World TopInvestor 2007-08 prize distribution ceremony

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”.


Moments from the ceremony