly twice its average daily volume, though it finished in the upper half of its daily range.

Big Lots () accounts for nearly 6% of total assets in each fund. Filings show shares of the discount chain were added in Q3 of last year. Big Lots’ shares have climbed 30% this year and 83% in the past 12 months.

First-quarter earnings doubled from the year-ago period and topped analysts’ estimates by 30%. Sales overall rose 3%, while same-store sales sales at stores that have been open for at least a year gained 4.9%.

Big Lots has a $600 million stock buyback program; it bought back $13.7 million in shares in the first quarter. In addition, it repurchased $100 million in stock in a guaranteed share repurchase program.

Commodities Prices Mixed

Trend Following was my eight-year “hazardous journey” for the truth about trend-following trading. was meant to fill a void in a marketplace inundated with books about finance and trading, but that lacked any resource or reference to the best strategy to make money in the markets: trend-following trading.

I have come to learn over time that trend following is a confusing term. The best definition I have seen comes from trading psychologist Van Tharp: “Let’s break down the term ‘trend following’ into its components. The first part is ‘trend.’ Every trader needs a trend to make money. If you think about it, no matter what the technique, if there is not a trend after you buy, then you will not be able to sell at higher prices.

“‘Following’ is the next part of the term. We use this word because trend followers always wait for the trend to shift first, then follow it.”

Trend following quite simply seeks to capture the majority of a trend, up or down, for profit. It trades for profits in the major asset classes of stocks, bonds, currencies and commodities.

That’s the simple part. Now for the controversial part of trend following.

Lao Tzu, a philosopher from the 6th century B.C., once said, “Those who have knowledge don’t predict, and those who predict do not have knowledge.” Trend followers do not predict market direction. They can’t predict the next big trend, and they can’t predict their performance. People have a hard time accepting those simple truths in a world where CNBC makes it seem like the next bit of news will be crucial to your trading account.

Probably the most-asked question I get on the subject is not directly related to trend-following trading. People want to know, “Have the markets changed?” The short and sweet answer is, “No, the markets have not changed.” Markets behave the same as they did 300 years ago. They are the same today because they always change.

Trend followers believe that if you have a trading system that’s sound — meaning its principles are designed to adapt — you can take advantage of market changes and make money. Changes in markets are no different from changes in the business world or in other areas of life. They will not hurt you if your strategy for handling them is based on reality, flexibility and responsibility for making your own decisions.

Consider the wisdom of John W. Henry, owner of the Boston Red Sox and a legend in the field of trend following: If you have a valid basic philosophy, the fact that things change turns out to be a benefit. At least you can survive. At the very least, you will survive over the long term. But if you don’t have a valid basic philosophy, you won’t be successful because change will eventually kill you.

I knew I could not predict anything, and that is why we decided to follow trends, and that is why we’ve been so successful. We simply follow trends. No matter how ridiculous those trends appear to be at the beginning, and no matter how extended or how irrational they seem at the end, we follow trends.

Still others are unconvinced of Henry’s logic. They argue that technology has erased any trading edge found by trend followers, thereby changing the markets. I disagree. Computers don’t erase “edge.” For every trader with a computer program saying “buy,” there are nine other traders with computer programs saying “sell.” No matter what you do, markets go through different stages: accumulation, runup, distribution and decline.

You need a plan to handle those stages with a positive expected value, just like the edge maintained by the Vegas casinos.

Look at it this way. You are just starting out. You are new to the game. Perhaps you have had some career success and saved a little money. Perhaps not. Maybe you are in college, maybe you are retired, or maybe you’re just ready to trade. Whatever the reason, once you start the process of entering the markets, you will need money to play the game.

There is no stated minimum capital to trading as a trend follower. There is no magic number. There are many factors relating to your starting capital, not the least of which is your own personal discipline and ability to stick with a trading system or stick with a trading advisor. Anyone who gives you an exact figure for starting capital is either conning you, or more probably, dismissing your query with a mindless answer. A top trader was asked this same question. He responded, “I ask the trader who thinks he needs a certain amount before he can trade exactly what amount he would need to stop trading.”

No one can guarantee you profits, whether you start trading with $5,000, $500,000 or $5 million. There is no dollar amount too little or too big that allows you to sit back and assume that your starting capital alone is some pivotal key to success. Rather than focusing on starting capital, decide how you are going to trade. What is your trading strategy going to be? Have you answered these five questions?
- How do you determine what market to buy or sell at any time?
- How much of a market do you buy or sell at any time?
- How do you determine when you buy or sell a market?
- How do you determine when you get out of a losing position?
- How do you determine when you get out of a winning position?

A complete trend-trading system uses these five questions to establish rules for entry and exit, along with rules about how much to buy or sell at any given time. Trend followers have rules ready to answer those five questions regardless of the particular day, week, month, year or current market condition.

Still, people ask, “How do you determine a trending market?” Wrong question! The question is, “How do you make money?” The answer involves taking small bets early on in a market (that is, starting to move or trend) to see whether the move matures and ends as a big trend. Trend followers enter markets long before the nightly news is reporting new 13-year highs in whatever market.

When the financial news starts talking about high oil prices or a stock at record lows or highs, trend followers have long since established their positions (and profits) and may be exiting when the late-to-the-party amateurs start taking their positions.

At the end of the day, good trading is a game. It’s all about odds. It’s all about probabilities and payouts. Trend followers focus their energy there, not where 99% of the crowd fixates. It’s their edge.