by ilene - April 7th, 2010 4:52 pm
Courtesy of The Pragmatic Capitalist
As always a must read here from Absolute Return Partners:
The Absolute Return Letter 0410_1_ –
by ilene - March 28th, 2010 3:58 pm
Tim presents a good argument in favor of not restricting short-selling in an effort to prop up overvalued markets. - Ilene
Courtesy of Tim at The Psy-Fi Blog
Short Selling Scapegoats
Whenever there’s some kind of major market crash and people start looking for handy scapegoats the usual line-up of suspects will include a preponderance of short-sellers, accused of unpatriotically selling stocks they don’t own in order to make windfall profits. It’s as though making a profit when everyone else is losing money suddenly becomes wrong. When times are tough it seems everyone’s a bleeding heart socialist.
Instead of banning short-selling regulators ought to be focusing on what measures they could take to make it more popular. If you want markets to be roughly efficient and not to fly off on some behaviourally induced flight of fancy then you need intelligent investors to be able to short-sell over-valued stocks. Waiting until everything goes wrong and then artificially distorting the markets in order to apply a tiny band-aid to a market holed below the waterline by a bloody great iceberg of behavioural bias is to invert cause and effect. Short-selling doesn’t cause market crashes, people do.
Shorting’s Scary
Shorting a stock is roughly the opposite to buying it. Technically you’re selling a security you don’t own and then waiting for it to fall so you can buy it back at a lower price, pocketing the difference. Although there are different ways of shorting there are ultimately only a couple of basic variations – covered shorting where you either own or, more likely, borrow the stock for a fee or naked shorting where you actually don’t have any of the stock you’re selling.
Shorting shares is not, generally, a widespread activity amongst investors. There are multiple reasons for this. Many institutional investors aren’t allowed to short stocks due to their remit, most individual investors don’t short due to behavioural issues and fears of unlimited losses. These individual concerns are linked – as we saw in discussing behavioural portfolios investors don’t like their losses from their upside potential layer eating into their downside protection layer, but as losses from shorting are potentially unlimited, this is a real risk for short-side investors.
Unlimited Liability
When we buy stocks the maximum we risk is the capital we put down up front, but when…
by ilene - March 25th, 2010 12:34 pm
Courtesy of Gus Lubin at Clusterstock/Business Insider
Citi’s Willem Buiter is calling the Chinese crash… in 2013.
The scary reason why it will take another three years for China to trainwreck is that the real bubble hasn’t even started yet.
After ten years of spectacular growth, China is still within the bounds of its remarkable fundamentals says Mr Buiter.
The world’s largest consumer class, blossoming in an orderly system, should be kicking the world’s ass. But over the next two years, Buiter warns, expect asset price movements to decouple entirely from fundamentals.
Then — unless Beijing outperforms every boom state in history — the bubble will…
Although we still seem to be in the early stages of an asset boom, bubble and bust sequence in the property and land markets, and perhaps just in the recovery stage for the stock market, it is nevertheless likely in our view that China will experience such a sequence, starting in the residential real estate market. From there it is likely to spread to the commercial real estate sector and to the stock market also. Predicting the timing of the bubble phase (when asset price movements decouple completely from fundamentals) and of the bursting of the bubble (when the fundamentals exact their revenge) is not a science – probably not even an art, but more something akin to witchcraft. Our best guess is that a significant bubble may still be one or two years away, and the bust probably at least three years.
Don’t miss Why Shanghai Real Estate Is The Most Obvious Bubble Ever >
See Also:
GMO’s Edward Chancellor: Watch Out For China’s 10 Big Red Flags
Here’s Why Andy Xie’s Latest Claim About Chinese Real Estate Is A Bombshell
by Chart School - March 17th, 2010 4:53 pm
Courtesy of JESSE’S CAFÉ AMÉRICAIN
The SP is trying to break out of the trend and hold it’s gains. I would not get in front of this, unless you wish to guarantee an opportunity for an additional short squeeze. Remember, the wiseguys can peek into your collective hand at will, and read your strategy within milliseconds of your executing it. That is why playing short term trends is becoming increasingly difficult for the individual speculator.
It is useful to watch the Nasdaq 100 at key support and resistance levels, as well as the broader indices. The SP futures are generally the ‘push’ where the flash and sizzle of bull markets occur of late. Buying the futures drags much of the market behind it. But this can only last for so long unless additional ‘real’ buying steps in.
Formidable retracement. Now the rally must show its mettle and either confirm an economic recovery or the start of a new bubble led by financial assets, or not.
Little pricing in of fear, but the markets remain thin and a bit uneasy.
The Dollar is hanging on to support.
by ilene - March 11th, 2010 1:59 pm
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Courtesy of Gus Lubin at Clusterstock/Business Insider
QB Partners fits the description of hedge funds that Rick Bookstaber accused of pumping the gold bubble and — even worse — of fueling the bubble with publicity.
The New York fund leapt to the defense of gold by sending an email to Business Insider with a message for Bookstaber.
Attached was the point-by-point rebuttal they gave to Nouriel Roubini in December when he had the nerve to diss gold.
See Also:
Rick Bookstaber: Hedge Funds Are Pumping The Gold Bubble And Luring Investors Off A Cliff
See also this chart (below) via Jesse’s Americain Cafe, and the comment by bidwhacker at Clusterstock
The economic cycle is definitely not the right framework for determining when to be in gold. Gold bull and bear markets can extend across economic upturns and downturns.
Absent an "economic meltdown" as you call it, the best tool for determining when the gold price will advance (at least since Nixon broke the last vestiges of the gold standard) is real interest rates:
Gold bull markets happen in an environment of negative real interest rates…This is the closest thing to an one-variable indicator for the gold market. But as you point out, it only good over longer periods of time and not a perfect correlation. The way I like to look at it is, when you have negative real interest rates, the odds are strongly with you that gold prices will go up.
by ilene - March 9th, 2010 4:13 pm
Courtesy of Gus Lubin at Clusterstock/Business Insider
The SEC’s Rick Bookstaber can hardly watch as sheep-like investors chase the gold bubble straight off a cliff.
Although his employer doesn’t give market advice, the SEC’s senior policy adviser shows his personal frustration in a post on Roubini Global Economics. First, he drops this great line about how people don’t even pretend that gold isn’t a bubble:
Even if a guy is just after sex, he at least has the decency to act like there is some substance behind his interest.
Second, Bookstaber thinks hedge funds managers like John Paulson have a pump and dump scheme on gold.
RGE:
Given that “hedge fund” and “highly secretive” are usually said in the same breath, don’t you get suspicious when so many of the top managers are so vocally out there about their gold investments? And when their positions are structured in a way that make them open to view? Paulson and Soros have huge positions in gold ETFs. We know that, because if you buy ETFs, they show up in your 13-F filing. Granted, with an equity investment you can’t help putting that information out into the market, but with an asset there are plenty of ways to take the position without signaling it.
That they are taking a highly visible route to their positions suggests the game that is being played is one of leading the herd. The 13-F reports positions with a big lag, so no one will notice if they quietly slip out the side door while the party is still hopping. And how about when the view is backed up by none other than Goldman Sachs? Will they let everyone know when they think it has gone too far before they get out. Or before they go short? Maybe they already have.
by ilene - March 1st, 2010 10:13 pm
Karl argues that the "animal idiocy" we’ve seen over the last year is proof that we’ve learned absolutely nothing. Hard to take the other side of that one. – Ilene
Courtesy of Karl Denninger at The Market Ticker
Yes, I said CRASH, and I meant it.
Why?
SINGAPORE/CAIRO, March 1 (Reuters) – Copper is likely to
climb when trading starts on Monday, lifted by uncertainty over
supply after the world’s top copper producer Chile was pounded
by a massive earthquake, analysts said over the weekend.
The front-month contract opened up more than 8%.
This, despite the fact that the earthquake was hundreds of miles away from the mines in Chile and there was zero damage to them. Some were offline for a few hours due to power failures, but none suffered any physical or structural damage, nor did their export points and the transportation network between the two.
So why did price spike more than 8% even though all this was known by the market before it re-opened for trading?
No part of the markets are trading on fundamental values, nor on forward business expectations. They are instead trading as "hot money" repositories where speculators rotate in and out of various instruments literally on a minute-by-minute basis.
This is how crashes happen.
When there is no fundamental value underlying a market there is no floor on price. Price then becomes one thing and one thing only – the number at which you can find another sucker to take your position from you.
This is how tulip bulbs went nuts in Holland, it is how houses went nuts in California in 2005, it is how tech stocks went nuts in 1999 and it is how oil went nuts in 2008.
But now literally everything has gone this way.
Take European national debt. We now know that Italy, for example, was cooking their books as early as 1995. This means that bond buyers overpaid for their bonds and took less coupon than they should have. This should have resulted in an immediate destruction in the value of those bonds when discovered, but it did not.
Why?
Because there was still a bigger fool.
Tech stocks were the same thing in 1999. These "companies" claimed the…
by ilene - January 20th, 2010 12:33 pm
Courtesy of Joe Weisenthal at Clusterstock
It’s not just perma-skeptics like Jim Chanos warning about a massive real estate bubble in China.
The latest is Fred Hu, the Goldman Sachs Inc. Chinese Chairman
ChinaPost reports (via Alphaville) that Hu told a conference in Taipei that Singapore, Hong Kong, and Mainland China all need to be on the lookout.
Bear in mind this isn’t just talk from the bank. Earlier this month it emerged that Goldman has been dumping real estate holdings in Shanghai.
See Also:
by ilene - January 13th, 2010 12:46 pm
Courtesy of Vince Veneziani and Joe Weisenthal at The Business Insider/Clusterstock
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The whole world felt the reverberations of China imposing leverage limits on its banks. Regulators there are clearly freaked out by the heat of its economy.
Meanwhile, Jim Chanos and Thomas Friedman are going back and forth about whether China is a bubble, and whether there’s money to be made shorting it.
So we thought we’d adjudicate the question.
Our answer is yes, China’s real estate is the most obvious bubble ever. More obvious than the Dubai bubble in fact.
by ilene - December 18th, 2009 1:53 pm
By Gus Lubin at The Business Insider
When he coined the term Chimerica in 2006, Niall Ferguson was refering to a mutually beneficial relationship: cheap money from China and wild spending from America.
But recently he has called for the end of Chimerica — seeing as America’s economy sucks and China looks a lot like bubble.
Published this week, his latest paper shows how insane fiscal policy in China created the monster.
January 28th, 2012 12:08 pm
Reminder: David is available to chat with Members, comments are found below each post.
Click here for the full report.
...January 3rd, 2012 8:20 am
Courtesy of MarketMontage. View original post here.
Ray Dalio has created a machine at hedge fund Bridgewater – not only have assets surpassed $120B, the fund continues to churn out some fantastic results for investors. Through end of August last year, the fund was up 25% YTD (and that was after an awful August for markets, and before the stampede upward of October); this after a 44% gain in 2010. Longer term, ...
December 28th, 2011 5:24 pm
Courtesy of Blain.
The US Dollar was up and the market was down on minimal volume. And yup, that's about the extent of today's action. The biggest gainer on my watch list of 125 securities was Bankrate (RATE) with a paltry +0.8% return. Updated market charts below. See you tomorrow!
...November 9th, 2011 5:48 pm
Courtesy of John Nyaradi.
Major US Markets including (NYSEARCA:DIA), (NYSEARCA:SPY), (NASDAQ:QQQ), and (NYSEARCA:IWM) dropped over 3% each on Italian bond fears and an increased worry that Europe will not be able to bail out its 4th largest economy. Furthermore, the iShares MCSI Italy Fund (NYSEARCA:EWI) wiped out over 9% today, further illustrating the dire situation in Italy and the European Union: ...November 4th, 2011 5:13 pm
Courtesy of John Nyaradi.
Markets dropped slightly lower today on G-20 news, mixed economic reports, and Grecian woes.After the confusing market action on Wall Street this week, it seems that markets cannot make up their minds after last week’s euphoric rally and Euro-zone compromise. It appeared that markets were on a meteoric rise that could have possibly carried us into Christmas, however Prime Minister Papandreou’s referendum call for Greece and MF Global’s bankruptcy soured the mood.
The SPDR Gold Trust (NYSEArca:GLD) dropped half a percent today; the fall likely represents the current troubles of MF Global Holdings (NYSEArca:MF), which filed for bankruptcy earlier this week. MF Global has ...
August 29th, 2011 10:52 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
The second economic disappointment of the day comes from the Dallas Fed, which dropped from -2.0 to -11.4 on expectations of -9.0- this was the 4th consecutive negative print month. The report was, in a word, horrible, with just 2 of the 15 constituent indices posting an increase, and the bulk solidly in the red, led by Unfilled and New Orders which dropped 16.8 and 11.2, respectively: not good for economic growth. On the employment side there was nothing good either, with both employment and hours worked declining by -...
May 25th, 2011 4:59 pm
Courtesy of Benzinga
Bloomberg reports that Diana Containerships (NASDAQ: DCIX) files to offer stock up to $172.5M. Diana Containerships says that Diana shipping will also buy $20M of stock.
Visit Benzinga >
...March 12th, 2011 12:00 am
Top 5 RisersStockRatingAnalysisVLOSTRONGBUYAn increasingly positive growth rate of past earnings, along with improving expectations for long term growth, make Valero a good prospect for high returns.KROSTRONGBUYKronos Worldwide has been gaining recognition from analysts as a good canditate for achieving higher than expected earnings along with higher overall projected valuation.SFIBUYiStar is one of the top candidates projected to achieve both higher than previously projected earnings in the short run and a higher earnings growth rate in the long run.AMATSTRONGBUYApplied Materials has been...March 10th, 2011 4:33 pm
Today’s tickers: S, FTR, JTX & SBUX
more from Caitlin
March 6th, 2011 11:25 pm
This post is for live trades and daily comments. Please click on "comments" below to follow our live discussion. All of our current virtual trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).
We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options.
Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.
To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here
Optrader
Swing trading virtual portfolio
One trade virtual portfolio
...March 6th, 2011 8:22 am
NEW: Elliott and Ilene are available to chat with Members regarding topics presented in SWW, comments are found below each post.
Here's the newest Stock World Weekly: Illusion Based on a Fantasy
Comments welcome... share your thoughts.
Stock World Weekly archives here >
...March 1st, 2011 9:42 am
February is now past, and the Biotech Porfolio is loaded with winners and a miss (PLX). MRK is down a bit, but I expect that trade to recover, and one could be more agressive and double down on it, or play another round at the Jan13 $30 options for roughly the same price. Below is the summary, and note the grey boxes are ones that did not fill. I am still a fan of BMRN, and like DEPO as well. Now let's look at a few others.
Table 1. PSW Biotech Plays Since January 2011
 
Our newest play is Momenta Pharmaceuticals (MNTA), who is pursuing a three-part business model which includes complex generic equivalents in partnership with the Sandoz division of Novartis, proprietary compounds, and follow-on- biologics (FOB). It seems that this company is tied up in competition/litigation wit...
Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
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Note: The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Philstockworld, LLC (PSW) nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither PSW nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance, including the tracking of virtual trades and portfolios for educational purposes, is not necessarily indicative of future results. Neither Phil, Optrader, or anyone related to PSW is a registered financial adviser and they may hold positions in the stocks mentioned, which may change at any time without notice. Do not buy or sell based on anything that is written here, the risk of loss in trading is great.
This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only intended at the moment of their issue as conditions quickly change. The information contained herein does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before investing, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice. |
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