Posts tagged ‘investing’

Oil Glut? Oil Shortage? Or just plain manipulation?

By , 19 July, 2009, 3 Comments

I wish there were some mechanism to thwart the obvious manipulation of oil prices in the US, short of nationalization (which is, in my opinion, unthinkable). But trusting our oil supply to the likes of Exxon Mobil, Saudi Arabia and the cabal at OPEC is akin to trusting organized pirates, which they are.

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Top Fund Manager Goes to Cash: Are the Bears Getting the Upper Hand?

By , 13 July, 2009, No Comment

Dan Sullivan has decided to go 100% cash… and that’s bad news, since Sullivan is not just any adviser.

According to Mark Hurlburt, Sullivan’s newsletter, The Chartist is in first place for stock market timing over the last three decades among those newsletters the Hulbert Financial Digest has tracked over this period. And though his mutual-fund newsletter — The Chartist Mutual Fund Letter — hasn’t been published for all three of those decades, it also is one of the top performers over the years it has existed.

Looks like the bull rally of the last four months is running out of gas.  As a scalper, it means little to me, but I would really like to see the economy improve for the sake of our country.  There have been far to many layoffs and jobs continue to be outsourced to cheaper foreign labor as companies struggle to eek out profits, or minimize loses.

So the bull market has lost a formidable ally.

Paul Krugman’s Comments

By , 12 July, 2009, No Comment

In his blog today, Krugman says:

“Like Brad, I’m not too happy with the policy justifications we’re getting from the administration. It’s perfectly clear that the stimulus was too small; I think they know that too. But they’ve made a political judgment that (a) they can’t push another round through and (b) the thing to do right now is defend the policy they already have.”

I am an avid reader of Krugman, and even though I tend toward Republican leanings, I have found the Republican fiscal policy of late, well, let’s just say it is misguided.  Of course, the drum beatings from the likes of Hannity and Limbaugh (the de-facto leader of the Republican part, God help us) are that Obama is spending the country into oblivion.

And we have spent a lot of money, not much of which has really made its way into the economy yet.  I am not sure who to blame for that, but the general consensus is that the second half of this year this money should trickle into the economy.  Even Nouriel Roubini, who is not known for his cheery prognostications, was more upbeat in his Friday postings that usual.  So the Republican party finds itself in a difficult position here, trying to use the old methods (think: tax cuts) to remedy a situation that is entirely different from other situations where this strategy worked.  And who really benefits from tax cuts?  Ummm…I think you know the answer.

Krugman stated in the early discussions on the Obama stimulus package that he felt the amount of the package was too small to do the job, and he has consistently maintained that position.  Now he laments that the political environment is not conducive to upping the ante on future stimulus packages and we find ourselves mired in a longer recession than we care to endure.

Sometimes economics is just plain at odds with society, and sometimes economics is just plain “in left field with no mitt.”   But on this one, I think I will side with Krugman, he had it right from the start.

I started a new commentary blog, “The Fractal Traders Commentary”

By , 8 July, 2009, No Comment

I am a fairly opinionated fellow and felt like I would like to express my ideas of financial events but felt “The Fractal Trader” should be devoted to matters pertaining to trading and theory.  So, Voila!  You can now here me rant and rave, if you choose to, at The Fractal Traders Commentary.

Hope you enjoy it and laugh some and get mad some.  I will be adding articles periodically.

Fitch Ratings statement from Friday

By , 14 June, 2009, 1 Comment

“Fitch Ratings today made massive downgrades on various vintage ‘05 through ‘08 subprime residential mortgage-backed securities (RMBS), indicating the extent of the fallout related to subprime defaults has yet to subside.

The rating agency slashed hundreds of RMBS ratings further into junk territory”

Then went on to say:

“The projected losses also reflect an assumption that from the first quarter of 2009, home prices will fall an additional 12.5% nationally and 36% in California, with home prices not exhibiting stability until the second half of 2010. To date, national home prices have declined by 27%. Fitch Rating’s revised peak-to-trough expectation is for prices to decline by 36% from the peak price achieved in mid-2006. The additional 9% decline represents a 12.5% decline from today’s levels.”

Fitch explains this:

“The home price declines to date have resulted in negative equity for approximately 50% of the remaining performing borrowers in the 2005-2007 vintages. In addition to continued home price deterioration, unemployment has risen significantly since the third quarter of last year, particularly in California where the unemployment rate has jumped from 7.8% to 11%.”

One of the nice things about scalping emini index futures contracts is the freedom from predicting long term, or any term, for that matter, pricing trends. I simply trade what is on the chart in front of me. I will surely admit that much of what I see leaves me scratching my head.

Did I mention that the stock market, by some indicators, is in positive territory for 2009?

And while I am in a questioning kind of mood, can someone explain to me just how the stock market could be in positive territory for the current year?

I don’t spend much of my time pondering the mysteries of life, such as, “what is the meaning of my existence”, or matters of metaphysical consequence. But the rationale for the recent rise in prices is beyond my little one-watt brain’s ability to compute. I have never seen the economy in such shambles, nor the employment numbers, nor the GDP numbers…..

The Fed has taken extraordinary measures, of questionable theoretical value, to prop up the economy, and the government has spent itself into oblivion.

Did I mention the stock market is up this year?

Maybe I should start contemplating the meaning of life.

Todays Charts and some observations

By , 11 June, 2009, No Comment
ESU9

ESU9

I am sure everyone remembered to roll to the Sept. contract today. The market roller coastered around the chart and various economic entities debated the validity of the economic data the government has released of late.

Over at Financial Armageddon, there is an interesting article from a fellow who claims the nation’s books are grossly understating the current unemployment figures, money supply…just about everything, once you get reading the article. His claim goes something like…”the country would be flat on it’s belly if we weren’t using doctored numbers…”

I’ve never been much of a conspiracy theory kind of guy, so I find his declaration of “all things government” to be a bit hard to swallow. On the other hand, another study showed the government subsequent revisions to economic data were usually negative, that is, the revisions usually put the economy in a less positive position than the initial release. Of course, you could argue coincidence. But I’ve never been too big on consistent coincidences, either.

So I suppose the truth lies somewhere between these extreme views. The government has changed the methodology it uses to measure the countries unemployment and GDP, and by in large, the new formulations tend to understate the seriousness of the current problems.

Sheesh, sometimes the entire business wears me out.

As an aside, I have been wondering what the difference in Bernie Madoff’s Ponzi scheme and the credit default Ponzi scheme AIG has saddled us with. Think about it….AIG did not have the assets to repay, nor was it even close, the entirety of the credit default swaps it issued….kinda of like Madoff, when you think about it. Only we gave AIG billions of dollars to straighten things out, we gonna give Madoff lots of years to straighten things out…in the pokey.

Where in the Hell are we in this ongoing mess?

By , 10 June, 2009, No Comment

I was listening to Dr. Roubini on a PBS clip last night and he believes we have averted the possibility of a depression. Hmmm….I decided that was some good news, I think.

As of late, though, I have felt manipulated by the powers-that-be (and you can decide just who the powers-that-be actually might be) as we have had this tremendous run-up in stock prices while unemployment has continued to march straight upward. Good Grief…the government’s official number is 9.45%, and some economists are squabbling that the calculation is artificially low, and if we used a non-manipulated formula for unemployment, say the one we used in 1982, the number would be much higher. And then there is the foreclosure issue…

The rate of foreclosures has also marched steadily upward, which would indicate that people do not have the money to pay for their homes. Or perhaps, they do not find it financially expedient to pay their homes and are diverting their funds to savings or some other investment vehicle, which I find highly unlikely.

The credit markets are broken, with the government guaranteeing everything from car manufacturer loans to bank accounts, to….well, you name it.

My point is simple: The stock market is disconnected from the economic health of the country. Granted, the VIX has stopped oscillating like a seismograph needle in 8.4 earthquake, but the markets, of late, would have you believing that everything is honky-dory.

I don’t feel honky-dory. No, the footing on the path I am walking feels loose and very sketchy.

With the amount of money we have pumped into the economy, a great deal of the looming disaster has been put off, but has it been put off forever, or have just put it off for another ten years?

In the past, countries that have inflated their M1 and pumped the kind of stimulus money into their economies have had a nasty dust-up with inflation, and that worries me. Where are we headed with inflation? I have this niggling that there is inflation out there waiting…at least it ought to be waiting.

No, none of the current economic data makes sense to me, there are too many asymmetric variables to account for to let me breath deep and comfortably.

Is financial television making us crazy?

By , 9 June, 2009, 1 Comment

By Barry Ritholtz – June 8th, 2009, 9:30AM

Over the past 5 years, I have appeared on various Financial TV shows over a 100 times. But I am also a huge consumer of financial news, in print, on the web, radio, and of course, TV. Being on both sides of the camera gives me a fairly good perspective on what does and doesn’t work on TV. I also have some strong ideas as to what is good and bad TV in terms of providing a social utility, being part of the democratic process, etc.

Indeed, this is a longstanding interest of mine. Over the weekend, I referenced the current Columbia Journalism Review (CJR) issue that focused on the role of the media in the credit crisis, stock market and economic collapse (CJR on CNBC, WSJ & Business Press). This area has long interested me (hence, our media panel at TBP conference). But I was surprised this post generated 100 comments from readers.

One emailer challenged me on CJR’s CNBC piece: “Its easy to complain, but what would you do to “fix” Financial Television?”

Challenge accepted. Here are my general suggestions as to how to “fix” what needs repair on not just CNBC, but all FinTV.

>
How to Fix Financial Television

1. Stop Yelling. Stop interrupting. Stop Talking Over Each Other: This is not Jerry Springer, its serious business. People’s retirement and investments are at stake. Please treat it that way.

2. Bring us People We Don’t Have Access to. What various FinTV channels do really well is when they bring us long, thoughtful interviews with the likes of Warren Buffett, WIlliam Ackman, David Einhorn, and others. People we wouldn’t ordinarily have access to. Example: This morning, CNBC had on James Rickard. More of this please.

3. S – L – O – W D – O – W – N

4. Risk: All traders must appreciate the potential downside of trades. So too, must FinTV. Explain stop losses. Understand Risk/Reward. Recognize there are periods when Buy & Hold is a jumbo loser.

5. Lose the Octobox. Fire whoever came up with the Decabox. ‘Nuff said.

6. Separate the Signal from the Noise. Understand that most of the day-to-day action is simply noise. Look at a long term chart, you can barely see 9187 or 9/11. If those major events get lost in the long term trend, what does the intraday jags, kinks and reversals mean? Very little. Recognize that not every data release, slice of news, or rumor is at all significant. Stop treating them as if they were.

7. Fact Check: An awful lot of things on air get stated with authority and confidence. Much of them are little more than junk or pop myths. Why is it that the more dubious a proposition is, the greater the confidence the speaker seems to muster? Consider fact checking as much of the statements that are made on air as possible, and making frequent corrections.

8. Accountability is important: I am astounded at some of the money losing hacks that are various shows again and again. These are the “articulate incompetants” to use Bennett Goodspeed’’s phrase. Why not keep track of the records of guests — and let the viewers know how their past few calls have been. Are they Perma-bulls or bears? Are their stock picks awful? Are they reliable money makers? If not, let us know. (Of course, the better question is, if not, why even have them on?)

9. Bring Back Louis Rukeyser: Not the man, but rather, his style. Wall $treet Week — Rukeyser hosted it from 1970 to 2005 — was plain-spoken, thoughtful and accessible. Quiet, contemplative, discussions, with intelligent market participants, revealing helpful information. The investing public would appreciate something of that sort — again.

10. Sound FX: What is with all the bizarre sound effects every time a screen changes? Its financial news, not a video game. Kill ‘em.

11. Embed your video (on your own website or YouTube) instead of using WMP. At long last, thank you.

12. Investigative Pieces: David Faber seems to have a monopoly on deep, long thoughtful analyses. Be they on Wal-Mart, the credit crisis, whatever, his long format work is a highlight of CNBC. More of these, please.

13. Most stock picks are losers. That’s normal, but the audience does not realize this. A big part of the challenge is informing the viewer that finding the biog winners is a low probability, high outcome event. As in a baseball, a 350 hitter is a star. Explain this to your audience.

14. Stop the Bull/Bear Debate: This is a vast over-simplification of the market, and often does not serve the audience well. There are nuances and variables that get lost when you reduce everything to black and white.

15. Partisanship: Leave your personal politics at home. Viewers don’t care what most of you think.

16. Respect the Audience: We are adults. Treat us that way.

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