tag:blogger.com,1999:blog-40319537534925672752024-03-13T22:30:52.322-07:00Upbeat InvestingLinxhttp://www.blogger.com/profile/06231462343123561311noreply@blogger.comBlogger43125tag:blogger.com,1999:blog-4031953753492567275.post-27466250013253751682016-12-30T11:28:00.002-08:002016-12-30T11:28:31.361-08:00What Happens to Bond Prices when Interest Rates Go Up?
<br />
<div style="margin: 0in 0in 0pt;">
When interest rates go up, prices for bonds and bond funds
fall and vice versa.<span style="mso-spacerun: yes;"> </span>The following
examples show the relationship between bond prices and rates.</div>
<br />
<div style="margin: 0in 0in 0pt;">
</div>
<br />
<div style="margin: 0in 0in 0pt;">
Municipalities and corporations sell bonds for
financing.<span style="mso-spacerun: yes;"> </span>The issuer who sells the bond
pays the buyer interest while the bond is outstanding, and then pays the
principal back when the bond is due, that is, when it <i style="mso-bidi-font-style: normal;">matures</i>.<span style="mso-spacerun: yes;"> </span></div>
<br />
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</div>
<br />
<div style="margin: 0in 0in 0pt;">
The price of the bond is fixed, as far as the issuer is
concerned.<span style="mso-spacerun: yes;"> </span>If the company sells a $1,000
bond with a 5% interest rate to be paid back in 30 years, the buyer will
receive $50 a year in interest, and then receive $1,000 back at the end of 30
years, if he has not sold the bond in the meantime</div>
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<div style="margin: 0in 0in 0pt;">
</div>
<br />
<div style="margin: 0in 0in 0pt;">
<b style="mso-bidi-font-weight: normal;">Changes in the Price
of Municipal or Corporate Bond </b></div>
<br />
<div style="margin: 0in 0in 0pt;">
<b style="mso-bidi-font-weight: normal;"> </b></div>
<br />
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If the bondholder keeps the bond to maturity, the changes in
price of the bond are not important.<span style="mso-spacerun: yes;"> </span>If
the bondholder does wish to sell the bond on the open market before maturity,
he will have to take into account the price movements. </div>
<br />
<div style="margin: 0in 0in 0pt;">
</div>
<br />
<div style="margin: 0in 0in 0pt;">
Consider the example above:<span style="mso-spacerun: yes;">
</span>if the bondholder elects to sell the bond after five years, he will have
to take the price that the market dictates.<span style="mso-spacerun: yes;">
</span>If market interest rates have increased in that time, he will find that
the price he can sell the bond at has decreased.<span style="mso-spacerun: yes;"> </span>It is an inverse relationship.<span style="mso-spacerun: yes;"> </span></div>
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<div style="margin: 0in 0in 0pt;">
</div>
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<div style="margin: 0in 0in 0pt;">
Why?<span style="mso-spacerun: yes;"> </span>If market
interest rates are now 6%, no one is going to pay full price for a bond that
only yields 5%.<span style="mso-spacerun: yes;"> </span>He will have to sell his
bond at an appropriate discount, so that the new buyer will achieve the same
effective interest rate as he could when buying a new bond.<span style="mso-spacerun: yes;"> </span></div>
<br />
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</div>
<br />
<div style="margin: 0in 0in 0pt;">
The opposite situation is also true.<span style="mso-spacerun: yes;"> </span>If interest rates go down, the bondholder
will find that his bond is now worth more.<span style="mso-spacerun: yes;">
</span>New buyers will be willing to pay more, that is, pay a premium, for a
bond with a 5% interest rate, when new bonds are only carrying a 4% rate.<span style="mso-spacerun: yes;"> </span></div>
<br />
<div style="margin: 0in 0in 0pt;">
</div>
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The amount of discount or premium depends on the difference
in rates and how long until maturity. <span style="mso-spacerun: yes;"> </span>Interest rates are different based on whether
the bonds are tax free or taxable. </div>
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</div>
<br />
<div style="margin: 0in 0in 0pt;">
<b style="mso-bidi-font-weight: normal;">Why Changes in
Interest Rates Effect Bond Fund Prices</b></div>
<br />
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<b style="mso-bidi-font-weight: normal;"> </b></div>
<br />
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Bonds are also held by mutual funds.<span style="mso-spacerun: yes;"> </span>Funds can be comprised of only fixed
investments like bonds, or can hold both stock and bond instruments.<span style="mso-spacerun: yes;"> </span>Since mutual funds can hold many bonds, some
of the bonds are likely maturing regularly and are replaced with new
bonds.<span style="mso-spacerun: yes;"> </span>Bonds in bond funds are also
bought and sold, so the mutual fund undergoes the same changes in price as
mentioned above.<span style="mso-spacerun: yes;"> </span></div>
<br />
<div style="margin: 0in 0in 0pt;">
</div>
<br />
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Since anyone can buy or sell fund shares at the end of each
day, bond funds, like other mutual funds, must be priced out every day.<span style="mso-spacerun: yes;"> </span>The price of the bond fund depends on how
much interest has been earned but not paid out, and the premium or discount
that the bonds would require if the bonds were sold that day, whether were actually
sold or not.<span style="mso-spacerun: yes;"> </span></div>
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</div>
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<div style="margin: 0in 0in 0pt;">
Bond and bond fund prices move up and down based on the
market.<span style="mso-spacerun: yes;"> </span>Buying a bond can be a stable
investment, but can be subject to the same market forces as stocks if the
bondholder wants to sell the bond before maturity.<span style="mso-spacerun: yes;"> </span></div>
Linxhttp://www.blogger.com/profile/06231462343123561311noreply@blogger.com0tag:blogger.com,1999:blog-4031953753492567275.post-52050246799440709172016-02-24T19:38:00.003-08:002016-02-24T19:38:54.850-08:00Two Days in the Life of Chipotle<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-size: 13.5pt;">I wanted to take a look at the last few days of trading in
Chipotle Stock ($CMG) to try to see if I could gain any lessons from moves that
at first seem had to understand. <o:p></o:p></span></div>
<div style="margin: 0in 0in 0.0001pt;">
<br /></div>
<div style="margin: 0in 0in 0.0001pt;">
<span style="font-size: 13.5pt;">There is a long term story but I intend to
focus on the short term. I think most everyone who sees this will be
aware of the general issues $CMG has had, namely, a very high valuation,
falling stock, food and safety issues. The stock reached $750 dollars in
August and then fell to $400 at the peak of the hubbub over e coli concerns.
<o:p></o:p></span></div>
<div style="margin: 0in 0in 0.0001pt;">
<br /></div>
<div style="margin: 0in 0in 0.0001pt;">
<span style="font-size: 13.5pt;">Two days ago the stock had recovered to
close at $525 on Monday, 2/22/16. The next morning, the stock received a
prominent <a href="http://finance.yahoo.com/video/deutsche-bank-downgrades-chipotle-173600119.html" target="_blank">downgrade</a> from Deutsche Bank analyst Karen Short (love the name)<span class="apple-converted-space"> </span>about the same issues that had been
dogging the company. The downgrade was to sell with a price target of
$400.</span><o:p></o:p></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-size: 13.5pt;">OK, a major Wall Street name (should Deutsche really be from Wall
Street?) downgrades, you would expect the stock to drop. And bang, on Tuesday it did to $511 or so
premarket. Then it opened a bit higher
than that, but still down. Then, all day
it started to rise and lo and behold, but the end of the day it was actually went
“green” as they say, higher than it started.
It ends the day at $525 again. The
downgrade was, like, completely forgotten.
What the hell?<o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-size: 13.5pt;">On Wednesday, the whole market craters when oil goes down, and
Chipotle goes back to $512, and when the market reverses like a steamroller
$CMG does like, nothing. It ends at
$514. A roller coaster ride with nobody
at the controls. Or at least that’s the
way it seems. <o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-size: 13.5pt;">Now, these $10 moves seem pretty big, but they are only 2% moves
because of the high share price. Still,
a 2% move day after day is substantial. <o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-size: 13.5pt;">I’m trying to understand.
Why does the downgrade impact share prices for maybe an hour? There are some who believe that ratings
changes are sinister, and that a downgrade is done in order to lower the share
price so that the big boys can buy it cheaper (and the opposite for an upgrade
so that the smart money can get out at a higher price.) The conspiracy theorists would add that the
large players knew the downgrade was coming so they could sell before it was
announced. <o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-size: 13.5pt;">I don’t know whether to believe this, I like to think I am not
that cynical. But otherwise, I am at a
loss to know why $CMG moved like this.
It just reinforces my belief that trading intraday moves is just
gambling, and there’s little logic to it.
Others may have different ideas. <o:p></o:p></span></div>
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Disclosure, I do have a option position on $CMG, looking for
it stay near its current price. </div>
Linxhttp://www.blogger.com/profile/06231462343123561311noreply@blogger.com0tag:blogger.com,1999:blog-4031953753492567275.post-33021133420214258832016-02-10T19:54:00.002-08:002016-02-10T19:54:46.952-08:00Don’t Wait to Begin Investing<div class="MsoNormal">
Thomas Bruni @BruniCharting
had a excellent tweet on the difference between investing and trading:</div>
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“As a
trader/analyst I don't like equities.</div>
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As an investor,
I'm buying stocks next week, month, year, decade, etc. Know your
timeframe/goals”</div>
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I started
thinking about some of the reasons why people delay investing. I ran the numbers on what happens if you
delay investing because you don’t like the market. </div>
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Let’s take a 30
year time frame. A $4,000 annual
investment at a modest 6% return awards you with $339,206 at the end of 30
years. </div>
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If you don’t
like this market and spend the money this year money instead of investing it, your
payout drops to $316,232. Postpone
investing by five years? Now your nest
egg is down to $236,625. Spending
$20,000 now costs you $100,000 down the road.
</div>
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<br /></div>
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But you don’t
the market? You think maybe a bear
market is coming next year? It doesn’t
matter. If you put your $4,000 in the
market and the market drops 20% this year, your fund is worth $333,572 after 30
years. The 6% annual increase over 29
years more than makes up for one bad year now. </div>
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Hey, it’s your
money, use it however makes you happy.
But I think you’ll be a lot happier if you have more of it to throw
around later when you need it. </div>
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Linxhttp://www.blogger.com/profile/06231462343123561311noreply@blogger.com0tag:blogger.com,1999:blog-4031953753492567275.post-28818995990209769892016-01-11T16:22:00.000-08:002016-01-11T16:22:02.113-08:00Time to go bullishI don't know about capitulation, overaold conditions or moving averages, but i know when stocks stop going down.. That was today.<br />
<br />
I turned bullish this afternoon when the market started to recover. Shorted some $UVXY and bought a put on $SQQQ which is the Bear ETF for the 3X SPY. <br />
<br />
People are way too bearish after the bad start to the year. Linxhttp://www.blogger.com/profile/06231462343123561311noreply@blogger.com0tag:blogger.com,1999:blog-4031953753492567275.post-81109794558544906542016-01-10T18:53:00.003-08:002016-01-10T18:53:58.809-08:00I'm Bearish HereIf you've got some money you are going to need in the next few months, or are a short term trader, you probably want to consider pulling it out of the market.<br />
<br />
If, on the other hand, you've have money in a 401K with a 20 year horizon, you'd be better served to just wait it out and add more if the market goes down. 20 years is a very long time as far as investments go. Think back to 1996. Could you have come close to predicting what was going to happen over the next 20 years then?<br />
<br />
<br />Linxhttp://www.blogger.com/profile/06231462343123561311noreply@blogger.com0tag:blogger.com,1999:blog-4031953753492567275.post-71786920337982922072015-07-07T17:12:00.001-07:002015-07-07T17:14:56.001-07:00Big Comeback in Stocks Today - Is it a Good Sign?The stock market come back big from being down even bigger. A lot of talk that this is a positive sign for the market, so I wanted to test it.<br />
<br />
The $SPY finished just under 2.% off the lows today, so I ran a sample of days where the index finished 1.8% or better above the low for the day. You could dice it a lot of ways, but this is the one I chose.<br />
<br />
It's happened a lot of the last 15 years, I looked at what happened the following day or days and didn't really see a major trend. Some days were up, some down and some barely moved. In looking at the list, I saw it happening a lot in 2008, a very bad year for stocks. So, I added up the numbers per year.<br />
<br />
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 128px;" x:str="">
<colgroup><col span="2" style="width: 48pt;" width="64"></col>
</colgroup><tbody>
<tr height="17" style="height: 12.75pt; mso-outline-level: 1; mso-outline-parent: collapsed;">
<td align="right" height="17" style="height: 12.75pt; width: 48pt;" width="64" x:num="">2015</td>
<td align="right" style="width: 48pt;" width="64" x:num="">3</td>
</tr>
<tr height="17" style="height: 12.75pt; mso-outline-level: 1; mso-outline-parent: collapsed;">
<td align="right" height="17" style="height: 12.75pt;" x:num="">2014</td>
<td align="right" x:num="">3</td>
</tr>
<tr height="17" style="height: 12.75pt; mso-outline-level: 1; mso-outline-parent: collapsed;">
<td align="right" height="17" style="height: 12.75pt;" x:num="">2013</td>
<td align="right" x:num="">2</td>
</tr>
<tr height="17" style="height: 12.75pt; mso-outline-level: 1; mso-outline-parent: collapsed;">
<td align="right" height="17" style="height: 12.75pt;" x:num="">2012</td>
<td align="right" x:num="">6</td>
</tr>
<tr height="17" style="height: 12.75pt; mso-outline-level: 1; mso-outline-parent: collapsed;">
<td align="right" height="17" style="height: 12.75pt;" x:num="">2011</td>
<td align="right" x:num="">21</td>
</tr>
<tr height="17" style="height: 12.75pt; mso-outline-level: 1; mso-outline-parent: collapsed;">
<td align="right" height="17" style="height: 12.75pt;" x:num="">2010</td>
<td align="right" x:num="">13</td>
</tr>
<tr height="17" style="height: 12.75pt; mso-outline-level: 1; mso-outline-parent: collapsed;">
<td align="right" height="17" style="height: 12.75pt;" x:num="">2009</td>
<td align="right" x:num="">40</td>
</tr>
<tr height="17" style="height: 12.75pt; mso-outline-level: 1; mso-outline-parent: collapsed;">
<td align="right" height="17" style="height: 12.75pt;" x:num="">2008</td>
<td align="right" x:num="">61</td>
</tr>
<tr height="17" style="height: 12.75pt; mso-outline-level: 1; mso-outline-parent: collapsed;">
<td align="right" height="17" style="height: 12.75pt;" x:num="">2007</td>
<td align="right" x:num="">7</td>
</tr>
<tr height="17" style="height: 12.75pt; mso-outline-level: 1; mso-outline-parent: collapsed;">
<td align="right" height="17" style="height: 12.75pt;" x:num="">2006</td>
<td align="right" x:num="">2</td>
</tr>
<tr height="17" style="height: 12.75pt; mso-outline-level: 1; mso-outline-parent: collapsed;">
<td align="right" height="17" style="height: 12.75pt;" x:num="">2005</td>
<td align="right" x:num="">1</td>
</tr>
<tr height="17" style="height: 12.75pt; mso-outline-level: 1; mso-outline-parent: collapsed;">
<td align="right" height="17" style="height: 12.75pt;" x:num="">2004</td>
<td align="right" x:num="">2</td>
</tr>
<tr height="17" style="height: 12.75pt; mso-outline-level: 1; mso-outline-parent: collapsed;">
<td align="right" height="17" style="height: 12.75pt;" x:num="">2003</td>
<td align="right" x:num="">23</td>
</tr>
<tr height="17" style="height: 12.75pt; mso-outline-level: 1; mso-outline-parent: collapsed;">
<td align="right" height="17" style="height: 12.75pt;" x:num="">2002</td>
<td align="right" x:num="">49</td>
</tr>
<tr height="17" style="height: 12.75pt; mso-outline-level: 1; mso-outline-parent: collapsed;">
<td align="right" height="17" style="height: 12.75pt;" x:num="">2001</td>
<td align="right" x:num="">40</td>
</tr>
<tr height="17" style="height: 12.75pt; mso-outline-level: 1; mso-outline-parent: collapsed;">
<td align="right" height="17" style="height: 12.75pt;" x:num="">2000</td>
<td align="right" x:num="">37</td>
</tr>
<tr height="17" style="height: 12.75pt; mso-outline-level: 1; mso-outline-parent: collapsed;">
<td align="right" height="17" style="height: 12.75pt;" x:num="">1999</td>
<td align="right" x:num="">20</td>
</tr>
<tr height="17" style="height: 12.75pt; mso-outline-level: 1; mso-outline-parent: collapsed;">
<td align="right" height="17" style="height: 12.75pt;" x:num="">1998</td>
<td align="right" x:num="">27</td>
</tr>
<tr height="17" style="height: 12.75pt; mso-outline-level: 1; mso-outline-parent: collapsed;">
<td align="right" height="17" style="height: 12.75pt;" x:num="">1997</td>
<td align="right" x:num="">24</td>
</tr>
<tr height="17" style="height: 12.75pt; mso-outline-level: 1; mso-outline-parent: collapsed;">
<td align="right" height="17" style="height: 12.75pt;" x:num="">1996</td>
<td align="right" x:num="">10</td>
</tr>
<tr height="17" style="height: 12.75pt; mso-outline-level: 1; mso-outline-parent: collapsed;">
<td align="right" height="17" style="height: 12.75pt;" x:num="">1995</td>
<td align="right" x:num="">2</td>
</tr>
<tr height="17" style="height: 12.75pt; mso-outline-level: 1; mso-outline-parent: collapsed;">
<td align="right" height="17" style="height: 12.75pt;" x:num="">1994</td>
<td align="right" x:num="">3</td>
</tr>
</tbody></table>
<br />
<div>
As you can see, the worst years are bear market years, 2008-9 and 2000-2002. Having a lot of these is a sign of volatility and a bad thing. I can't say what one day will bring, but a lot of them are not good. </div>
<div>
<br /></div>
<div>
Best of luck trading. </div>
Linxhttp://www.blogger.com/profile/06231462343123561311noreply@blogger.com0tag:blogger.com,1999:blog-4031953753492567275.post-43121139837854527262015-04-28T12:27:00.001-07:002015-04-28T17:53:19.512-07:00Why I am short gold today<br />
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I sold off all of my money in equities today. Not that I am particularly bearish going into tomorrow’s Fed meeting, just that I don’t have a good feel for what may come out of the meeting. I expect I will be buying back in after a few days, once things settle down.<br />
<br /></div>
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The one thing I did keep is a short position in the Miners, Junior Miners and in Silver, via the 3x ETFs. The reasoning, such as it is, is that the general consensus is that the Fed will be dovish when it announces tomorrow. I judge this on the fact that gold and silver have exploded to the upside this week.<br />
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<br /></div>
<div class="MsoNormal" style="font-family: Calibri, sans-serif; font-size: 11pt; margin: 0in 0in 0pt;">
The strategy is no matter what the Fed announces, good things happen.</div>
<div class="MsoNormal" style="font-family: Calibri, sans-serif; font-size: 11pt; margin: 0in 0in 0pt;">
<br /></div>
<div class="MsoListParagraph" style="font-family: Calibri, sans-serif; font-size: 11pt; margin: 0in 0in 0pt 0.5in; text-indent: -0.25in;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;"> </span></span>If they are dovish as expected, then nothing much will happen. I should get the benefit of those ETFs going down through the daily rebalancing, or through a small selloff.</div>
<div class="MsoListParagraph" style="font-family: Calibri, sans-serif; font-size: 11pt; margin: 0in 0in 0pt 0.5in; text-indent: -0.25in;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;"> </span></span>If they are a bit more hawkish, I expect Gold will sell off big time, dragging the miners down with it.</div>
<div class="MsoNormal" style="font-family: Calibri, sans-serif; font-size: 11pt; margin: 0in 0in 0pt;">
<br /></div>
<div class="MsoNormal" style="font-family: Calibri, sans-serif; font-size: 11pt; margin: 0in 0in 0pt;">
<br /><br />
I see it as a win/win, or at least a win/not lose. It’s the concept of going against a crowded trade. </div>
<div class="MsoNormal" style="font-family: Calibri, sans-serif; font-size: 11pt; margin: 0in 0in 0pt;">
<br /></div>
<div class="MsoNormal" style="font-family: Calibri, sans-serif; font-size: 11pt; margin: 0in 0in 0pt;">
I’ll know tomorrow if it works. If I don’t get shaken out before that.</div>
<div class="MsoNormal" style="font-family: Calibri, sans-serif; font-size: 11pt; margin: 0in 0in 0pt;">
<br /></div>
<div class="MsoNormal" style="font-family: Calibri, sans-serif; font-size: 11pt; margin: 0in 0in 0pt;">
<br /></div>
</div>
</div>
Linxhttp://www.blogger.com/profile/06231462343123561311noreply@blogger.com0tag:blogger.com,1999:blog-4031953753492567275.post-53853621504388044982015-01-19T16:45:00.001-08:002015-01-19T16:45:12.871-08:00Where are the Customers on the Forbes’ Billionaires List?<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The Forbes list of billionaires is out for 2015 and Michelle Celarier @mcelarier tweeted that there were 38 hedge fund managers on the list, led by Ray Dalio at $15.2 million. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
I posed a question to Michelle, “Where are the Customers on the list?” and she responded that, indeed they were on there, as many billionaires would be clients of the hedge funds. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
And I suppose that’s true. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
But, the hedge fund managers had achieved the list because they ran hedge funds. The customers made it because they earned or inherited the money from other endeavors, not because they invested their money in hedge funds. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
I just wonder how many customers made the list in spite of investing with the hedgies rather than because of them.</div>
<div class="MsoNormal">
</div>
Linxhttp://www.blogger.com/profile/06231462343123561311noreply@blogger.com0tag:blogger.com,1999:blog-4031953753492567275.post-38951104183674340892014-10-26T17:46:00.000-07:002014-10-26T17:46:07.365-07:00Does the $UVXY decay over the weekend?<div class="MsoNormal">
Someone on Stocktwits made a comment that you should never hold the $UVXY over the weekend because you loose (sic) 2% due to decay. I ran the numbers going back to when the UVXY
was established to check that statement. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The UVXY is the Proshares Ultra Short term VIX futures ETF,
which is a measure of volatility in the SPY futures times two. This ETF was created in 2011. Since its inception, it has declined in price
by close to 98%, due to its design. The question is whether this occurs over a
weekend. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The results? The UVXY
moves a lot over the weekend, but there is no clear trend. Actually, the net change from Friday close to
open Monday averages out to almost nothing.
Some weeks it moves up, some down, but overall, it is almost exactly
zero (0.12%). </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Most of the move in $UVXY happens intraday, not over
night. Personally, I don’t ever recommend
holding this ETF because of the decay mentioned. But it’s not about the weekend. </div>
<div class="MsoNormal">
<br /></div>
<br />
<div class="MsoNormal">
This post is not a recommendation to buy or sell any
investment. Disclosure: as of posting
date I have no position in $UVXY, but I often buy and sell and may at any time. </div>
Linxhttp://www.blogger.com/profile/06231462343123561311noreply@blogger.com0tag:blogger.com,1999:blog-4031953753492567275.post-64984846212490415862014-08-05T14:08:00.005-07:002014-08-05T14:08:53.590-07:00It's Not Easy<div class="MsoNormal">
I am big fan of Stocktwits, I uncover a tremendous amount of
great information there, and I get a many good ideas of the traders, investors
and generally good people.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
That said, let me rant just a bit:</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
I bristle when anyone says making money
via any particular trade is easy, or simple, or a no-brainer (at least unless
maybe it is coming from Carl Icahn.)
Nothing about the market is easy and even if the person gets the trade
right, it’s not because it was easy. </div>
<div class="MsoNormal">
<br /></div>
<br />
<div class="MsoNormal">
If I see someone call a trade easy, I figure they are arrogant,
a newbie, or both. Experienced and savvy
traders don’t call anything about the market simple. </div>
Linxhttp://www.blogger.com/profile/06231462343123561311noreply@blogger.com0tag:blogger.com,1999:blog-4031953753492567275.post-24125964664933057982014-08-04T14:05:00.001-07:002014-08-04T14:07:00.779-07:00The Bull Market is Intact!<div class="MsoNormal">
Sorry for the hyperbole in the title. Neither I, nor anyone else knows if the bull
market will continue another day. This
post is a follow up to <a href="http://upbeatinvesting.blogspot.com/2014/08/it-works-until-it-doesnt.html" target="_blank">one I wrote on the weekend</a>. In that one, I looked at the $VXX performance
after it had gone up by 15% over three days.
</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
For the last three years, every time the $VXX met that
criteria, it dropped back on the fourth day.
Nine out of nine. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
What does that have to do with the bull market? In a discussion on Stocktwits, another member
@allgoodtrades remarked that we were in a bull market, and the $VXX wouldn’t
continue to spike like it did in 2011. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
And lo and behold, what happened on August 4th? The $VXX did drop, a substantial amount,
actually. Ten out of ten now. Leading me
to conclude the bull market is intact, the SVXX should keep dropping and all is
right with the world. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
OK, that’s a stretch, and I intend to remain cautious. But
from this indicator, I see no reason not be optimistic, or upbeat, about the
market.</div>
<div class="MsoNormal">
</div>
Nothing in this post is meant to be a solicitation to buy or
sell any security. Linxhttp://www.blogger.com/profile/06231462343123561311noreply@blogger.com0tag:blogger.com,1999:blog-4031953753492567275.post-67554912744888352302014-08-02T18:42:00.000-07:002014-08-02T18:45:03.520-07:00It Works until it Doesn’t<div class="MsoNormal">
I recently owned some $VXX puts and sold them on
Friday. It was a sort of continuing
trade over the last few weeks of puts and short positions which I finally
closed out. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
$VXX is the iPath S&P 500 VIX short term ETN. The VIX is a measure of volatility in the
market. Simplistically, the VIX
generally goes up when the overall market is falling, and vice versa. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In response to an inquiry, I had a civil discussion with
@allgoodtrades (Gavin) on Stocktwits about where the $VXX was going next. He thought it would fall, and I was concerned
about it spiking higher if there was a correction (crash) on Monday, August 4<sup>th</sup>. I was staying on the sidelines. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Gavin challenged me to look at the chart and find another time
in the last three years where $VXX rose as much as it did in the last three
days. It’s very hard to see that in a
chart, so I ran the historical prices in Yahoo! Finance. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Over the three days ending 8/1/14, $VXX went up 15%. In running the numbers, I found nine times where
the $VXX went up 15% or more over the last three years, actually a little less
than three years, more on that later. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Although this wasn’t as unusual as Gavin thought, I did
something interesting. In each of the
nine times the ETN ramped over a three day period, in closed lower on the
fourth day. Nine out of nine. It’s hard to beat those odds.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b>The VIX in 2011<o:p></o:p></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
Unless you go back the full three
years. In August 2011, the $VXX had a
spike that kept on going. Check out the
closing prices from that period. </div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<table border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse: collapse; margin-left: 4.65pt; mso-padding-alt: 0in 5.4pt 0in 5.4pt; width: 135px;">
<tbody>
<tr style="height: 12.75pt; mso-yfti-firstrow: yes; mso-yfti-irow: 0;">
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">8/22/2011<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">43.86<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 12.75pt; mso-yfti-irow: 1;">
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">8/19/2011<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">42.55<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 12.75pt; mso-yfti-irow: 2;">
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">8/18/2011<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">40.47<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 12.75pt; mso-yfti-irow: 3;">
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">8/17/2011<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">33.53<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 12.75pt; mso-yfti-irow: 4;">
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">8/16/2011<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">32.87<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 12.75pt; mso-yfti-irow: 5;">
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">8/15/2011<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">32.18<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 12.75pt; mso-yfti-irow: 6;">
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">8/12/2011<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">34.13<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 12.75pt; mso-yfti-irow: 7;">
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">8/11/2011<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">33.78<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 12.75pt; mso-yfti-irow: 8;">
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">8/10/2011<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">35.17<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 12.75pt; mso-yfti-irow: 9;">
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">8/9/2011<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">31.26<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 12.75pt; mso-yfti-irow: 10;">
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">8/8/2011<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">34.78<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 12.75pt; mso-yfti-irow: 11;">
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">8/5/2011<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">30.31<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 12.75pt; mso-yfti-irow: 12;">
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">8/4/2011<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">28.89<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 12.75pt; mso-yfti-irow: 13;">
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">8/3/2011<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">24.08<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 12.75pt; mso-yfti-irow: 14;">
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">8/2/2011<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">23.97<o:p></o:p></span></div>
</td>
</tr>
<tr style="height: 12.75pt; mso-yfti-irow: 15; mso-yfti-lastrow: yes;">
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 53.0pt;" valign="bottom" width="71"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">8/1/2011<o:p></o:p></span></div>
</td>
<td nowrap="" style="height: 12.75pt; padding: 0in 5.4pt 0in 5.4pt; width: 48.0pt;" valign="bottom" width="64"><div align="right" class="MsoNormal" style="text-align: right;">
<span style="font-family: Arial; font-size: 10.0pt;">22.41<o:p></o:p></span></div>
</td>
</tr>
</tbody></table>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
So, which do you believe? Nine out of nine times during a great bull
market, or the one time when it looked bad for equities? Do you think the market we have now is the
same as the last three years, or are we in for the rough ride like we had in
2011? </div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
Honestly, I don’t know, but the risk
is pretty great, and for me, worth watching from the sidelines. The point is
that if you find something that works every time, it’s still not guaranteed to
work the next time. The situation may be different. <i>It works until it doesn't.<o:p></o:p></i></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
And by the way, the $VXX wasn't
around in 2008, but you imagine what would have happened to $VXX or it's more leveraged cousin $UVXY when the market really
crashed</div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<br />
<div class="MsoNormal" style="text-align: justify;">
Good luck. We’ll know shortly. Nothing in this post is a solicitation to buy
or sell securities. </div>
Linxhttp://www.blogger.com/profile/06231462343123561311noreply@blogger.com0tag:blogger.com,1999:blog-4031953753492567275.post-14303239826627821742014-08-01T18:18:00.000-07:002014-08-01T18:57:51.142-07:00My Investor’s Toolkit<div class="MsoNormal">
I am not really a technical trader, although I do think
there is some benefit to watching the moving averages. I just think the rest of TA is overdone. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
I am looking for an edge, either the best ideas or news that
will allow me to be more proactive. So,
my toolkit is mostly bloggers and news providers.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Listed in the order that I generally use them.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Twitter – I follow all the big name traders, you know, the
Fast Money guys, JC Parets, Jon Boorman.
Mostly professionals in the stock biz.
Also TV people like Becky, Maria, Mandy, Trish, Jane…
well, you get the idea. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Stocktwits – I have people I follow, generally not those
that I follow on Twitter. These are mostly
amateurs, or hobbyists. It’s more of a
social thing You can see who I follow
there if you click on my name. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
CNBC.com – Generally business news and stock quotes. Works best on my phone, an HTC One, which I don’t recommend. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Yahoo Finance – More news and quotes. I also like their charts, which allow you to
compare multiple symbols, and are easy for a non-chart guy like me to
follow. I also use the historical price
function which allows me to download daily prices to excel and manipulate
them. Did you know it is better to buy
Apple on Monday vs. Friday, over time? I
don’t know if that knowledge is worth all that much, though. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
There are a few bloggers I follow when I can. I usually see the entries when they post a
link on Twitter, but these I will actually look up:</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
thereformedbroker.com – Josh Brown</div>
<div class="MsoNormal">
ritholtz.com – Barry Ritholtz</div>
<div class="MsoNormal">
crossingwallstreet.com – Eddy Elfenbein</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
I don’t care for Business Insider because it’s a bandwidth
hog. I will sometimes read the
articles. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
I don’t watch much business TV any more. If I can, Fast Money and once n a while that
Cramer guy. </div>
<div class="MsoNormal">
<br /></div>
<br />
<div class="MsoNormal">
Props to 1nvestor for the inspiration</div>
Linxhttp://www.blogger.com/profile/06231462343123561311noreply@blogger.com0tag:blogger.com,1999:blog-4031953753492567275.post-79633023661171932912014-07-29T14:18:00.001-07:002014-07-29T14:20:32.591-07:00Why I Post my Trades on Stocktwits<div class="MsoNormal">
Stocktwits is a site founded by Howard Lindzon that allows
just about anyone to comment on most publicly traded stocks. Many people use it to ask questions, share
their opinions, or plug their newsletters or websites. I like to post my trades there, with
entrances and exits. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
I started with the goal of posting all my trades, but have
decided I don’t have the time, or the interest in sharing every detail of my
trading. Still, I do find it helpful to
share not only what I am thinking at a given moment, but also the actions I
have taken. I may post what I buy, and I
try to give an idea of the price I paid or sold at, and a vague I idea of the
size of the trade. One thing I don’t do
is give the number of shares or options.
How much I invest is really only my business. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Why do I share this? OK, first, this is NOT why I post my
trades:</div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
</div>
<ol>
<li><span style="font-size: 7pt; text-indent: -0.25in;"> </span><span style="text-indent: -0.25in;">I don’t post to gloat on my winners.</span><span style="text-indent: -0.25in;"> </span><span style="text-indent: -0.25in;">Investing is really difficult, and no one
needs to know how smart I am, or that I pretend to be.</span><span style="text-indent: -0.25in;"> </span><span style="text-indent: -0.25in;">If I see someone gloating, it’s a real
turn-off.</span></li>
<li><span style="text-indent: -0.25in;">I don’t post to sell anything, because I am not
selling anything.</span><span style="text-indent: -0.25in;"> </span><span style="text-indent: -0.25in;">No newsletters,
websites, or books.</span><span style="text-indent: -0.25in;"> </span><span style="text-indent: -0.25in;">Yet.</span><span style="text-indent: -0.25in;"> </span><span style="text-indent: -0.25in;">You can’t buy my ideas on stock trades,
because they aren’t for sale.</span><span style="text-indent: -0.25in;"> </span><span style="text-indent: -0.25in;">I don’t
know that anyone would pay for them anyway.</span></li>
</ol>
<!--[if !supportLists]--><br />
<div class="MsoNormal">
So, why do I share them?</div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l1 level1 lfo2; text-indent: -.25in;">
</div>
<ol>
<li><span style="text-indent: -0.25in;">Someone may get some benefit, or education.</span><span style="text-indent: -0.25in;"> </span><span style="text-indent: -0.25in;">I have gotten nice notes from people who did
say they learned something from what I am doing, usually from a follow up
question.</span><span style="text-indent: -0.25in;"> </span><span style="text-indent: -0.25in;">I have gotten some nice (and
some not so nice) responses from people who take the other side.</span><span style="text-indent: -0.25in;"> </span><span style="text-indent: -0.25in;">That’s OK, it’s what makes a market.</span></li>
<li><span style="text-indent: -0.25in;">The biggest reason I post is that it keeps me
honest with myself.</span><span style="text-indent: -0.25in;"> </span><span style="text-indent: -0.25in;">If I know that I
will be sharing my trades, it is a lot harder to take a risky, unjustified
position (a “flyer”).</span><span style="text-indent: -0.25in;"> </span><span style="text-indent: -0.25in;">Like buying
options before an earnings report, or shorting a momentum stock.</span><span style="text-indent: -0.25in;"> </span><span style="text-indent: -0.25in;">I may still do these dumb things, but if I
plan to expose my thinking to the world, I would like there to actually be some
thought to expose.</span><span style="text-indent: -0.25in;"> </span></li>
</ol>
<br />
<div class="MsoNormal">
Best of luck trading.
Nothing here is a solicitation to buy or sell securities. <a href="https://www.blogger.com/null" name="_GoBack"></a></div>
Linxhttp://www.blogger.com/profile/06231462343123561311noreply@blogger.com0tag:blogger.com,1999:blog-4031953753492567275.post-17664395649931052042014-06-19T16:36:00.001-07:002014-06-19T16:36:58.168-07:00The Big Mistake I Made in 1999The 1995 to 1999 period in the stock market was known as the dot com era, when the internet exploded and money poured in many stocks which had no profits, little revenue and depended on "eyeballs" as a metric. <br />
<br />
As a young (well, younger) investor at the time, my main interest early on was building a retirement nest egg and making a fair return on my available cash, which wasn't all that much. I had been trained to think of investing in good companies that paid a safe dividend. <br />
<br />
It was a good strategy, and early on, I did pretty well, swelling my meager retirement account into a nice bundle and making a few bucks for play money. <br />
<br />
<b>Scansoft </b><br />
<br />
Then one day, my boss at the time, introduced me to a bit more risk. He gave some advice on a company named Scansoft. I didn't know what they did then, and don't now. But in few days, I made $1,000, a 20% return. You would think I was hooked, but ah, I wasn't. My training told me this wasn't right. So, I backed off, and returned to safe investing.<br />
<br />
All the while watching everyone making huge gains on stocks that no one thought had any value. Names like Vertical Net and PSI Net are ingrained in my memory. Huge valuations with no sustainable business model.<br />
<br />
<b>Echelon</b><br />
<br />
Then there was one called Echelon that was particularly annoying. Someone I knew knew someone was had researched the company, and they had a real product. The stock started at 3 and came to my attention at 6. I bought it at $13, it went to 30, and I bailed, convinced that it didn't belong there and would come crashing down. <br />
<br />
Of course, it finally hit 100 before it crashed. I don't know if it's still around and I don't care.<br />
<br />
<b>My Big Mistake</b><br />
<b><br /></b>
My mistake, as it turns out was NOT getting caught up in the fever and ridiculous valuations. If I had, I would have made a lot of money, and could have gotten conservative nearer the top, or after it had been reached. <br />
<br />
I see this a lot now. Some people have been fighting this bull market all the way up. I try not to, despite my conservative nature. Bring it on. I hope to have enough time to bail on the downslope rather than the way up. <br />
<br />
Please, please, do your own due diligence, and don't take anything I say as an offer to buy or sell securities. Look at my track record. Linxhttp://www.blogger.com/profile/06231462343123561311noreply@blogger.com0tag:blogger.com,1999:blog-4031953753492567275.post-53769729411494990112014-05-25T19:00:00.001-07:002014-05-25T19:00:30.334-07:00My Best Advice for Stock Market Traders<div class="MsoNormal">
I consider myself an investor, not really a trader, but like
a lot of people, I do think I pick a winning trade from time to time. Unfortunately, since my funds are limited,
like everyone, it leads me to sell stocks in order to buy new ones. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
This leads to my worst performance. I always think that my current holding is not
going to as good as my next one. I sell
what I have to chase something else.
Generally, this is usually a bad move.
The stock used to own does just as well or better than the new one I
bought. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Add to that fact that in the process I paid commissions to
go in and out of the two positions.
That’s just dumb. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b>Comparison to
Baseball<o:p></o:p></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
I’m a baseball fan, and if there’s one thing I don’t like to
see in baseball, it’s overmanaging, particularly when a manager changes
relievers repeatedly, multiple times in an inning. As if the next pitcher is guaranteed to get
next guy out. Like the next pitcher is
going to be better than the one that is already in there. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Sometimes he does the job, sometimes he doesn’t. In baseball, there’s no way to know how the
other guy would have done. In stocks, we
do know. They continue to trade even if
we don’t own them. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
So, a little advice:
STOP TRADING SO MUCH. Review not
only your past trades, but what happens to stocks after you sell them. You will likely find that you would have been
just as well off, or better even with commissions, as if you just held the
first stock. </div>
<div class="MsoNormal">
<br /></div>
<br />
<div class="MsoNormal">
If you feel you have to trade just to do something, then you
have another problem. You aren’t trying
to make money; you are trying to fill some other need. If so, just expect to continue to
underperform. Nothing is going to help
that. </div>
Linxhttp://www.blogger.com/profile/06231462343123561311noreply@blogger.com0tag:blogger.com,1999:blog-4031953753492567275.post-22072698243316917032014-05-25T13:33:00.002-07:002014-05-25T13:33:14.253-07:00Where's the Stock Market Crash?If you follow the stock market pundits, you know that many of them have been calling, or at least warning of a crash for some time now. So, you have to wonder, where is it?<br />
<br />
I mean, it's been years now. Some of my favorites have been calling for a 50 percent fall for so long the market would have to fall 50 just to get back to the level where they first made the call.<br />
<br />
Now, anything is possible, and I dont know the future, but neither does anyone else. Generally, the market doesnt make big moves. Only rarely is there more than a 5 percent move in a month's time. You have a better chance of losing 5 percent by moving your money in and out than having the market take a tumble.<br />
<br />
So, my advice is, every time you feel like making a trade, do something else. I won't suggest to you what, but anything. Get a candy bar. Watch a movie. Et cetera. If you still feel like making a move later, make a smaller one than you planned.<br />
<br />
And if think Pundits have the answers, read Macke and Brown's book, Clash of the Financial Pundits.Linxhttp://www.blogger.com/profile/06231462343123561311noreply@blogger.com0tag:blogger.com,1999:blog-4031953753492567275.post-80841368621233217482014-05-13T15:32:00.003-07:002014-05-13T15:32:38.748-07:00Why is the Stock Market so High? <div class="MsoNormal">
The stock market, as measured by the Dow Jones and SP 500,
closed at another record high today.
That causes many people to ask:
Why is the market at all time highs?
Is it overvalued? Will it crash soon?</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
As to the first question, there is some debate as to whether
the market is high. Yes, it is, in dollar
terms, higher than it ever has been. But,
if you take into account inflation, it isn’t as high in “inflation-adjusted”
terms as it was a few times in the past.
</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
More importantly, there isn’t really a perfect measure of
what “high” means. It is only in terms
of price, or a percentage of what companies earn (the P/E ratio). Or you can look at the P/E over the last 10 years
(<st1:place w:st="on">CAPE</st1:place> ratio.)
You can find justification for just about any position you want. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b>The Stock Market is
High<o:p></o:p></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
If you accept that it is high based on the price, there are
possible explanations. I prefer the
simple supply and demand explanation. In
basic economics, when there is more supply for a good, the price drops, and
vice versa. When demand for a product
goes up, the price goes up. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Right now, there is a bit of reduction in supply because
companies are going private, fewer companies are going public, and public
companies are buying back shares at an increased rate. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
I tend to think the big difference relates to increased
demand for stocks because of low interest rates. If an investor has money to put to work, his
options are limited. He can only get
2.6% on a ten year bond. Other options,
like real estate or gold, are less liquid.
That is, harder to get money out in a short time. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Therefore, more money is pouring into stocks, many of which
pay a dividend, and have recently gone up.
</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
So, why is the stock market high? Because like Richard Gere in An Officer and a
Gentleman, “(it’s) got no place else to go. “</div>
<div class="MsoNormal">
<br /></div>
<br />
<div class="MsoNormal">
As always, nothing here is meant to be a recommendation to
buy or sell securities. </div>
Linxhttp://www.blogger.com/profile/06231462343123561311noreply@blogger.com0tag:blogger.com,1999:blog-4031953753492567275.post-58239311317146119012014-05-10T10:54:00.000-07:002014-05-10T10:54:19.766-07:00Compound Interest, Die Hard and Hans Gruber<i>Die Hard</i> is a spectacularly entertaining movie and can be used as a lesson in compound interest. <br />
<br />
Spoilers follow. <br />
<br />
The villain, Hans Gruber, played marvelously by Alan Rickman, attempts to steal $600 million dollars and plans his escape so that he can retire to an island and earn 20%. <br />
<br />
Now, even in those days, earning 20% wasn't easy, and it seems less likely now. But, taking him at his word, he was very smart financially. His plans are something everybody can sensibly aspire to.<br />
<br />
The movie was made in 1988. If he had been able to accomplish the two things:<br />
<br />
1. Steal $600 million<br />
2. Earn 20%<br />
<br />
and hadn't had to touch the money,<br />
<br />
he would, through the magic of compound interest, now have a fortune worth<br />
<br />
<table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 124px;" x:str=""><tbody>
<tr height="17" style="height: 12.75pt;">
<td class="xl22" height="17" style="height: 12.75pt; width: 93pt;" width="124" x:num="57237729986.441368">$57,237,729,986.44 </td></tr>
</tbody></table>
<br /><div>
That's $57 billion and change, which would make him 5th on Forbes' list of <a href="http://www.forbes.com/sites/abrambrown/2014/03/03/forbes-billionaires-full-list-of-the-worlds-500-richest-people/" target="_blank">world's richest people</a></div>
<div>
<br /></div>
<div>
Not bad. .</div>
Linxhttp://www.blogger.com/profile/06231462343123561311noreply@blogger.com0tag:blogger.com,1999:blog-4031953753492567275.post-92202197406466914372014-04-28T19:00:00.001-07:002014-04-28T19:00:29.543-07:00A Fable on Stock Market Valuation<div class="MsoNormal">
Why valuation is a lousy measure.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
King Midas gave up the gold thing, and bought all the
outstanding float of $KMID. Midas owned
1,000,000 shares of the stock, and on the day he bought the last share, he paid
$100. Therefore, the closing price of
the stock gave him a market cap of $100 million. That’s one hundred million dollars. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Now Little Johnny tended the King’s gardens and prevailed
upon him to sell him a share of $KMID.
Believing it was undervalued he offered the King $110 for that
share. The King was an evil man, so
happily took the money at the bid. He
was amazed to find out his value in the company had risen to $10,999,890. And he had 110 bucks cash to show for
it. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
When Johnny’s mother found out that he had blown the family
grocery money, he forced him to return to Midas to sell the stock back. The evil Midas agreed, but at the price of
$105. With no alternative, Johnny took the
price, poorer but wiser. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
King Midas had all his stock back, $5 in his pocket, and a
new market valuation of $10,500,000. The
stock caught the attention of the Wall Street pundits and trend followers. But,
of course nothing about the company or the stock really changed. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Farfetched? I
suppose. It would take a lot of dumb, evil
people make something like this happen in the real stock market.</div>
<div class="MsoNormal">
<br /></div>
<br />
<div class="MsoNormal">
Oh, yeah. Think
about that the next time you invest in a stock simply because the price
changes. </div>
Linxhttp://www.blogger.com/profile/06231462343123561311noreply@blogger.com0tag:blogger.com,1999:blog-4031953753492567275.post-88018917355173809722014-04-06T18:59:00.000-07:002014-04-06T19:02:02.091-07:00Why the $QQQ and $IWM fell more than the $SPY and $DIAI saw this stat for the following indexes just now, as of April 4. Thanks ro @stockcats for posting it.<br />
<br />
: % off the all-time intraday highs as of Friday's close <a class="twitter-cashtag pretty-link js-nav" data-query-source="cashtag_click" dir="ltr" href="https://twitter.com/search?q=%24IWM&src=ctag"><s>$</s><b>IWM</b></a> -5.0% <a class="twitter-cashtag pretty-link js-nav" data-query-source="cashtag_click" dir="ltr" href="https://twitter.com/search?q=%24QQQ&src=ctag"><s>$</s><b>QQQ</b></a> -5.4% <a class="twitter-cashtag pretty-link js-nav" data-query-source="cashtag_click" dir="ltr" href="https://twitter.com/search?q=%24DIA&src=ctag"><s>$</s><b>DIA</b></a> -1.3% <a class="twitter-cashtag pretty-link js-nav" data-query-source="cashtag_click" dir="ltr" href="https://twitter.com/search?q=%24SPY&src=ctag"><s>$</s><b>SPY</b></a> -1.7%<br />
<div>
It looks like $IWM and $QQQ are down seriously. Well, they are, from the recent highs. </div>
<div>
<br /></div>
<div>
However, look at how far they are up from the 52 week low based on Friday's close. </div>
<div>
<br /></div>
<div>
$IWM 28.4%</div>
<div>
$QQQ 29.1%</div>
<div>
$SPY 21.4%</div>
<div>
$DIA 13.8%</div>
<div>
<br /></div>
<div>
So, it seems pretty reasonable for the small caps and Nazz to have the biggest decline, since they had the run-up to get there. </div>
Linxhttp://www.blogger.com/profile/06231462343123561311noreply@blogger.com0tag:blogger.com,1999:blog-4031953753492567275.post-36051034675753219892014-04-05T12:50:00.002-07:002014-04-05T12:50:30.786-07:00Calling the Top of the Bull MarketI tried a few weeks ago to call the top of the bull market. Silly me. <br />
<br />
No one can call the market top. If they do it's just luck. Really, what happens is that someone repeatedly calls for a top and when they it finally happens, they claim victory. Silly them.<br />
<br />
The latest attempt to find an indicator that we are at the top relates to the fact that the NASDAQ and small caps ($IWM) have fallen a great deal in the last few days. They are supposed to be leaders, and when fall, the market will follow them. <br />
<br />
But they haven't been leaders in this market. Tech hasn't performed nearly as well as the broad market, and although small caps have exceeded the S&P, they haven't done that much better, and were partially driven by the ridiculous jump in biotech stocks. Which have hit a wall and dropped like a rock in the last few days. <br />
So it the bull market over? Nah, not in my opinion. It may take a few days or weeks off, but as long as interest rates remain low (and they still are ridiculously low in historical terms) there is no reason to think that money will flee the stock market for a better opportunity.<br />
<br />
Long and strong. <br />
<br />
Nothing here is a recommendation to buy or sell stocks. Linxhttp://www.blogger.com/profile/06231462343123561311noreply@blogger.com0tag:blogger.com,1999:blog-4031953753492567275.post-42502643491825935262014-03-16T18:21:00.001-07:002014-03-16T18:21:32.161-07:00Is the Stock Market Tired?The anonymous blogger who goes by the name Jesse Livermore, @Jesse_Livermore on Twitter, made a comment today that the market was tired. <br />
<br />
With all due respect to "Jesse", whom I really like:<br />
<br />
That's nonsense. <br />
<br />
Tired a physical state that can befall people and other living things. Stocks don't get tired. Markets result from the actions of people buying and selling stocks in this context. I assume Jesse knows this and is just using shorthand for the situation that he sees, that the market has reached a top and that there are more people selling than buying at current prices. <br />
<br />
But buyers aren't "tired" of buying. No one ever gets tired of making money. This is what traders and investors do. They buy stocks. They sell them when they don't think they are going up, but they don't get tired. If they get tired and go home, they neither buy or sell stocks, and the price doesn't change. <br />
<br />
My point is, don't think of markets in terms of human actions or situations. Markets don't get tired, or sleepy, cranky or annoyed, happy or gleeful. Stocks move up based on whether someone is willing to pay a higher price, and fall when they don't. <br />
<br />
OK, now I'm tired. <br />
<br />
Nothing in this blog is recommendation to buy or sell anything. Linxhttp://www.blogger.com/profile/06231462343123561311noreply@blogger.com0tag:blogger.com,1999:blog-4031953753492567275.post-78171942061065721172014-03-04T16:00:00.000-08:002014-03-04T16:00:39.648-08:00The End of the Bull MarketThis is it. The end of the bull market. March 4, 2014. The SP 500 hit a high of $1876 and change today, on a big increase sparked by Russia backing off of the Ukraine. Of course, it wasn't really a back off. They simply did what they had already planned on doing.<br />
<br />
Why here, why now? I don't have a lot of fancy charts, although if I tried I could come up with something to validate my position. But why bother? I could just as easily find another chart that would say the opposite. <br />
<br />
The market has been frothy for a while. The momentum names are flying. I saw Netflix ($NFLX) hit $450 today. Chipotle is over $570. Tesla who I have a small short position in, is 4 times an analyst's estimate. I have been bullish because I didn't see an alternative place to invest. But now I see commodities are racing. I am long Corn and Coffee through options, but there are plenty others. <br />
<br />
I am not predicting a crash. With interest rates this low, I doubt the market falls a lot. But I don't see it going up for a long while, a position I now share with Henry Blodgett. <br />
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I am still long in my long term accounts, although I may rethink that position. <br />
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I am not making any recommendations on any specific investment. Enjoy the ride.Linxhttp://www.blogger.com/profile/06231462343123561311noreply@blogger.com0tag:blogger.com,1999:blog-4031953753492567275.post-24116798717397340912014-02-24T15:10:00.002-08:002014-02-24T15:10:59.861-08:00Understandable Analyst Buy and Sell Calls<div class="MsoNormal">
I saw a tweet today from @<span lang="EN" style="color: #292f33; font-family: Arial; font-size: 10.5pt; mso-ansi-language: EN;"><a href="https://twitter.com/Stephanie_Link">Stephanie_Link</a></span> that
Standpoint had downgraded Amazon $AMZN from Sell to Strong Sell. Now, really what does that mean? All you can
do is sell a stock, you can’t strongly sell it.
It’s meaningless. </div>
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It reminds of the scene in A Few Good Men where the Demi
Moore character “strenuously” objects to a statement from a witness, and gets
ridiculed for it. As if strenuously
objecting is more important than any other kind of objection. </div>
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So, I came up with my own sell ratings that are easy to
understand, and actionable. </div>
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<b><u>Buys<o:p></o:p></u></b></div>
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Buy 1 – Buy this stock, when it looks like it’s a good
price, maybe on a pullback. </div>
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Buy 2 – Buy it now.</div>
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Buy 3 – Buy it on margin, now</div>
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Buy 4 – Mortgage your house to buy it</div>
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<b><u>Sells<o:p></o:p></u></b></div>
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Sell 1 – Sell the stock on an up day</div>
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Sell 2 – Sell all that you have, now</div>
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Sell 3 – Sell all that you have, and short more, up to your
limit</div>
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Sell 4 – Mortgage your house to short the stock, and buy out
of the money puts </div>
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See, understandable, actionable recommendations. Now, you won’t see me actually make any of these
calls, because I am not an analyst. And
no one in their right mind should take action on Sell or Buy 4. </div>
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And I don’t own any Amazon, and nothing here is a
recommendation to buy or sell stock. </div>
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Linxhttp://www.blogger.com/profile/06231462343123561311noreply@blogger.com0