The daily link

It appears some of us are interested in the business of trading, hopefully for both fun and profit.
Here's a place to talk about that. I suggest two main categories. How to trade (timeless), and what are you trading now, and why, and how it turned out. Those tend to be missing from the pro boards, so pundits can have selective memory....but that's not all that is important. Being wrong is part of the game, and how to handle it and make money anyway is crucial, for just one example.
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The daily link

Postby Doug Coulter » Fri Apr 08, 2011 12:06 pm

Some to ponder, some to laugh -- financial links in this thread. I create another for the links I use every single day to see what's going on. These are just today's wrap and flow, and probably won't work after awhile.

A relatively reasoned look at the effect of QE:
ComFed.JPG
Correlations -- the inflation the fed claims not to be creating with QE

http://www.minyanville.com/businessmark ... 1/id/33844
This obviously has various important implications. What happens when they stop? And realizing the markets are usually forward looking for about 6 months, and that QE is supposed to end in June, if not sooner? What's wrong with this picture? Even some of the fed have issues with this. Commodities are hot as anything right now, but you've been warned! Ben's in a real bind here. Bill Gross of PIMCO, the worlds largest bond firm, has dropped our debt from his portfolio. With the Fed buying 70% of our debt with fake money, who will step up and buy it once they stop? Expect a real rush to the exits on treasuries when they stop, or a little sooner. All that money will have to go somewhere, so I expect a kind of impulse, overshoot and ringing in that and various other markets if and when.

Anything Todd Harrison writes is worth reading -- do read his book online, or buy a copy. His daily stuff often requires some context, as he doesn't repeat himself that much, and tends to refer to his previous writings. No, I don't always agree with him -- but he's smart and honest and worth paying attention to. Usually, those who know don't talk. Todd's an exception. Todd thinks we're headed for the real crash, and predictions he's made over the last 3 or so years are all coming true -- even in the order he's made them. That's pretty doggone impressive. He's usually a bit too early for the normal attention span...
He believes we are in the eye of a huge financial storm, that has been temporarily papered over with fiat paper money. I tend to agree, it's just a matter of when. The approach our Fed is taking is very similar to what caused the Roman Empire to finally utterly fail -- and a lot of others. One thing he mentions that isn't common knowledge, is how much "bad paper" is out there, off books -- you have to be "in" to know about things like that. He indicates it as a multiple of the world GDP -- which is pretty scary. Also, all our main banks are one FASB rule away from insolvency - the only reason they aren't is a relaxation of the rule that they must mark to market. So right now their statements ignore all the bad loans and all their profits are fake, despite the ongoing bailouts they get, borrowing money free at the Fed, then buying treasuries (one hand washes the other) and commodities -- see above.

This one's a hoot:
http://www.bloomberg.com/news/2011-04-0 ... -baum.html

What if they shut down the government and no one noticed? Or things actually got better. Do you just suppose that might be their main fear?

Mark Hulbert sometimes has something worthwhile to say -- he's kind of a professional back tester. And he's dead wrong too, often enough, as driving with the rear view mirror can be. But it's also worth a glance even if you're moving forward, for context if nothing else. This is NOT one of the boards I post on -- it's a place I go when bored to waste a little time and be entertained.

Note, in the news game -- all articles that have a number in the title (7 reasons for blah) or that say things like "3 ETF's to play the trend in ...." are 100% bullshit. ETFs are the newest scam by people in the financial industry who can't trade well, so they just create these and skim off a nice, risk free profit. Is that who you want to trust your money with? Assuming actions speak louder than words, I think that tells a tale. ETFs make it easy to "de-worsify" not diversify. And some appear to be scams, like REMX, a rare earth metals ETF that when all it's holdings have a 5% up day (or more) doesn't go up!

It's much better to just do your homework and only trade the best in sector individual stocks -- it's not that much more work and the payoff is a factor of several. ETFs are only good for things you otherwise can't trade, and often stink even then. Further, since an ETF in say, coal, buys all the coal outfits -- it messes up the markets. Because when money flows in, all the coal outfits go up due to the ETF having to buy them, whether they deserve it or not. On the other side, when money flows out of an ETF, they have to sell even the best in sector stocks, and they go down for no other reason. It's a disease on the markets, smearing the good with the bad.

The comparison feature of google finance is your friend at homework time. See picture and weep. I rest my case on ETF's, at least for now.
Screenshot-1.png
ETF ripping you off bigtime
Posting as just me, not as the forum owner. Everything I say is "in my opinion" and YMMV -- which should go for everyone without saying.
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Re: The daily link

Postby Doug Coulter » Thu Apr 14, 2011 5:46 pm

Don't have a strictly on-topic good trading link today, just one about how silly and stupid people are influenced by fear. And how often it turns out to be profitable to do so for someone....

So, it's totally on topic and relevant after all -- what do you think drives people's market decisions? Have fun. Bruce's board has a lot of really good stuff on it for real thinkers, going way way back (especially good before and just after the 9/11 incident). And yes, I own his books. I used to do ELINT for our guys so I find security topics interesting.
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Re: The daily link

Postby Doug Coulter » Fri Apr 15, 2011 10:50 am

Todd Harrison has an interview video with Bloomberg. I like this guy.
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Re: The daily link - here we go

Postby Doug Coulter » Sun Apr 17, 2011 10:47 am

http://politics.slashdot.org/story/11/0 ... s-Dealings

This is the top of the slippery slope we're about to slide on down in the US (dragging a few with us, no doubt). Most of Slashdot doesn't understand this -- no surprise, it's not their thing. Strong and weak currencies are readily confused with "increasing" and "decreasing" values. The first is an amount, the second is a rate, and the implications are quite different. A weak currency makes exports easier, while a weakening currency makes them harder -- because people may just as well wait and buy it cheaper later.

Canary in the coal mine time.

The key to understanding this are the concepts of position, direction, and rates. It's not just one thing.

The fear of course, is that zillions of bucks, long since printed -- much more than the current flood of new money, come flooding home uncontrollably due to this and the likely sequels. Unless our Fed reverses course (unlikely it seems) that would mean having to destroy fiat money, instead of rabidly printing it (digitally, no paper needed) to keep the value near-constant.
All these bucks were held in foreign banks as a way to do trade. If they don't need them for that anymore, why hold on to something going down in value? They're not stupid.

That kinda leaves no way to fund the government in a world where we are buying 70% of our own debt, which is 40% of our spending (the official number -- the real one no one knows). The only counterbalance for this is the odd fact that before the boom, what was going on amounted to the creation of dollars (should have been illegal, but you know about loopholes). When all that fake value just kind of disappeared (and more than is admitted as I can discuss elsewhere -- the forensic accounting was actually fun for once), it took this massive fiat printing campaign to even stay even in the effective money supply! But obviously we've overshot if you look at the prices of "things we need" vs "things we want". Oil, food -- up. Computers, tech bling -- mostly down.

Now my personal thought as to why the pols are/were so afraid to shut down the government is the extent to which taxpayers would notice no difference. The net "takers" certainly would, but then, they're not the people who brib^h^h^h^h er, pay the pols.

Just yesterday, I came across a few cars stuck behind a tree that had fallen across the road, keeping a bunch of people from getting home (the only other way would have required 50 extra miles of driving in a "can't get there from here" kind of situation). And they were just sitting there, calling the DMV and spouses on their cel phones, and generally complaining. Many large men, healthy, some with tools, just watching this (rather small) tree sit there in the way. I just went up, took a rope out of my trunk, and pulled the sucker off the road. No dependence on the government -- a real eye-opener for some otherwise smart people, that was -- and somehow I was a momentary hero for independent thinking and a minimum of preparedness. They'd have waited for hours, or until Tuesday, for government help otherwise, or wasted $10-$15 on gas to go around, while still whining!

Wake up sheeple! Your ability to survive depending on a very narrow specialty that seems mostly to involve driving a car you can't fix using oil you can't produce, while talking on a cel phone you don't understand, just because you have some expertise in shuffling papers around regulations you know but few others can navigate, is about to be very much lessened.

And please do learn the difference between an amount, and a rate, at least. An amount, spent on something I need, that's durable, is done with and over. A rate -- such as rent, phone bill, property taxes, food -- enslaves you to have to keep coming up with it. A tiny leak can drain an ocean, or fill one - rates and amounts aren't the same thing!

All the things you pay for in rates are inflation-tied -- real inflation, not the type the pols report. Your income is not, at least not automatically. Our own local government is about to demand a tripling (yes, that's right) in our property taxes -- they know inflation numbers reported by the Fed are pretty bogus. Of course, we're just going down to the seat and beat the crap out of them -- we have that option here, and tell them who to fire and what to cut. The rest of the world isn't so luckily positioned.

Look out below. In a few years, when it's really getting horrible and as usual, people are looking at who to blame rather than how to fix it -- this time will be where they point out it all began.
Actually, it's been building for decades, this is merely a cusp. But is is a cusp, a place where things have to move seriously in some direction from here, it can't stay balanced on a knife edge anymore.
Posting as just me, not as the forum owner. Everything I say is "in my opinion" and YMMV -- which should go for everyone without saying.
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Re: The daily link

Postby johnf » Mon Apr 18, 2011 5:08 am

Doug
well said about the sheeple that is.
We were known as the number 8 wire brigade a few years ago ie you could fix almost anything with fencing wire
now i see Able males waiting for the AA to change a flat tyre for them --scared of getting a mark on their peter cardigan suits

the day of reckoning is not far away

A few years ago 2004 we had a massive storm and power went out -it usually does in a bad storm but it didn't return for me for four days

no prob our water is pumped up to a header tank 600 gals to pressure the house, so with care it can last for at least a week with no crimp on normal life ie chip heater that heats the hot water cylinder ( showers washing), barbeque for making coffee /tea in the morning and a fire in the lounge that has a hot plate to cook on in the evenings. And yes a gas generator to top up the fridge and freezer once a day.

An eye opener, many of my neighbours not so well equipped small pressure water systems that suck water from a tank below the house and no other means of cooking except for maybe a camp stove for the lucky ones.

The funny thing was that when talking to the local power board their priority was for suburbia that was suffering the same problems but were even worse equipped. Their take on this is that if we live in the country then we were more prepared --for some okay but the other wannabes around here --they were pissed --our house ablaze of light and me watching the tv catching up on the unfolding mayhem.

WHY DID YOU HELP THEM-- just point them to the nearest cliff and say you saw some lemmings get down just fine.
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Re: The daily link

Postby Doug Coulter » Mon Apr 18, 2011 11:10 am

Looks like I got lucky -- US credit downgraded today, and market is tanking, down about 200 points as I type. A much larger than normal move. My moves to get out over the last few trading days seem to be highly vindicated -- this would have hurt badly. Instead, my short on US treasury debt is zooming now. Too bad I covered some of it while it was losing money!

I try really hard to be what Heinlein called an "honest witness" for me, the glass is neither half-empty or half-full (pessimistic or optimistic) -- I try to view it as 50%, without attaching those emotions to it. Really helps in the trading compared to people who can't or don't do that.

And thus, rather than one of the perma-bears, who of course have been predicting this for generations (and some of whom used the last crash to self justify) or any other stopped clock, I can call things better -- and this was the cusp, I got it right. This won't be the end of things, that's a ways down the road I think, but it's the turning point. Of course, I could be wrong, and the moment anyone forgets that one -- they ARE wrong.

////

Yes, it's amazing how wimpy people have become over the last century or so -- the product of an educational system designed to create obedient little wage-slaves I suppose. The system was created by people with an interest in creating citizens who are easy to extract taxes from, and has long since lost any other pretense of a goal outside that. When everybody works for someone, and it's all through channels and on paper -- who benefits? Not the people, but they sure are easier to skim some taxes and other value off from. And it's easy to keep them believing that the troubles caused by the last batch of clowns can be solved by voting for the other batch of clowns as well. When your choices are Tweedle-dee and Tweedle-dum, both of whome spin the same underlying agenda (more for themselves), just in different ways....well, that's not much choice, is it.

In the 1930's, in rural America, no one had electricity unless they made it (and a few of the old windmills are still around in this area). No big deal. Everyone heated with wood -- and that's generally cut and stacked in advance anyway, so everyone had "backup". Babies were born at home, maybe with a midwife. Food came from places other than the grocery store, and people had that backed up too as stored produce from their own labors, usually most of a year's worth. All that slack is gone from the current system.

Now when electricity goes out over a region, it's declared a disaster area! Babies can only be born in an expensive hospital, of course. No one can even fix their own car, plumbing, wiring, heater -- you name it. DIY, with some exceptions, is dying. Now it's "do it for me", which I suppose does help create jobs, but it's not perhaps as efficient in other ways -- and makes handling real disaster a lot harder, as the sheep are just in the way of the people who have to come and do it for them. Fewer capable responders and all of those far too specialized.

It's not just the people not knowing how anymore, or being "too good to get dirty" though that is a really major component. You can't really heat with wood when you've packed yourselves into apartment buildings, nor make enough solar energy to support that stupidity. Further, even LP or natgas heaters won't run without electricity in a lot of cases -- I had to do a little searching to find ones that would to back up my wood heat here. Since we have at least a minority of actual dirt farmers here -- those guys haven't fallen prey to the various degradations that seem to be turning the human race into a bunch of wimps -- and I admire anyone who can do that and make a living doing it. Competition with the big, delicately balanced factory farms is tough indeed, but the results are better -- we eat well around here off locally produced food. But I'm in an exceptional location for America -- the place time forgot, and there aren't many places like this.
The difficulty of putting in all this easy-peasy modern infrastructure in the mountains has "held us back" in ways I find pleasing -- and in no way "held back". In one way, that was why I was kind of surprised to see what I did the other day -- we've had some city-boys move in around the area, and they don't yet "get it" like the "locals" do. We will just have to educate them in how to be real humans rather than plastic little robots.

Imagine people trying to be reasonably prepared in a dense city -- can you imagine an apt building with 1k dwellers all trying to run little backup generators or heaters? How would they splice into the wiring? I could do it (have done) but....they are just hosed by previous decisions they've made, perhaps without taking all the consequences into account. In fact, many of them will tout on discussion boards how they are "greener" and "more efficient" by living in a dense city, since they don't drive as much (which, in my experience isn't true either -- I've spent many an hour commute in a city trying to go just 6-8 miles in rush hour). It's easy to do if you conveniently forget about any numbers that aren't going your way -- like what it costs to ship things in and take out the trash from a dense city - and not just gasoline but other infrastructure that has considerable capital costs. Sins of omission are all too easy to commit in analysis when you have an agenda.

And to the extent there's much awareness of this, it's become political, which means people with pre-conceived notions and a vested interest in grinding a particular ax have sprung up to influence the sheeple for their own ends, making anything like truth very difficult to get across to them -- even if you can get them to listen. They are so used to the slick presentations by those clowns that just telling the truth "without glitzy production values in fancy high dollar propaganda" doesn't work too well.

Well, I'll try to get another neat link today -- it's been a busy morning doing other things, some exciting things are afoot just now, on which, more later.

Here's a quick an easy one -- our government practicing "denial" -- what else would you expect? I've been pondering the situation we've allowed to exist where even a good man in some positions must tell outright lies or make the problems worse.
Posting as just me, not as the forum owner. Everything I say is "in my opinion" and YMMV -- which should go for everyone without saying.
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Re: The daily link

Postby Doug Coulter » Tue Apr 26, 2011 11:48 am

I like this guy, I've been watching for a bit and he's getting his feet under him pretty solidly.
http://seekingalpha.com/article/265414- ... set-prices

His current thinking is that we might be set up for a fairly drastic drop in commodities (including things like silver and gold), depending on what the fed says about QE and ZIRP.

My thinking agrees with his fairly closely, and I'm only in any of those for short times, so I hope to miss any really large downdraft, though SLV was a heck of a surprise today (but not a loss, yet).
Obviously watching that one closely. Is this a buyable dip, or a sign that the crazy runup is going to reverse, or will it simply flatten? If I knew that, I'd have more time in the lab, for now I just have to watch.

I think if we get a real good dip (like 10%) that it will reverse and be a good time to buy, for at least one more time -- medium term. Farther out, we are still tracking the "fake" recovery after the '29 crash frighteningly closely....which implies another real big dip along the way, then markets so flat that it's going to be hard to make money for awhile.

However, it really is different this time in a number of ways, we are in previously uncharted territory:

Sovereign debt highest since WW II. But no huge demand for reconstruction and growth like last time. And the US doesn't have the advantage of being the only country with an industrial base not bombed into the stone age this time.

Vast reduction in the number of people who provide a substantial amount of their own food -- or anything else. All is now bought from some big outfit -- food, oil, fertilizer.

Approaching the limits of the planet's carrying capacity - yield per hectare is no longer going up faster than demand. Peak oil. Fear of nuclear. Fear of natgas frakking.

Growth engine of the world -- China -- looking a heck of a lot like we did before the last crash -- empty cities....government unable to really control bank lending (there are reports that they simply ignore the government and still make loans "on the side and off the books" now. Pretty familiar. They have nicely large foriegn reserves compared to most, but anyone suddenly forced to live on savings does tend to cut back -- and they are the demand at the margin for a heck of a lot of things.

The ability of the price of almost any investment vehicle to change suddenly and overnight when you're not awake and able to do much about it. Used to be a goodly bit slower when all this was manual, but now we're at the other extreme with trading machines co-located at the exchanges to improve latency due to speed of light!

So, short term bearish, mid term bullish, long term bearish again, and very long term -- well the humans do have a record of muddling through, but sometimes it's very painful along the way.
Of course, Uncle Ben could wrinkle his brow just so and the press could buy obvious lies once again, and that short term (this week and next maybe) is actually harder to predict as a result of that than the others.

And I still ponder why we allow a system to exist that in large part depends on trusted people telling lies to avoid the self-fulfilling-ness of bad news. They do it over and over, and when caught out, there's always some plausible explanation that they were in some sense an idiot. Except I don't see them as idiots (quite). More like "short sighted", or "let the future take care of itself".

Now, I own no tinfoil hats at all. But this jump in the broad markets today (dow up 117 as I type) *before* the fomc shouts to me that someone, or someones with tons of money, already knows what the fed is going to say....doesn't take a tinfoil hat to notice corruption that repeats over and over and over long time periods. We'll of course see if it's a blip, or is confirmed after the speechifying. I find sudden shocks like this are useful in one way, even though that SLV hurt pretty bad -- now go back and look at who predicted it yesterday, and that's someone you might want to listen to more closely in the future, if they build up a track record of being right....however they manage it.

And for humor today, slightly creepy, but I want one! Most other sorts of tech might affect the quality of your life, daily, a lot less...
Posting as just me, not as the forum owner. Everything I say is "in my opinion" and YMMV -- which should go for everyone without saying.
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Re: The daily link

Postby Doug Coulter » Thu Apr 28, 2011 11:12 pm

A couple rounds of "the dismal science" not so dismal in these depictions -- unless you listen to what's being said and look around you. But still worth your time if you have any desire to understand what is coming before being crushed by it.

http://www.youtube.com/watch?v=d0nERTFo-S



Here's round two, awful good -- and an appropriate use of the words together....a good description of an awful state? Maybe better than the first round if you know the context.
Form your own conclusions. You can guess mine. The real lie, never mentioned by either set of pols is that I believe Keynes said one should do the spending in bad times with money saved up in the good times. Where are all his fans during good times and still running deficits? Or Hayek's for that matter.

http://www.youtube.com/watch?v=GTQnarzm ... r_embedded

Posting as just me, not as the forum owner. Everything I say is "in my opinion" and YMMV -- which should go for everyone without saying.
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Re: The daily link

Postby Doug Coulter » Thu May 05, 2011 11:26 am

Here's a hot one.
http://www.businessinsider.com/bloomber ... ws-2010-12

Seems someone clever at Bloomberg (which is weird itself) has figured out how to get earnings hours in advance of them being made public, and the trick is trivial -- and it's legal.

It amounts to this. Companies put their earnings online early, usually in their investor relations section of the web page they have. They just don't provide a link to the new release until the stated time. However, bean counters being as imaginative as usual, if last quarter's numbers were under something like www.intel.com/investors/Q12010earnings/release.pdf, well, you can guess what the link is going to be for the next quarter pretty easily.... (I just made that one up, but you get the idea on how to do this at home).

(I use the same trick here for our online data)

As the article says, could be manna from heaven - you put on your trade when you know earnings, but no one else does, take it back off when the official release happens. Eg buy the rumor and sell the news, only in this case, both are news.

The only flaw I see in this scheme is that sometimes companies show good numbers (which are generally judged compared to analysts expectations vs a straight good/bad criteria) but still get clobbered, where others zoom on the same kind of good numbers. Still, and edge is an edge.
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Re: The daily link

Postby Doug Coulter » Mon May 09, 2011 11:57 am

Here's one about the effect of the reverse split in Citibank stock, a favorite of the HFT guys as mentioned here. Turns out (I sort or knew this) that with the low stock price, the volume rebate system was adding a little extra profit to those huge trades -- evidently the system was based on share count (dumb) rather than dollars.
The net effect is that the 10::1 reverse split now makes C not so fun for those guys, and they're casting about for other things to work with.

http://www.reuters.com/article/2011/05/ ... NK20110506

Humans would be funnier if they weren't so stupid.
Although I generally trade in round lots myself, it's because it's easier on my head to do the math. What I'm really doing is trading in "units" in my money management scheme, and rounding to the nearest round lot. I don't care if the stock price is $1 or $1000 mostly. I do avoid the real low and real high priced ones, as the real low priced ones tend to be easier to manipulate due to thin trading (C is obviously an exception there), and the high priced ones, golly, sometimes exceed a "unit" in my system for a round lot.

Here's a link I find useful, and this is probably a dupe but here goes:

http://quotes.ino.com/exchanges/category.html?c=metals

This is where to find out how the metals futures are trading. Often a leading indicator to the stocks of the companies that either produce or consume them. The parent site, ino.com, has dollar vs other basket and crude on it (and a lot of other stuff).
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