Posts Tagged ‘Andy Kessler’

The Yo-Yo Market and You

WSJ: The Yo-Yo Market and You

Courtesy of Andy Kessler 

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Bull markets, it is said, climb a wall of worry. Smart investors buy in early when worries about profits or inflation or wars scare away the faint of heart. Latecomers then bid up stocks as each worry becomes unfounded, until there is nothing left to worry about. Once there is only good news, the market peaks as there is no one left to buy.Yo-yo

Bear markets, on the other hand, fall into what I like to call the pit of doom. Forget about worries—actual bad stuff happens, until nothing bad is left to happen and the market bottoms as there is no one left to sell.  

From early May through last week, the market dropped 1500 points into the pit, on the backs of gushing BP oil, riots in Europe, a 30% drop in pending home sales and the news that maybe your next door neighbor is a Russian spy. But now we’ve seen 680 Dow points added over seven straight up days before a slight decline yesterday. What the heck is going on?

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Wall Street Meat – Andy Kessler

Wall Street Meat – Andy Kessler

Courtesy of Howard Lindzon 

One of my favorite interviews so far is this one with Andy Kessler who really knows the dark lessons of Wall Street.

‘It is a royal pain in the ass to manage someone else’s money’

I love his style of investing (trends), writing and his experience and candor is second to none for aspiring hedge fund managers and writers. In the interview he also talks about trend investing and his biggest winner.

Lot’s of lessons here:


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WSJ: Galleon and the Trouble With Insider Trading

WSJ: Galleon and the Trouble With Insider Trading

Courtesy of Andy Kessler

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It happened almost every earnings season. Our hedge fund would own a million shares in some company and two weeks before it was to report quarterly earnings, its stock would start dropping. There was no news to explain it. We were in the dark, even though it was my job to know. Inevitably, the company would report a disappointing quarter, missing Wall Street’s earnings expectations by a penny or two. Someone knew. A salesman’s brother-in-law heard a few deals didn’t close. Or maybe an insider was singing.

The recent arrest of Galleon Group hedge fund’s Raj Rajaratnam on insider trading charges puts a spotlight on this game. Is trading on industry knowledge widespread? Absolutely. That’s how many hedge funds and mutual funds get an edge. Is insider trading also widespread? Only the Securities and Exchange Committee’s wire-tappers know for sure.

It’s a short walk from running an information network to being an insider.

Stock markets trade on information. Millions of people generate billions of trades every day. Each trade contains a tiny piece of information built into it. ("I think Apple is killing Nokia" or "I think GM is toast.") Eventually we are proved right or wrong, and we make money or we don’t. In the long run, the market is always right. On any given day, your guess is as good as mine.

As long there have been markets, there have been those who have tried to get an edge. Whoever could get the first news from a battlefield, of an oil discovery, or figure out that a company’s earnings were better than anyone expected could reap almost instant profits. Edward Calahan invented the stock ticker (later improved by Thomas Edison and Alfred Vail) just so J.P. Morgan could sit in midtown and get stock quotes from the New York Stock Exchange faster than anyone else. Everyone else had to wait for the Dow Jones Customers’ Afternoon Letter with closing prices.

Now it has come to the point where firms are spending millions and putting wicked fast computer servers next to exchanges so they can have an edge and, through a system of high-speed or "flash" trading, figure out which way individual stocks or the markets are heading before anyone else.

Can individual


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Dow Jones vs. the Monetary Base Chart

Dow Jones vs. the Monetary Base Chart

Courtesy of Andy Kessler

This chart ran along with The Bernanke Market piece that ran in the Wall Street Journal back in July. I thought it was worth updating. The market seems to be following the Fed’s money creation. I suspect the market will give out well before the Fed stops printing money.

The monetary base data is from this page at the St. Louis Fed. WSBASE is defined as the "Sum of currency in circulation, reserve balances with Federal Reserve Banks, and service-related adjustments to compensate for float."

DJIA vs WSBASE Sept 25 2009 YTD

 


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Forbes: Lehman and Meritocracy

Forbes: Lehman and Meritocracy

Courtesy of Andy Kessler, posted at Andy’s blog & Forbes

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Part of the charm of Wall Street, and what scares most reasonable people away, is that it is as close to a meritocracy as exists on this earth. It’s dog eat dog. It’s sink or swim. You do a trade and it makes money, then you’re a hero (for a moment anyway) and deserve a bonus. You bring in a deal, you get paid. You lasso more clients’ assets under your firm’s roof, you’re a hitter. I once discovered some good news on the stocks I followed before the rest of the Street, and mentioned it to the sales force at a morning meeting and moved markets in New York, Tokyo and London. I had the head of global equities pat my head on the elevator ride up the next morning. Pat my head! I was told he never does that.

meritocracyThe flip side, of course, is what makes Wall Street so dangerous. You lose money for the firm and you’re a heel. Do it again and you don’t get paid that year. Do it a third time and you’re out of a job. Just like that. Gone. I’ve seen it happen to friends and acquaintances at just about every firm up and down Wall Street. There is no tenure on Wall Street, no job security, no long-term guarantees. Ten- and 20-year careers end in a flash. Happens all the time, and everybody who works in the business knows this.

That’s one reason why everyone is paid so well. Think of it as combat pay. But the other reason compensation is many, many multiples of the average wage in this country is that trading stocks, doing IPOs, merging companies, managing money is a very lucrative business. Not everyone can do it. It looks easy, football-field-sized trading rooms jammed with adrenalin-rush maniacs sitting in front of huge LCD screens. It might as well be a call center in Mumbai. But it’s hard. Really nasty hard. Wall Street hires in that 99 percentile zone. And then they make your life miserable hoping you’ll quit before they break you. Or hoping they break you before you lose money for the firm. It’s not WalMart or General Motors or even Pfizer or Intel. It’s trial by fire.

You


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WSJ: Why AT&T Killed Google Voice

WSJ: Why AT&T Killed Google Voice

Courtesy of  Andy Kessler

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Earlier this month, Apple rejected an application for the iPhone called Google Voice. The uproar set off a chain of events—Google’s CEO Eric Schmidt resigning from Apple’s board, and the Federal Communications Commission (FCC) investigating wireless open access and handset exclusivity—that may finally end the 135-year-old Alexander Graham Bell era. It’s about time.

Google_voice_logo With Google Voice, you have one Google phone number that callers use to reach you, and you pick up whichever phone—office, home or cellular—rings. You can screen calls, listen in before answering, record calls, read transcripts of your voicemails, and do free conference calls. Domestic calls and texting are free, and international calls to Europe are two cents a minute. In other words, a unified voice system, something a real phone company should have offered years ago.

Att-3g-iphone  Apple has an exclusive deal with AT&T in the U.S., stirring up rumors that AT&T was the one behind Apple rejecting Google Voice. How could AT&T not object? AT&T clings to the old business of charging for voice calls in minutes. It takes not much more than 10 kilobits per second of data to handle voice. In a world of megabit per-second connections, that’s nothing—hence Google’s proposal to offer voice calls for no cost and heap on features galore.

What this episode really uncovers is that AT&T is dying. AT&T is dragging down the rest of us by overcharging us for voice calls and stifling innovation in a mobile data market critical to the U.S. economy.

For the latest quarter, AT&T reported local voice revenue down 12%, long distance down 15%. With customers unplugging home phones and using flat-rate Internet services for long-distance calls (again, voice is just data), AT&T’s wireline operating income is down 36%. Even in the wireless segment, which grew 10% overall, per-customer voice revenue is down 7%.

Wireless data service is AT&T’s only bright spot, up a whopping 26% per customer. How so? As any parent of teenagers knows, text messages are 20 cents each, or $5,000 per megabyte. After the first month and a $320 bill, we all pony up $10 a month for unlimited texting plans. Same for Internet access. With my iPhone, I pay $30 a month for unlimited data service (actually, one gigabyte per month). Is it worth that? The à la carte price for…
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WSJ: The Bernanke Market

Andy Kessler may have the answer to why the market keeps going up, even in the face of enduring economic pain (if you look beyond the ever rising indexes). 

WSJ: The Bernanke Market

Courtesy of Andy Kessler

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http://online.wsj.com/article/SB124762005061042587.html

I remember once buying the stock of a small company and I couldn’t believe my luck. Every time my fund bought more shares the stock would go up. So we bought even more and the stock kept climbing. When we finally built our full position and stopped buying the stock started dropping, ending up at a price below where we started buying it. We were the market.

Just about every policy move to right the U.S. economy after the subprime sinking of the banking system has been a bust. We saved Bear Stearns. We let Lehman Brothers go. We forced Merrill Lynch, Wachovia and Washington Mutual into the hands of others. We took control of Fannie and Freddie and AIG and even own a few car companies, pumping them with high-test transfusions. None of this really helped.

[Commentary] the dow tracks the money supply

We have a zero interest-rate policy. We guaranteed bank debt. We set up the Troubled Asset Relief Program (TARP) to buy toxic mortgage assets off bank balance sheets. But when banks refused to sell at fire sale prices, we just gave them the money instead. Dumb move. So we set up the Public-Private Investment Program to get private investors to buy these same toxic assets with government leverage, and still there are few sellers. Meanwhile, the $1 trillion federal deficit is crowding out private investment and the porky $787 billion stimulus hasn’t translated into growth.

At the end of the day, only one thing has worked — flooding the market with dollars. By buying U.S. Treasuries and mortgages to increase the monetary base by $1 trillion, Fed Chairman Ben Bernanke didn’t put money directly into the stock market but he didn’t have to. With nowhere else to go, except maybe commodities, inflows into the stock market have been on a tear. Stock and bond funds saw net inflows of close to $150 billion since January. The dollars he cranked out didn’t go into the hard economy, but instead into tradable assets. In other words, Ben Bernanke has been the market.

The good news is that Mr. Bernanke got the major banks, except for Citigroup,


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WSJ: Was It A Sucker’s Rally?

Here’s an excellent summary of the reasons for the latest rally in equities, which are the same as the reasons why Andy believes it will ulimately fail.  – Ilene

WSJ: Was It A Sucker’s Rally?

Courtesy of Andy Kessler

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The Dow Jones Industrial Average has bounced an astounding 30% from its March 9 low of 6547. Is this the dawn of a new era? Are we off to the races again? 

Only a fool predicts the stock market, so here I go.

I’m not so sure. Only a fool predicts the stock market, so here I go. This sure smells to me like a sucker’s rally. That’s because there aren’t sustainable, fundamental reasons for the market’s continued rise. Here are three explanations for the short-term upswing:

1) Armageddon is off the table. It has been clear for some time that the funds available from the federal government’s Troubled Asset Relief Program (TARP) were not going to be enough to shore up bank balance sheets laced with toxic assets.

On Feb. 10, Treasury Secretary Timothy Geithner rolled out another, much hyped bank rescue plan. It was judged incomplete — and the market sold off 382 points in disgust.

Citigroup stock flirted with $1 on March 9. Nationalizations seemed inevitable as bears had their day.

Still, the Treasury bought time by announcing on the same day as Mr. Geithner’s underwhelming rescue plan that it would conduct "stress tests" of 19 large U.S. banks. It also implied, over time, that no bank would fail the test (which was more a negotiation than an audit). And when White House Chief of Staff Rahm Emanuel clearly stated on April 19 that nationalization was "not the goal" of the administration, it became safe to own financial stocks again.

It doesn’t matter if financial institution losses are $2 trillion or the pessimists’ $3.6 trillion. "No more failures" is policy. While the U.S. government may end up owning maybe a third of the equity of Citi and Bank of America and a few others, none will be nationalized. And even though future bank profits will be held back by constant write downs of "legacy" assets (we don’t call them toxic anymore), the bears have backed off and the market rallied — Citi is now $4.

2) Zero yields. The Federal Reserve, by driving short-term rates to almost zero, has messed


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Phil's Favorites

A second COVID-19 wave? Here are 6 lessons from the first

 

A second COVID-19 wave? Here are 6 lessons from the first

A man wearing a face mask to curb the spread of COVID-19 walks past a temporary Pride art installation in Vancouver on Aug. 3, 2020. THE CANADIAN PRESS/Darryl Dyck

Courtesy of Loren Falkenberg, University of Calgary and Jillian Walsh, University of York

As COVID-19 spread across the globe, governments looked to epidemiologists to slow its transmission.

Without a vaccine, large-scale testing capacity and sufficient critical-care beds, epidemiologists pushed...



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Biotech/COVID-19

A second COVID-19 wave? Here are 6 lessons from the first

 

A second COVID-19 wave? Here are 6 lessons from the first

A man wearing a face mask to curb the spread of COVID-19 walks past a temporary Pride art installation in Vancouver on Aug. 3, 2020. THE CANADIAN PRESS/Darryl Dyck

Courtesy of Loren Falkenberg, University of Calgary and Jillian Walsh, University of York

As COVID-19 spread across the globe, governments looked to epidemiologists to slow its transmission.

Without a vaccine, large-scale testing capacity and sufficient critical-care beds, epidemiologists pushed...



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ValueWalk

Coronavirus stimulus checks talks break over partisan fight

By Michelle Jones. Originally published at ValueWalk.

August 8th update: The likelihood of Coronavirus stimulus checks coming in the near future has dampened. Late Friday, Trump tweeted out that the Democrats were mostly interested in bailing out blue (Democratic) states, which are in deep date. Whatever, ones feelings on the matter the fact that there is public feuding over other crucial details does not bode well for checks anytime soon.

Editor’s note: This article contains the latest news on the coronavirus stimulus package. It’s updated regularly with news about coronavirus stimulus checks and related issues.

August 7, 2020 Update: Americans’ hope of a second round of coronavirus stimulus checks is drying up again as talks between the White House and key Democrats collapse. Although the two sides agree that they should send a sec...



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Zero Hedge

House Ethics Committee Finds Rashida Tlaib Violated Campaign Finance Rules

Courtesy of ZeroHedge View original post here.

Authored by Jack Philips via The Epoch Times,

The House Ethics Committee found Rep. Rashida Tlaib (D-Mich.), a member of the so-called “Squad,” violated campaign finance rules by receiving a campaign salary after she was no longer a candidate.

...



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The Technical Traders

Melt-Up Continues While Metals Warn of Risks

Courtesy of Technical Traders

What a week for Metals and the markets, folks. The Transportation Index is up nearly 4% for the week.  The Dow Jones Industrial Average is up over 3% for the week.  Silver is up over 14% and reached a peak near $30 (over 23%).  Gold is up over 2.5% and trading above $2025 right now – with a peak price level near $2090.  If you were not paying attention this week, there were some really big moves taking place.

MELT-UP WITH HIGH RISKS – PAY ATTENTION

Overall, our research team believes the current “melt-up” price action is likely to continue as global investors continue to believe the US Fed will do everything possible to save the...



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Digital Currencies

Raoul Pal: "It May Not Be Worth Owning Any Asset Other Than Bitcoin"

Courtesy of ZeroHedge View original post here.

Authored by Turner Wright via CoinTelegraph.com,

Raoul Pal, CEO and founder of Real Vision, says Bitcoin may soon become his only asset for long-term investments.

image courtesy of CoinTelegraph ...



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Kimble Charting Solutions

Silver Headed Back To $50, Top Of The Cup & Handle Pattern?

Courtesy of Chris Kimble

Could Silver be creating a multi-decade bullish “Cup & Handle” pattern? Possible!

Did a retest of a handle breakout take place in March at (1), where Silver created one of the largest bullish reversals in decades? Possible!

Could Silver be creating a 40-year bullish pattern? Anything is possible! I humbly have to say share this; I’ve been in the business for 40-years and I haven’t seen anything like this.

Silver looks to have double topped back in 2011 at $50, which was the 1980 highs. After double topping, Silver ...



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Chart School

RTT browsing latest..

Courtesy of Read the Ticker

Please review a collection of WWW browsing results. The information here is delayed by a few months, members get the most recent content.



Date Found: Sunday, 29 March 2020, 07:00:37 PM

Click for popup. Clear your browser cache if image is not showing.


Comment: Silver Shorts Are In a Bind | Ted Butler youtu.be/qQc0AoJp-Q8



Date Found: Monday, 30 March 2020, 05:21:45 PM

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Comment: 5 Questions From You for Luke Gromen youtu.be/nVZD_fuxbQE


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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Members' Corner

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

 

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

No matter the details of the plot, conspiracy theories follow common patterns of thought. Ranta Images/iStock/Getty Images Plus

Courtesy of John Cook, George Mason University; Sander van der Linden, University of Cambridge; Stephan Lewandowsky...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

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About Phil:

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...

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Ilene is editor and affiliate program coordinator for PSW. Contact Ilene to learn about our affiliate and content sharing programs.