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They came from all over the world. The winners
of the World TopInvestor competition, a year-long, live,
real money, capital markets trading competition , visited
Denmark to receive their well-earned prizes.
 After
a 15-hour flight from Hong Kong, this year’s winner,
Haochen Hu, arrived in Denmark on Friday 4 April. While
securities markets broke down all over the world, 33
year old Haochen Hu, returned a profit of 785 %
“I must admit that I cannot guarantee a profit like
that every year. I was surprised that the profit was
that high. But it was an unusual market, because it
was constantly changing and therefore very inconsistent.
This meant huge risks, but also great opportunities”,
says Haochen Hu.
Although Hu is not afraid to take chances, the chances
he does take are well thought through and he only invests
in products that he has a thorough understanding of.
Be careful investing in stocks
“I don’t invest in stocks at all. There are thousands
of companies all over the world and you can’t possibly
know them all inside out. In my opinion, investing
in stocks is too risky for the private investor. My
investment universe is actually quite limited. I only
trade FX crosses and FX contracts. Even within this
area, I stick to a limited number of FX’es and crosses,”
the top investor says.
During the World TopInvestor competition, Hauchen
Hu concentrated on Futures in the Chinese currency renminbi,
USDYEN and EURYEN crosses, as well as the Australian
and the New Zealand dollars.
“My strategy was actually quite simple. Obviously,
the American dollar had to drop, so it was all about
focusing on the yen which was just getting stronger
and stronger, “Hu explains.
Contrary to most other securities competitions, the
participants in the World TopInvestor competition invest
their own money. The participants must have an account
with one of the brokers of the competition consisting
of at least 5,000 dollars or euro’s to enter the competition.
Haochen Hu leveraged that amount and which ensured him
the huge profit. The hedge funds also leverage their
investments, but in 2007, no one came even close to
Hu’s profit.
According to Hedge Fund Research Inc., indices --a
series of benchmarks designed to reflect hedge fund
industry performance by constructing equally weighted
composites of constituent funds-- show the weighted
index was up 10.02% in 2007. Research from Morningstar,
a leading provider of independent investment research,
indicates the average return was 12.5%.
Forex and CFDs
The most actively traded instruments during this year’s
competition were spot forex followed by CFDs.
Winning the Hungarian leg of the competition, retired
broker György Doleschall gained 315% during the competition.
He traded USDYEN and occasionally, he would trade futures.
“I made a lot of money against the carry trade. I
think I made a 708% gain when the carry trade collapsed”,
he says.
He admitted the biggest mistake he made was to stop
trading the weeks when the American dollar dropped.
“But I had a big lead anyhow and knew I was going
to win”, says Doleschall who became the winner of
the Hungarian League sponsored by Buda-Cash, a brokerage
house member of the Budapest Stock Exchange.
Professional trader, John Rodrigues, who traded on
brokerage firm DIF’s platform, has been in the business
for 15 years. He won the Portuguese segment of the competition
by trading mostly US stocks.
“I started out pretty well but by August I was down
in the mid-20 percentage points. However, I stuck
mostly to my investments in alternative energy companies
such as STP [SunTech Power] and FSLR [First Solar].
Both did well in the portfolio and by October I was
in the top 5”, says Rodrigues, who owns brokerage
firm, Lusitania Asset Management, based in New Jersey,
USA.
Rodrigues thinks it was a very tight race and is surprised
how well Paulo Pinto, concept originator of World TopInvestor
and CEO of DIF Broker, performed, considering he only
traded S&P futures. “It was not until February that
I knew I had won”, comments John, who applied technical
analyses for his investment decisions during the competition.
Follow your strategy to the end
Hauchen Hu’s advice to other investors is to create
stop-loss strategies prior to any investment and to
follow these strategies.
“Take all the profit you can, but don’t become
too greedy”.
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