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The Stock Room blog go to start apppro’s take for 05/25/2013 09:30 am EST The etFing of our markets & economy! Investopedia: Definition of 'Exchange-Traded Fund - ETF'“A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. ETFs experience price changes throughout the day as they are bought and sold.” Wikipedia: Investment uses “ETFs generally provide the easy diversification, low expense ratios, and tax efficiency of index funds, while still maintaining all the features of ordinary stock, such as limit orders, short selling, and options. Because ETFs can be economically acquired, held, and disposed of, some investors invest in ETF shares as a long-term investment for asset allocation purposes, while other investors trade ETF shares frequently to implement market timing investment strategies. Buying and selling flexibility – ETFs can be bought and sold at current market prices at any time during the trading day, unlike mutual funds and unit investment trusts, which can only be traded at the end of the trading day. As publicly traded securities, their shares can be purchased on margin and sold short, enabling the use of hedging strategies, and traded using stop orders and limit orders, which allow investors to specify the price points at which they are willing to trade.” But the 2 main points that seems to be lost above is that: · ETF’s were supposed to be easy ways for the “INDIVIDUAL” investor to buy and sell a MUTUAL Fund during regular market hours. ETF’s haven’t been around so long and most of you should remember that the SEC allowed these WMD’s because they were told it was supposed to HELP the small investor! Well, BULLSHIT! · ETF’s were supposed to TRACK the underlying equities. The price of the stocks that comprise the ETF were supposed to determine the ETF’s value – NOT the price (NAV) of the ETF determined the value of the UNDER securities. “If there is strong investor demand for an ETF, its share price will (temporarily) rise above its net asset value per share, giving arbitrageurs an incentive to purchase additional creation units from the ETF and sell the component ETF shares in the open market. The additional supply of ETF shares reduces the market price per share, generally eliminating the premium over net asset value. A similar process applies when there is weak demand for an ETF and its shares trade at a discount from net asset value.” Since their mainstream introduction in 1993 with the ETF that followed the S&P 500 the Spyders (SPY), ETF’s have multiplied like the recent invasion of Some say that these ETF’s benefit the small investor by giving them a way of investing across broad spectrums easily and cheaply. I agree – I buy these all the time and find their ease and benefits enormous. HOWEVER, what ETF’s have really become are play toys of HFT machines and their algo’s that they use. Please look at this chart from Friday comparing the $SPX & the $VIX. The 1st is the S&P 500 and the 2nd is the Volatility Index >>> mirror images!
What you really have is 1 machine trading volatility (Volatility is NOT an asset! “Soup is NOT a meal!”), while a second machine is reacting to the 1st machine’s algo’s and is trading the S&P 500. These nano second trades are done over and over and over, and all probably based on some “Heat Seeker” algo that found a keyword somewhere about something or another. Meanwhile, the rest of us humans sit there with our mouths wide open wondering what the heck is going on as “vacuuming” algo’s suck the bids and life out of the market. Also, which was controlling which? Was the S&P going up and down because it’s underlying stocks were going up & down; OR was the S&P going up and down because a machine was forcing the VIX up and down and another machines was forcing the S&P up and down in response? I say the later and IT’S NOT SUPPOSED TO BE THIS WAY!
This is NOT what these WMD’s were supposed to do! All this does is create mini-flash after mini-flash. These algo’s serve no real purpose and the only outcome is continued uncertainty and angst! Most importantly of all: little to none of this QE based machine trading $’s ever winds up helping Main St, but rather it just gets gambled away on the Vegas Strip! Pandora’s Box has been opened and yanking these WMD’s from the exchanges will never happen. BUT in lieu of that there are my 2 easy Golden Rules’ alternatives: 2. Crack down on naked short selling. Require stock certificate #'s when a short sale needs to be covered, including ETF’s. a. Stop the shorting of ALL ETF’s. This is just legalized naked shorting—makes no sense. 5. Have ALL ETF’s trade on a 20-minute delayed basis. Get these instruments of mass destruction back to what they were supposed to do: mimic mutual funds. NO pre or aftermarket trading. _______________________________________ apppro’s take for 05/12/2013 07:30 am EST Bloomberg’s (is a) hack – Shades of Murdock? If Bloomberg had done this to George Clooney or even worse Beyonce – ALL HELL WOULD BREAK LOOSE! Demand Congressional hearings and OVERSIGHT NOW! Wall Street: How Much Does Bloomberg Know? at CNBC07:22pm EDT Bloomberg bars reporters from client activity AP09:05pm EDT
Question 1: When the reporters accessed clients’ info on their Bloomberg Terminals, were they able to also see TRADES of $JPM & $GS and than use insider info to trade on that themselves??? Question 2: How MUCH did Michael Bloomberg KNOW & when did he know it? Added Question 3: Didn’t Bloomberg out the JPMorgan London Whale, and where the hell did they get that information??
The 5 Golden Rules: 3. Institute some rules on how the media ’reports’ news in order to prevent rumor-boarding. Not censorship… just sensibility & responsibility. _______________________________________ apppro’s take for 05/11/2013 01:30 pm EST Schrödinger's Cat—Looking inside the Fed’s Box! There are several ways of interpreting the cat in the poisoned box scenario. Personally I find the Big Bang one the best:
Right now the asylum we call the stock market is debating when and how the Fed will end its so-called QE program. Not going to get into the debate on whether QE’s benefits were real or not, all I will do is repeat my Main Saying: Don’t blame the Fed… it’s not their fault we allowed a few SHORT-term traders/traitors to use QE $’s to CREATE ‘put spreads’ INSTEAD of CREATING JOBS! In this case “the box” is the Fed ending the QE policy, and until we open that box we will not really know whether the economy is dead or alive. The real issue now is that some are trying to decide even before we seal that cat up in that box, whether he will come out dead or alive. In a recent article Joshua M Brown really tried to make some sense of some of these speculations The End is Where We Start From. I give him credit for it, but he too is missing the real point. Like the 2nd more complicated way of interpreting Schrödinger's Cat So WHAT if the Fed slowly ends that misguided practice of “Twisting into the Wind”!? So WHAT if the Fed starts to slowly cut back on dumping all that cheap money into the system!? (Continued on page 2) |
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Main Slogan: “It’s The Mentality Stupid” A SHORT-term mentality does NOT build bridges. A SHORT-term mentality does NOT create jobs. A SHORT-term mentality does NOT create prosperity. A SHORT-term mentality creates NOTHING, but uncertainty, fear, angst, and hate. Main Principle: “It’s NOT how much you make, BUT rather how LONG it took you to make it!” STOP the INSANITY NOW! - #StIN Revised Tax Rules: 1. Capital gains 5+ years* - 5% tax on capital gains 2. Capital gains 2 > 5 years* ** - 15% tax on capital gain 3. Capital gains 1 > 2 years* - 35% tax on capital gains 4. Capital gains 6 > 12 months - 45% tax on capital gains 5. Capital gains under <6 months - 55% tax on capital gains 6. Most critical of all — Institute a capital gains tax of 65% on ALL short sales not directly tied to a long buy by a regulated hedge fund. *Quasi Buffett Rule > Anyone whose main source of ‘income’ (retired persons excluded) that comes directly from capital gains, should be taxed at never less than the 1>2 year 35% rate—no matter what the cg term length. ** Dividends are taxed at this level—15%. Main Saying: Don’t blame the Fed… it’s not their fault we allowed a few SHORT-term traders/traitors to use QE $’s to CREATE ‘put spreads’ INSTEAD of CREATING JOBS! OPERATION DIRECT DEPOSIT Fed SELLS longer dated Treasury’s and uses that money to buy LOCAL STATE infrastructure bonds. Lehman’s Principle: The confidence destruction of an entire entity based on SHORT-term re-evaluation of LONG-term holdings due to unrestricted RUMORmongering and GANGshorting! Basically, taking a 30-YEAR something and basing it on a 30-SECOND whatever! End Mark-To-Market M2M! The 5 Golden Rules - #The5GoldenRules 1. Immediately, reinstate the Up-Tick Rule. 2. Crack down on naked short selling. Require stock certificate #'s when a short sale needs to be covered, including ETF’s. a. Stop the shorting of ALL ETF’s. This is just legalized naked shorting—makes no sense. 3. Institute some rules on how the media ’reports’ news in order to prevent rumor-boarding. Not censorship… just sensibility & responsibility. 4. Pass a Wind-Fall Capital Gains Tax of 65% on ALL short sales not directly tied to a long buy by a regulated hedge fund! 5. Have ALL ETF’s trade on a 20-minute delayed basis. Get these instruments of mass destruction back to what they were supposed to do: mimic mutual funds. NO pre or aftermarket trading. “EXPORT THE CRAP OUT OF NATURAL GAS!” - Tax Plan Þ Institute a 10% EXPORT TAX to be paid by the buyer at the point of export. · Apply 8% DIRECTLY to paying down the deficit, ONLY. · Apply 2% to help fund our Superfunds Cleanup. · So that NG prices never go crazy, have that tax increase the higher NG gets. For example, if NG gets to $5.50 the tax increase to 20%, $7.50 the tax becomes 30%, ETC. Therefore the buyers wont’ want it and the prices will be held in check. Truly the MOST disgraceful BUT truthful quote of not only 2012 but the last 10 years!
The Most DISGRACEFUL quote of 2012, so far!
The BEST quote of 2011
The Most DISGRACEFUL quote of 2011
The 2nd Most DISGRACEFUL quote of 2011
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