7 ‘Money’ Songs to Listen to While Trading

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Speculating the markets can be a painstaking and slow process, and yet sometimes opportunities and trades can be fast and furious. Here are seven of my favorite songs to listen to while trading throughout the day. Continue reading

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Ten Killer Financial Bloggers

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As you know, web logging, known more popularly as ‘blogging’, has grown tremendously.  Much like social networks, such as Facebook and MySpace, bloggers develop web pages to share their thoughts and opinions, doings and activities and, of course, photos.   Better than social networks, in my view, blogs are a more convenient way to stay connected with those that share the same interests. Continue reading

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Reversal in Market Uptrend?

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Folks:

I share with you recent emails to colleagues and clients. The audience is more professional and thus the communications somewhat different than my usual posts. But I hope this provides a sketch of my current outlook. Continue reading

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Posted in Mission, Orientation, S&P 500, Situation, Technical Analysis, Valuation | 1 Comment

Hard Disk Drives & the Black Swan

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It’s been three weeks since I last posted.  My hard disk drive on my laptop failed and it took dozens of hours to get all my data back.  With the stroke of luck, I was able to retrieve everything.

I’m fairly diligent in backing up my files and photos, particularly of my 14-month old son, Viktor.  I also have 18 years of my work – research papers, communiqués, spreadsheets and financial models, all of which are personally very valuable.

One night, my wife and I decided to consolidate all the photos and files between our two laptops.  In the process of reorganizing the file folders, I cleared my external hard disk back-up drive so that we didn’t have redundant files and copies upon copies of photos.  The 12 hours I exposed myself to no back-ups my laptop hard disk drive failed.  Years of diligently backing up my files, the one day I risk reformatting the external hard disk drive and boom, my internal hard disk fails.  Wow!  What are the odds?

The situation reminds of the Black Swan.  Former Wall Street stock options trader, Nassim Taleb, wrote his now famous book, The Black Swan, highlighting market risks that most financial models fail to incorporate.  In the business, they’re known as fail-tail risk, the event of an event.  Taleb correctly pointed out that risk is far greater and more frequent than current financial and statistical models estimate, and that investors fail to assess this catastrophic risk in valuing assets. I wrote about flawed financial modeling in my post, Mea Copula. Continue reading

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Chrysler Files for Bankruptcy

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Chrysler filed for bankruptcy, the first of possibly three. The economic consequences could prolong the recession. Consumers, aware of Chrysler’s bankruptcy, might be reluctant to purchase a Chrysler or Dodge, despite all the Federal government warrantee guarantees. Thus, demand could fall further (Chrysler sales were the worst recently, down 48% among all reported auto makers). Auto suppliers might curtail their business with Chrysler, hampering parts supply or perhaps raise costs. Advertising budgets might be curtailed, adversely affecting advertising agency business and TV and radio ad slots. Many dealerships might be forced to close, leaving empty commercial real estate lots. And, of course, more auto workers, parts makers and dealership personnel could see their jobs lost. But ALL stakeholders are at fault. Continue reading

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Cashed Out

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Early this morning I sold all stock positions and moved to cash. Continue reading

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Beating the Stock Market

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In early March, when the S&P 500 was nearing 700, I thought stocks were attractive enough to finally (re)invest, moving portfolios from a 100% cash position to roughly half stock, half cash.  Portfolios are up significantly, God bless.  For the first quarter 2009, the stock portfolios increased around 20% (as of this post, invested stocks are up roughly 34% year-to-date); estimated total portfolio returns are up around 11% (as of this post, total portfolio returns are up roughly 18% year-to-date).  This compares to the S&P 500 being down 11.3% for the first quarter (as of this post, the S&P 500 is down 3. 8% year-to-date).  As an investment manager, I am most humbly fortunate. Continue reading

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Merry Earnings Season

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Every three months (some off calendar) we play this little game of show and tell.  Sell-side analysts have their targets up; the Street hopes the companies get the shot in the black.  Sometimes they miss the paint, and investors quickly exit positions, sending the stock down.  Other times it’s a bull’s eye, or a blow-out, as it’s known in the industry.  Suddenly, everyone is racing to grab whatever shares they can, sending the price rocketing.  And other times, said company hits the black, ‘to the penny’, and shareholders are comforted for at least the next three months. Continue reading

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Bank Stocks Riskier, but I’m Still In.

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With the recent run-up in financial stocks (God bless), they have also grown increasingly risky.  Think for a moment.  Stocks, as represented by the S&P 500, have risen 25.3% since its intraday low on 6 March.  Through the same period, bank stocks, as measured by the S&P Banking Index (BIX) has risen 71.8%.  Question: just how much more upside do the banks have after their stellar rise over the past month?  That question alone will give pause to some, thinking that there will inevitably be a pullback in the very near future. Continue reading

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Bought Financials…Again

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Yesterday morning, I bought back into financial stocks. Continue reading

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