Posts Tagged ‘Costanza Paradox’

On Stocks and the Costanza Paradox

Joshua sheds light on market absurdity using the Costanza analogy. – Ilene 

On Stocks and the Costanza Paradox

Courtesy of Joshua M Brown, The Reformed Broker  



George Costanza: "My life is the opposite of everything I want it to be. Every instinct I have, in every part of life, be it something to wear, something to eat … It’s all been wrong."

In a classic episode of Seinfeld called The Opposite, perma-loser George Costanza comes to the realization that if he would just act completely contrarily to his own instincts, things would begin to go his way.

Jerry Seinfeld: "If every instinct you have is wrong, then the opposite would have to be right."

One cannot help but see the parallels between George’s epiphany and the paradox of the high beta market rally that has left even the most experienced players in utter disbelief.

Think about how rewarding it’s been for traders who have completely violated any sense of prudence or market savvy:

*AIG ($AIG) barely avoids liquidation – buy it and enjoy percentage gains in the thousands!

*Unemployment remains at around 10%, inital jobless claims are still climbing – so buy some specialty or even luxury retailers!

*Mortgage rates are inching higher and housing has not truly bottomed – so snag some Hovnanian ($HOV), some lumber names and why not a little Home Depot ($HD).

*Oil breaks out above $85 – and the airlines go wild!

*Congress passes a de facto takeover of Healthcare – OMG!  Healthcare stocks are rallying on the news of their newly subjugated status!

*Commercial RE is a time bomb – REITs!  I gotta have more REITs!

We can document dozens of these types of paradoxical setups.  Investors are taking almost any opportunity to do the opposite of what they’d normally be expected to do.  If everyone in the market is a contrarian, is the true contrarian the non-contrarian?  Heh – "Whaaaaat is the deeeeaal with contrarians?"  Thanks, Jerry.

If Georgie was running a hedge fund right now and abiding by his counterintuitive life strategy, he’d be absolutely killing it.

George Costanza: "I tell you this, something is happening in my life. it’s all happening because I’m completely ignoring every urge towards common sense and good judgment I’ve ever had. This is no longer just some crazy notion. Jerry, this is my religion!"

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Capital Allocation: Evidence, Analytical Methods & Assessment Guidance - Mauboussin

By VW Staff. Originally published at ValueWalk.

Capital Allocation: Evidence, Analytical Methods & Assessment Guidance by Michael Mauboussin

Michael Mauboussin is the author of The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing (Harvard Business Review Press, 2012), Think Twice: Harnessing the P...

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Zero Hedge

China's Capital Outflows Are Soaring Again: Goldman Finds Sept. FX Flows Surged To $78 Billion

Courtesy of ZeroHedge. View original post here.

If one looks at China's reserve data released by the PBOC, one would be left with the impression that China's capital outflows - the bogeyman that sent global risk assets tumbling in late 2015 and early 2016 -  have moderated notably in 2016 after the surge during the summer of 2015 and in early 2016. However, as we explained previously, the PBOC has a habit of hiding what is truly happening below the surface, using legitimate mechanisms such as forward contracts,as well as some less legitimate ones. So to get an accurate perspective of what is happe...

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Kimble Charting Solutions

Bio-Tech; In more trouble if this fails, says Joe Friday

Courtesy of Chris Kimble.

At one point in time, actually for years, Bio-Tech (IBB) was a market leader. From the 2009 lows to 2015, IBB out gained the S&P by more than 250%. Since the summer of 2015, Bio Tech has remained a leader, a “downside leader!” IBB has lagged the S&P by over 35% in the past 15-months.

Is the downside leadership over for IBB? Below updates the pattern on IBB


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Market News

News You Can Use From Phil's Stock World


Financial Markets and Economy

Oil is tumbling after Russia’s largest oil company said the country can 'significantly' pump up production (Business Insider)

Prices for West Texas Intermediate crude, the US benchmark, are down by 2.3% at $50.65 per barrel, while prices for Brent crude, the international benchmark, are down by 2.5% at $51.38 per barrel as of 10:56 a.m. ET.

Dudley Sees Fed Rate Rise by Year-End If Data on Track (Bloomberg)

Federal Reserve Bank of New York President William Dudley repeated that he expects an interest-rate increase...

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Phil's Favorites

EU Sanction Madness and Merkel's Blatant Hypocrisy

Courtesy of Mish.

A battle over sanctions is brewing in the EU this evening.

The EU lead by European Council president Donald Tusk seeks more sanctions on Russia over Aleppo.

However,  Italian prime minister Matteo Renzi Pushes Back on Sanctions because Italy was stung more by sanctions than other nations.

The European Union said it was too soon to consider imposing sanctions on Russia for the bombing of rebel-held areas of Syria, while maintaining the threat of action if Vladimir Putin doesn’t back down.

After the first of two days of talks in Brussels, EU leaders said “all available options” remain on the table, without mentioning sanc...

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Members' Corner

The Orlando Massacre Part 3

Courtesy of Nattering Naybob.

A continuation of a Naybob of IT's Natterings from Part 1 and Part 2...

While many Christian churches expressed grief and offered free funeral services for the victims of the Orlando shooting, the fundamentalist Westboro Baptist Church held an anti-gay protest during the funeral of the victims.

But the Westboro Baptist Church's protest rally was blocked by about 200 people who formed a human barricade on the main street in downtown Orlando, ...

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Insider Scoop

Exclusive: Ecoark Looks To Tackle The $160 Billion Food Waste Problem

Courtesy of Benzinga.

The fresh food supply chain undergoes a ton of waste. The loss in fresh food nearly costs producers and retailers $160 billion in the US alone. Despite this huge sum, the market to cut down this waste has largely gone unaddressed by corporate America.

Ecoark Holdings Inc (OTC: EARK) is taking steps to address this market and it could ultimately be a win for several parties: the grower, the retailer and the c... more from Insider

Chart School

Neutral Day for Indices

Courtesy of Declan.

Markets were unable to build on premarket gains, but did manage to finish the day where they started.

The S&P closed with a narrow range doji, a doji which finished below Friday's bearish black candlestick. The pattern of the last five days is playing more in bears favour, but with support around 2,115 holding there is still a chance a broad swing low is in play; confirmation comes on a move above 2,160. Trading volume sided with bulls on a confirmed accumulation day.

The Nasdaq was able to push above Fri...

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Swing trading portfolio - week of October 17th, 2016

Reminder: OpTrader is available to chat with Members, comments are found below each post.


This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  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 ...

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Mapping The Market

The Most Overlooked Trait of Investing Success

Via Jean-Luc

Good article on investing success:

The Most Overlooked Trait of Investing Success

By Morgan Housel

There is a reason no Berkshire Hathaway investor chides Buffett when the company has a bad quarter. It’s because Buffett has so thoroughly convinced his investors that it’s pointless to try to navigate around 90-day intervals. He’s done that by writing incredibly lucid letters to investors for the last 50 years, communicating in easy-to-understand language at annual meetings, and speaking on TV in ways that someone with no investing experience can grasp.

Yes, Buffett runs an amazing investment company. But he also runs an amazing investor company. One of the most underappreciated part of his s...

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Digital Currencies

Gold, Silver and Blockchain - Fintech Solutions To Negative Rates, Bail-ins, Currency Debasement and Cashless

Courtesy of ZeroHedge. View original post here.

By Jan Skoyles

I was so pleased yesterday by the announcement that I have joined the Research team at GoldCore as it meant that I could finally start talking about it and was back in a role that lets me indulge in my passion by researching and geeking out on all things gold, silver and money.


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Epizyme - A Waiting Game

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer.  One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."

Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.  

Genetic components are the DNA sequences that are 'inherited.'  Some of these genes are stronger than others in their expression (e.g., eye color).  Yet, some genes turn on or off due to external factors (environmental), and it is und...

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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.

To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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PSW is more than just stock talk!


We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more! features the most important and most interesting news items from around the web, all day, every day!

News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...

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